AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 12, 2000
REGISTRATION NO. 333-38018
AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PINNACLE FINANCIAL PARTNERS, INC.
(Name of Small Business Issuer in its Charter)
TENNESSEE 6021 62-182853
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of Industrial Identification No.)
incorporation or organization) Classification Code Number)
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3401 WEST END AVENUE, SUITE 306, NASHVILLE, TENNESSEE 37203, (615) 250-1800
(Address, and Telephone Number of Principal Executive Offices)
THE COMMERCE CENTER, 211 COMMERCE STREET, NASHVILLE, TENNESSEE 37201
(Address of Principal Place of Business or Intended Principal Place of Business)
M. TERRY TURNER
PINNACLE FINANCIAL PARTNERS, INC.
SUITE 306
3401 WEST END AVENUE
NASHVILLE, TENNESSEE 37203
(615) 250-1800
(Name, Address, and Telephone Number, of Agent for Service)
COPIES TO:
KATHRYN L. KNUDSON, ESQ. RALPH W. DAVIS, ESQ.
POWELL, GOLDSTEIN, FRAZER & MURPHY LLP WALLER LANSDEN DORTCH & DAVIS, PLLC
191 PEACHTREE STREET, N.E., 16(TH) FLOOR NASHVILLE CITY CENTER
ATLANTA, GEORGIA 30303 511 UNION STREET, SUITE 2100
(404) 572-6952 NASHVILLE, TENNESSEE 37219-1760
(615) 252-2481
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Approximate date of proposed sale to the public: as soon as practicable after this Registration Statement has become effective.
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /
If the delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / /
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PRELIMINARY PROSPECTUS DATED JULY 12, 2000; SUBJECT TO COMPLETION
2,500,000 SHARES
[LOGO]
A PROPOSED BANK HOLDING COMPANY FOR
PINNACLE NATIONAL BANK (PROPOSED)
COMMON STOCK
We are offering shares of Pinnacle Financial Partners, Inc. common stock to raise the money required to start Pinnacle National Bank, a proposed national bank. Pinnacle Financial will be the holding company and sole shareholder of Pinnacle National after it is organized. Pinnacle National will be headquartered in Nashville, Tennessee, and upon receipt of final regulatory approval, we expect to open Pinnacle National in the third or fourth quarter of 2000. This is our first offering of common stock to the public, and currently no public market exists for our shares. This is a firm commitment underwriting. Unless otherwise waived by Pinnacle Financial, any one investor may purchase up to a maximum of 25,000 shares. We will request that quotations for our common stock be reported on the Nasdaq OTC Bulletin Board under the symbol "PINN."
Our organizers are being offered warrants to purchase one share of our common stock for every two shares they purchase in the offering. Once vested, our organizers may exercise their warrants and purchase additional shares of our common stock at an exercise price of $10.00 per share. See "Description of Our Capital Stock--Organizers' Shares and Warrants" on page 44.
OUR COMMON STOCK IS NOT A DEPOSIT OR A BANK ACCOUNT AND IS NOT INSURED BY
THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY.
AN INVESTMENT IN OUR COMMON STOCK INVOLVES SIGNIFICANT RISKS. YOU SHOULD NOT INVEST IN THIS OFFERING UNLESS YOU CAN AFFORD TO LOSE ALL OF YOUR INVESTMENT. WE HAVE DESCRIBED WHAT WE BELIEVE ARE THE MATERIAL RISKS OF THIS INVESTMENT UNDER THE HEADING "RISK FACTORS" BEGINNING ON PAGE 6.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PER SHARE TOTAL
--------- -----------
Public offering price...................................... $10.00 $25,000,000
Underwriting discount...................................... $ .53 $ 1,313,000
Proceeds to the company, before expenses................... $ 9.47 $23,687,000
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We will not pay an underwriting discount for shares purchased in the offering by our organizers, and the underwriting discount that will apply to shares purchased in the offering by individuals referred to the underwriters by our organizers, up to 410,000 shares, will equal 3.0% of the public offering price, or $.30 per share. The underwriting discount that will apply to all other shares purchased in the offering will equal 7.0% of the public offering price, or $.70 per share. The underwriters' discount shown in the foregoing table reflects a blended rate based on the assumption that 800,000 of the shares will have either no discount or the 3.0% discount. The underwriters have the right to purchase up to an additional 316,500 shares at $10.00 per share, less the underwriters' discount of $.70 per share, within 30 days after the date of this prospectus to cover over-allotments.
The underwriters expect to deliver the shares of common stock on , 2000.
PaineWebber Incorporated J.C. Bradford & Co. |
, 2000
PINNACLE FINANCIAL PARTNERS, INC.
AND
PINNACLE NATIONAL BANK (PROPOSED)
MARKET AREA
[LOGO]
SUMMARY
THIS SUMMARY DOES NOT CONTAIN ALL THE INFORMATION YOU SHOULD CONSIDER BEFORE INVESTING IN THE COMMON STOCK. WE ENCOURAGE YOU TO READ CAREFULLY THE ENTIRE PROSPECTUS BEFORE INVESTING. UNLESS OTHERWISE STATED, ALL INFORMATION IN THIS PROSPECTUS ASSUMES THE UNDERWRITERS DO NOT EXERCISE THE OVER-ALLOTMENT OPTION.
PINNACLE FINANCIAL AND PINNACLE NATIONAL
Pinnacle Financial Partners, Inc. is a Tennessee corporation that was incorporated on February 28, 2000 to organize and serve as the holding company for Pinnacle National Bank, a proposed national bank. Pinnacle National will operate as a community bank emphasizing personalized banking relationships with individuals and businesses located within its primary service area, which is comprised of metropolitan Nashville-Davidson County and the surrounding counties of Cheatham, Dickson, Robertson, Rutherford, Sumner, Williamson and Wilson.
On March 29, 2000 we applied for approval from the Office of the Comptroller of the Currency to organize Pinnacle National as a national bank in Nashville, Tennessee. In our application, we indicated to the OCC that we anticipate raising $25.0 million in capital and investing approximately $22.6 million in Pinnacle National. Accordingly, in order to receive final approval of our application to organize Pinnacle National, we anticipate that we will be required to invest a minimum of $22.6 million in Pinnacle National, receive FDIC approval of our application for deposit insurance and implement appropriate banking policies and procedures. We filed an application with the FDIC for Pinnacle National to obtain deposit insurance on March 29, 2000, and plan to file an application with the Federal Reserve for Pinnacle Financial to become a bank holding company and to acquire all of the capital stock of Pinnacle National. After receiving all necessary regulatory approvals, we plan to begin operations in our permanent facility in the third or fourth quarter of 2000.
WHY WE ARE ORGANIZING A NEW BANK IN NASHVILLE, TENNESSEE
The economic stability and growth of the Nashville-Davidson County area are important to the economic stability and growth of our entire primary service area. Our primary service area's economic strength comes from its large employer base, which includes the national, state or corporate headquarters of a number of large corporations such as Nissan Motor Manufacturing Corporation U.S.A., BellSouth, the Kroger Company, and Columbia/HCA Healthcare Corporation. Additionally, according to the Nashville Area Chamber of Commerce, the regional economy continues to benefit from low unemployment, consistent job growth, substantial outside investment, and expansion and broadening of its labor force. We anticipate that these factors will cause more businesses to relocate to, or start operations in, the Nashville-Davidson County area and, in turn, will increase the demand for depository and lending services within our market.
We believe that our primary service area will sustain continued growth. According to estimates compiled by CACI Marketing Systems, Inc., a marketing research firm retained by Pinnacle Financial, the 1999 population for our primary service area exceeded 1.1 million, representing a 19.4% increase over the area's 1990 population. Additionally, CACI projects that by 2004 the population for our primary service area will increase by over 100,000, with the number of households rising by 9.3% to approximately 496,000 during the same period. As a result, we anticipate that the area's expanding population and expected growth in total households will enlarge Pinnacle National's potential customer base.
With the competitive dynamics of today's financial industry, we believe that positioning ourselves as solely a community bank will not be enough. In the wake of modern technology and the prosperity of the United States' financial markets over the past decade, banking clients have generally become more sophisticated in their approach to selecting financial services providers. We believe that the most important criteria to our targeted clients when selecting a bank is their desire to receive exceptional
customer service while being able to enjoy convenient access to a broad array of sophisticated financial products. Additionally, if presented with a choice, we believe that many of these individuals and businesses would prefer to deal with a locally-owned and headquartered institution. Although there are currently three Nashville-Davidson County based community banks, we believe we can distinguish ourselves by providing the level of personal service often associated with a community bank while also offering the requisite technology and skilled advisors to deliver more sophisticated financial products and services than a typical community bank.
DIRECTORS AND OFFICERS
Our directors, who are also the proposed directors of Pinnacle National, consists of 10 of our 14 organizers and include:
- Sue G. Atkinson
- Colleen Conway-Welch
- Clay T. Jackson
- John E. Maupin, Jr.
- Robert A. McCabe, Jr.
- Robert E. McNeilly, Jr.
- Dale W. Polley
- James L. Shaub, II
- Reese L. Smith, III
- M. Terry Turner
All of our directors are residents of Nashville's metropolitan area and are active in their local communities. As a result, our directors intend to utilize their diverse backgrounds and their extensive local business relationships to attract clients from all segments of Pinnacle National's primary service area. See "Management" on page 30.
Additionally, we have retained the following experienced individuals to serve on our senior management team:
- M. Terry Turner is the president and chief executive officer of Pinnacle Financial and the proposed president and chief executive officer of Pinnacle National. Mr. Turner has over 20 years of experience in the banking industry and has served in various management positions throughout his career with both Park National Bank in Knoxville and First American National Bank in Nashville, including serving as the president of First American's general banking and investment services group divisions.
- Robert A. McCabe, Jr. is the chairman of the board of Pinnacle Financial and the proposed chairman of the Board of Pinnacle National. Mr. McCabe has over 24 years of experience in the banking industry, including serving as vice chairman of the board of First American Corporation in Nashville.
- Hugh M. Queener is the executive vice president and chief administrative officer of Pinnacle Financial and the proposed executive vice president and chief administrative officer of Pinnacle National. Mr. Queener has over 17 years of experience in banking, including serving as executive vice president of retail lending for First American in Nashville.
We believe that our executive officers' extensive banking experience is very strong for a community bank's management team; therefore, we anticipate that our ability to compete effectively will be enhanced because of the experience of our management team and their familiarity of the banking industry within our primary service area.
PHILOSOPHY AND STRATEGY
Our philosophy is based on three major trends that we see in today's financial services industry:
- client usage of more sophisticated financial products;
- client perception of decreasing service levels at banking institutions; and
- client demand for more convenient access to financial services.
In light of these trends, our management philosophy will be centered on delivering to individuals and small- to medium-sized businesses exceptional client service and effective financial advice through highly trained personnel who understand and care about the broad financial needs and objectives of our clients. In order to implement our philosophy, our specific business strategies will involve:
- capitalizing on our directors' and officers' diverse community involvement, professional expertise, and personal and business contacts;
- hiring and retaining highly experienced and qualified banking and financial personnel with established client relationships within our primary market area;
- providing individualized attention with consistent, local decision-making authority;
- offering a full line of financial services to include traditional depository and credit products, as well as investment and insurance products;
- capitalizing on customer dissatisfaction with financial institutions that are not meeting the sophisticated financial needs of consumers and small- to medium-sized businesses;
- establishing a distribution strategy designed to prudently expand our physical and virtual market presence;
- positioning our main office in downtown Nashville to establish our connection with Nashville's prominent commercial and private banking markets;
- utilizing technology and strategic outsourcers to provide a broad array of sophisticated and convenient products and services; and
- implementing an aggressive marketing program to promote Pinnacle National's philosophy and market presence.
PRODUCTS AND SERVICES
In general, Pinnacle National's target market will be consumers and small- to medium-sized businesses with annual revenues of less than $25,000,000. However, many of our products and services will be targeted at the financial needs of smaller business clients with annual revenues of less than $10,000,000 and individual clients who have significant borrowing and investment requests.
We plan to offer directly, or through a strategic third party selected by us, products and services that will provide our clients with access to an array of sophisticated financial products typically offered only by larger banks. As a result, our sales process will be driven by the individual needs of our clients, and with the assistance of highly developed financial planning tools, we will focus on providing specific advice tailored to meet the financial goals of our individual clients. For the consumer, this will result in a case-by-case assessment of an individual's investment, insurance and debt financing needs; for the small- to medium-sized business, this will entail various cash management information systems that will permit timely and accurate management of cash resources. Additionally, we anticipate that our professional staff will often work in partnership with our client's financial advisory team, which may include the client's attorney, accountant, or other financial advisor.
Pinnacle National will also offer traditional banking products and services, including checking, savings, interest-bearing checking, money market, certificate of deposit, IRA and cash management accounts. Ancillary services will also be offered, such as debit and credit card services and direct deposit.
THE OFFERING AND OWNERSHIP BY OUR ORGANIZERS AND DIRECTORS
We are offering 2,500,000 shares of our common stock for $10.00 per share. Our organizers and directors intend to purchase 391,000 shares, which will represent 15.6% of the shares outstanding after the offering. In recognition of our organizers' financial risk and efforts in organizing Pinnacle Financial and Pinnacle National, our organizers are being offered by this prospectus, at no cost to them, warrants
to purchase one additional share of our common stock, at $10.00 per share, for every two shares they purchase in the offering. Given the intent of our organizers to purchase 391,000 shares in this offering, we expect to issue to our organizers warrants to purchase up to an aggregate of 195,500 additional shares of our common stock. We believe our organizers' financial interest in Pinnacle Financial will encourage their active participation in growing our business. We hope to sell the remaining shares to individuals and businesses primarily within the Nashville metropolitan area who share our desire to support a new community bank.
The 2,500,000 shares of common stock offered does not include the over-allotment option granted to the underwriters to purchase up to 316,500 additional shares, 195,500 shares issuable upon the exercise of the warrants issued to our organizers or 520,000 shares that we may issue from time to time under our stock incentive plan.
USE OF PROCEEDS
We will use $22.6 million raised in this offering to capitalize Pinnacle National. This is the amount of capital that we have indicated to the Office of the Comptroller of the Currency that we anticipate investing in Pinnacle National prior to its opening. We anticipate using the $827,000 in net proceeds remaining after capitalizing Pinnacle National to repay the amount drawn on our line of credit, to provide Pinnacle Financial with working capital and for other general business purposes. See "Use of Proceeds--Use of Proceeds by Pinnacle Financial" on page 13.
In turn, Pinnacle National will use the $22.6 million that it receives from Pinnacle Financial to fund, over the next 12 months following the close of the offering, approximately:
- $865,000 in pre-opening and organizational expenses;
- $251,000 in lease payments for its main office and temporary facilities;
- $1,650,000 in lease-hold improvements to its main office, including furniture, fixtures and equipment; and
- $2,800,000 in expansion costs to open two additional branch locations, including furniture, fixtures and equipment.
We estimate that after funding the above expenses/capital expenditures Pinnacle National will have approximately $17.0 million in remaining proceeds available to add to its expected deposit base and other funding sources to support its lending and general operating activities. See "Use of Proceeds--Use of Proceeds by Pinnacle National" on page 13.
DIVIDENDS
We do not plan to pay dividends until we recover the losses that we will have incurred and become profitable. Our future dividend policy will depend on our earnings, capital requirements, financial condition and other factors that our board of directors consider relevant. See "Dividends" on page 16 and "Supervision and Regulation--Payment of Dividends" on page 57.
LOCATION OF OFFICES
The address and phone number of our temporary executive office are:
Suite 306 3401 West End Avenue Nashville, Tennessee 37203 (615) 250-1800
Our permanent main office and executive offices will be located at:
The Commerce Center 211 Commerce Street Nashville, Tennessee 37201
Our main office will consist of approximately 12,135 square feet of leased office space in The Commerce Center located on the corner of 3(rd) Street and Commerce Street. We plan to begin tenant build-out of our main office in the second quarter of 2000, which we anticipate will be completed by the end of the third quarter of 2000. Once completed, we will begin banking operations out of our main office facility. Accordingly, we anticipate that we will open for business in our main office location in the third or fourth quarter of 2000.
We anticipate that the downtown location of our main office will provide us with desired visibility in Nashville's prominent commercial and private banking markets. However, as in most metropolitan markets, there is a growing demand for more convenient access to banking and investment products and services by banking clients. Consequently, as part of our strategy to provide convenient access to our banking products and services and to expand our market visibility, we expect to implement a distribution strategy that we believe will be a prudent expansion of Pinnacle National's proposed operations. Under our distribution strategy, we anticipate opening offices in the Brentwood area, the Belle Meade/Green Hills area, the Rivergate Mall or Hendersonville area, and the Bellevue area within the first two years of Pinnacle National's operations. Each of these areas listed are currently within our primary service area and represent, in the view of our management, important sub-markets of our overall primary service area. As of the date of this prospectus, we have not selected or procured any actual site locations, and there can be no assurance that we will open these offices, or if opened, that they will be profitable.
RISK FACTORS
THE FOLLOWING PARAGRAPHS DESCRIBE WHAT WE BELIEVE ARE THE MATERIAL RISKS OF AN INVESTMENT IN THE COMMON STOCK. WE MAY FACE OTHER RISKS AS WELL, WHICH WE HAVE NOT ANTICIPATED. AN INVESTMENT IN THE COMMON STOCK INVOLVES A SIGNIFICANT DEGREE OF RISK, AND YOU SHOULD NOT INVEST IN THE COMMON STOCK UNLESS YOU CAN AFFORD TO LOSE YOUR ENTIRE INVESTMENT. BEFORE DECIDING TO INVEST IN THE COMMON STOCK, PLEASE CAREFULLY READ THE ENTIRE PROSPECTUS, INCLUDING THE CAUTIONARY
STATEMENT FOLLOWING THE RISK FACTORS REGARDING THE USE OF FORWARD-LOOKING STATEMENTS.
WE HAVE NO OPERATING HISTORY UPON WHICH TO BASE AN ESTIMATE OF OUR FUTURE FINANCIAL PERFORMANCE.
We do not have any operating history on which to base any estimate of our future earning prospects. Pinnacle Financial was only recently formed, and Pinnacle National will not receive final approval from the Office of the Comptroller of the Currency to begin operations until after this offering is completed. Consequently, there is no historical operating or financial information that would be helpful in deciding whether to invest in Pinnacle Financial.
WE EXPECT TO INCUR LOSSES INITIALLY, AND YOU MAY NOT RECOVER ALL OR ANY PART OF YOUR INVESTMENT IF WE DO NOT BECOME PROFITABLE.
Most new banks incur substantial start-up expenses, are not profitable in the first year of operation and, in some cases, are not profitable for several years. If we are ultimately unsuccessful, you stand to lose part or all of your investment in the common stock. Additionally, Pinnacle National's loans will initially be unseasoned--new loans to new borrowers. As a result, it will take several years to establish the borrowers' payment histories, making it more difficult to evaluate the quality of the loan portfolio. Our profitability will depend on Pinnacle National's profitability, and we can give no assurance that Pinnacle National will ever operate profitably. See "Management's Discussion and Analysis of Financial Condition and Plan of Operations" on page 16.
FAILURE TO IMPLEMENT OUR BUSINESS STRATEGIES MAY ADVERSELY AFFECT OUR FINANCIAL PERFORMANCE.
If we cannot implement our business strategies, we will be limited in our ability to develop business and serve our clients, which will in turn have an adverse effect on our financial performance. The organizers have developed a business plan that details the strategies that we intend to implement in our efforts to achieve profitable operations. However, even if the key elements of our business strategy are successfully implemented, they may not have the favorable impact on operations that we anticipate. See "Our Proposed Business--Philosophy and Strategy" on page 22.
DEPARTURES OF OUR KEY PERSONNEL OR DIRECTORS MAY IMPAIR OUR OPERATIONS.
If any of our executive officers were to leave Pinnacle National, our operations could suffer due to the costs associated with recruiting new personnel and orienting them to our business. Particularly, we believe M. Terry Turner, Robert A. McCabe, Jr. and Hugh M. Queener are important to our success, and if they terminate their employment with us, our financial condition and results of operations may be adversely affected. These executives have been instrumental in our organization and will be the key management officials in charge of our daily business operations. While we have entered into three-year employment agreements with Mr. Turner and Mr. Queener and anticipate entering into a three-year employment agreement with Mr. McCabe, Mr. Turner's and Mr. Queener's current agreements and Mr. McCabe's proposed agreement do not contain non-competition or non-solicitation provisions; therefore, we cannot be assured of their continued service. See "Executive Compensation--Employment Agreements" on page 38.
Additionally, our directors' community involvement, diverse backgrounds and extensive local business relationships are important to our success. If any of our directors discontinue his or her
relationship with us for whatever reason, or if the composition of our board of directors changes materially, our growth could be adversely affected. See "Management" on page 30.
A DELAY IN BEGINNING PINNACLE NATIONAL'S OPERATIONS WILL RESULT IN ADDITIONAL LOSSES.
A delay in the start of Pinnacle National's operations will increase pre-opening expenses and postpone Pinnacle National's realization of potential revenues. This could cause our accumulated deficit to increase as a result of continuing operating expenses, such as salaries and other administrative expenses, coupled with our lack of revenue. Although we expect to receive all final regulatory approvals and to begin business in the third or fourth quarter of 2000, we can give no assurance as to when, if at all, these events will occur.
IF REGULATORY CONDITIONS ARE NOT SATISFIED, WE MAY DISSOLVE AND LIQUIDATE AND YOU MAY ONLY RECEIVE A PORTION, IF ANY, OF YOUR INVESTMENT.
If we do not receive final approval for Pinnacle National to start its banking operations, we anticipate that we will dissolve Pinnacle Financial. If we dissolve Pinnacle Financial after the close of the offering, shareholders will recover only a portion, if any, of their original investment because we will have used the proceeds of the offering to pay all organizational, pre-opening and offering expenses, including any lease obligations and capital costs, incurred through the time that Pinnacle Financial is finally dissolved. Although we have applied for the requisite regulatory approvals to begin banking operations, final approvals may not be granted in a timely manner, if at all. The closing of this offering is not conditioned upon the receipt of final regulatory approvals.
WE WILL FACE STRONG COMPETITION FOR CLIENTS, ESPECIALLY FROM LARGE AND MORE ESTABLISHED FINANCIAL INSTITUTIONS, WHICH MAY HINDER US FROM OBTAINING CLIENTS AND MAY CAUSE US TO PAY HIGHER INTEREST RATES ON OUR DEPOSITS OR CHARGE LOWER INTEREST RATES ON OUR LOANS THAN OUR COMPETITORS' RATES FOR AN EXTENDED PERIOD.
We anticipate offering very competitive loan and deposit rates as we establish ourselves in the market, but if excessive competition forces us to offer more aggressive pricing indefinitely, our net interest margin will suffer and our financial performance will be negatively impacted. Pinnacle National will compete with numerous other lenders and deposit-takers. With multiple financial institutions already doing business in the Nashville metropolitan area and the possibility that additional competitors may enter the market in the future, we will be faced continuously with significant competition. Moreover, some of our competitors are not subject to the same degree of regulation as we will be and may have greater resources than will be available to us. See "Our Proposed Business--Market Opportunities--Competition" on page 21.
WE MAY NOT BE ABLE TO COMPETE WITH OUR LARGER COMPETITORS FOR LARGER CLIENTS BECAUSE OUR LENDING LIMITS WILL BE SIGNIFICANTLY LOWER THAN THEIRS.
Our lending limit will be significantly less than the limits for most of our competitors, and may hinder our ability to establish relationships with larger businesses in our market area. When we begin our banking operations, our internal lending limit to any single borrower will be $1.5 million, which is below our initial legal lending limit of approximately $3.3 million for unsecured loans and $5.5 million for various secured loans, as governed by federal regulation. Based on either our internal lending limit or our legal lending limit, Pinnacle National will need to sell participations in its loans to other financial institutions in order to meet the lending needs of our clients requiring extensions of credit above these limits. However, our strategy to accommodate larger loans by selling participations in those loans to other financial institutions may not be successful. See "Our Proposed Business--Lending Services--Lending Limits" on page 25.
GOVERNMENT REGULATION MAY HAVE AN ADVERSE EFFECT ON OUR PROFITABILITY AND GROWTH.
We are subject to extensive government supervision and regulation. Our ability to achieve profitability and to grow could be adversely affected by state and federal banking laws and regulations. These regulations are intended primarily to protect depositors, not shareholders. In addition, the burden imposed by federal and state regulations may place us at a competitive disadvantage compared to competitors who are less regulated. Future legislation or government policy may also adversely affect the banking industry or our operations. In particular, with the enactment of the Gramm-Leach-Bliley Act, many federal and state laws barring affiliations between banks, securities firms, insurance companies and other financial services providers have been eliminated. We believe the removal of these barriers may significantly increase competition in our industry. See "Supervision and Regulation" on page 52.
CHANGES IN INTEREST RATES MAY DECREASE OUR NET INTEREST INCOME.
Our profitability will depend substantially on Pinnacle National's net interest income, which is the difference between the interest income earned on its loans and other assets and the interest expense paid on its deposits and other liabilities. A large change in interest rates may significantly decrease or eliminate our profitability. While we intend to take measures to minimize the effect that changes in interest rates will have on Pinnacle National's net interest income and profitability, these measures may not be effective. See "Management's Discussion and Analysis of Financial Condition and Plan of Operations--Liquidity and Interest Rate Sensitivity" on page 17.
AN ECONOMIC DOWNTURN, ESPECIALLY ONE AFFECTING OUR PRIMARY SERVICE AREA, MAY REDUCE OUR DEPOSIT BASE AND THE DEMAND FOR OUR LOANS AND OTHER PRODUCTS AND MAY DECREASE OUR EARNINGS.
As a holding company for a community bank, our success will depend on the general economic condition of the region in which we operate, which we cannot forecast with certainty. Unlike many of our larger competitors, the majority of Pinnacle National's borrowers and depositors will be individuals and small- to medium-sized businesses located or doing business in our primary service area. Consequently, an adverse change in the local economy could decrease our earnings by making it more difficult for borrowers to repay their loans, reducing our deposit base and significantly impacting the demand for our products and services. See "Our Proposed Business" on page 19.
WE DETERMINED THE PUBLIC OFFERING PRICE ARBITRARILY, AND OUR FUTURE STOCK PRICE MAY FLUCTUATE BELOW THE INITIAL PUBLIC OFFERING PRICE ONCE THE SHARES BECOME FREELY TRADABLE.
Pinnacle Financial and the underwriters arbitrarily set the public offering price after considering capital needs, prevailing market conditions and the price of comparable publicly traded companies. Because we have no operating history, the public offering price could not be based on historical measures of our financial performance and does not bear any relationship to Pinnacle Financial's assets, book value, net worth or any other recognized criteria of value. Therefore, the public offering price may not reflect the market price for the common stock after the offering. Several factors will cause the market price to fluctuate after the offering, some of which are beyond our control, and the price for the common stock may drop below its initial public offering price. These factors include our results of operations, financial analysts' future estimates of our earning potential, economic conditions in our market area and trends in the banking industry. See "Underwriting" on page 50.
AN ACTIVE TRADING MARKET FOR OUR COMMON STOCK MAY NOT DEVELOP, POTENTIALLY LIMITING YOUR ABILITY TO SELL YOUR SHARES, AND A SALE OF A LARGE BLOCK OF SHARES MAY AFFECT YOUR ABILITY TO SELL YOUR SHARES AT OR ABOVE THE INITIAL PUBLIC OFFERING PRICE.
Although the underwriters intend to apply to have quotations for our common stock posted on the OTC Bulletin Board, an active trading market may not develop or continue after the offering. If an active trading market does not develop or continue after the offering, you may not be able to sell your shares at or above the price at which these shares are being offered to the public. Additionally, the sale of a large block of shares outstanding after the close of the offering could adversely affect the market price of the common stock.
We anticipate that our directors and executive officers will purchase 391,000 shares or 15.6% of our common stock in the offering, which will be subject to resale limitations after the close of the offering and may hinder the development of an active trading market. Specifically, our directors and executive officers have agreed with the underwriters not to sell the shares they purchase in the offering for a period of 180 days after the date of this prospectus without the underwriters' consent. After the 180-day period, the shares held by our organizers and executive officers will be eligible for sale subject to the resale limitations of Rule 144 of the Securities Act. You should consider carefully the limited liquidity of your investment before purchasing any shares of the common stock. See "Underwriting" on page 50 and "Shares Eligible for Future Sale" on page 49.
EXERCISE OF WARRANTS AND STOCK OPTIONS WILL CAUSE DILUTION OF YOUR OWNERSHIP IN PINNACLE FINANCIAL.
Our organizers and executive officers and other individuals employed by us may exercise their warrants or options to purchase common stock, which would result in the dilution of your proportionate interest in Pinnacle Financial. At the close of the offering, we expect that shareholders who are not organizers, directors or executive officers of Pinnacle Financial will own 2,109,000 shares, or approximately 84.4%, of our outstanding common stock. Upon completion of this offering, however, we will issue to our organizers warrants to purchase a total of up to 195,500 shares of common stock, and will issue to our executive officers, under our stock incentive plan, options to purchase up to a total of 120,000 shares of common stock. If these warrants and options granted to our organizers and executive officers were exercised in full, the ownership percentage of our shareholders who are not directors or executive officers would drop from 84.4% to 74.9% of our outstanding common stock.
WE MAY NOT BE ABLE TO RAISE ADDITIONAL CAPITAL ON TERMS FAVORABLE TO US, IF AT ALL.
In the future, should we need additional capital to support our business, expand our operations or maintain our minimum capital requirements, we may not be able to raise additional funds through the issuance of additional shares of common stock or other securities. Even if we are able to obtain capital through the issuance of additional shares of common stock or other securities on terms acceptable to us, the sale of these additional shares could significantly dilute your ownership interest and may be made at prices lower than the price at which we are selling shares in this offering.
OUR BOARD OF DIRECTORS IS AUTHORIZED TO ISSUE ADDITIONAL SHARES OF COMMON STOCK AND SHARES OF PREFERRED STOCK WHICH, IF ISSUED, MAY DILUTE YOUR OWNERSHIP INTEREST, REDUCE THE MARKET PRICE OF OUR COMMON STOCK AND ADVERSELY AFFECT YOUR VOTING RIGHTS.
Our board of directors is authorized by our charter to issue additional shares of common stock and shares of preferred stock without the consent of our shareholders. If we issue additional shares of common stock after the close of the offering, your percentage interest in Pinnacle Financial would be diluted. Additionally, preferred stock, when issued, may rank senior to common stock with respect to voting rights, payment of dividends, and amounts received by shareholders upon liquidation, dissolution or winding up. The existence of rights that are senior to common stock may reduce the price of our
shares of common stock. Other than the issuance of common stock subject to warrants and options granted to our organizers and executive officers, we do not have any current plans to issue any shares of common stock or preferred stock after the close of the offering.
OUR DIRECTORS AND OFFICERS COULD HAVE THE ABILITY TO INFLUENCE SHAREHOLDER
ACTIONS IN A MANNER THAT MAY BE ADVERSE TO YOUR PERSONAL INVESTMENT OBJECTIVES.
Together, our directors and executive officers may be able to influence the outcome of director elections or block a significant transaction, such as a merger or acquisition, that might otherwise be approved by the shareholders. For example, to be elected, a director nominee generally must receive more votes than any other nominee for the same seat on the board of directors; a merger or acquisition not adopted by two-thirds of our board of directors generally must be approved by a two-thirds vote of the shareholders; and, most other matters generally require that more shares be voted for rather than against the proposal. We anticipate that our directors and executive officers will directly or indirectly own 391,000 shares or 15.6% of our outstanding common stock after the close of the offering. Additionally, we will be issuing warrants and options to our directors and executive officers. Although these warrants and options will vest over time, if our directors and executive officers exercised all of their warrants and options, they could directly or indirectly own 706,500 shares, representing 25.1% of our outstanding common stock. Consequently, our directors and executive officers, as a group, may hold enough shares to effectively block a potential merger or acquisition, or any other important matter requiring the affirmative vote of two-thirds of our outstanding common stock, and may significantly influence the outcome of a vote on any other matter. See "Selected Provisions of the Charter and Bylaws" on page 45.
YOU MAY BE DEPRIVED OF AN OPPORTUNITY TO SELL YOUR SHARES AT A PREMIUM OVER MARKET PRICES BECAUSE TENNESSEE STATE LAW AND OUR CHARTER LIMIT THE ABILITY OF OTHERS TO ACQUIRE US.
In many cases, shareholders receive a premium for their shares when a company is purchased by another. Under Tennessee law, however, no bank holding company may acquire control of Pinnacle Financial until Pinnacle National has been incorporated for five years. In addition, state and federal law and our charter make it difficult for anyone to purchase Pinnacle Financial without approval of our board of directors. These provisions include the existence of preferred stock, staggered terms for the directors, restrictions on the ability to change the number of directors or to remove a director, supermajority voting requirements and flexibility in considering acquisition proposals. See "Selected Provisions of Our Charter and Bylaws" on page 45.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements concerning Pinnacle Financial and Pinnacle National and their operations, performance, financial conditions and likelihood of success. Forward-looking statements are based on many assumptions and estimates, and include statements about the competitiveness of the banking industry, potential regulatory obligations, our business strategies and other statements that are not historical facts. When used in this prospectus, the words "may," "would," "could," "will," "expect," "anticipate," "believe," "intend," "plan" and "estimate," and similar expressions generally identify forward-looking statements. Because forward-looking statements involve many risks and uncertainties, some of which are beyond our control, actual results may differ materially from those expressed in the forward-looking statements. The most significant of these risks, uncertainties and other factors are discussed under the heading "Risk Factors" beginning on page 6 of this prospectus. We urge you to carefully consider these factors prior to making an investment in our common stock.
USE OF PROCEEDS
We estimate that we will receive net proceeds of $23,567,000 from the sale of 2,500,000 shares of common stock in the offering, after deducting the estimated underwriting discount of $1,313,000 and estimated offering expenses of $120,000. If the underwriters exercise their over-allotment option in full, we will receive $2,943,450 in additional net proceeds, after deducting an additional underwriting discount of $221,550.
On June 28, 2000, we established a line of credit with SunTrust Bank, Nashville, Tennessee in the amount of $1,500,000 at the prime rate, as published in the Money Rates section of THE WALL STREET JOURNAL, which replaces our former line of credit with The Bank of Nashville. This line of credit is for the purpose of paying both Pinnacle Financial's organizational expenses and Pinnacle National's organizational and pre-opening expenses incurred prior to the completion of the offering. We intend to pay off this line of credit with proceeds that we receive from this offering. The following two sections describe our proposed use of proceeds based on our present plans and business conditions.
USE OF PROCEEDS BY PINNACLE FINANCIAL
The following table shows the anticipated use of the proceeds by Pinnacle Financial. We describe Pinnacle National's anticipated use of proceeds in the following section.
PERCENTAGE
OF GROSS
AMOUNT PROCEEDS
----------- ----------
Gross proceeds from offering................................ $25,000,000 100.0%
Underwriters' discount...................................... $ 1,313,000 5.3%
Organizational expenses..................................... $ 140,000 0.6%
Offering expenses........................................... $ 120,000 0.5%
Investment in capital stock of Pinnacle National............ $22,600,000 90.4%
-----------
Remaining proceeds.......................................... $ 827,000 3.3%
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We will use $22.6 million to capitalize Pinnacle National. We will initially invest the remaining net proceeds, and any proceeds received upon the exercise of the over-allotment option granted to the underwriters, in United States government securities or deposit them with Pinnacle National. In the long-term, we will use these funds for operational expenses and other general corporate purposes, including the provision of additional capital to Pinnacle National, if necessary. Although we do not have any specific plans for future acquisitions, we may also use the proceeds to establish or acquire other financial institutions or financially related businesses if deemed appropriate.
USE OF PROCEEDS BY PINNACLE NATIONAL
The following table shows the anticipated use of the proceeds allocated to Pinnacle National. These proceeds will be in the form of an investment in Pinnacle National's common stock by Pinnacle Financial. The following table shows the use of proceeds of Pinnacle National for a period of 12 months from the completion of this offering. Leasehold improvements, furniture, fixtures and equipment will be capitalized and amortized over the life of the lease or over the estimated useful life of the asset. Subject to the discretion of its Board of Directors, Pinnacle National will use the remaining proceeds to make loans, purchase securities and otherwise conduct business operations, which would include the payment of working capital expenses such as salaries and benefits, advertising, data processing and other operational expenses that exceed initial operating income. We believe that
the net proceeds of this offering will satisfy our capital requirements for at least 12 months following the opening of Pinnacle National.
PERCENTAGE OF
PINNACLE NATIONAL'S
AMOUNT INITIAL CAPITALIZATION
----------- ----------------------
Investment by Pinnacle Financial in Pinnacle National's
common stock.............................................. $22,600,000 100.0%
Pre-opening and organizational expenses..................... $ 865,000 3.8%
Tenant build-out of our main office, including furniture,
fixtures and equipment.................................... $ 1,650,000 7.3%
Branch expansion (two branches)............................. $ 2,800,000 12.4%
Rental payments for our main office (12 months)............. $ 246,000 1.1%
Rental payments for West End Lease (4 months)............... $ 5,000 --
-----------
Remaining proceeds.......................................... $17,034,000 75.4%
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The foregoing table is subject to change in response to any changes made to Pinnacle National's underlying business plan. For example, if we decide to lease rather than purchase our two branch expansion locations, as referenced above, we will likely use less than the allocated $2.8 million for this activity. Consequently, any savings gained by such a change would likely be reallocated to general working capital for Pinnacle National.
CAPITALIZATION
The following table shows Pinnacle Financial's capitalization as of June 30, 2000 and its pro forma consolidated capitalization, as adjusted to give effect to the receipt of the net proceeds from the sale of 2,500,000 shares of common stock in the offering.
M. Terry Turner, president and chief executive officer of Pinnacle Financial, has purchased one share of Pinnacle Financial's common stock at a price of $10.00. Pinnacle Financial will redeem this share for $10.00 upon the issuance of shares in this offering. The number of shares shown as outstanding after giving effect to the offering, and the book value of those shares, do not include shares of common stock issuable upon the exercise of the warrants held by the organizers or stock options issuable under our stock incentive plan. For additional information regarding the number and terms of these warrants and options, see "Description of Our Capital Stock--Organizers' Shares and Warrants" on page 44 and "Executive Compensation--Stock Incentive Plan" on page 40.
JUNE 30, 2000
SHAREHOLDERS' EQUITY ACTUAL AS ADJUSTED
-------------------- ------------- -----------
Preferred stock, no par value, 10,000,000 shares authorized;
no shares issued or outstanding........................... -- --
Common stock, $1.00 par value, 10,000,000 shares authorized;
1 share issued and outstanding; 2,500,000 shares issued
and outstanding as adjusted............................... $ 1 $ 2,500,000
Additional paid-in capital(1)............................... $ 9 $21,067,000
Deficit accumulated during the development stage............ (384,629)(2) (1,005,000)(3)
--------- -----------
Total shareholders' equity............................ $(384,619) $22,562,000
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Book value per share(4)..................................... N/A $ 9.02
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(1) The expenses of the offering will be charged against this account. We estimate that the offering expenses will be $1,433,000, which includes $1,313,000 in underwriting discounts and $120,000 in other offering expenses, including legal, accounting and printing expenses, and registration fees.
(2) This deficit reflects organizational and pre-opening expenses incurred through June 30, 2000, consisting primarily of salaries, legal and consulting fees.
(3) The "As Adjusted" accumulated deficit results from estimated organizational and pre-opening expenses of $1,005,000 incurred through Pinnacle National's target opening date of September 30, 2000. Actual organizational and pre-opening expenses may be higher and may therefore increase the deficit accumulated during the pre-opening stage and further reduce shareholders' equity.
(4) After giving effect to the receipt of the net proceeds from this offering, there is an immediate dilution in the book value per share of $.98, resulting from recognition of organizational and pre-opening expenses and charging the offering expenses against paid-in capital.
DIVIDENDS
Initially, we intend to retain all of our earnings to support our operations and to expand our business. Additionally, we are subject to significant regulatory restrictions on the payment of cash dividends. See "Supervision and Regulation--Payment of Dividends" on page 57. In light of these restrictions and our need to retain and build capital, we do not plan to pay dividends at least until such time as we become profitable and recover any losses incurred during our initial operations. Our payment of future dividends and our dividend policy will depend on our earnings, capital requirements and our financial condition, as well as other factors that our board of directors considers relevant.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
PLAN OF OPERATIONS
Pinnacle Financial's financial statements and related notes, which are included in this prospectus, provide additional information relating to the following discussion of our financial condition. See "Index to Financial Statements."
Pinnacle Financial was incorporated on February 28, 2000 to serve as a holding company for Pinnacle National Bank, a proposed national bank. Since February 28, 2000, our main activities have been:
- seeking, interviewing and selecting our directors and officers;
- preparing our business plan;
- securing a line of credit;
- applying for a national bank charter;
- applying for FDIC deposit insurance;
- applying to become a bank holding company; and
- raising equity capital through this offering.
From our inception on February 28, 2000 to the close of the offering, Pinnacle Financial's operations have been and will continue to be funded through a line of credit. Currently, our line of credit is with SunTrust Bank, Nashville, Tennessee in the amount of $1,500,000, of which $522,660 was outstanding as of July 10, 2000. This line of credit with SunTrust Bank replaces our former line of credit with The Bank of Nashville. The line of credit bears interest at the prime rate, as published in the Money Rates section of THE WALL STREET JOURNAL, is due on December 31, 2000 and is guaranteed by 13 of our 14 organizers. See "Related Party Transactions" on page 43. We anticipate that the line of credit amount will increase as working capital needs of Pinnacle Financial and Pinnacle National grow through the organizational phase. We plan to repay the line of credit in full after the close of the offering.
FINANCIAL RESULTS
From February 28, 2000 through March 31, 2000, our net loss amounted to $87,098. From February 28, 2000 through June 30, 2000, our net loss amounted to $384,629. The estimated net loss for the period from February 28, 2000 through September 30, 2000, the anticipated opening date of Pinnacle National, is $1,005,000, which is attributable to the following estimated expenses:
Salaries and benefits....................................... $ 690,000
Legal, consulting and professional fees..................... 225,000
Other pre-opening expenses.................................. 90,000
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Total....................................................... $1,005,000
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OFFICES
On March 16, 2000, Pinnacle Financial entered into an agreement with Commerce Street Associates to lease 12,135 square feet of office space in an office building known as The Commerce Center located on the corner of 3(rd) Street and Commerce Street, Nashville, Tennessee. The leased property will be the site for our main office. The planned tenant build-out of our main office is expected to begin in the second quarter of 2000 with total costs, including furniture, fixtures and equipment, estimated at $1.66 million. After Pinnacle National is capitalized, it will assume our lease
with Commerce Street Associates and will pay the remaining balance of the renovation costs incurred. The term of our main office lease is 10 years with initial monthly rent being $20,471.21.
The tenant build-out of our main office is expected to be completed by the end of the third quarter 2000. Consequently, we anticipate opening for business in the third or fourth quarter of 2000, soon after these lease-hold improvements are completed. However, until our main office is ready for us to occupy, our temporary executive offices will continue to be located in Suite 306 of the 3401 West End Building, which is approximately four miles west of our main office facility. The initial lease term for our temporary facility began April 1, 2000 and ends February 28, 2001. We currently pay monthly rent in the amount of $1,758 for our temporary facility.
We anticipate that our main office location downtown will provide us with desired visibility in Nashville's prominent commercial and private banking markets. However, as in most metropolitan markets, there is a growing demand for more convenient access to banking and investment products and services by banking clients. Consequently, as part of our strategy to provide convenient access to our banking products and services and to expand our market visibility, we expect to implement a distribution strategy that we believe will be a prudent expansion of Pinnacle National's proposed operations. Under our distribution strategy, we anticipate opening offices in the Brentwood area, the Belle Meade/Green Hills area, the Rivergate Mall or Hendersonville area, and the Bellevue area within the first two years of Pinnacle National's operations. Each of these areas listed are currently within our primary service area and represent, in the view of our management, important sub-markets of our overall primary service area. As of the date of this prospectus, we have not selected or procured any actual site locations, and there can be no assurance that we will open these offices, or if opened, that they will be profitable.
LIQUIDITY AND INTEREST RATE SENSITIVITY
Since Pinnacle Financial has been in the organizational stage, there are no results of operations to present at this time. Nevertheless, once Pinnacle National begins operations, net interest income, Pinnacle Financial's primary source of earnings, will fluctuate with significant interest rate movements. To lessen the impact of these fluctuations, we intend to structure the balance sheet so that repricing opportunities exist for both assets and liabilities in roughly equal amounts at approximately the same time intervals. Imbalances in these repricing opportunities at any point in time constitute interest rate sensitivity.
Interest rate sensitivity refers to the responsiveness of interest-bearing assets and liabilities to change in market interest rates. The rate sensitive position, or "gap," is the difference in the volume of rate sensitive assets and liabilities at a given time interval. The general objective of gap management is to actively manage rate sensitive assets and liabilities in order to reduce the impact of interest rate fluctuations on the net interest margin. We will generally attempt to maintain a balance between rate sensitive assets and liabilities as the exposure period is lengthened to minimize Pinnacle National's overall interest rate risk.
We will regularly evaluate the balance sheet's asset mix in terms of several variables:
- yield;
- credit quality;
- appropriate funding sources; and
- liquidity.
To effectively manage the balance sheet's liability mix, we plan to focus on expanding our deposit base and converting assets to cash as necessary.
As Pinnacle National continues to grow, we will continuously structure its rate sensitivity position in an effort to hedge against rapidly rising or falling interest rates. Pinnacle National's asset and liability committee will meet on a monthly basis to develop a strategy for the upcoming period.
Liquidity represents the ability to provide steady sources of funds for loan commitments and investment activities, as well as to maintain sufficient funds to cover deposit withdrawals and payment of debt and operating obligations. We can obtain these funds by converting assets to cash or by attracting new deposits. Pinnacle National's ability to maintain and increase deposits will serve as its primary source of liquidity.
Other than this offering, we know of no trends, demands, commitments, events or uncertainties that should result in or are reasonably likely to result in Pinnacle Financial's liquidity increasing or decreasing in any material way in the foreseeable future.
CAPITAL ADEQUACY
We believe that the net proceeds of this offering will satisfy our capital requirements for at least the next 12 months following the opening of Pinnacle National. Accordingly, we do not anticipate that it will be necessary to raise additional funds to operate Pinnacle Financial or Pinnacle National for at least the next 12 months after Pinnacle National opens. All anticipated material expenditures for this period have been identified and provided for out of the proceeds of this offering. For additional information about planned expenditures, see "Use of Proceeds" on page 12.
OUR PROPOSED BUSINESS
BACKGROUND
PINNACLE FINANCIAL. We incorporated Pinnacle Financial as a Tennessee corporation on February 28, 2000 to serve as a bank holding company that will own 100% of the capital stock of Pinnacle National. Pinnacle Financial plans to use $22.6 million of the net proceeds of this offering to purchase the capital stock of Pinnacle National. Initially, we will have no business operations other than owning and managing Pinnacle National.
We anticipate filing an application with the Federal Reserve to become a bank holding company after we receive preliminary approval from the OCC to organize Pinnacle National. We have chosen this holding company structure because we believe it will provide flexibility that would not otherwise be available. With a holding company structure, we may assist Pinnacle National in maintaining its required capital ratios by borrowing money and contributing the proceeds of that debt to Pinnacle National as primary capital. Additionally, under provisions of the Gramm-Leach-Bliley Act, which took effect March 11, 2000, a bank holding company may seek to become a financial holding company. A financial holding company may engage in activities that are financial in nature or incidental or complementary to a financial activity, including some insurance transactions, real estate development activities and merchant banking activities, in which Pinnacle National will be prohibited from engaging. Although we do not presently intend to become a financial holding company, we may be able to do so with a proper notice or filing to the Federal Reserve if we believe that there is a need for these services in our market area, that we can be successful in these activities and that these activities could be profitable. See "Supervision and Regulation--Pinnacle Financial" on page 52.
PINNACLE NATIONAL. On March 29, 2000 we submitted our application to the Office of the Comptroller of the Currency to organize Pinnacle National. In our application, we indicated to the OCC that we anticipate raising $25.0 million in capital and investing approximately $22.6 million in Pinnacle National. Accordingly, in order to receive final approval of our application to organize Pinnacle National, we anticipate that we will be required to invest a minimum of $22.6 million in Pinnacle National, receive approval of our application to the FDIC for deposit insurance and implement appropriate banking policies and procedures. After receiving all necessary regulatory approvals, we anticipate beginning operations at our main office facility in the third or fourth quarter of 2000.
MARKET OPPORTUNITIES
PRIMARY SERVICE AREA. Pinnacle National's primary service area, which comprises the Nashville Metropolitan Statistical Area, includes the following counties:
- Cheatham County
- Davidson County
- Dickson County
- Robertson County
- Rutherford County
- Sumner County
- Williamson County
- Wilson County
This area represents a geographic area that covers approximately 4,000 square miles, eight counties and a population in excess of one million.
Pinnacle National's main office will be located in Nashville's central business district in downtown Nashville. The downtown market claims a variety of commercial establishments and entertainment venues, and we believe it to be a critical location for financial institutions requiring visibility within Nashville's prominent commercial and private banking markets. Accordingly, we believe that this location will be well suited for the business development efforts of the experienced relationship
managers that we intend to hire. Additionally, during the first two years after Pinnacle National opens for business, we intend to establish four more offices within our primary service area. We believe these additional offices will strengthen our market presence, allowing us to grow our deposit base more rapidly.
LOCAL ECONOMY. The economic success of our primary service area depends heavily upon the economic viability of Nashville, Tennessee. Nashville is the capital of Tennessee and an important transportation, business and tourism center within the United States. Additionally, the Nashville-Davidson County area has recently attracted a number of significant business relocations, and job growth continues in all sectors. For example, according to the Nashville Area Chamber of Commerce, over the first half of 1999 Nashville experienced employment gains as high as 6.7% in the finance and insurance sector, with service jobs growing at a rate of 4.8% over the same six-month period.
Part of our primary service area's economic strength comes from its large employer base, which includes the national, state or corporate headquarters of a number of large corporations such as Nissan Motor Manufacturing Corporation U.S.A., BellSouth, the Kroger Company, and Columbia/HCA Healthcare Corporation. With its diverse employer base, our primary service area does not rely on any single industry sector. Additionally, according to the Nashville Area Chamber of Commerce, the regional economy continues to benefit from consistent job growth, substantial outside investment, and expansion and broadening of its labor force. We anticipate that these factors will cause more businesses to relocate to, or start operations in, our primary service area and, in turn, will increase the demand for depository and lending services within our market.
According to the Nashville Area Chamber of Commerce, the largest private sector employers within our primary service area are Vanderbilt University and Medical Center and Columbia/HCA Healthcare Corporation. Our primary service area's top ten private-sector employers are listed below and illustrate the diversification of the area's business and trade.
OUR PRIMARY SERVICE AREA'S TOP TEN PRIVATE-SECTOR EMPLOYERS TOTAL EMPLOYEES INDUSTRY -------------------------------- --------------- ----------------------- Vanderbilt University & Medical Center................ 12,719 Education Columbia/HCA Healthcare Corporation................... 8,100 Health care Gaylord Entertainment................................. 6,454 Music and entertainment Nissan Motor Manufacturing Corporation U.S.A.......... 6,000 Manufacturing Kroger Company........................................ 5,750 Retail trade Reemay, Inc........................................... 5,070 Manufacturing United Parcel Service................................. 4,500 Service First American National Bank (now AmSouth)............ 4,200 Financial Shoney's, Inc......................................... 4,125 Retail trade St. Thomas Hospital................................... 4,000 Health care |
With 18 colleges and universities and four community colleges within 75 miles of Nashville, there is abundant opportunity for workforce preparation and ongoing development of existing workers. Since 1990, the labor market in the Nashville Economic Market, which is comprised of our primary service area and two additional counties--Maury and Montgomery, has increased 15.6% to 710,077 persons. The largest component of employment is non-agricultural services and retail/wholesale trade.
POPULATION. According to estimates provided by CACI Marketing Systems, Inc., a marketing research firm retained by Pinnacle Financial, during the period from 1990 to 1999 the population of our primary service area has grown from 985,026 to 1,176,596, representing an increase of 19.4%. By 2004, CACI further projects the area's total population will grow by 100,000 to approximately 1,278,000.
The following table shows the Nashville Area Chamber of Commerce's population data for each of the eight counties that comprise our primary service area.
PERCENTAGE
COUNTY 1990 1999 INCREASE
------ -------- -------- ----------
Cheatham........................................ 27,140 35,560 31.0%
Davidson........................................ 510,784 541,490 6.0%
Dickson......................................... 35,061 41,482 18.3%
Robertson....................................... 41,494 51,499 24.1%
Rutherford...................................... 118,570 169,862 43.3%
Sumner.......................................... 103,281 126,227 22.2%
Williamson...................................... 81,021 119,855 47.9%
Wilson.......................................... 67,675 83,672 23.6%
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According to CACI estimates, in 1999 our primary service area had approximately 454,012 households, 41.6% of which had household wealth (defined as financial net worth) of $100,000 or more. Additionally, the median family income for our primary service area in 1999 was estimated to be $41,692. Although CACI's estimates indicated that 40.6% of the population in our primary service area had income below this average, 39.8% had income equal to or greater than $50,000.
COMPETITION. According to the FDIC, bank and thrift deposits in Pinnacle National's primary service area grew from approximately $13.0 billion in June 1995 to more than $16.1 billion in June 1999. This multi-billion dollar deposit base is primarily controlled by large, multi-state banks headquartered outside of Nashville, which include AmSouth, Bank of America, First Union, SunTrust and Union Planters. Although these large, multi-state institutions are well established in the area, the majority of the community banks in our primary service area have been able to increase their deposit market share. According to the FDIC, the following trends occurred in deposit market share from June 1995 to June 1999:
- Total deposits for the large, multi-state banks described above grew 17.1% from $10.1 billion to $11.9 billion, compared to 24.6% growth from $13.0 billion to $16.1 billion in the overall deposit market.
- The slower relative growth of these large banks resulted in their combined relative deposit market share falling from 78.3% to 73.7%.
- The five largest community-oriented banks operating in the service area during the entire four-year period saw their total deposits grow 72.3% from $756 million to $1.3 billion. These banks included Wilson Bank & Trust, Franklin National Bank, Cavalry Bank, The Bank of Nashville and Farmers Bank.
- These five community banks increased their combined relative deposit market share from 5.8% to 8.1%.
Although we believe the general trends outlined above indicate that large, multi-state competitors in our primary service area are losing relative deposit market share to their community bank competitors, we also believe that positioning ourselves as solely a community bank will not be enough to compete in today's financial industry. In the wake of modern technology and the prosperity of the United States' financial markets over the past decade, banking clients have generally become more sophisticated in their approach to selecting financial services providers. We believe that the most important criteria to our targeted clients when selecting a bank is their desire to receive exceptional customer service while being able to enjoy convenient access to a broad array of sophisticated financial products. Additionally, when presented with a choice, we believe that many of our targeted clients
would prefer to deal with a locally-owned institution headquartered in Nashville, like Pinnacle National, as opposed to a large, multi-state bank.
With the loss of Nashville's only large, locally headquartered bank, First American National Bank, we believe that there exists an opportunity for Pinnacle National to lure customers who may be dissatisfied away from large, multi-state competitors not based in Nashville, as well as from community banks that are not meeting their customers' sophisticated financial needs. Although The Bank of Nashville, Citizens Bank and Trust and Capital Bank & Trust operate as Nashville-based community banks, we believe we can distinguish ourselves by providing the level of personal service often associated with a community bank while also offering the requisite technology and skilled advisors to deliver more sophisticated financial products and services than a typical community bank.
We understand that we will be continuously faced with significant competition and that new or existing community banks may establish or expand their operations into the Nashville-Davidson County area, the focal point of Pinnacle National's primary service area. However, currently none of the other larger community banks identified above has a significant presence in the Nashville-Davidson County area. For example, Cavalry Bank based in Murfreesboro, Tennessee has nine branches in Rutherford County and holds 18.0% of the county's deposit base; Franklin National Bank based in Franklin, Tennessee has four branches in Williamson County and holds 21.0% of the county's deposit base; Farmers Bank based in Portland, Tennessee has three branches in both Sumner and Robertson Counties and holds 9.6% of Sumner County's deposit base and 16.0% of Robertson County's deposit base; and Wilson Bank & Trust based in Lebanon, Tennessee has eight branches in Wilson County and holds 35.5% of the county's deposit base. Although we have no current plans to branch into these counties, it is foreseeable, however, that these other larger community banks could decide to extend their operations into the Nashville-Davidson County area, potentially having an adverse impact on our ability to gain market share.
We also recognize that most of our competitors have substantially greater resources and lending limits than Pinnacle National. As a result, Pinnacle National may have to pay higher interest rates to attract depositors or extend credit with lower interest rates to attract borrowers.
PHILOSOPHY AND STRATEGY
Our philosophy is based on three major trends that we see in today's financial services industry:
- Client usage of more sophisticated financial products continues to grow, causing traditional banks to lose market share to other types of financial services companies, such as mutual funds and securities brokerage firms. As a result, consumers are turning to a much broader set of institutions to meet the complexity of their growing financial needs. As investment choices multiply, consumers will likely search for professional guidance in making their financial decisions.
- Customers generally perceive that service levels at banks are decreasing. However, this general perception does not mean that consumers are willing to accept or tolerate impersonal service. On the contrary, according to PSI Global, small business owners want a reliable point of contact who is knowledgeable about their businesses and the financial products and services that are important to the success of their businesses.
- There is significant growth in the demand for convenient access to financial services, particularly through ATMs, telephone banking and internet banking.
In light of these trends, our management philosophy will be centered on delivering to individuals and small- to medium-sized businesses exceptional client service and effective financial advice through highly trained personnel who understand and care about the broad financial needs and objectives of
our clients. Additionally, we intend to utilize sophisticated technologies that will allow our clients to access our products and services when it is convenient for them.
In order to implement our philosophy, our specific business strategies will involve the following:
EXPERIENCED SENIOR MANAGEMENT. We are assembling a senior management team that possesses extensive experience in the banking industry, as well as substantial business and banking contacts in our market. For example, the proposed top three executives of Pinnacle National, Mr. Turner, Mr. McCabe and Mr. Queener, collectively have more than 64 years of banking experience, most of which is in the Nashville market. See "Management" on page 30.
COMMUNITY-ORIENTED BOARD OF DIRECTORS. The majority of our board of directors consists primarily of long-time metropolitan Nashville residents with extensive contacts in our primary service area. The board of directors also represents a wide array of business experience and community involvement, and their continued active involvement will provide an opportunity to promote Pinnacle National and its products and services. We anticipate that our directors will bring substantial business and banking contacts to Pinnacle National as a result of their experience, involvement and community standing.
SKILLED EMPLOYEES. We will strive to hire highly trained and seasoned associates that can bring with them existing client relationships established through their prior banking experience. If we are successful in hiring associates with established client relationships, Pinnacle National will be able to grow more rapidly than if we hired associates who require time to develop a client base. Additionally, we plan to train our associates to answer questions about all of our products and services, as well as on a breadth of financial topics, so that they will be in a position to provide effective financial advice.
INDIVIDUAL CLIENT ATTENTION. We will focus on providing individualized service and attention to our clients, which will include individuals and small-to medium-sized businesses. We will concentrate on establishing and maintaining long-term client relationships by working to ensure that our clients have positive banking experiences. As our associates, officers and directors become familiar with each client on an individual basis, we will be able to respond to credit requests more quickly and be more flexible in approving loans based on collateral quality and personal knowledge of the client's banking needs.
CAPITALIZE ON CUSTOMER DISSATISFACTION. With the general perception that service levels at banks are decreasing, we believe that many traditional banking clients are looking at alternative institutions like securities brokerage firms and mutual funds as their desired savings vehicle. Accordingly, we will endeavor to capitalize on those individuals and businesses who may be dissatisfied by what we perceive as impersonal customer service or the less than satisfactory response by some of our competitors to the sophisticated financial needs of today's consumers. By positioning ourselves as a locally-owned and locally-headquartered bank that delivers exceptional personal service and financial advice tailored for today's marketplace, we believe that we will draw many of these dissatisfied individuals and businesses to us.
LOCAL DECISION-MAKING. We will emphasize local decision-making with experienced bankers and will focus on both employee retention and the delivery of personal, professional and responsive service. As Pinnacle National expands into other communities, it intends to maintain its policy of making decisions locally. This will allow Pinnacle National to be more responsive to client requests and to the needs of clients within the particular community.
STRATEGIC LOCATIONS. Pinnacle National's main office will be located in Nashville's central business district in downtown Nashville, a critical location for financial institutions requiring visibility within Nashville's prominent commercial and private banking markets. We believe this will enhance Pinnacle National's image as a strong competitor. Additionally, as part of our strategy to provide convenient access to our banking products and services and to expand our market visibility, we expect to implement a distribution strategy that we believe is a prudent expansion of Pinnacle National's physical
operations into important sub-markets within our primary service area. However, our distribution strategy will not be limited to opening new offices, but will further include the implementation of other convenient delivery systems, such as 24 hour telephone and internet banking.
ADVANCED TECHNOLOGY. Pinnacle National intends to use advanced banking and communications technology to deliver services that will match the level of sophistication of Pinnacle National's larger competitors. By positioning Pinnacle National as a community bank committed to understanding the financial needs of its clients and by enhancing its service quality and convenience through user-friendly technologies, we expect to establish meaningful client relationships from both new and existing residents and businesses in the area.
MARKETING AND ADVERTISING. We have retained Atkinson Public Relations, which is principally owned by one of our organizers, to promote Pinnacle National's image as a technologically responsive, community-focused bank that emphasizes prompt, professional and personalized financial advisory and lending services to individuals and businesses. Pinnacle National will also sponsor various community activities in our primary service area and will use media services such as radio advertising, local newspapers and direct mail campaigns to promote its products and services.
OFFICER AND DIRECTOR CALL PROGRAM. We intend to implement an active officer and director call program to promote Pinnacle National's philosophy. The purpose of this call program will be to personally visit prospective clients, assess their needs and invite them to do business with us.
OFFER FEE-GENERATING PRODUCTS AND SERVICES. Pinnacle National's range of services, pricing strategies, interest rates paid and charged, and hours of operation will be structured to attract its target clients and grow its market share. Additionally, we plan to offer a competitive array of investment and financial planning products and services, which should further differentiate us from our competitors that do not offer such products and services directly from their banking locations.
LENDING SERVICES
LENDING POLICY. We will offer a full range of lending products, including commercial, real estate and consumer loans to individuals and small-to medium-sized businesses and professional concerns. We will compete for these loans with competitors who are well established in the Nashville metropolitan area and have greater resources and lending limits.
It is our plan that Pinnacle National's initial loan portfolio be comprised of the following:
LOAN CATEGORY RATIO ------------- -------- Commercial loans............................................ 40% Commercial/residential real estate loans.................... 40% Consumer loans.............................................. 20% |
Based on our management team's past lending experience, we believe that, when properly managed and monitored, none of these categories represents a significantly higher risk than the other. Additionally, Pinnacle National plans to avoid concentrations of loans to a single industry or secured by a particular type of collateral.
LOAN APPROVAL AND REVIEW. Pinnacle National's loan approval policies will provide for various levels of officer lending authority. When the amount of total loans to a single borrower exceeds that individual officer's lending authority, an officer with a higher lending limit or Pinnacle National's executive committee will determine whether to approve the loan request. Pinnacle National will not make any loans to any of its directors or executive officers unless its board of directors, excluding the interested party, first approves the loan, and the terms of the loan are no more favorable than would be available to any comparable borrower.
LENDING LIMITS. Pinnacle National's lending activities will be subject to a variety of lending limits imposed by federal law. Differing limits apply based on the type of loan or the nature of the borrower, including the borrower's relationship to the bank. In general, however, Pinnacle National will be able to loan any one borrower a maximum amount equal to either:
- 15% of Pinnacle National's capital and surplus; or
- 25% of its capital and surplus if the amount that exceeds 15% is fully secured by readily marketable collateral.
Based on its proposed capitalization and projected pre-opening expenses, Pinnacle National's initial legal lending limit will be approximately $3.3 million for loans not fully secured plus an additional $2.2 million, or a total of approximately $5.5 million, for loans that meet the federal guidelines. These legal limits will increase or decrease as Pinnacle National's capital increases or decreases as a result of its earnings or losses, among other reasons. Our management team has adopted an internal lending limit of $1.5 million, which will initially be lower than the applicable legal limit. However, based on either our internal lending limit or our legal lending limit, Pinnacle National will need to sell participations in its loans to other financial institutions in order to meet all of the lending needs of our clients requiring extensions of credit above these limits.
CREDIT RISKS. The principal economic risk associated with each category of loans that Pinnacle National expects to make is the creditworthiness of the borrower. Borrower creditworthiness is affected by general economic conditions and the strength of the relevant business market segment. General economic factors affecting a borrower's ability to repay include interest, inflation and employment rates, as well as other factors affecting a borrower's clients, suppliers and employees.
The well established financial institutions in Nashville's market are likely to make proportionately more loans to medium- to large-sized businesses than Pinnacle National will make. Many of Pinnacle National's anticipated commercial loans will likely be made to small- to medium-sized businesses that may be less able to withstand competitive, economic and financial pressures than larger borrowers.
COMMERCIAL LOANS. We expect that loans for commercial purposes in various lines of businesses will be one of the primary components of Pinnacle National's loan portfolio. The terms of these loans will vary by purpose and by type of any underlying collateral.
- EQUIPMENT LOANS. Pinnacle National will typically make equipment loans for a term of five years or less at fixed or variable rates, with the loan fully amortized over the term. Equipment loans generally will be secured by the financed equipment, and the ratio of the loan principal to the value of the financed equipment or other collateral will generally be 80% or less. We expect that these loan-to-value ratios will be sufficient to compensate for fluctuations in the market value of the equipment and will help minimize losses that could result from poor maintenance or the introduction of updated equipment models into the market.
- WORKING CAPITAL LOANS. Loans to support working capital will typically have terms not exceeding one year and will usually be secured by accounts receivable, inventory or personal guarantees of the principals of the business. For loans secured by accounts receivable or inventory, principal will typically be repaid as the assets securing the loan are converted into cash, and for loans secured with other types of collateral, principal will typically be due at maturity. The quality of the commercial borrower's management and its ability both to properly evaluate changes in the supply and demand characteristics affecting its markets for products and services and to effectively respond to such changes are significant factors in a commercial borrower's creditworthiness. General risks affecting a commercial borrower's ability to repay include interest, inflation and the demand for the commercial borrower's products and/or services, as well as other factors affecting a borrower's customers, suppliers and employees.
REAL ESTATE LOANS. Pinnacle National will make commercial real estate loans, residential real estate loans and, to a limited degree, construction and development loans. Pinnacle National's real estate loans may include commercial loans where Pinnacle National takes a security interest in real estate as supplemental, but not principal, collateral for the loan. Home equity loans and lines of credit will be classified as consumer loans rather than real estate loans.
- COMMERCIAL REAL ESTATE. Commercial real estate loan terms generally will be limited to five years or less, although payments may be structured on a longer amortization basis. Interest rates may be fixed or adjustable, although rates typically will not be fixed for a period exceeding 60 months. Pinnacle National will generally charge an origination fee of one percent. We will attempt to reduce credit risk on our commercial real estate loans by emphasizing loans on owner-occupied office and retail buildings where the ratio of the loan principal to the value of the collateral as established by independent appraisal does not exceed 80% and net projected cash flow available for debt service greater than or equal to 120% of the debt service requirement. In addition, Pinnacle National generally will require personal guarantees from the principal owners of the property supported by a review by Pinnacle National's management of the principal owners' personal financial statements. Risks associated with commercial real estate loans include fluctuations in the value of real estate, new job creation trends, tenant vacancy rates and the quality of the borrower's management. Pinnacle National will limit its risk by analyzing borrowers' cash flow and collateral value on an ongoing basis.
- RESIDENTIAL REAL ESTATE. Pinnacle National's residential real estate loans will consist of first mortgage products and construction loans. We will offer fixed and variable rates on our mortgages with the amortization of the loan generally not exceeding 30 years and the rates generally not being fixed or "booked" for a period over 60 months. These loans will be made in accordance with Pinnacle National's appraisal policy and with the ratio of the loan principal to the value of collateral as established by independent appraisal generally not exceeding 95%. We expect that these loan-to-value ratios will be sufficient to compensate for fluctuations in real estate market value and to minimize losses that could result from a downturn in the residential real estate market.
- CONSTRUCTION AND DEVELOPMENT LOANS. To a lesser extent, we may make construction and development loans on a pre-sold basis, but we do not initially intend to make construction and development loans on a speculative basis. We may do so in the future, however, if deemed appropriate by our board of directors. If the borrower has entered into an agreement to sell the property prior to beginning construction, then the loan is considered to be on a pre-sold basis. If the borrower has not entered into an agreement to sell the property prior to beginning construction, then the loan is considered to be on a speculative basis. If we make these loans, they would generally have a term of nine to twelve months and interest would be paid quarterly. The ratio of the loan principal to the value of the collateral as established by independent appraisal typically would not exceed 80%. Any speculative loans would be based on the borrower's financial strength and cash flow position. Loan proceeds would be disbursed based on the percentage of completion and only after the project has been inspected by an experienced construction lender or independent appraiser. Risks associated with construction loans include fluctuations in the value of real estate and new job creation trends.
CONSUMER LOANS. Pinnacle National will make a variety of loans to individuals for personal, family and household purposes, including secured and unsecured installment and term loans, home equity loans and home equity lines of credit. Consumer loan repayments depend upon the borrower's financial stability and are more likely to be adversely affected by divorce, job loss, illness and personal hardships. Because many consumer loans are secured by depreciable assets such as boats, cars and trailers, the loan should be amortized over the useful life of the asset. To minimize these risks, the loan officer will review the borrower's past credit history, past income level, debt history and, when applicable, cash
flow and determine the impact of all these factors on the ability of the borrower to make future payments as agreed. We expect that the principal competitors for consumer loans will be the established banks in Pinnacle National's market.
LENDING OFFICERS. Pinnacle National intends to hire commercial and consumer lenders with local experience and customer contacts in order to develop our loan portfolios. Therefore, each lender will be expected to utilize these contacts to generate business for Pinnacle National.
INVESTMENTS
In addition to loans, Pinnacle National will make other investments primarily in obligations of the United States, obligations guaranteed as to principal and interest by the United States and other taxable securities. No investment in any of those instruments will exceed any applicable limitation imposed by law or regulation. The Executive Committee will review the investment portfolio on an ongoing basis in order to ensure that the investments conform to Pinnacle National's policy as set by the board of directors.
ASSET AND LIABILITY MANAGEMENT
The Executive Committee will manage Pinnacle National's assets and liabilities and will strive to provide a stable, optimized net interest margin, adequate liquidity and a profitable after-tax return on assets and return on equity. The committee will conduct these management functions within the framework of written loan and investment policies that Pinnacle National will adopt. The committee will attempt to maintain a balanced position between rate sensitive assets and rate sensitive liabilities. Specifically, it will chart assets and liabilities on a matrix by maturity, effective duration and interest adjustment period and attempt to manage any gaps in maturity ranges.
DEPOSIT SERVICES
Pinnacle National will seek to establish a broad base of core deposits, including savings, checking, interest-bearing checking, money market and IRA accounts, as well as a variety of certificates of deposit. To attract deposits, Pinnacle National will employ an aggressive marketing plan in its overall service area and will feature a broad product line and competitive rates and services. The primary sources of deposits will be residents of, and businesses and their employees located in, Pinnacle National's primary market area. Pinnacle National plans to obtain these deposits through personal solicitation by its officers and directors, direct mail solicitations and advertisements published in the local media. In order to attract its initial deposit base, Pinnacle National may offer higher interest rates on various deposit accounts.
OTHER BANKING SERVICES
Given client demand for increased convenience in accessing banking and investment services, Pinnacle National will also offer a broad array of convenience-centered products and services, including 24 hour telephone and internet banking, debit cards, credit cards, direct deposit and cash management services for small- to medium-sized businesses. Additionally, Pinnacle National plans to become associated with one or more nationwide networks of automated teller machines that our clients will be able to use throughout Tennessee and other regions. We do not plan to charge our clients for the use of these automated teller machines since we will initially have only one location. We also plan to offer MasterCard-Registered Trademark- and VISA-Registered Trademark- credit card services through a correspondent bank as an agent for Pinnacle National. Pinnacle National does not plan to exercise trust powers during its initial years of operation, but will provide fee-based asset management advisory services through a strategic business partner that has not yet been selected. It may in the future offer a full-service trust department, but cannot do so without the prior approval of the Office of the Comptroller of the Currency.
Given today's significant demand for investment services, we have entered into a strategic alliance with LM Financial Partners, Inc., a registered broker-dealer and investment adviser, to offer and sell various securities and other financial products to the public from Pinnacle National locations. As a result, Pinnacle National will offer, through LM Financial Partners, non-FDIC insured investment products in order to assist Pinnacle National's clients in achieving their financial objectives consistent with their risk tolerances. Specifically, we anticipate that these investment products will include:
- Mutual Funds
- Fixed Annuities
- Variable Annuities
- Stocks
- Money Market Instruments
- Financial Planning
- Treasury Bills
- Unit Investment Trusts
- Bonds
- Listed Options
- Asset Management Accounts
We anticipate that all of the financial products listed above will be offered by LM Financial Partners from Pinnacle National's main office when Pinnacle National begins its banking operations. Additionally, we believe that the brokerage and investment advisory program to be offered by LM Financial Partners will not only complement Pinnacle National's general banking business, but will further support our business philosophy and strategy of delivering to our clients those products and services that meet their sophisticated financial needs.
We selected LM Financial Partners after careful review of several different brokerage and investment advisory service providers. Additionally, we have structured our relationship with LM Financial Partners in compliance with the Securities Exchange Act, as amended by the Gramm-Leach-Bliley Act of 1999, and federal banking regulations and guidelines. For example, as part of our effort to comply with federal law, we will make it clear to our clients that LM Financial Partners, as opposed to Pinnacle National itself, is the entity offering the brokerage and investment advisory products and services and that these products and services are not FDIC-insured. In addition, all products made available under the LM Financial Partners program will only be offered in designated areas of Pinnacle National's offices, and these areas will be leased to LM Financial Partners. We believe that these and other compliance measures will significantly decrease our exposure to any potential liability that may be associated with implementing such a third party arrangement.
The initial term of our arrangement with LM Financial Partners is for one year and is expected to begin approximately at the same time that Pinnacle National opens for business. Additionally, the brokerage program agreement and lease will be terminable upon 60 days written notice by either party. Under the terms of the lease and the brokerage program agreement with LM Financial Partners, Pinnacle National will receive a minimum lease payment of approximately $105 per month for each leased area, plus a percentage of commission credits and fees generated by the program. Pinnacle National will remain, however, responsible for various expenses associated with the program, including promotional and advertising expenses, furnishings and equipment expenses for the leased areas, and general personnel costs. During the first 12 months of operating the program, we expect that it will generate approximately $660,000 in gross revenue, leading to an estimated $165,000 in net income, before taxes, for Pinnacle National. However, as the program becomes more established and as our client base expands, we expect that the program will become a more significant revenue source for Pinnacle National.
By offering brokerage and investment advisory products and services through a third party like LM Financial Partners, we believe that we will be able to avoid costly organizational and pre-opening expenses often associated with offering, on a proprietary basis, such an investment product line. With
LM Financial Partners being the sponsor of the program, we do not anticipate having more than approximately $550,000 or 2.4% of Pinnacle National's initial capital of $22.6 million at risk. As a result, if the program should be unsuccessful, our financial exposure would be limited.
Additionally, Pinnacle National will also offer various life and health insurance products through Legg Mason Financial Services, Inc., a licensed insurance agency and affiliate of LM Financial Partners, in order to assist clients in achieving their financial objectives. Our agreement with Legg Mason Financial Services will be governed by the same brokerage program agreement and lease entered into with LM Financial Partners, as explained above.
As one example of our ability to provide exceptional banking convenience while limiting branch distribution expense, Pinnacle National will also offer its targeted commercial clients a courier service that will pick up non-cash deposits and minimal cash deposits of up to approximately $200 from the client's place of business. Pinnacle National will provide this service through a third party, which has not yet been chosen, that is approved by the Public Service Commission for bank-related work.
EMPLOYEES
When we begin operations, Pinnacle National projects that it will have 34 full-time employees. We do not expect that Pinnacle Financial will have any employees who are not also employees of Pinnacle National.
MANAGEMENT
GENERAL
The following table sets forth, for the directors and executive officers of
Pinnacle Financial, (1) their names, addresses and ages at May 1, 2000,
(2) their respective positions with us, (3) the number of shares of our common
stock they intend to purchase in the offering, (4) the percentage of outstanding
shares such number will represent, and (5) the number of shares subject to
warrants and options that they will receive when we complete this offering. The
numbers of shares indicated in the table are based on "beneficial ownership"
concepts as defined by the Securities and Exchange Commission. Beneficial
ownership includes shares that are either owned or may be acquired within
60 days by the principal, a spouse, minor children and other relatives residing
in the same household, and trusts, partnerships, corporations or deferred
compensation plans which are affiliated with the principal. This table
separately discloses the number of warrants and options that will be granted to
each organizer or executive officer.
SHARES ANTICIPATED TO BE
OWNED FOLLOWING WARRANTS
THE OFFERING AND OPTIONS
----------------------------- -----------
NAME, ADDRESS AND AGE POSITION HELD NUMBER PERCENT NUMBER
--------------------- ------------- ------ -------- -----------
CLASS I DIRECTORS:
Sue R. Atkinson (60)............. Director 10,000 * 5,000
5 St. James Place
Nashville, TN 37215
Colleen Conway-Welch (56)........ Director 10,000 * 5,000
109 Lynwood Terrace
Nashville, TN 37205
Clay T. Jackson (46)............. Director 25,000 1.0 12,500
5819 Hillsboro Road
Nashville, TN 37205
CLASS II DIRECTORS:
John E. Maupin, Jr. (52)......... Director 1,000 * 500
2 Morningside Court
Nashville, TN 37215
Robert A. McCabe, Jr. (49)....... Chairman of the 75,000 3.0 82,500(1)
Suite 306 Board
3401 West End Avenue
Nashville, TN 37203
Robert E. McNeilly, Jr. (67)..... Director 25,000 1.0 12,500
4323 Glen Eden Drive
Nashville, TN 37205
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SHARES ANTICIPATED TO BE
OWNED FOLLOWING WARRANTS
THE OFFERING AND OPTIONS
----------------------------- -----------
NAME, ADDRESS AND AGE POSITION HELD NUMBER PERCENT NUMBER
--------------------- ------------- ------ -------- -----------
CLASS III DIRECTORS:
Dale W. Polley (50).............. Director 25,000 1.0 12,500
1 Webster Lane
Nashville, TN 37205
James L. Shaub, II (43).......... Director 25,000 1.0 12,500
1103 Belle Meade Blvd.
Nashville, TN 37205
Reese L. Smith, III (52)......... Director 30,000 1.2 15,000
1101 Moran Road
Franklin, TN 37609
M. Terry Turner (45)............. Director, 75,000 3.0 82,500(2)
812 Jones Parkway President,
Brentwood, TN 37027 and Chief Executive
Officer
OFFICER AND ORGANIZER
NOT ALSO A DIRECTOR:
Hugh M. Queener (44)............. Executive Vice 35,000 1.4 47,500(3)
9318 Atherton Drive President and Chief
Brentwood, TN 37027 Administrative
Officer
All Directors and Executive...... 336,000 13.4 288,000
Officers as a Group (11 persons)
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* Represents ownership of less than 1.0%.
(1) Mr. McCabe will receive an option to purchase 45,000 shares of common stock under our stock incentive plan, as well as a warrant to purchase 37,500 shares.
(2) Mr. Turner will receive an option to purchase 45,000 shares of common stock under our stock incentive plan, as well as a warrant to purchase 37,500 shares.
(3) Mr. Queener will receive an option to purchase 30,000 shares of common stock under our stock incentive plan, as well as a warrant to purchase 17,500 shares.
Other than Dr. Maupin who became a director on March 28, 2000, each person listed as a director in the table above has been a director of Pinnacle Financial since its incorporation date of February 28, 2000. Our directors serve staggered terms, which means that one-third of the directors will be elected each year at our annual meeting of shareholders. The initial term of our Class I directors will expire in 2001, the initial term of our Class II directors will expire in 2002 and the initial term of our Class III directors will expire in 2003. Thereafter, each respective class of directors will serve for a term of three years. Our officers are appointed by our board of directors and hold office at the will of our board. See "Selected Provisions of Our Charter and Bylaws" on page 45.
Each of our directors listed above is also a proposed director of Pinnacle National. Each of Pinnacle National's proposed directors will, upon approval by the OCC, serve until Pinnacle National's
first shareholders' meeting, which will convene shortly after Pinnacle National receives its charter. Pinnacle Financial, as the sole shareholder of Pinnacle National, will nominate each proposed director to serve as a director of Pinnacle National at that meeting. After the first shareholders' meeting, directors of Pinnacle National will serve for a term of one year and will be elected by Pinnacle Financial each year at Pinnacle National's annual meeting of shareholders. Pinnacle National's officers will be appointed by its board of directors and will hold office at the will of its board of directors.
None of our directors and executive officers have a family relationship as close as first cousins.
Eleven of our fourteen organizers will serve as directors and/or executive officers of Pinnacle Financial as noted in the previous table. The remaining three organizers that are not also directors and/or executive officers of Pinnacle Financial, and the amount of our common stock they intend to purchase in the offering, are:
SHARES ANTICIPATED
TO BE OWNED FOLLOWING
ORGANIZER THE OFFERING
--------- ---------------------
John W. Eakin............................................ 10,000
David B. Ingram.......................................... 35,000
Linda E. Rebrovick....................................... 10,000
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As organizers, these individuals will also receive warrants to purchase additional shares of our common stock. See "Description of Our Capital Stock--Organizers' Shares and Warrants" on page 44.
The 2,500,000 shares of our common stock offered by this prospectus to the public, which includes our organizers, directors and executive officers, will not be issued until after the close of the offering. Accordingly, while our organizers, directors and executive officers intend to purchase 391,000 shares of the 2,500,000 shares being offered by this prospectus, they will not be issued shares of our common stock, nor be required to fund their intended purchases of our common stock, prior to the close of the offering, which we anticipate will occur within the third quarter of 2000. Our organizers may also acquire additional shares of our common stock, up to a maximum aggregate number for all organizers of 1,500,000 shares, in order to achieve the minimum capitalization required by the Office of the Comptroller of the Currency for Pinnacle National.
The following is a biographical summary of each of our organizers, directors and executive officers:
SUE R. ATKINSON
Ms. Atkinson is chairman and chief executive officer of Atkinson Public Relations of Nashville, Tennessee. Ms. Atkinson was raised in Tennessee and educated at Vanderbilt University, Nashville, Tennessee, where she received a bachelor's degree. She began her professional career as director of development for Nashville Public Television in 1971, serving until 1979. In 1979, she became president of Holder Kennedy Public Relations of Nashville, and remained in this capacity until founding her own public relations firm in 1986. In the area of public relations, Ms. Atkinson has worked with First American Corporation since 1991, and with Commerce Union/Sovran Bank/C&S Sovran from 1986 to 1991. Ms. Atkinson currently serves on the board of directors and executive committee of the Nashville Area Chamber of Commerce, and has served as a board member for the Metropolitan Nashville Convention Commission, the Nashville Symphony Association, Children's Hospital of Vanderbilt University and Leadership Nashville. She has also served on the board of trustees of the Alumni Association of Vanderbilt University.
COLLEEN CONWAY-WELCH
Ms. Conway-Welch is the dean and chief executive officer of the Vanderbilt University School of Nursing, Nashville, Tennessee, a position she has held since 1984, and is a director of Quorum Health
Group, Inc. Because of her international stature as a voice for the nursing profession, Ms. Conway-Welch has been previously called on to advise both President Reagan's Commission on HIV and President Bush's Advisory Committee on the Arts. Her professional activities include or have included serving as a member of the board of directors for First Union National Bank of Tennessee, the American Physicians Network, the Godchaux Brothers Foundation, and Quorum Health Resources. In her community role, she has served on the board of directors for the Nashville Symphony, the Nashville Area Chamber of Commerce and the Nashville Rotary Foundation. Currently, Ms. Conway-Welch chairs the Middle Tennessee United Way campaign.
JOHN W. EAKIN, JR.
Mr. Eakin is president and owner of Eakin Properties LLC, and has lived and worked his entire life in Nashville, Tennessee. In 1987, Mr. Eakin co-founded Eakin & Smith, Inc., a real estate company, which he operated for nine years. From 1996 to 1999, Mr. Eakin joined the firm of Highwoods Properties as senior vice president and board member as a result of Highwoods' acquisition of his company. Currently Mr. Eakin serves as an advisory board member for AmSouth Bank in Nashville, Tennessee, and as a board member of Montgomery Bell Academy. Previously, Mr. Eakin has served on the boards of CCA Prison Realty Trust, Central Parking System, the American Red Cross and the Tennessee Society to Prevent Blindness. Mr. Eakin's civic affiliations include the Nashville Downtown Rotary, the Nashville Area Chamber of Commerce and the Young President's Organization.
DAVID B. INGRAM
Mr. Ingram is chairman and president of Ingram Entertainment, Inc., a distributor of pre-recorded videocassettes, DVDs, video games, and related multimedia products. From 1989 to 1991, Mr. Ingram was assistant to the treasurer at Ingram Industries, the parent to Ingram Distribution. In 1991, he began working in various capacities at Ingram Entertainment before becoming chairman and president in 1996. Currently, he is an advisory board member of AmSouth Bank in Nashville and serves as a board member of Buy.com, a publicly traded internet shopping service, and the Tennessee Golf Foundation. Mr. Ingram is a graduate of Duke University, Durham, North Carolina, and the Owen Graduate School of Management at Vanderbilt University in Nashville. Mr. Ingram is a native Tennessean and has lived in the Nashville area for 31 years.
CLAY T. JACKSON
Mr. Jackson is president and principal of Cooper, Love & Jackson, a full-line insurance agency, and has served in this capacity since 1989. Mr. Jackson is active in the Nashville community, serving as a member of Leadership Nashville, the Partnership 2000 committee for the Nashville Area Chamber of Commerce and a member of the Nashville Rotary Club. His prior board positions include the Nashville Institute for the Arts, the Nashville Ballet, the Nashville Humane Association and USF&G Insurance Companies. Mr. Jackson is a native Tennessean and has lived in the Nashville area for 46 years.
JOHN E. MAUPIN, JR.
Dr. Maupin is president and chief executive officer of Meharry Medical College, a position he has held since 1994. Located in Nashville, Tennessee, Meharry is one of the nation's largest private minority institutions exclusively dedicated to education health care professionals and biomedical scientists. Dr. Maupin came to Meharry from the Morehouse School of Medicine in Atlanta, Georgia, where he served as executive vice president from 1989 to 1994. Before joining Morehouse, he was chief executive officer of Southside Healthcare, Inc., from 1987-1989 and prior to that Deputy Commissioner of Health, Baltimore City Health Department (1981-1987). Dr. Maupin has served as president of the National Dental Association, and has served on several national professional advisory groups, including the Board of Scientific Counselors, National Institute of Dental Research. Currently, he serves as a
member of the National Committee of Foreign Medical Education Accreditation for the U.S. Department of Education, and the Board of Overseers of the Vanderbilt-Ingram Cancer Center. Dr. Maupin is also active in the Nashville community as a board member of the United Way Middle Tennessee, Community Foundation of Middle Tennessee and the Nashville Chamber of Commerce. He currently serves on the board of directors of LifePoint Hospitals, Inc., American General Series Portfolio Companies and US Life Income Fund and Monarch Dental Corporation.
ROBERT A. MCCABE, JR.
Mr. McCabe is the chairman of the board of Pinnacle Financial. Mr. McCabe began his banking career with First American Corporation as an officer trainee for its then existing subsidiary, First American National Bank of Knoxville. From 1976 to 1984, Mr. McCabe held various positions with the bank, including senior vice president. In 1985, Mr. McCabe was asked to serve as an executive vice president of the retail bank of First American National Bank of Nashville, a position he held until 1987 when First American promoted him to president and chief operating officer of the First American Bank of Knoxville. In 1989, Mr. McCabe was given added responsibility by being named president and chief operating officer for First American's east Tennessee region. Mr. McCabe continued in that position until 1991, when First American selected him as president of First American's corporate banking division, and shortly thereafter, as president of its general banking division. In 1994, First American appointed Mr. McCabe as a vice chairman, a position in which he was responsible for the fee income strategy of the corporation. In March 1999, Mr. McCabe assumed additional responsibility for all banking operations, a position he held until First American's merger with AmSouth in October 1999. Since then, Mr. McCabe has been active as a consultant to the banking industry. In addition to his banking experience with First American, Mr. McCabe served as a director of Sirrom Capital from 1996 to 1999, and currently serves as a director of SSC Service Solutions, Nashville, Tennessee. Mr. McCabe is a graduate of the University of Tennessee where he received a B.S. in Economics and an MBA in Finance. He later attended an Executive Management Program at Harvard Business School.
Mr. McCabe has been active in various civic organizations within his community, including Leadership Knoxville, Leadership Nashville, Partnership 2000 and Nucleus Knoxville. He has also been a member of the Bankers Roundtable since 1993, Young Presidents Organization since 1988, and currently serves on the Nashville Area Chamber of Commerce Board of Governors and is president of the Nashville Symphony.
ROBERT E. MCNEILLY, JR.
Mr. McNeilly is a retired banker, and is currently a board member of the Ragland Corporation, a privately-owned, real estate holding company. From 1993 to 1996, Mr. McNeilly served as president of First American Trust Company, Nashville, Tennessee, and from 1986 to 1993, as the chairman of First American Bank of Nashville. Prior to 1986, Mr. McNeilly was involved in the printing industry for 29 years where he held various management positions. He has lived and worked in Nashville most of his life, and has held many key civic leadership roles including chairman of the Nashville Area Chamber of Commerce, chairman of the Metropolitan Action Commission, and president of the Canby Society of the Vanderbilt Medical Center. Mr. McNeilly is a board member of the Montgomery Bell Academy, the Nashville United Way, Tennessee Medical Endowment, Tennessee State Foundation and the Tennessee Performing Arts Center.
DALE W. POLLEY, SR.
Mr. Polley recently retired as a vice chairman of First American Corporation and First American National Bank. In the nine years preceding this position, Mr. Polley served in various executive management positions at First American, which included serving as its president from 1997 to 1999.
Before joining First American in 1991, Mr. Polley was group executive vice president and treasurer for C&S/Sovran Corporation, and held various positions within Sovran before its merger with C&S. Mr. Polley joined Sovran from Commerce Union Bank of Nashville where he was its executive vice president and chief financial officer.
Mr. Polley serves on the boards of directors of the Federal Reserve Bank of Atlanta (Nashville branch), Nashville Sports Council, Music City Bowl, T.J. Martel Foundation, St. Thomas Foundation and Vanderbilt--Ingram Cancer Center. Additionally, he has formerly served on the boards of directors of: the American Cancer Society; the American Heart Association; YMCA; and the United Way, where he served as chairman of the board and chairman of the community's 1995 fundraising campaign. Mr. Polley has also served as president of the Nashville Club for the University of Kentucky Alumni Association. Currently, Mr. Polley serves as the chairman of the steering committee for the Sports Council's hosting of the 2001 SEC Men's Basketball Tournament, and is a member of Leadership Nashville, Tennessee Society of Certified Public Accountants and the Financial Executive Institute.
HUGH M. QUEENER
Mr. Queener is Pinnacle Financial's executive vice president and chief administrative officer and the proposed chief administrative officer of Pinnacle National. Mr. Queener is a graduate of Tennessee Wesleyan College where he received his bachelor's degree in Business Administration in 1977. Following his graduation, Mr. Queener joined Park National Bank in Knoxville where he worked in the audit and operations support area of the bank until 1981. At that time, he joined The Kirchman Corporation of Orlando, Florida, and served from 1981 to 1984 and from 1986 to 1987 in various roles, including senior vice president for client service, installations, software development and support. In between his employment with The Kirchman Corporation, Mr. Queener served in similar capacities with Systeme in Orlando, Florida, a competitor of the Kirchman Corporation. In 1987, Mr. Queener joined First American National Bank of Nashville, and held various operations and management positions during his 13 year tenure with the bank. Most recently, he was executive vice president of retail lending. In this role, he oversaw a $7.8 billion loan portfolio, as well as a staff of 550 people. Since moving to Nashville, Mr. Queener has become involved in the Brentwood Rotary Club, the Nashville Area Habitat for Humanity, and the YMCA. Mr. Queener is also on the administrative board of Brentwood United Methodist Church.
LINDA E. REBROVICK
Ms. Rebrovick is executive vice president and a managing director of KPMG Consulting LLC, Nashville, Tennessee, and has served as a member of KPMG's board of directors since 1997. Ms. Rebrovick has worked in Nashville her entire career following graduation from Auburn University in 1977. Originally operating as a manager and a business unit executive for IBM, Ms. Rebrovick joined KPMG as director of the mid-south strategic services consulting practice in 1994. Since 1995, Ms. Rebrovick has held various executive positions within KPMG, and in 1997, the firm named her managing partner of the health care consulting practice. Ms. Rebrovick is a well recognized business and civic leader. The Davidson County Business and Professional Women's Club has honored her as Woman of the Year, NASHVILLE BUSINESS AND LIFESTYLES named her as one Nashville's Emerging Leaders, and the United Way of Middle Tennessee nominated her as one of their candidates for Volunteer of the Year. She is a former board member of the American Heart Association and American Lung Association of Middle Tennessee. Her current community activities include serving on the boards of the United Way of Middle Tennessee. Additionally, she is a member of Leadership Nashville, Tennessee Leadership and Nashville Junior Chamber of Commerce. Ms. Rebrovick is a native Tennessean and has lived in Nashville for 44 years.
JAMES L. SHAUB, II
Mr. Shaub is president and chief executive officer of Southeast Waffles, LLC, a multi-state waffle house franchise based in Nashville. Mr. Shaub is a graduate of Vanderbilt University where he received a bachelor's degree in economics. Before his career as a restaurateur, Mr. Shaub was vice president of NationsBank of Tennessee, formerly Commerce Union Bank. He has been very active in Nashville civic affairs, serving as a board member of the Cumberland Science Museum and Grassmere Wildlife Park and as president of the Nashville Child Center.
REESE L. SMITH, III
Mr. Smith is president of Haury & Smith Contractors, Inc., a real estate development firm. He is a native Tennessean, and he has operated this business in the Nashville area since his graduation from the University of Tennessee at Martin in 1970. From 1996 to 1999, Mr. Smith served as a board member of First Union National Bank of Nashville, and was a founder and director of Brentwood National Bank from its inception in 1991 to 1996. Mr. Smith has previously served on the Tennessee State Board for Licensing Contractors for 14 years, as a trustee of Brentwood Academy and as president of the Battleground Academy Alumni Association. Currently, Mr. Smith serves as a national director of the National Association of Home Builders and is chairman of the trustees at Forest Hills United Methodist Church.
M. TERRY TURNER
Mr. Turner is Pinnacle Financial's president and chief executive officer and the proposed president and chief executive officer of Pinnacle National. Mr. Turner is a graduate of the Georgia Institute of Technology where he received his bachelor's degree in Industrial Management in 1976. Following his graduation, Mr. Turner worked for Arthur Andersen & Company as a consultant in Atlanta, Georgia, and joined one of his clients, Park National Bank, Knoxville, Tennessee in 1979 where he held various management positions, including senior vice president of the bank's commercial division. In 1985, Mr. Turner joined First American National Bank, Nashville, Tennessee, as a result of its acquisition of Park National Bank. Mr. Turner remained at First American for the remainder of his banking career until his position as president and head of the retail and community banking groups was eliminated following First American's merger with AmSouth Bank. In this capacity, Mr. Turner had oversight responsibility for $11.9 billion in deposits, $6.7 billion in loans, 391 branches and 4,600 employees. Mr. Turner's banking career at First American in Nashville has covered 14 years, and has entailed executive level responsibilities for almost all aspects of its banking and investment operations.
During Mr. Turner's tenure in Nashville, he has served as an advisory board chairman for the Salvation Army, vice chairman for the Southern Baptist Foundation and as a member of the board of trustees of Belmont University. Mr. Turner currently serves on the executive committee of the Nashville Credit Bureau and as chairman of the board of trustees for Brentwood Academy. Mr. Turner is an active member in the Young President's Organization and is also a member of numerous local clubs and organizations including Leadership Nashville and Caduceus Society.
BOARD COMMITTEES
Pinnacle Financial's board of directors has established the committees described below. The members of each committee will be the same for Pinnacle National as they are for Pinnacle Financial.
EXECUTIVE COMMITTEE. The Executive Committee will recommend to the board, in conjunction with management, all major policies and procedures pertaining to loan policy. Specifically, the Executive Committee will ensure the establishment of the loan approval system, review all loans in excess of a predetermined amount, and review all past due reports, rated loan reports, OREO reports, non-accrual reports, and other indicators of overall loan portfolio quality. Additionally, the Executive Committee
will establish measurements for adequacy of the loan loss reserve and review any other matters that are pertinent to the loan portfolio such as yield and concentrations.
The Executive Committee will have overall responsibility for investment strategy of Pinnacle Financial and Pinnacle National, which will include:
- managing investment liquidity;
- managing investment risk;
- managing net interest margins;
- monitoring deposit level trends and pricing;
- monitoring asset level trends and pricing; and
- making portfolio investment decisions.
The Executive Committee will be responsible for recommending nominations for expired board seats and/or additional board members.
AUDIT COMMITTEE. The principal responsibility of the Audit Committee is to ensure that the board receives objective information regarding policies, procedures, and controls of Pinnacle Financial and Pinnacle National with respect to auditing, accounting, internal accounting controls, and financial reporting. Among other things, this committee's responsibilities will include:
- recommending the appointment of an independent auditor on an annual basis;
- reviewing the independent auditor's report and management's response;
- reviewing all reports from regulatory authorities and management's responses;
- establishing independent reviews and audits; and
- establishing appropriate levels of director and officer insurance and blanket bond insurance coverage.
COMMUNITY AFFAIRS COMMITTEE. The Community Affairs Committee will evaluate overall community relations including public affairs and advertising. The Community Affairs Committee will establish Pinnacle National's community development program, and assess and work to ensure compliance with the Community Reinvestment Act, fair lending laws, and the Home Mortgage Disclosure Act. Additionally, this committee will oversee Pinnacle National's corporate contribution program.
HUMAN RESOURCES COMMITTEE. The Human Resources Committee will establish or approve all policies and procedures related to the human resources function of Pinnacle Financial and Pinnacle National to include employee compensation, incentive programs, health insurance, 401(k), and employee stock option plans. Additionally, this committee will approve the hiring of all executive officers.
EXECUTIVE COMPENSATION
OFFICER COMPENSATION
We were incorporated on February 28, 2000, and consequently, do not have historical compensation information for the requisite period required to be reported under the rules promulgated by the Securities and Exchange Commission. Accordingly, the following table shows the anticipated salary information for our president and chief executive officer during 2000, and for our existing and proposed executive officers who are each projected to earn approximately $100,000 or more in salary and bonus in 2000.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-----------------------------------------
OTHER ANNUAL
YEAR SALARY ($) BONUS ($) COMPENSATION ($)
-------- ---------- --------- ----------------
M. Terry Turner,.................................... 2000 183,333 0 0(1)
President and Chief Executive Officer
Robert A. McCabe, Jr................................ 2000 91,667 0 65,500(2)
Chairman of the Board and
Chief Financial Services Officer
Hugh M. Queener..................................... 2000 120,000 0 0(1)
Executive Vice President and
Chief Administrative Officer
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(1) We have omitted information on "perks" and other personal benefits because the aggregate value of these items do not exceed $50,000 or 10% of the executive officer's combined salary and bonus, as reported above.
(2) Mr. McCabe is expected to receive $65,500 from Pinnacle Financial for his consulting services rendered prior to his employment agreement becoming effective on August 1, 2000. At that time, his duties as our chief financial services officer will begin.
EMPLOYMENT AGREEMENTS
M. TERRY TURNER. Effective March 1, 2000, Pinnacle Financial and Pinnacle National entered into a three-year employment agreement with M. Terry Turner regarding Mr. Turner's employment as our president and chief executive officer. Under the terms of the agreement, Mr. Turner will receive a salary of $220,000 per year, plus benefits, and annual bonus compensation as determined by the board of directors. Mr. Turner's agreement also provides that Pinnacle Financial will grant Mr. Turner an incentive stock option to purchase 45,000 shares of our common stock at an exercise price of $10.00 per share. Mr. Turner's option will be issued under our stock incentive plan and will constitute 11.3% of the shares reserved for issuance under the plan. Mr. Turner's option will generally become exercisable in equal one-fifth annual increments over a five-year period beginning on the one-year anniversary after the close of the offering.
Mr. Turner's agreement will automatically renew for an additional day each day after March 31, 2000, so that it will always have a three-year term, unless any of the parties to the agreement gives
notice of his or its intent not to renew the agreement. Additionally, under Mr. Turner's agreement, we will be obligated to pay Mr. Turner his base salary for the following terminating events:
PAYMENT OBLIGATION
TERMINATING EVENT OF BASE SALARY
----------------- ------------------------------------------
Mr. Turner becomes permanently
disabled.............................. Maximum of six months
Pinnacle National abandons its
organizational efforts................ Until December 31, 2000
Pinnacle National terminates Mr.
Turner's employment without cause, as
defined............................... End of agreement's term
Mr. Turner terminates his employment for
cause................................. Maximum of 12 months
Mr. Turner terminates his employment
with cause within 12 months after a Three times base salary and target bonus,
change of control, as defined......... plus benefits
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ROBERT A. MCCABE, JR. Effective August 1, 2000, Pinnacle Financial and
Pinnacle National will enter into a three-year employment agreement with Robert
A. McCabe, Jr. regarding Mr. McCabe's employment as chairman of the board of
directors and chief financial services officer. Under the terms of the
agreement, Mr. McCabe will receive a salary of $220,000 per year, plus benefits,
and annual bonus compensation as determined by the board of directors.
Mr. McCabe's agreement also provides that Pinnacle Financial will grant
Mr. McCabe an incentive stock option to purchase 45,000 shares of our common
stock at an exercise price of $10.00 per share. Mr. McCabe's option will be
issued under our stock incentive plan and will constitute 11.3% of the shares
reserved for issuance under the plan. Mr. McCabe's option will generally become
exercisable in equal one-fifth annual increments over a five-year period
beginning on the one-year anniversary after the close of the offering.
Mr. McCabe's agreement will automatically renew for an additional day each day after August 1, 2000, so that it will always have a three-year term, unless any of the parties to the agreement gives notice of his or its intent not to renew the agreement. Additionally, under Mr. McCabe's agreement, we will be obligated to pay Mr. McCabe his base salary under the same conditions and terms as described above for Mr. Turner's employment agreement.
Although Mr. McCabe's employment agreement does not become effective until August 1, 2000, Mr. McCabe has been involved in specific pre-opening activities as an independent consultant. Currently, Mr. McCabe is receiving $15,000 per month for his consulting services performed in connection with Pinnacle Financial, which include developing a capital plan and an asset/liability management structure, obtaining our main office site and locating additional office sites, and interfacing with regulatory agencies. We anticipate that this consulting relationship will continue until Mr. McCabe's employment agreement becomes effective. Additionally, until July 15, 2000, Mr. McCabe will be a party to an employee non-solicitation agreement entered into with his former employer. Accordingly, he is not participating in any personnel research or hiring decisions involving current employees of his former employer.
HUGH M. QUEENER. Effective April 1, 2000, Pinnacle Financial and Pinnacle National entered into a three-year employment agreement with Hugh M. Queener regarding Mr. Queener's employment as executive vice president and chief administrative officer. Under the terms of the agreement, Mr. Queener will receive a salary of $160,000 per year, plus benefits, and annual bonus compensation as determined by the board of directors. Mr. Queener's agreement also provides that Pinnacle Financial will grant Mr. Queener an incentive stock option to purchase 30,000 shares of our common stock at an exercise price of $10.00 per share. Mr. Queener's option will be issued under our stock incentive plan and will constitute 7.5% of the shares reserved for issuance under the plan. Mr. Queener's option will
generally become exercisable in equal one-fifth annual increments over a five-year period beginning on the one-year anniversary after the close of the offering.
Mr. Queener's agreement will automatically renew for an additional day each day after March 1, 2000, so that it will always have a three-year term, unless any of the parties to the agreement gives notice of his or its intent not to extend the agreement. Additionally, under Mr. Queener's agreement, we will be obligated to pay Mr. Queener his base salary under the same conditions and terms as described earlier for Mr. Turner's employment agreement.
DIRECTOR COMPENSATION
We anticipate paying cash director fees to our non-employee directors of $500 per board of directors meeting attended and $250 per committee meeting attended. Additionally, each non-employee, committee chair will also receive $250 per quarter. Prior to paying director compensation, we will adopt director compensation policies that conform to applicable law.
STOCK INCENTIVE PLAN
GENERAL. Pinnacle Financial's 2000 Stock Incentive Plan provides us with the flexibility to grant incentive stock options and non-qualified stock options to our organizers, directors, executive officers and employees for the purpose of giving them a proprietary interest in and encouraging them to remain involved with Pinnacle Financial or Pinnacle National. The board of directors has reserved 520,000 shares of common stock, an amount equal to 20.8% of the shares of common stock expected to be sold in the offering, for issuance under the plan. The number of shares reserved for issuance may be adjusted in the event of a stock split, recapitalization or similar event as described in the plan.
Our executive officers will be issued stock option awards under the plan in connection with the employment agreements that we have entered into with them. See "Executive Compensation--Employment Agreements" on page 38.
ADMINISTRATION. The plan is administered by our Human Resources Committee, with committee members being appointed by the board of directors of Pinnacle Financial. The board plans to consider the disinterested standards contained in both Section 162(m) of the Internal Revenue Code and Rule 16(b)(3) under the Securities Exchange Act when appointing members to the committee. The committee will have the authority to grant awards under the plan, to determine the terms of each award, to interpret the provisions of the plan and to make all other determinations that it may deem necessary or advisable to administer the plan.
The plan permits the committee to grant stock options to eligible persons. The committee may grant these options on an individual basis or design a program providing for grants to a group of eligible persons. The committee determines, within the limits of the plan, the number of shares of common stock subject to an option, to whom an option is granted, the exercise price and forfeiture or termination provisions of each option. Unless otherwise permitted by the committee, a holder of a stock option generally may not transfer the option during his or her lifetime.
OPTION TERMS. The plan provides for the grant of incentive stock options and non-qualified stock options. The committee will determine whether an option is an incentive stock option or a non-qualified stock option when it grants the option, and the option will be evidenced by an agreement describing the material terms of the option. The maximum number of shares of common stock with respect to which options may be granted during any calendar year to any participant may not exceed 75,000.
The committee determines the exercise price of an option. The exercise price of an incentive stock option may not be less than the fair market value of the common stock on the date of the grant, or less than 110% of the fair market value if the participant owns more than 10% of the outstanding
common stock of Pinnacle Financial or its subsidiaries. When the incentive stock option is exercised, Pinnacle Financial will be entitled to place a legend on the certificates representing the shares of common stock purchased upon exercise of the option to identify them as shares of common stock purchased upon the exercise of an incentive stock option. The exercise price of non-qualified stock options granted during the first three years after Pinnacle National opens for business may not be less than 100% of the fair market value of the common stock on the date that the option is awarded, based upon any reasonable measure of fair market value. The exercise price of non-qualified stock options granted after the third anniversary of the date Pinnacle National opens for business may not be less than 85% of the fair market value on the date of grant. The committee may permit the exercise price to be paid in cash or through a cashless exercise executed through a broker. The committee may authorize financing by Pinnacle Financial to assist a participant with payment of the exercise price. The committee may make cash awards designed to cover tax obligations of participants that result from the receipt or exercise of a stock option.
The committee will also determine the term of an option, which may not exceed ten years from the date of grant; however, any incentive stock option granted to a participant who owns more than 10% of the outstanding common stock of Pinnacle Financial or its subsidiaries will not be exercisable more than five years after the date the option is granted. Subject to any further limitations in the applicable agreement, if a participant's employment is terminated, an option's status as an incentive stock option will expire no later than three months after the date of termination of employment. If, however, termination of employment is due to death, disability, up to one year may be substituted for the three-month period. Incentive stock options are also subject to the further restriction that the aggregate fair market value, determined as of the date of the grant, of common stock as to which any incentive stock option first becomes exercisable in any calendar year is limited to $100,000 per recipient. If incentive stock options covering common stock with a value in excess of $100,000 first become exercisable in any one calendar year, the excess will be non-qualified options.
TERMINATION OF OPTIONS. The terms of particular options may provide that they terminate, among other reasons: upon the holder's termination of employment or other status with Pinnacle Financial or any affiliate; upon a specified date, upon the holder's death, disability or retirement; or, upon the occurrence of a change in control of Pinnacle Financial or Pinnacle National. An agreement may provide that if the holder of an option dies or becomes disabled, the holder's estate or personal representative may exercise the option. The committee may, within the terms of the plan and the applicable agreement, cancel, accelerate, pay or continue an option that would otherwise terminate for the reasons discussed above.
REORGANIZATIONS. In the event of any change in the outstanding shares of common stock by reason of any subdivision or combination of shares, payment of a stock dividend or other increase or decrease in the number of outstanding shares effected without the receipt of consideration, the plan provides for appropriate adjustment, as determined by the committee, in:
- the number and kind of shares reserved for issuance under the plan and subject to options granted;
- the exercise price subject to unexercised options; and
- the maximum number of shares of common stock for which options may be granted to any one individual in any calendar year.
In the event of specified corporate reorganizations, the committee may, within the terms of the plan and the applicable agreement, assume, substitute, cancel (with or without consideration), accelerate, remove restrictions or otherwise adjust the terms of an option.
AMENDMENT AND TERMINATION OF THE PLAN. The board of directors has the authority to amend or terminate the plan. The board of directors is not required to obtain shareholder approval to amend or terminate the plan, but may condition any amendment or termination of the plan upon shareholder approval if it determines that shareholder approval is necessary or appropriate under tax, securities, or other laws. The board's action may not adversely affect the rights of a holder of a stock option without the holder's consent.
FEDERAL INCOME TAX CONSEQUENCES. The following discussion outlines generally the federal income tax consequences of participation in the plan.
-INCENTIVE STOCK OPTIONS. A participant will not recognize income and will not be taxed upon the grant of an incentive stock option nor upon the exercise of all or a portion of the option. Instead, the participant will be taxed when he or she sells the shares of common stock purchased upon exercise of the incentive stock option. The participant will be taxed on the difference between the price he or she paid for the common stock and the amount for which he or she sells the common stock. If the participant does not sell the shares of common stock prior to two years from the date of grant of the incentive stock option and one year from the date the common stock is transferred to him or her, any gain will be a capital gain, and Pinnacle Financial will not be entitled to a corresponding deduction. If the participant sells the shares of common stock at a gain before that time, the difference between the amount the participant paid for the common stock and the lesser of its fair market value on the date of exercise or the amount for which the stock is sold will be taxed as ordinary income and Pinnacle Financial will be entitled to a corresponding deduction. If the participant sells the shares of common stock for less than the amount he or she paid for the stock prior to the one- or two-year periods indicated, no amount will be taxed as ordinary income, and the loss will be taxed as a capital loss. Exercise of an incentive stock option may subject a participant to, or increase a participant's liability for, the alternative minimum tax.
-NON-QUALIFIED OPTIONS. A participant will not recognize income upon the grant of a non-qualified option or at any time before the exercise of the option or a portion of the option. When the participant exercises a non-qualified option or portion of the option, he or she will recognize compensation taxable as ordinary income in an amount equal to the excess of the fair market value of the common stock on the date the option is exercised over the price paid for the common stock, and Pinnacle Financial will then be entitled to a corresponding deduction.
Depending upon the time period for which shares of common stock are held after exercise of a non-qualified option, the sale or other taxable disposition of shares acquired through the exercise of a non-qualified option generally will result in a short- or long-term capital gain or loss equal to the difference between the amount realized on the disposition and the fair market value of the shares when the non-qualified option was exercised.
Special rules apply to a participant who exercises a non-qualified option by paying the exercise price, in whole or in part, by the transfer of shares of common stock to Pinnacle Financial and to a participant who is subject to the reporting requirements of Section 16 of the Securities Exchange Act.
RELATED PARTY TRANSACTIONS
We expect to enter into banking and other business transactions in the ordinary course of business with our directors and officers, including members of their families, and corporations, partnerships or other organizations in which they have a controlling interest. If these transactions occur, each transaction will:
- in the case of banking transactions, be on substantially the same terms, including price or interest rate and collateral, as those prevailing at the time for comparable transactions with unrelated parties, and any banking transactions will not be expected to involve more than the normal risk of collectibility or present other unfavorable features to Pinnacle National;
- in the case of business transactions, be on terms no less favorable than could be obtained from an unrelated third party; and
- in the case of all related party transactions, be approved by a majority of the directors, including a majority of the directors who do not have an interest in the transaction.
In addition to transactions in the ordinary course of our business, our operations have been and will continue to be funded through a line of credit. Currently, our line of credit is with SunTrust Bank, Nashville, Tennessee. The total amount of our line of credit is $1,500,000, of which $522,660 was outstanding as of July 10, 2000. The loan bears interest at the prime rate, as printed in the Money Rates section of THE WALL STREET JOURNAL, and is due on December 31, 2000. To maintain professional independence between our organizers' existing business interests, all of our organizers except Dr. Maupin have directly guaranteed the line of credit with SunTrust. We plan to repay the line of credit after the close of the offering.
On March 16, 2000, we entered into a letter agreement with Atkinson Public Relations of which one of our directors, Sue G. Atkinson, is a principal. Under the agreement, Atkinson Public Relations provides us with general marketing and public relations services. The agreement's term began March 1, 2000 and ends August 1, 2000, with monthly fees being $8,000, plus costs. The agreement is terminable by either party upon 60 days written notice. The agreement was approved by our board of directors, with Ms. Atkinson abstaining from the vote, and was based on similar terms used by Atkinson Public Relations for its other bank clients. At the end of the agreement's initial term, we expect to enter into a long-term public relations agreement with Atkinson Public Relations on terms comparable to our current letter agreement.
DESCRIPTION OF OUR CAPITAL STOCK
COMMON STOCK
Our charter authorizes our board of directors, without shareholder approval, to issue up to 10,000,000 shares of common stock, $1.00 par value, of which at least 2,500,000 shares will be issued in this offering. As of the date of this prospectus, 520,000 shares of our common stock, or an amount equal to 20.8% of the shares of common stock offered in this prospectus, were reserved for issuance under our stock incentive plan and 195,500 shares of our common stock, or an amount equal to 7.8% of the shares of common stock offered in this prospectus, were reserved for issuance upon the exercise of the warrants offered by this prospectus to be issued to our organizers.
All shares of our common stock will be entitled to share equally in dividends from legally available funds, when, as and if declared by our board of directors. We do not anticipate that we will pay any cash dividends on our common stock in the near future. If we were to voluntarily or involuntarily liquidate or dissolve, all shares of our common stock would be entitled to share equally in all of our remaining assets available for distribution to our shareholders. Each holder of common stock will be entitled to one vote for each share on all matters submitted to the shareholders. Whenever we issue new shares of capital stock, holders of our common stock will not have any right to acquire authorized but unissued capital stock of Pinnacle Financial. No cumulative voting, redemption, sinking fund or conversion rights or provisions apply to our common stock. All shares of our common stock issued in the offering as described in this prospectus will be fully paid and non-assessable.
PREFERRED STOCK
Our charter also authorizes our board of directors, without shareholder approval, to issue up to 10,000,000 shares of preferred stock, no par value. Our board of directors may determine the terms of the preferred stock. Preferred stock may have voting rights, subject to applicable law and as determined by our board of directors. Although we have neither issued nor have any present plans to issue any preferred stock, the ownership and control of Pinnacle Financial by the holders of our common stock would be diluted if we were to issue preferred stock that had voting rights. If issued, however, we would not offer to any of our organizers preferred stock except on the same terms as offered to other existing shareholders or new shareholders.
ORGANIZERS' SHARES AND WARRANTS
The organizers intend to purchase a total of 391,000 shares of common stock in the offering at a price of $10.00 per share. This represents 15.6% of the shares that will be outstanding after the offering, or 13.9% if the over-allotment option granted to the underwriters is exercised in full.
We have established a line of credit in the amount of $1,500,000, of which $522,660 was outstanding as of July 10, 2000. The line of credit is guaranteed by 13 of our 14 organizers. See "Related Party Transactions" on page 43. In recognition of our organizers' financial risk and efforts in organizing Pinnacle Financial and Pinnacle National, our organizers are being offered by this prospectus, at no cost to them, warrants to purchase one additional share of our common stock, at $10.00 per share, for every two shares they purchase in the offering. Given the intent of our organizers to purchase 391,000 shares in this offering, we expect to issue to our organizers warrants to purchase up to an aggregate of 195,500 additional shares of our common stock. The warrants will vest in one-third annual increments over a period of three years beginning on the one-year anniversary of the date of close of the offering. The warrants will remain exercisable for the ten-year period following the date of the close of the offering. Additionally, if Pinnacle National's capital falls below the minimum level determined by the Office of the Comptroller of the Currency, we may be directed to require all of our organizers to exercise or forfeit their warrants.
TRANSFER AGENT
The transfer agent and registrar for our common stock is Registrar and Transfer Company, Cranford, New Jersey.
SELECTED PROVISIONS OF OUR CHARTER AND BYLAWS
PROTECTIVE PROVISIONS
GENERAL. Shareholders' rights and related matters are governed by the Tennessee Business Corporation Act and our charter and bylaws. Our charter and bylaws contain protective provisions that would have the effect of impeding an attempt to change or remove our management or to gain control of Pinnacle Financial in a transaction not supported by its board of directors. These provisions are discussed in more detail below. In general, one purpose of these provisions is to assist our board of directors in playing a role in connection with attempts to acquire control of Pinnacle Financial. They allow the board of directors to further and protect Pinnacle Financial's interests, and those of its shareholders as appropriate under the circumstances, by enhancing the board's ability to maximize the value to be received by the shareholders upon a sale.
Although our management believes the protective provisions are beneficial to Pinnacle Financial's shareholders, they also may tend to discourage some takeover bids. As a result, Pinnacle Financial's shareholders may be deprived of opportunities to sell some or all of their shares at prices that represent a premium over prevailing market prices. On the other hand, defeating undesirable acquisition offers can be a very expensive and time-consuming process. To the extent that the protective provisions discourage undesirable proposals, we may be able to avoid those expenditures of time and money.
The protective provisions also may discourage open market purchases by a potential acquirer. These purchases could increase the market price of the common stock temporarily, enabling shareholders to sell their shares at a price higher than that which otherwise would prevail. In addition, the provisions could decrease the market price of the common stock by making the stock less attractive to persons who invest in securities in anticipation of price increases from potential acquisition attempts. The provisions also could make it more difficult and time consuming for a potential acquirer to obtain control of Pinnacle Financial by replacing its board of directors and management. Furthermore, the provisions could make it more difficult for Pinnacle Financial's shareholders to replace our board of directors or management, even if a majority of the shareholders believes that replacing them would be in Pinnacle Financial's best interests. As a result, the protective provisions could tend to keep the incumbent board of directors and management in place.
Our charter also contains a provision that eliminates the potential personal liability of directors for monetary damages in specific circumstances. In addition, our bylaws contain provisions that provide for indemnification for our directors and officers. The protective provisions and the provisions relating to elimination of liability and indemnification of our directors and officers are discussed more fully below.
PREFERRED STOCK. The existence of preferred stock could impede a takeover of Pinnacle Financial without the approval of our board of directors. This is because our board of directors could issue shares of preferred stock to persons friendly to current management, which could render more difficult or discourage any attempt to gain control of Pinnacle Financial through a proxy contest, tender offer, merger or otherwise. In addition, the issuance of shares of preferred stock with voting rights may adversely affect the rights of the holders of our common stock and, in various circumstances, could decrease the market price of our common stock.
STAGGERED TERMS FOR BOARD OF DIRECTORS. Our board of directors is divided into three classes. Directors serve staggered terms, which means that roughly one-third of the directors will be elected each year at Pinnacle Financial's annual meeting of shareholders. The initial term of the Class I directors expires in 2001, the initial term of the Class II directors expires in 2002 and the initial term of the Class III directors expires in 2003. Thereafter, each director will serve for a term of three years. This means that unless the existing directors were to resign, it would take at least two annual meetings of Pinnacle Financial's shareholders to replace a majority of its directors. Any amendment of this
provision adopted by less than two-thirds of the entire board of directors would require the affirmative vote of the holders of at least two-thirds of the outstanding shares of common stock; otherwise, the amendment would only require the affirmative vote of at least a majority of the outstanding shares of common stock.
CHANGE IN NUMBER OF DIRECTORS. Our charter provides that any change in the number of our directors within the range set forth in our bylaws, or any change in the range itself as set forth in our bylaws, would have to be made by the affirmative vote of two-thirds of the entire board of directors or by the affirmative vote of the holders of at least two-thirds of the issued and outstanding shares of common stock.
REMOVAL OF DIRECTORS. Our charter provides that one or more directors may be removed for cause during their terms by the affirmative vote of two-thirds of the entire board of directors or by the affirmative vote of the holders of at least a majority of the issued and outstanding shares of common stock entitled to vote in an election of directors. Directors may also be removed during their terms without cause only by the affirmative vote of the holders of two-thirds of the issued and outstanding shares of common stock entitled to vote in an election of directors. Any amendment of this provision adopted by less than two-thirds of the entire board of directors would require the affirmative vote of the holders of at least two-thirds of the outstanding shares of common stock; otherwise, the amendment would only require the affirmative vote of at least a majority of the outstanding shares of common stock.
SUPERMAJORITY VOTING ON SELECTED TRANSACTIONS. Our charter, with exceptions, requires that any merger or similar transaction involving Pinnacle Financial or any sale or other disposition of all or substantially all of its assets will require the affirmative vote of a majority of Pinnacle Financial's directors then in office and the affirmative vote of the holders of at least two-thirds of the outstanding shares of common stock. However, if our board of directors has approved the particular transaction by the affirmative vote of two-thirds of the entire board, then the applicable provisions of Tennessee law would govern and shareholder approval of the transaction would require only the affirmative vote of the holders of a majority of the outstanding shares of common stock entitled to vote on the transaction. Any amendment of this provision adopted by less than two-thirds of the entire board of directors would require the affirmative vote of the holders of at least two-thirds of the outstanding shares of common stock; otherwise, the amendment would only require the affirmative vote of at least a majority of the outstanding shares of common stock.
EVALUATION OF AN ACQUISITION PROPOSAL. Our charter provides the factors that our board of directors must consider in evaluating whether an acquisition proposal made by another party is in the best interests of Pinnacle Financial and its shareholders. The term "acquisition proposal" refers to any offer of another party to:
- make a tender offer or exchange offer for the common stock or any other equity security of Pinnacle Financial;
- merge or combine Pinnacle Financial with another corporation; or
- purchase or otherwise acquire all or substantially all of the properties and assets owned by Pinnacle Financial.
The board, in evaluating an acquisition proposal, is required to consider all relevant factors, including:
- the expected social and economic effects of the transaction on our employees, our clients and other constituents, such as our suppliers of goods and services;
- the payment being offered by the other corporation in relation to (1) our current value at the time of the proposal as determined in a freely negotiated transaction and (2) the board of directors' estimate of our future value as an independent company at the time of the proposal; and
- the expected social and economic effects on the communities within which we operate.
We have included this provision in our charter because serving our community is one of the reasons we are organizing Pinnacle National. As a result, the board believes its obligation in evaluating an acquisition proposal extends beyond evaluating merely the payment being offered in relation to the market or book value of the common stock at the time of the proposal.
While the value of what is being offered to shareholders in exchange for their stock is the main factor when weighing the benefits of an acquisition proposal, the board believes it is appropriate also to consider all other relevant factors. For example, the board will evaluate what is being offered in relation to the current value of Pinnacle Financial at the time of the proposal as determined in a freely negotiated transaction and in relation to the board's estimate of the future value of Pinnacle Financial as an independent concern at the time of the proposal. A takeover bid often places the target corporation virtually in the position of making a forced sale, sometimes when the market price of its stock may be depressed. The board believes that frequently the payment offered in such a situation, even though it may exceed the value at which shares are then trading, is less than that which could be obtained in a freely negotiated transaction. In a freely negotiated transaction, management would have the opportunity to seek a suitable partner at a time of its choosing and to negotiate for the most favorable price and terms that would reflect not only Pinnacle Financial's current value, but also its future value.
One effect of the provision requiring our board of directors to take into account specific factors when considering an acquisition proposal may be to discourage a tender offer in advance. Often an offeror consults the board of a target corporation before or after beginning a tender offer in an attempt to prevent a contest from developing. In our board's opinion, this provision will strengthen its position in dealing with any potential offeror that might attempt to acquire Pinnacle Financial through a hostile tender offer. Another effect of this provision may be to dissuade shareholders who might be displeased with the board's response to an acquisition proposal from engaging Pinnacle Financial in costly litigation.
The charter would not make an acquisition proposal regarded by the board as being in Pinnacle Financial's best interests more difficult to accomplish. It would, however, permit the board to determine that an acquisition proposal was not in Pinnacle Financial's best interests, and thus to oppose it, on the basis of the various factors that the board deems relevant. In some cases, opposition by the board might have the effect of maintaining incumbent management.
Any amendment of this provision adopted by less than two-thirds of the entire board of directors would require the affirmative vote of the holders of at least two-thirds of the outstanding shares of common stock; otherwise, the amendment would only require the affirmative vote of at least a majority of the outstanding shares of common stock.
INDEMNIFICATION
Our bylaws provide that our directors and officers will be indemnified against expenses that they actually and reasonably incur if they are successful on the merits of a claim or proceeding. In addition, the bylaws provide that we will advance to our directors and officers reasonable expenses of any claim or proceeding so long as the director or officer furnishes us with (1) a written affirmation of his or her good faith belief that he or she has met the applicable standard of conduct and (2) a written statement
that he or she will repay any advances if it is ultimately determined that he or she is not entitled to indemnification.
When a case or dispute is settled or otherwise not ultimately determined on its merits, the indemnification provisions provide that we will indemnify our directors and officers when they meet the applicable standard of conduct. The applicable standard of conduct is met if the director or officer acted in a manner he or she in good faith believed to be in or not opposed to Pinnacle Financial's best interests and, in the case of a criminal action or proceeding, if the director or officer had no reasonable cause to believe his or her conduct was unlawful. Our board of directors, shareholders or independent legal counsel determines whether the director or officer has met the applicable standard of conduct in each specific case.
Our bylaws also provide that the indemnification rights contained in the bylaws do not exclude other indemnification rights to which a director or officer may be entitled under any bylaw, resolution or agreement, either specifically or in general terms approved by the affirmative vote of the holders of a majority of the shares entitled to vote. We can also provide for greater indemnification than is provided for in the bylaws if we choose to do so, subject to approval by our shareholders. We may not, however, indemnify a director or officer for liability arising out of circumstances that would cause the director or officer to remain liable for his or her actions as described below under "Limitation of Liability."
The indemnification provisions of the bylaws specifically provide that we may purchase and maintain insurance on behalf of any director or officer against any liability asserted against and incurred by him or her in his or her capacity as a director, officer, employee or agent whether or not we would have had the power to indemnify against such liability.
Our bylaws further provide that, under similar limitations and conditions specified above for our directors and officers, we may provide indemnification for our employees and agents.
We are not aware of any pending or threatened action, suit or proceeding involving any of our directors or officers for which indemnification may be sought.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of Pinnacle Financial under the foregoing provisions, or otherwise, Pinnacle Financial has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
LIMITATION OF LIABILITY
Our charter eliminates, with exceptions, the potential personal liability of a director for monetary damages to Pinnacle Financial and to its shareholders for breach of a duty as a director. There is no elimination of liability for:
- a breach of the director's duty of loyalty to Pinnacle Financial or its shareholders;
- an act or omission not in good faith or which involves intentional misconduct or a knowing violation of law; or
- any payment of a dividend or approval of a stock repurchase that is illegal under the Tennessee Business Corporation Act.
This provision does not eliminate or limit our right or the right of our shareholders to seek injunctive or other equitable relief not involving monetary damages.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the offering, we will have 2,500,000 shares of common stock outstanding, or 2,816,500 shares if the over-allotment option granted to the underwriters is exercised in full. These shares of common stock will be freely tradable without restriction, except that "affiliates" of Pinnacle Financial must comply with the resale limitations of Rule 144 under the Securities Act. Rule 144 defines an "affiliate" of a company as a person who directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the company. Affiliates of a company generally include its directors, officers and principal shareholders. A total of at least 391,000 shares owned directly or indirectly by our affiliates will not be available for sale for a period of 180 days after the date of this prospectus without the underwriters' consent. After the 180-day period, the shares held by our affiliates will be eligible for sale subject to the resale limitations of Rule 144 discussed below.
In general, under Rule 144, affiliates will be entitled to sell within any three-month period a number of shares that does not exceed the greater of:
- 1% of the outstanding shares of common stock; or
- the average weekly trading volume during the four calendar weeks preceding his or her sale.
Sales under Rule 144 are also subject to manner of sale provisions, notice requirements and the availability of current public information about Pinnacle Financial. Affiliates will not be subject to the volume restrictions and other limitations under Rule 144 beginning 90 days after their status as an affiliate terminates.
Even though Rule 144 would otherwise permit the sale of shares held by affiliates beginning 90 days after the date of this prospectus, Pinnacle Financial and its organizers and executive officers have each agreed with the underwriters that they will not sell any shares of common stock for a period of 180 days from the date of this prospectus without the underwriters' prior written consent except in limited circumstances.
We intend to offer by this prospectus warrants to our organizers to purchase up to a total of 195,500 shares of common stock, representing an amount equal to 7.8% of the common stock sold in the offering. We have also reserved 520,000 shares of common stock, representing 20.8% of the common stock sold in the offering, for issuance under our stock incentive plan. Of the 520,000 shares reserved for our stock incentive plan, 120,000 shares or 23.1% of the reserved shares will be awarded under the terms of the employment agreements entered into and proposed to be entered into with our executive officers. We intend to register the shares issuable upon exercise of these warrants and options. Upon registration, these shares will be eligible for resale in the public market without restriction by persons who are not affiliates of Pinnacle Financial, and to the extent they are held by affiliates, under Rule 144 without a holding period.
Prior to the offering, there has been no public market for our common stock, and we cannot predict the effect, if any, that the sale of shares or the availability of shares for sale will have on the market price prevailing from time to time. Nevertheless, sales of substantial amounts of our common stock in the public market could adversely affect prevailing market prices and our ability to raise equity capital in the future.
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement among Pinnacle Financial and the underwriters named below, the underwriters have agreed to purchase from Pinnacle Financial, and Pinnacle Financial has agreed to sell to the underwriters, the number of shares of common stock listed opposite each underwriter's name below.
NUMBER OF
NUMBER OF OVER-ALLOTMENT
FIRM SHARES SHARES
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J.C. Bradford & Co., LLC...........................
PaineWebber Incorporated...........................
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The underwriting agreement provides that the underwriters' obligations are subject to approval of specified legal matters by counsel and to various other conditions customary in a firm commitment, underwritten public offering. The underwriters are required to purchase and pay for the shares offered by this prospectus other than those covered by the over-allotment option described below.
We will not pay an underwriting discount for 391,000 shares purchased in the offering by our organizers and the underwriting discount that will apply to shares purchased in the offering by individuals referred to the underwriters by our organizers, up to 410,000 shares, will equal 3.0% of the public offering price, or $.30 per share. The underwriting discount that will apply to all other shares purchased in the offering will equal 7.0% of the public offering price listed on the cover page of this prospectus, or $.70 per share.
The underwriters propose to offer the common stock directly to the public at the public offering price listed on the cover page of this prospectus and to securities dealers at that price less a concession not in excess of $ per share. The underwriters may allow, and the selected dealers may reallow, a concession not in excess of $ per share to other brokers and dealers. We expect that the shares of common stock will be ready for delivery on or about , 2000. After the offering, the offering price and other selling terms may change.
The public offering price was determined arbitrarily by Pinnacle Financial and the underwriters after considering several factors. These factors include prevailing market conditions and the price of comparable publicly traded companies.
Pinnacle Financial has granted the underwriters an option, exercisable within 30 days after the date of this prospectus, to purchase up to 316,500 additional shares of common stock to cover over-allotments, if any, at the public offering price listed on the cover page of this prospectus, less the applicable 7.0% underwriting discount. The underwriters may purchase these shares only to cover over-allotments made in connection with this offering. If the over-allotment option is exercised, in whole or in part, to cover any short sales made, the underwriters will deliver a copy of the final prospectus to all purchasers of the over-allotment shares. Accordingly, these purchasers will be entitled to the same legal remedies provided under the federal securities laws as any other purchaser of shares covered by the registration statement. The potential size of the syndicate short position is not expected to exceed 316,500 shares, or 12.7% of the initial 2,500,000 shares to be outstanding upon the close of the offering.
The underwriters do not intend to sell shares of common stock to any account over which it exercises discretionary authority.
Pinnacle Financial and each of our organizers and executive officers has agreed with the underwriters not to sell any shares of common stock for a period of 180 days from the date of this prospectus without the underwriters' prior written consent. The underwriters and their affiliates may on
occasion be a client of, engage in transactions with, and perform services for Pinnacle Financial or Pinnacle National in the ordinary course of business.
Pinnacle Financial has agreed to indemnify the underwriters against specified liabilities, including liabilities under the Securities Act of 1933, or to contribute to payments that the underwriters may be required to make in connection with these liabilities.
In connection with this offering, the underwriters may purchase and sell common stock in the open market. These transactions may include over-allotment and stabilizing transactions, and purchases to cover syndicate short positions created in connection with this offering. Stabilizing transactions consist of bids or purchases for the purpose of preventing or retarding a decline in the market price of the common stock, and syndicate short positions involve the underwriters' sale of a greater number of shares of common stock than they are required to purchase from Pinnacle Financial in the offering. These activities may stabilize, maintain or otherwise affect the market price of the common stock, which may be higher than the price that might otherwise prevail in the open market. The underwriters may effect these transactions on the OTC Bulletin Board or otherwise and may discontinue them at any time.
SUPERVISION AND REGULATION
Both Pinnacle Financial and Pinnacle National will be subject to extensive state and federal banking regulations that impose restrictions on and provide for general regulatory oversight of our operations. These laws are generally intended to protect depositors and not shareholders. The following discussion describes the material elements of the regulatory framework that will apply.
PINNACLE FINANCIAL
Since Pinnacle Financial will own all of the capital stock of Pinnacle National, it will be a bank holding company under the federal Bank Holding Company Act of 1956. As a result, Pinnacle Financial will primarily be subject to the supervision, examination, and reporting requirements of the Bank Holding Company Act and the regulations of the Federal Reserve.
ACQUISITIONS OF BANKS. The Bank Holding Company Act requires every bank holding company to obtain the Federal Reserve's prior approval before:
- acquiring direct or indirect ownership or control of any voting shares of any bank if, after the acquisition, the bank holding company will directly or indirectly own or control more than 5% of the bank's voting shares;
- acquiring all or substantially all of the assets of any bank; or
- merging or consolidating with any other bank holding company.
Additionally, the Bank Holding Company Act provides that the Federal Reserve may not approve any of these transactions if it would result in or tend to create a monopoly or, substantially lessen competition or otherwise function as a restraint of trade, unless the anticompetitive effects of the proposed transaction are clearly outweighed by the public interest in meeting the convenience and needs of the community to be served. The Federal Reserve is also required to consider the financial and managerial resources and future prospects of the bank holding companies and banks concerned and the convenience and needs of the community to be served. The Federal Reserve's consideration of financial resources generally focuses on capital adequacy, which is discussed below.
Under the Bank Holding Company Act, if adequately capitalized and adequately managed, Pinnacle Financial or any other bank holding company located in Tennessee may purchase a bank located outside of Tennessee. Conversely, an adequately capitalized and adequately managed bank holding company located outside of Tennessee may purchase a bank located inside Tennessee. In each case, however, restrictions may be placed on the acquisition of a bank that has only been in existence for a limited amount of time or will result in specified concentrations of deposits. For example, Tennessee law prohibits a bank holding company from acquiring control of a Tennessee-based financial institution until the target financial institution has been incorporated for five years. As a result, no bank holding company may acquire control of Pinnacle Financial until after the fifth anniversary date of Pinnacle National's incorporation.
CHANGE IN BANK CONTROL. Subject to various exceptions, the Bank Holding Company Act and the Change in Bank Control Act, together with related regulations, require Federal Reserve approval prior to any person or company acquiring "control" of a bank holding company. Control is conclusively presumed to exist if an individual or company acquires 25% or more of any class of voting securities of the bank holding company. Control is rebuttably presumed to exist if a person or company acquires 10% or more, but less than 25%, of any class of voting securities and either:
- the bank holding company has registered securities under Section 12 of the Securities Exchange Act of 1934, or
- no other person owns a greater percentage of that class of voting securities immediately after the transaction.
We intend to register our common stock under the Securities Exchange Act of 1934. The regulations provide a procedure for challenge of the rebuttable control presumption.
PERMITTED ACTIVITIES. On November 12, 1999 President Clinton signed the Gramm-Leach-Bliley Act, which amends the Bank Holding Company Act and expands the activities in which bank holding companies and affiliates of banks are permitted to engage. The Act eliminates many federal and state law barriers to affiliations among banks and securities firms, insurance companies, and other financial service providers. The provisions of the Act relating to permitted activities of bank holding companies and affiliates of banks became effective on March 11, 2000. Since we do not intend to begin our operations until September 2000, the following discussion describes the activities in which Pinnacle Financial will be permitted to engage under the Bank Holding Company Act, as amended by the Gramm-Leach-Bliley Act.
Generally, if Pinnacle Financial qualifies and elects to become a financial holding company, which is described below, it may engage in activities that are:
- financial in nature;
- incidental to a financial activity; or
- complementary to a financial activity and do not pose a substantial risk to the safety or soundness of depository institutions or the financial system generally.
In determining whether a particular activity is financial in nature or incidental or complementary to a financial activity, the Federal Reserve must consider (1) the purpose of the Bank Holding Company and Gramm-Leach-Bliley Acts, (2) changes or reasonable expected changes in the marketplace in which financial holding companies compete and in the technology for delivering financial services, and (3) whether the activity is necessary or appropriate to allow financial holding companies to effectively compete with other financial service providers and to efficiently deliver information and services. The Act expressly lists the following activities as financial in nature:
- lending, trust and other banking activities;
- insuring, guaranteeing, or indemnifying against loss or harm, or providing and issuing annuities, and acting as principal, agent, or broker for these purposes, in any state;
- providing financial, investment, or advisory services;
- issuing or selling instruments representing interests in pools of assets permissible for a bank to hold directly;
- underwriting, dealing in or making a market in securities;
- other activities that the Federal Reserve may determine to be so closely related to banking or managing or controlling banks as to be a proper incident to managing or controlling banks;
- foreign activities permitted outside of the United States if the Federal Reserve has determined them to be usual in connection with banking operations abroad;
- merchant banking through securities or insurance affiliates; and
- insurance company portfolio investments.
To qualify to become a financial holding company, our depository institution subsidiaries must be well capitalized and well managed and must have a Community Reinvestment Act rating of at least "satisfactory." Additionally, we must file an election with the Federal Reserve to become a financial holding company and provide the Federal Reserve with 30 days written notice prior to engaging in a permitted financial activity. Although we do not have any immediate plans to file an election with the Federal Reserve to become a financial holding company, one of the primary reasons we selected the
holding company structure was to have increased flexibility. Accordingly, if deemed appropriate in the future, we may seek to become a financial holding company.
Under the Bank Holding Company Act, a bank holding company, which has not qualified or elected to become a financial holding company, is generally prohibited from engaging in or acquiring direct or indirect control of more than 5% of the voting shares of any company engaged in nonbanking activities unless, prior to the enactment of the Gramm-Leach-Bliley Act, the Federal Reserve found those activities to be so closely related to banking as to be a proper incident to the business of banking. Activities that the Federal Reserve has found to be so closely related to banking as to be a proper incident to the business of banking include:
- factoring accounts receivable;
- acquiring or servicing loans;
- leasing personal property;
- conducting discount securities brokerage activities;
- performing selected data processing services;
- acting as agent or broker in selling credit life insurance and other types of insurance in connection with credit transactions; and
- performing selected insurance underwriting activities.
Despite prior approval, the Federal Reserve may order a bank holding company or its subsidiaries to terminate any of these activities or to terminate its ownership or control of any subsidiary when it has reasonable cause to believe that the bank holding company's continued ownership, activity or control constitutes a serious risk to the financial safety, soundness, or stability of any of its bank subsidiaries.
SUPPORT OF SUBSIDIARY INSTITUTIONS. Under Federal Reserve policy, Pinnacle Financial is expected to act as a source of financial strength for Pinnacle National and to commit resources to support Pinnacle National. This support may be required at times when, without this Federal Reserve policy, Pinnacle Financial might not be inclined to provide it. In the unlikely event of Pinnacle Financial's bankruptcy, any commitment by it to a federal bank regulatory agency to maintain the capital of Pinnacle National will be assumed by the bankruptcy trustee and entitled to a priority of payment.
PINNACLE NATIONAL
Since Pinnacle National will be chartered as a national bank, it will primarily be subject to the supervision, examination and reporting requirements of the National Bank Act and the regulations of the Office of the Comptroller of the Currency. The Office of the Comptroller of the Currency will regularly examine Pinnacle National's operations and has the authority to approve or disapprove mergers, the establishment of branches and similar corporate actions. The Office of the Comptroller of the Currency also has the power to prevent the continuance or development of unsafe or unsound banking practices or other violations of law. Additionally, Pinnacle National's deposits will be insured by the FDIC to the maximum extent provided by law. Pinnacle National will also be subject to numerous state and federal statutes and regulations that will affect its business, activities and operations.
BRANCHING. National banks are required by the National Bank Act to adhere to branching laws applicable to state banks in the states in which they are located. Under Tennessee law, Pinnacle National may open branch offices throughout Tennessee with the prior approval of the Office of the Comptroller of the Currency and Tennessee's Department of Financial Institutions. In addition, with prior regulatory approval, Pinnacle National will be able to acquire branches of existing banks located
in Tennessee. Pinnacle National and any other national or state-chartered bank generally may branch across state lines by merging with banks in other states if allowed by the applicable states' laws. Tennessee law, with limited exceptions, currently permits branching across state lines either through interstate merger or branch acquisition.
The Federal Deposit Insurance Act gives a state the authority to allow out-of-state banks to branch into the state by establishing a new start-up branch. Tennessee, however, only permits an out-of-state bank, short of an interstate merger, to branch into Tennessee through branch acquisition on a reciprocal basis. Consequently, only banks located in states that allows interstate branching through branch acquisition would be permit to branch into Tennessee by acquiring an existing branch operating within Tennessee. This provides a limited barrier of entry into the Tennessee banking market, which protects us from an important segment of potential competition. However, because Tennessee does not permit start-up branching in Tennessee by an out-of-state bank, our ability to branch in another state by establishing a new start-up branch may be similarly limited.
PROMPT CORRECTIVE ACTION. The Federal Deposit Insurance Corporation Improvement Act of 1991 establishes a system of prompt corrective action to resolve the problems of undercapitalized financial institutions. Under this system, the federal banking regulators have established five capital categories (well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized) in which all institutions are placed. Federal banking regulators are required to take various mandatory supervisory actions and are authorized to take other discretionary actions with respect to institutions in the three undercapitalized categories. The severity of the action depends upon the capital category in which the institution is placed. Generally, subject to a narrow exception, the banking regulator must appoint a receiver or conservator for an institution that is critically undercapitalized. The federal banking agencies have specified by regulation the relevant capital level for each category.
An institution that is categorized as undercapitalized, significantly undercapitalized, or critically undercapitalized is required to submit an acceptable capital restoration plan to its appropriate federal banking agency. A bank holding company must guarantee that a subsidiary depository institution meets its capital restoration plan, subject to various limitations. The controlling holding company's obligation to fund a capital restoration plan is limited to the lesser of 5% of an undercapitalized subsidiary's assets or the amount required to meet regulatory capital requirements. An undercapitalized institution is also generally prohibited from increasing its average total assets, making acquisitions, establishing any branches or engaging in any new line of business, except under an accepted capital restoration plan or with FDIC approval. The regulations also establish procedures for downgrading an institution and a lower capital category based on supervisory factors other than capital.
FDIC INSURANCE ASSESSMENTS. The FDIC has adopted a risk-based assessment
system for insured depository institutions that takes into account the risks
attributable to different categories and concentrations of assets and
liabilities. The system assigns an institution to one of three capital
categories: (1) well capitalized; (2) adequately capitalized; and
(3) undercapitalized. These three categories are substantially similar to the
prompt corrective action categories described above, with the "undercapitalized"
category including institutions that are undercapitalized, significantly
undercapitalized, and critically undercapitalized for prompt corrective action
purposes. The FDIC also assigns an institution to one of three supervisory
subgroups based on a supervisory evaluation that the institution's primary
federal regulator provides to the FDIC and information that the FDIC determines
to be relevant to the institution's financial condition and the risk posed to
the deposit insurance funds. Assessments range from 0 to 27 cents per $100 of
deposits, depending on the institution's capital group and supervisory subgroup.
In addition, the FDIC imposes assessments to help pay off the $780 million in
annual interest payments on the $8 billion Financing Corporation bonds issued in
the late 1980s as part of the government rescue of the thrift industry. This
assessment rate is adjusted quarterly and is set at 2.08 cents per $100 of
deposits for the second quarter of 2000.
The FDIC may terminate its insurance of deposits if it finds that the institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.
COMMUNITY REINVESTMENT ACT. The Community Reinvestment Act requires that, in connection with examinations of financial institutions within their respective jurisdictions, the Federal Reserve, the FDIC, or the Office of the Comptroller of the Currency, shall evaluate the record of each financial institution in meeting the credit needs of its local community, including low and moderate income neighborhoods. These facts are also considered in evaluating mergers, acquisitions, and applications to open a branch or facility. Failure to adequately meet these criteria could impose additional requirements and limitations on Pinnacle National. Under the Gramm-Leach-Bliley Act, banks with aggregate assets of not more than $250 million will be subject to a Community Reinvestment Act examination only once every 60 months if the bank receives an outstanding rating, once every 48 months if it receives a satisfactory rating and as needed if the rating is less than satisfactory. Additionally, banks will be required to publicly disclose the terms of various Community Reinvestment Act-related agreements.
OTHER REGULATIONS. Interest and other charges collected or contracted for by Pinnacle National are subject to state usury laws and federal laws concerning interest rates. Pinnacle National's loan operations are also subject to federal laws applicable to credit transactions, such as the:
- federal Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers;
- Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves;
- Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit;
- Fair Credit Reporting Act of 1978, governing the use and provision of information to credit reporting agencies;
- Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; and
- rules and regulations of the various federal agencies charged with the responsibility of implementing these federal laws.
The deposit operations of Pinnacle National are subject to the:
- Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; and
- Electronic Funds Transfer Act and Regulation E issued by the Federal Reserve to implement that act, which govern automatic deposits to and withdrawals from deposit accounts and clients' rights and liabilities arising from the use of automated teller machines and other electronic banking services.
CAPITAL ADEQUACY
Pinnacle Financial and Pinnacle National will be required to comply with the capital adequacy standards established by the Federal Reserve, in the case of Pinnacle Financial, and the Office of the Comptroller of the Currency, in the case of Pinnacle National. The Federal Reserve has established a risk-based and a leverage measure of capital adequacy for bank holding companies. Pinnacle National is also subject to risk-based and leverage capital requirements adopted by the Office of the Comptroller
of the Currency, which are substantially similar to those adopted by the Federal Reserve for bank holding companies.
The risk-based capital standards are designed to make regulatory capital requirements more sensitive to differences in risk profiles among banks and bank holding companies, to account for off-balance-sheet exposure, and to minimize disincentives for holding liquid assets. Assets and off-balance-sheet items, such as letters of credit and unfunded loan commitments, are assigned to broad risk categories, each with appropriate risks weights. The resulting capital ratios represent capital as a percentage of total risk-weighted assets and off-balance-sheet items.
The minimum guideline for the ratio of total capital to risk-weighted assets is 8%. Total capital consists of two components, Tier 1 capital and Tier 2 capital. Tier 1 capital generally consist of common stock, minority interests in the equity accounts of consolidated subsidiaries, noncumulative perpetual preferred stock, and a limited amount of cumulative perpetual preferred stock, less goodwill and other specified intangible assets. Tier 1 capital must equal at least 4% of risk-weighted assets. Tier 2 capital generally consists of subordinated debt, other preferred stock, and a limited amount of loan loss reserves. The total amount of Tier 2 capital is limited to 100% of Tier 1 capital.
In addition, the Federal Reserve has established minimum leverage ratio guidelines for bank holding companies. These guidelines provide for a minimum ratio of Tier 1 capital to average assets, less goodwill and other specified intangible assets, of 3% for bank holding companies that meet specified criteria, including having the highest regulatory rating and implementing the Federal Reserve's risk-based capital measure for market risk. All other bank holding companies generally are required to maintain a leverage ratio of at least 4%. The guidelines also provide that bank holding companies experiencing internal growth, as will initially be the case for Pinnacle Financial, or making acquisitions will be expected to maintain strong capital positions substantially above the minimum supervisory levels. Furthermore, the Federal Reserve has indicated that it will consider a bank holding company's Tier 1 capital leverage ratio, after deducting all intangibles, and other indicators of capital strength in evaluating proposals for expansion or new activities.
We are also subject to capital guidelines issued by our respective primary regulators, which provide for minimum ratios of total capital to total assets.
Failure to meet capital guidelines could subject a bank or bank holding company to a variety of enforcement remedies, including issuance of a capital directive, the termination of deposit insurance by the FDIC, a prohibition on accepting brokered deposits, and other restrictions on its business. As described above, significant additional restrictions can be imposed on FDIC-insured depository institutions that fail to meet applicable capital requirements. See "--Pinnacle National--Prompt Corrective Action" on page 55.
PAYMENT OF DIVIDENDS
Pinnacle Financial is a legal entity separate and distinct from Pinnacle National. The principal sources of Pinnacle Financial's cash flow, including cash flow to pay dividends to its shareholders, are dividends that Pinnacle National pays to its sole shareholder, Pinnacle Financial. Statutory and regulatory limitations apply to Pinnacle National's payment of dividends to Pinnacle Financial as well as to Pinnacle Financial's payment of dividends to its shareholders.
Pinnacle National is required by federal law to obtain the prior approval of
the Office of the Comptroller of the Currency for payments of dividends if the
total of all dividends declared by our board of directors in any year will
exceed (1) the total of Pinnacle National's net profits for that year, plus
(2) Pinnacle National's retained net profits of the preceding two years, less
any required transfers to surplus.
The payment of dividends by Pinnacle Financial and Pinnacle National may also be affected by other factors, such as the requirement to maintain adequate capital above regulatory guidelines. If, in the opinion of the Office of the Comptroller of the Currency, Pinnacle National were engaged in or about to engage in an unsafe or unsound practice, the Office of the Comptroller of the Currency could require, after notice and a hearing, that Pinnacle National stop or refrain from engaging in the practice. The federal banking agencies have indicated that paying dividends that deplete a depository institution's capital base to an inadequate level would be an unsafe and unsound banking practice. Under the Federal Deposit Insurance Corporation Improvement Act of 1991, a depository institution may not pay any dividend if payment would cause it to become undercapitalized or if it already is undercapitalized. Moreover, the federal agencies have issued policy statements that provide that bank holding companies and insured banks should generally only pay dividends out of current operating earnings. See "--Pinnacle National--Prompt Corrective Action" on page 55.
RESTRICTIONS ON TRANSACTIONS WITH AFFILIATES
Pinnacle Financial and Pinnacle National are subject to the provisions of
Section 23A of the Federal Reserve Act. Section 23A places limits on the amount
of:
- a bank's loans or extensions of credit to affiliates;
- a bank's investment in affiliates;
- assets a bank may purchase from affiliates, except for real and personal property exempted by the Federal Reserve;
- the amount of loans or extensions of credit to third parties collateralized by the securities or obligations of affiliates; and
- a bank's guarantee, acceptance or letter of credit issued on behalf of an affiliate.
The total amount of the above transactions is limited in amount, as to any one affiliate, to 10% of a bank's capital and surplus and, as to all affiliates combined, to 20% of a bank's capital and surplus. In addition to the limitation on the amount of these transactions, each of the above transactions must also meet specified collateral requirements. Pinnacle National must also comply with other provisions designed to avoid the taking of low-quality assets.
Pinnacle Financial and Pinnacle National are also subject to the provisions of Section 23B of the Federal Reserve Act which, among other things, prohibits an institution from engaging in the above transactions with affiliates unless the transactions are on terms substantially the same, or at least as favorable to the institution or its subsidiaries, as those prevailing at the time for comparable transactions with nonaffiliated companies.
Pinnacle National is also subject to restrictions on extensions of credit to its executive officers, directors, principal shareholders and their related interests. These extensions of credit (1) must be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with third parties, and (2) must not involve more than the normal risk of repayment or present other unfavorable features.
PRIVACY
Financial institutions are required to disclose their policies for collecting and protecting confidential information. Clients generally may prevent financial institutions from sharing personal financial information with nonaffiliated third parties except for third parties that market the institutions' own products and services. Additionally, financial institutions generally may not disclose consumer account numbers to any nonaffiliated third party for use in telemarketing, direct mail marketing or other marketing through electronic mail to consumers.
LEGAL MATTERS
Powell, Goldstein, Frazer & Murphy LLP, Atlanta, Georgia will pass upon the validity of the shares of common stock offered by this prospectus for Pinnacle Financial. Waller Lansden Dortch & Davis, A Professional Limited Liability Company, Nashville, Tennessee, is acting as counsel for the underwriters in connection with legal matters relating to the shares of common stock offered by this prospectus.
EXPERTS
Pinnacle Financial's audited financial statements as of March 31, 2000, and for the period from February 28, 2000 (inception) to March 31, 2000, included in this prospectus have been included in reliance on the report of Arthur Andersen LLP, independent certified public accountants, given on the authority of that firm as experts in accounting and auditing.
REPORTS TO SHAREHOLDERS
Upon the effective date of the Registration Statement on Form SB-2 that registers the shares of common stock offered by this prospectus with the Securities and Exchange Commission, Pinnacle Financial will be subject to the reporting requirements of the Securities Exchange Act, which include requirements to file annual reports on Form 10-KSB and quarterly reports on Form 10-QSB with the Securities and Exchange Commission. This reporting obligation will exist for at least one year and will continue for successive fiscal years, except that these reporting obligations may be suspended for any subsequent fiscal year if at the beginning of such year the common stock is held of record by less than 300 persons.
At any time that Pinnacle Financial is not a reporting company, it intends to furnish its shareholders with annual reports containing audited financial information for each fiscal year on or before the date of the annual meeting of shareholders. Pinnacle Financial's fiscal year ends on December 31. Additionally, Pinnacle Financial will also furnish such other reports as it may determine to be appropriate or as otherwise may be required by law.
ADDITIONAL INFORMATION
Pinnacle Financial has filed with the Securities and Exchange Commission a Registration Statement on Form SB-2 under the Securities Act with respect to the shares of common stock offered by this prospectus. This prospectus does not contain all of the information contained in the Registration Statement. For further information with respect to Pinnacle Financial and the common stock, we refer you to the Registration Statement and the exhibits to it. The Registration Statement may be examined and copied at the public reference room maintained by the Securities and Exchange Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549 and at the regional offices of the Securities and Exchange Commission located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and Seven World Trade Center, 13th Floor, New York, New York 10048. You may also obtain information on the operation of the public reference room by calling 1-800-SEC-0330. The Securities and Exchange Commission also maintains a Web site (http://www.sec.gov) that contains registration statements, reports, proxy and information statements and other information regarding registrants, such as Pinnacle Financial, that file electronically with the Securities and Exchange Commission.
Pinnacle Financial and the organizers have filed various applications with the FDIC, the Federal Reserve, the Tennessee Department of Financial Institutions and the Office of the Comptroller of the Currency. These applications and the information they contain are not incorporated into this prospectus. You should rely only on information contained in this prospectus and in the related Registration Statement in making an investment decision. To the extent that other available information not presented in this prospectus, including information available from Pinnacle Financial and
information in public files and records maintained by the FDIC, the Federal Reserve, the Tennessee Department of Financial Institutions and the Office of the Comptroller of the Currency, is inconsistent with information presented in this prospectus or provides additional information, that information is superseded by the information presented in this prospectus and should not be relied on. Projections appearing in the applications are based on assumptions that the organizers believe are reasonable, but as to which they can make no assurances. Pinnacle Financial specifically disaffirms those projections for purposes of this prospectus and cautions you against relying on them for purposes of making an investment decision.
INDEX TO FINANCIAL STATEMENTS
Report of Independent Public Accountants.................... F-2 Balance Sheet as of March 31, 2000 and June 30, 2000 (unaudited)............................................... F-3 Statement of Operations and Accumulated Deficit for the Period February 28, 2000 (inception) to March 31, 2000 and for the period February 28, 2000 (inception) to June 30, 2000 (unaudited).......................................... F-4 Statement of Changes in Stockholder's Deficit for the Period February 28, 2000 (inception) to March 31, 2000 and for the period February 28, 2000 (inception) to June 30, 2000 (unaudited).................. F-5 Statement of Cash Flows for the Period February 28, 2000 (inception) to March 31, 2000 and for the period February 28, 2000 (inception) to June 30, 2000 (unaudited)............................................... F-6 Notes to Financial Statements............................... F-7 |
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Organizers
Pinnacle Financial Partners, Inc.
We have audited the accompanying balance sheet of PINNACLE FINANCIAL PARTNERS, INC. (a Tennessee Corporation, a Company in the development stage and formerly TMP, Inc.) as of March 31, 2000 and related statement of operations and accumulated deficit, stockholder's deficit and cash flows for the period from February 28, 2000 (inception) to March 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Pinnacle Financial Partners, Inc., (a Company in the development stage) as of March 31, 2000, and the results of its operations and its cash flows for the period from February 28, 2000 (inception) to March 31, 2000 in conformity with accounting principles generally accepted in the United States.
/s/ ARTHUR ANDERSEN LLP
Nashville, Tennessee
May 19, 2000
|
PINNACLE FINANCIAL PARTNERS, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
BALANCE SHEETS
MARCH 31, 2000 JUNE 30, 2000
-------------- -------------
(UNAUDITED)
ASSETS
Cash and cash equivalents................................... $ 19,844 $ 3,497
Deposits, legal retainer and other.......................... 27,246 85,839
Deferred stock offering costs............................... 9,500 39,500
Furniture and fixtures...................................... -- 4,486
-------- ---------
Total assets.......................................... $ 56,590 $ 133,322
-------- ---------
LIABILITIES AND STOCKHOLDER'S DEFICIT
LIABILITIES:
Line of credit............................................ $100,000 $ 472,660
Accrued expenses.......................................... 43,678 45,281
COMMITMENT AND CONTINGENCIES
STOCKHOLDER'S DEFICIT:
Common stock, $1 par value; 10,000,000 shares authorized;
1 share issued and outstanding.......................... 1 1
Preferred stock, no par value; 10,000,000 shares
authorized, no shares issued and outstanding............ -- --
Additional paid-in capital................................ 9 9
Deficit accumulated in the development stage.............. (87,098) (384,629)
-------- ---------
Total stockholder's deficit........................... (87,088) (384,619)
-------- ---------
Total liabilities and stockholder's deficit........... $ 56,590 $ 133,322
======== =========
|
The accompanying notes are an integral part of this financial statement.
PINNACLE FINANCIAL PARTNERS, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
FOR THE PERIOD FEBRUARY 28, 2000 (INCEPTION) TO MARCH 31, 2000
AND FOR THE PERIOD FEBRUARY 28, 2000 (INCEPTION) TO JUNE 30, 2000 (UNAUDITED)
PERIOD ENDING
------------------------------
MARCH 31, 2000 JUNE 30, 2000
-------------- -------------
(UNAUDITED)
EXPENSES:
Interest.................................................. $ 308 $ 6,506
Salaries and employee benefits............................ 23,658 137,747
Legal and consulting fees................................. 54,496 168,175
Other..................................................... 8,636 72,201
------- --------
Total expenses.......................................... 87,098 384,629
======= ========
NET LOSS AND ACCUMULATED DEFICIT............................ $87,098 $384,629
======= ========
|
The accompanying notes are an integral part of this financial statement.
PINNACLE FINANCIAL PARTNERS, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF STOCKHOLDER'S DEFICIT
FOR THE PERIOD FEBRUARY 28, 2000 (INCEPTION) TO MARCH 31, 2000
AND FOR THE PERIOD FEBRUARY 28, 2000 (INCEPTION) TO JUNE 30, 2000 (UNAUDITED)
DEFICIT
ACCUMULATED
COMMON STOCK ADDITIONAL IN THE TOTAL
------------------- PAID-IN DEVELOPMENT STOCKHOLDER'S
SHARES AMOUNT CAPITAL STAGE DEFICIT
-------- -------- ---------- ----------- -------------
Issuance of common stock.................... 1 $ 1 $ 9 $ $ 10
Net loss for the period February 28, 2000 to
March 31, 2000............................ (87,098) (87,098)
--- ---- ---- --------- ---------
BALANCE, MARCH 31, 2000..................... 1 $ 1 $ 9 $ (87,098) $ (87,088)
=== ==== ==== ========= =========
Issuance of common stock.................... 1 $ 1 $ 9 $ $ 10
Net loss for the period February 28, 2000 to
June 30, 2000 (unaudited)................. (384,629) (384,629)
--- ---- ---- --------- ---------
BALANCE, JUNE 30, 2000 (UNAUDITED).......... 1 $ 1 $ 9 $(384,629) $(384,619)
=== ==== ==== ========= =========
|
The accompanying notes are an integral part of this financial statement.
PINNACLE FINANCIAL PARTNERS, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FEBRUARY 28, 2000 (INCEPTION) TO MARCH 31, 2000
AND FOR PERIOD FEBRUARY 28, 2000 (INCEPTION) TO JUNE 30, 2000 (UNAUDITED)
PERIOD ENDING
------------------------------
MARCH 31, 2000 JUNE 30, 2000
-------------- -------------
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................. $(87,098) $(384,629)
Adjustments to reconcile net income to net cash provided
by operating activities:
Accrued expenses........................................ 43,678 45,281
-------- ---------
Cash used by operating activities..................... (43,420) (339,348)
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Deposits, legal retainer and other........................ (27,246) (85,839)
-------- ---------
Purchase of furniture and fixtures.................... -- (4,486)
-------- ---------
Cash used by investing activities..................... (27,246) (90,325)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings.................................. 100,000 472,660
Proceeds from issuance of common stock.................... 10 10
Deferred stock offering costs............................. (9,500) (39,500)
-------- ---------
Cash provided by financing activities................. 90,510 433,170
-------- ---------
CASH BALANCE AT END OF PERIOD............................... $ 19,844 $ 3,497
======== =========
|
The accompanying notes are an integral part of this financial statement.
PINNACLE FINANCIAL PARTNERS, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Pinnacle Financial Partners, Inc. (the "Company") was formed to organize and own all of the capital stock of Pinnacle National Bank (the "Bank"), a proposed national bank to be located in Nashville, Tennessee, by a group of fourteen individuals (the "Organizers"). The Company was originally incorporated in the state of Tennessee in February 2000 as TMP, Inc. In April 2000, the Company's board of directors approved a name change to Pinnacle Financial Partners, Inc., and the Company filed an application for reservation of corporate name with the Tennessee Secretary of State on April 25, 2000. Upon receipt of required regulatory approvals, the proposed bank will operate as a community bank emphasizing personalized banking relationships with individuals and businesses. The Organizers have filed applications with the Office of The Comptroller of the Currency to obtain a national bank charter and with the Federal Deposit Insurance Corporation ("FDIC") for deposit insurance. Provided the necessary capital is raised and the necessary regulatory approvals are received, it is expected that operations will commence in the third or fourth quarter of 2000. Ten of the fourteen Organizers will serve on the initial board of directors.
The Company is a development stage enterprise as defined by Statement of Financial Accounting Standard No.7, "Accounting and Reporting by Development Stage Enterprises", as it devotes substantially all its efforts to establishing a new business. The Company's planned principal operations have not commenced and revenue has not been recognized from the planned principal operations.
The Company plans to raise a minimum of $25,000,000 by offering for sale 2,500,000 shares of its common stock. The Company will use $22,600,000 of the proceeds to capitalize the proposed Bank. The Organizers, directors, executive officers, and members of their immediate families expect to purchase a total of 391,000 shares at an aggregate purchase price of approximately $3,910,000.
ORGANIZATIONAL AND PRE-OPENING COSTS
Activities since inception have consisted of organizational activities necessary to obtain regulatory approvals and preparation activities to commence business as a commercial bank. Organizational costs are primarily legal fees, consulting fees, and application fees related to the incorporation of the Company and initial organization of the Bank. The organizational and pre-opening costs will be charged against the initial period's operating results.
The Company estimates that both it and the Bank will incur organizational and pre-opening costs totaling approximately $1,005,000.
DEFERRED STOCK OFFERING COSTS
Deferred stock offering costs are expenses incurred by the Company in connection with the offering and issuance of its stock. The deferred stock offering costs will be deducted from the Company's additional paid-in capital after the stock offering. If the stock offering is deemed unsuccessful, all deferred stock offering costs will be charged to operations during the period in which the offering is deemed unsuccessful. These expenses are estimated to be approximately $120,000.
PINNACLE FINANCIAL PARTNERS, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. LINE OF CREDIT
As of March 31, 2000, borrowings consist of $100,000 drawn on a $700,000 line of credit obtained from The Bank of Nashville. Interest is payable monthly, at the prime rate plus 1/2 percent, with the principal being due on February 28, 2001. Twelve of the Company's fourteen organizers have directly guaranteed the line of credit. The line of credit is being used to fund the Bank's organizational and pre-opening costs.
3. STOCKHOLDER'S EQUITY
COMMON STOCK
The Company has the authority to issue up to 10,000,000 shares of voting common stock, $1 par value.
CUMULATIVE VOTING RIGHTS
The Company has elected not to have cumulative voting, and no shares issued by the Company may be cumulatively voted.
PREEMPTIVE RIGHTS
The stockholders of the Company shall not have any preemptive rights regarding any issuance of the Company's capital stock.
PREFERRED STOCK
The Company has the authority to issue up to 10,000,000 shares of preferred stock, no par value. The board of directors may determine the terms of the preferred stock. Preferred stock may have voting rights, subject to applicable law and as determined by the board of directors.
STOCK OFFERING
Upon receiving preliminary regulatory approvals, the Company, through its underwriter, plans to offer for sale to the general public 2,500,000 shares of $1 stated par value common stock at an offering price of $10.00 per share. The underwriter has the right to exercise its over-allotment option to purchase up to an additional 316,500 shares of common stock at $10.00 per share, less the applicable underwriting discount. The Organizers as executive officers intend to purchase an aggregate of 391,000 shares of common stock to be sold in the offering which represents approximately 15.6% of the offering. The Organizers will receive a warrant to purchase one share of common stock for every two shares of common stock purchased in the offering. The exercise price for the warrants will be $10.00 per share and the warrants will vest in one-third annual increments over a period of three years beginning on the one-year anniversary of the date of close of the offering. The warrants will remain exercisable for the ten-year period following the date of the close of the offering.
4. INCOME TAXES
As of March 31, 2000, the Company had a net operating loss carryforward of $87,098.
PINNACLE FINANCIAL PARTNERS, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. INCOME TAXES (CONTINUED) There was no provision (benefit) for income taxes for the period from March 1, 2000 to March 31, 2000, since a 100% valuation reserve is being maintained for the net operating loss carryforward.
5. COMMITMENT AND CONTINGENCIES
EMPLOYMENT CONTRACT
The Company entered into a three-year employment contract with its President and Chief Executive Officer ("CEO") on March 1, 2000. The agreement will automatically renew for an additional day each day after March 31, 2000, so that it will always have a three-year term, unless any of the parties to the agreement gives notice of intent not to renew the agreement. The contract provides that the President and CEO will receive an initial annual salary of $220,000. The contract provides that the President and CEO shall receive an annual bonus as determined by the board of directors. Additionally, the President and CEO will receive other benefits including an incentive stock option to purchase 45,000 shares of common stock at an exercise price of $10 per share. The stock options will become exercisable in equal one-fifth annual increments over a five-year period beginning on the one-year anniversary after the prospectus becomes effective.
LEASE AGREEMENT
On March 16, 2000, the Company entered into an agreement with Commerce Street Associates to lease 12,135 square feet of office space in an office building in Nashville, Tennessee that will be the site of the Bank's main office facility. The planned tenant build-out of the main office is expected to begin in the second quarter of 2000 with total costs, including furniture, fixtures and equipment, estimated at $1.66 million. After the Bank is capitalized, it will assume the lease with Commerce Street Associates and will pay the remaining balance of the renovation costs incurred. The term of the main office lease is 10 years with initial monthly rent being $20,471.
6. RELATED PARTY TRANSACTIONS
The Company paid a director $5,500 for consulting services related to pre-opening activities of the Company.
The Company entered into a letter agreement with a public relations company, of which one of the Company's directors is a principal. The agreement term began March 1, 2000 and ends August 1, 2000. As of March 31, 2000 the Company incurred $8,000 of expenses under the agreement.
7. SUBSEQUENT EVENT
In April 2000, the Company entered into a lease for temporary office space. The lease, which began on April 1, 2000 and ends February 28, 2000, requires monthly rent in the amount of $1,758.
PROSPECTIVE INVESTORS MAY RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. NO ONE HAS AUTHORIZED ANYONE TO PROVIDE PROSPECTIVE INVESTORS WITH INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT SEEKING AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF THE DELIVERY OF THIS PROSPECTUS OR ANY SALE OF THESE SECURITIES.
TABLE OF CONTENTS
PAGE
--------
Summary................................ 1
Risk Factors........................... 6
Caution Regarding Forward-Looking
Statements........................... 11
Use of Proceeds........................ 12
Capitalization......................... 14
Dividends.............................. 15
Management's Discussion and Analysis of
Financial Condition and Plan of
Operations........................... 16
Our Proposed Business.................. 19
Management............................. 30
Executive Compensation................. 38
Related Party Transactions............. 43
Description of Our Capital Stock....... 44
Selected Provisions of Our Charter and
Bylaws............................... 45
Shares Eligible for Future Sale........ 49
Underwriting........................... 50
Supervision and Regulation............. 52
Legal Matters.......................... 59
Experts................................ 59
Reports to Shareholders................ 59
Additional Information................. 59
Index to Financial Statements.......... F-1
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UNTIL 2000 (40 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS THAT BUY, SELL OR TRADE THE COMMON STOCK, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS AN UNDERWRITER AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
2,500,000 SHARES
[LOGO]
A PROPOSED BANK HOLDING
COMPANY FOR
PINNACLE NATIONAL BANK
(PROPOSED)
COMMON STOCK
PROSPECTUS
PaineWebber Incorporated
J.C. Bradford & Co.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Consistent with the applicable provisions of the laws of Tennessee, the
Registrant's charter and bylaws provide that the Registrant shall indemnify its
directors and officers against expenses (including attorneys' fees) and
liabilities arising from actual or threatened actions, suits or proceedings,
whether or not settled, to which they become subject by reason of having served
in such role if such director or officer acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interests of the
Registrant and, with respect to a criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. Advances against
expenses shall be made so long as the person seeking indemnification agrees to
refund the advances if it is ultimately determined that he or she is not
entitled to indemnification. A determination of whether indemnification of a
director or officer is proper because he or she met the applicable standard of
conduct shall be made (1) by the board of directors of the Registrant, (2) in
certain circumstances, by independent legal counsel in a written opinion or
(3) by the affirmative vote of a majority of the shares entitled to vote, but
shares owned by or are under voting control of directors or officers who are at
the time parties to the proceeding may not vote on the determination.
In addition, the Registrant's charter, subject to exceptions, eliminates the potential personal liability of a director for monetary damages to the Registrant and to the shareholders of the Registrant for breach of a duty as a director. There is no release of liability for (1) a breach of the director's duty of loyalty to the Registrant or its shareholders, (2) an act or omission not in good faith or which involves intentional misconduct or a knowing violation of law, or (3) as to any payment of a dividend or approval of a stock repurchase that is illegal under the Tennessee Business Corporation Act. The charter does not eliminate or limit the right of the Registrant or its shareholders to seek injunctive or other equitable relief not involving monetary damages.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated expenses, other than underwriting discounts and commissions, of the sale of the Registrant's common stock, no par value, are as follows:
Securities and Exchange Commission Registration Fee......... $ 7,436
National Association of Securities Dealers, Inc. Filing
Fee....................................................... 3,000
Blue Sky Fees and Expenses.................................. 10,000
Legal Fees and Expenses..................................... 30,000
Accounting Fees and Expenses................................ 20,000
Printing and Engraving Expenses............................. 45,000
Miscellaneous............................................... 4,564
--------
Total..................................................... $120,000
========
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ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
On March 30, 2000, the Registrant issued to M. Terry Turner, in a private placement, one share of the Registrant's Common Stock, $1.00 par value, for an aggregate price of $10.00 in connection with the organization of the Company. The sale to Mr. Turner was exempt from registration under the Securities Act pursuant to Section 4(2) of the Act because it was a transaction by an issuer that did not involve a public offering.
II-1
ITEM 27. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
--------------------- ------------------------------------------------------------
1.1 Form of Underwriting Agreement
3.1 Charter, as amended and restated*
3.2 Bylaws
4.1 Specimen Common Stock Certificate
4.2 See Exhibits 3.1 and 3.2 for provisions of the Charter and
Bylaws defining rights of holders of the Common Stock
5.1 Legal Opinion of Powell, Goldstein, Frazer & Murphy LLP
10.1 Lease Agreement by and between TMP, Inc. (former name of
Pinnacle Financial Partners, Inc.) and Commercial Street
Associates dated March 16, 2000 (main office)*
10.2 Lease Agreement by and between TMP, Inc. (former name of
Pinnacle Financial Partners, Inc.) and D and W Companies,
Inc. d/b/a Psychiatric Solutions, Inc. dated March 3, 2000
(temporary facility)*
10.3 Promissory Note dated February 29, 2000 executed by TMP,
Inc. (former name of Pinnacle Financial Partners, Inc.) and
accepted by The Bank of Nashville, Nashville, Tennessee, and
form of Commercial Guaranty*
10.4 Form of Pinnacle Financial Partners, Inc.'s Organizers'
Warrant Agreement*
10.5 Pinnacle Financial Partners, Inc. 2000 Stock Incentive Plan*
10.6 Employment Agreement dated as of March 1, 2000 by and
between Pinnacle National Bank (Proposed), Pinnacle
Financial Partners, Inc. and M. Terry Turner*
10.7 Proposed Employment Agreement to be dated as of August 1,
2000 by and between Pinnacle National Bank (Proposed),
Pinnacle Financial Partners, Inc. and Robert A. McCabe, Jr.
10.8 Employment Agreement dated as of April 1, 2000 by and
between Pinnacle National Bank (Proposed), Pinnacle
Financial Partners, Inc. and Hugh M. Queener
10.9 Letter Agreement dated March 14, 2000 and accepted March 16,
2000 by and between Pinnacle Financial Corporation (now
known as Pinnacle Financial Partners, Inc.) and Atkinson
Public Relations*
10.10 Form of Agreement of Sale and License Agreement by and
between Pinnacle Financial Partners, Inc. and SER Macrosoft,
Inc.
10.11 Brokerage Program Agreement and Lease by and between
Pinnacle Financial Partners, Inc., LM Financial Partners,
Inc. and Legg Mason Financial Services, Inc.
10.12 Understanding of Terms and Conditions Agreement dated
June 21, 2000 (and accepted June 27, 2000) by and between
Pinnacle Financial Partners, Inc. and Interior Design
Services, Inc.
10.13 Promissory Note dated June 28, 2000 executed by Pinnacle
Financial Partners, Inc. and accepted by SunTrust Bank,
Nashville, Tennessee, and form of Guaranty (supercedes
exhibit 10.3 previously filed)
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II-2
EXHIBIT
NUMBER DESCRIPTION
--------------------- ------------------------------------------------------------
10.14 Employment Agreement dated March 1, 2000 by and between
Pinnacle National Bank (Proposed), Pinnacle Financial
Partners, Inc. and M. Terry Turner (supercedes exhibit 10.6
previously filed)
10.15 Pinnacle Financial Partners, Inc. 2000 Stock Incentive Plan
(supercedes Exhibit 10.5 previously filed)
23.1 Consent of Arthur Andersen LLP dated May 30, 2000*
23.2 Consent of Powell, Goldstein, Frazer & Murphy LLP (contained
in Exhibit 5.1)
23.3 Consent of Arthur Andersen LLP dated July 11, 2000
24.1 Power of Attorney*
27.1 Financial Data Schedule (for SEC use only) 3/31/2000*
27.2 Financial Data Schedule (for SEC use only) 6/30/2000
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* Previously filed.
ITEM 28. UNDERTAKINGS.
The Registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes as follows:
(a) (1) To file, during any period in which it offers or sells securities, a post-effectiveamendment to this Registration Statement to:
(i) Include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective Registration Statement;
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(iii) Include any additional or changed material information on the plan of distribution.
(2) For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration any of the securities being registered that remain unsold at the end of the offering.
The Registrant hereby undertakes as follows:
(b) (1) For determining any liability under the Securities Act, to treat the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant under Rule 424(b)(1), or (4) or 497(h) under the Securities Act as part of this Registration Statement as of the time the Commission declared it effective.
(2) For determining any liability under the Securities Act, to treat each post-effective amendment that contains a form of prospectus as a new registration statement for the securities offered in the Registration Statement, and that offering of the securities at that time as the initial bona fide offering of those securities.
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SIGNATURES
In accordance with the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements of filing on Form SB-2 and authorized this Registration Statement Amendment to be signed on its behalf by the undersigned in the City of Nashville, State of Tennessee, on July 10, 2000.
PINNACLE FINANCIAL PARTNERS, INC.
By: /s/ M. TERRY TURNER
-----------------------------------------
M. Terry Turner
PRESIDENT AND CHIEF EXECUTIVE OFFICER
|
In accordance with the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates stated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ SUE R. ATKINSON+ Director
------------------------------------------- July 10,
Sue R. Atkinson 2000
/s/ COLLEEN CONWAY-WELCH+ Director
------------------------------------------- July 10,
Colleen Conway-Welch 2000
/s/ CLAY T. JACKSON+ Director
------------------------------------------- July 10,
Clay T. Jackson 2000
/s/ JOHN E. MAUPIN, JR.+ Director
------------------------------------------- July 10,
John E. Maupin, Jr. 2000
/s/ ROBERT A. MCCABE, JR.+ Chairman of the Board of
------------------------------------------- Directors July 10,
Robert A. Mccabe, Jr. 2000
/s/ ROBERT E. MCNEILLY, JR.+ Director
------------------------------------------- July 10,
Robert E. Mcneilly, Jr. 2000
/s/ DALE W. POLLEY+ Director
------------------------------------------- July 10,
Dale W. Polley 2000
/s/ HUGH M. QUEENER+ Executive Vice President, Chief
------------------------------------------- Administrative Officer ** July 10,
Hugh M. Queener 2000
|
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SIGNATURE TITLE DATE
--------- ----- ----
/s/ JAMES L. SHAUB, II+ Director
------------------------------------------- July 10,
James L. Shaub, II 2000
/s/ REESE L. SMITH, III+ Director
------------------------------------------- July 10,
Reese L. Smith, III 2000
/s/ M. TERRY TURNER President, Chief Executive
------------------------------------------- Officer, and Director* July 10,
M. Terry Turner 2000
|
* Principal executive officer.
** Principal financial and accounting officer.
+ /s/ M. TERRY TURNER
--------------------------------------
M. Terry Turner
ATTORNEY-IN-FACT
|
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Exhibit 1.1
2,500,000 Shares
PINNACLE FINANCIAL PARTNERS, INC.
Common Stock
UNDERWRITING AGREEMENT
_______________, 2000
PAINEWEBBER INCORPORATED
J.C. BRADFORD & CO., L.L.C.
As Representatives of the
several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Ladies and Gentlemen:
Pinnacle Financial Partners, Inc., a Tennessee corporation (the "Company") and proposed bank holding company for Pinnacle National Bank, a national banking association (the "Bank"), proposes to sell an aggregate of 2,500,000 shares (the "Firm Shares") of the Company's Common Stock, $1.00 par value per share (the "Common Stock"), to you and to the other underwriters named in Schedule I (collectively, the "Underwriters"), for whom you are acting as Representatives (the "Representatives"). The Company has also agreed to grant to you and the other Underwriters an option (the "Option") to purchase up to an additional 316,500 shares of Common Stock (the "Option Shares") on the terms and for the purposes set forth in Section 1(b). The Firm Shares and the Option Shares are hereinafter collectively referred to as the "Shares."
The initial public offering price per share for the Shares and the purchase price per share for the Shares to be paid by the several Underwriters shall be agreed upon by the Company and the Representatives, acting on behalf of the several Underwriters, and such agreement shall be set forth in a separate written instrument substantially in the form of Exhibit A hereto (the "Price Determination Agreement"). The Price Determination Agreement may take the form of an exchange of any standard form of written telecommunication among the Company and the Representatives and shall specify such applicable information as is indicated in Exhibit A hereto. The offering of the Shares will be governed by this Agreement, as supplemented by the Price Determination Agreement. From and after the date of the execution and delivery of the Price Determination Agreement, this Agreement shall be deemed to incorporate, and, unless the
context otherwise indicates, all references contained herein to "this Agreement" and to the phrase "herein" shall be deemed to include the Price Determination Agreement.
The Company confirms as follows its agreements with the Representatives and the several other Underwriters.
1. AGREEMENT TO SELL AND PURCHASE.
(a) On the basis of the representations,
warranties and agreements of the Company herein contained and subject to all the
terms and conditions of this Agreement, the Company agrees to sell to each
Underwriter named below, and each Underwriter, severally and not jointly, agrees
to purchase from the Company at the purchase price per share for the Firm Shares
to be agreed upon by the Representatives and the Company in accordance with
Section 1(c) or 1(d) hereof and set forth in the Price Determination Agreement,
the number of Firm Shares set forth opposite the name of such Underwriter in
Schedule I, plus such additional number of Firm Shares which such Underwriter
may become obligated to purchase pursuant to Section 8 hereof. Schedule I may be
attached to the Price Determination Agreement.
(b) Subject to all the terms and conditions of this Agreement, the Company grants the Option to the several Underwriters to purchase, severally and not jointly, up to 316,500 Option Shares from the Company at the same price per share as the Underwriters shall pay for the Firm Shares. The Option may be exercised only to cover over-allotments in the sale of the Firm Shares by the Underwriters and may be exercised in whole or in part at any time (but not more than once) on or before the 30th day after the date of the Price Determination Agreement, upon written or telegraphic notice (the "Option Shares Notice") by the Representatives to the Company no later than 12:00 noon, New York City time, at least two and no more than five business days before the date specified for closing in the Option Shares Notice (the "Option Closing Date") setting forth the aggregate number of Option Shares to be purchased and the time and date for such purchase. On the Option Closing Date, the Company will issue and sell to the Underwriters the number of Option Shares set forth in the Option Shares Notice, and each Underwriter will purchase such percentage of the Option Shares as is equal to the percentage of Firm Shares that such Underwriter is purchasing, as adjusted by the Representatives in such manner as they deem advisable to avoid fractional shares.
(c) The initial public offering price per share for the Firm Shares and the purchase price per share for the Firm Shares to be paid by the several Underwriters shall be agreed upon and set forth in the Price Determination Agreement. In the event such price has not been agreed upon and the Price Determination Agreement has not been executed by the close of business on the fourteenth business day following the date on which the Registration Statement (as hereinafter defined) becomes effective, this Agreement shall terminate forthwith, without liability of any party to any other party except that Section 6 shall remain in effect.
2. DELIVERY AND PAYMENT. Delivery of the Firm Shares shall be made to the Representatives for the accounts of the Underwriters at the office of PaineWebber Incorporated, 1285 Avenue of the Americas, New York, New York 10019],1/ [credit to the account of the Company with the Depository Trust Company],2/ against payment of the purchase price by wire transfer of Federal Funds or similar same day funds to an account designated in writing by the Company to PaineWebber Incorporated at least one business day prior to the Closing Date (as hereinafter defined). Such payment shall be made at 10:00 a.m., New York City time, on the third business day (or fourth business day, if the Price Determination Agreement is executed after 4:30 p.m.) after the date on which the first bona fide offering of the Shares to the public is made by the Underwriters or at such time on such other date, not later than ten business days after such date, as may be agreed upon by the Company and the Representatives (such date is hereinafter referred to as the "Closing Date").
To the extent the Option is exercised, delivery of the Option Shares against payment by the Underwriters (in the manner specified above) will take place at the offices specified above for the Closing Date at the time and date (which may be the Closing Date) specified in the Option Shares Notice.
[Certificates evidencing the Shares shall be in definitive form and shall be registered in such names and in such denominations as the Representatives shall request at least two business days prior to the Closing Date or the Option Closing Date, as the case may be, by written notice to the Company. For the purpose of expediting the checking and packaging of certificates for the Shares, the Company agrees to make such certificates available for inspection at least 24 hours prior to the Closing Date or the Option Closing Date, as the case may be.]3/
The cost of original issue tax stamps, if any, in connection with the issuance and delivery of the Firm Shares and Option Shares by the Company to the respective Underwriters shall be borne by the Company. The Company will pay and save each Underwriter and any subsequent holder of the Shares harmless from any and all liabilities with respect to or resulting from any failure or delay in paying Federal and state stamp and other transfer taxes, if any, which may be payable or determined to be payable in connection with the original issuance or sale to such Underwriter of the Firm Shares and Option Shares.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents, warrants and covenants to each Underwriter that:
(a) A registration statement (Registration No. 333-38018) on Form SB-2 relating to the Shares, including a preliminary prospectus and such amendments to such registration statement as may have been required to the date of this
2/ Insert if the Shares will be delivered through the Depository Trust Company.
3/ Insert if the Shares will be delivered in certificated form.
Agreement, has been prepared by the Company under the provisions of the Securities Act of 1933, as amended (the "Act"), and the rules and regulations (collectively referred to as the "Rules and Regulations") of the Securities and Exchange Commission (the "Commission") thereunder, and has been filed with the Commission. The term "preliminary prospectus" as used herein means a preliminary prospectus as contemplated by Rule 430 or Rule 430A ("Rule 430A") of the Rules and Regulations included at any time as part of the registration statement. Copies of such registration statement and amendments and of each related preliminary prospectus have been delivered to the Representatives. The term "Registration Statement" means the registration statement as amended at the time it becomes or became effective (the "Effective Date"), including financial statements and all exhibits and any information deemed to be included by Rule 430A or Rule 434 of the Rules and Regulations. If the Company files a registration statement to register a portion of the Shares and relies on Rule 462(b) of the Rules and Regulations for such registration statement to become effective upon filing with the Commission (the "Rule 462 Registration Statement"), then any reference to the "Registration Statement" shall be deemed to include the Rule 462 Registration Statement, as amended from time to time. The term "Prospectus" means the prospectus as first filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations or, if no such filing is required, the form of final prospectus included in the Registration Statement at the Effective Date.
(b) On the Effective Date, the date the Prospectus is first filed with the Commission pursuant to Rule 424(b) (if required), at all times subsequent to and including the Closing Date and, if later, the Option Closing Date and when any post-effective amendment to the Registration Statement becomes effective or any amendment or supplement to the Prospectus is filed with the Commission, the Registration Statement and the Prospectus (as amended or as supplemented if the Company shall have filed with the Commission any amendment or supplement thereto), including the financial statements included in the Prospectus, did or will comply with all applicable provisions of the Act and the Rules and Regulations and will contain all statements required to be stated therein in accordance with the Act and the Rules and Regulations. On the Effective Date and when any post-effective amendment to the Registration Statement becomes effective, no part of the Registration Statement or any such amendment did or will contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading. At the Effective Date, the date the Prospectus or any amendment or supplement to the Prospectus is filed with the Commission and at the Closing Date and, if later, the Option Closing Date, the Prospectus did not or will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. The foregoing representations and warranties in this Section 3(b) do not apply to any statements or omissions made in reliance on and in conformity with information relating to any Underwriter furnished in writing to the Company by the Representatives specifically for inclusion in the Registration Statement or Prospectus or any amendment or supplement thereto. For all purposes of this Agreement, the amounts of the selling concession and reallowance set forth in the Prospectus constitute the only information relating to any Underwriter furnished in writing to the Company by the Representatives specifically for inclusion in the Registration Statement, the preliminary prospectus or the Prospectus. The Company has not distributed any offering material in connection with the offering or sale of the Shares other than the Registration Statement, the preliminary prospectus, the Prospectus or any other materials, if any, permitted by the Act.
(c) The Company is, and at the Closing Date will be, a corporation duly organized, validly existing and in good standing under the laws of the State of Tennessee. The Company has, and at the Closing Date will have, full power and authority to conduct all the activities conducted by it, to own or lease all the assets owned or leased by it and to conduct its business as described in the Registration Statement and the Prospectus. The Bank is a national banking association in organization under the laws of the United States of America and, upon the issuance of a charter by the Office of the Comptroller of the Currency (the "OCC"), will have full power and authority to own or lease its properties and conduct its business as described in the Prospectus. Neither the Company nor the Bank is required to be licensed or qualified to do business as a foreign corporation under the laws of any other jurisdiction. Except for the stock of the Bank, the Company does not own, and at the Closing Date will not own, directly or indirectly, any shares of stock or any other equity or long-term debt securities of any corporation or have any equity interest in any firm, partnership, joint venture, association or other entity. Complete and correct copies of the certificate of incorporation and of the by-laws of the Company and the Bank and all amendments thereto have been delivered to the Representatives, and no changes therein will be made subsequent to the date hereof and prior to the Closing Date or, if later, the Option Closing Date.
(d) The outstanding shares of Common Stock have been, and the Shares to be issued and sold by the Company upon such issuance will be, duly authorized, validly issued, fully paid and nonassessable and will not be subject to any preemptive or similar right. The description of the Common Stock in the Registration Statement and the Prospectus is, and at the Closing Date will be, complete and accurate in all respects. Except as set forth in the Prospectus, the Company does not have outstanding, and at the Closing Date will not have outstanding, any options to purchase, or any rights or warrants to subscribe for, or any securities or obligations convertible into, or any contracts or commitments to issue or sell, any shares of Common Stock, any shares of capital stock of the Bank or any such warrants, convertible securities or obligations.
(e) Upon the issuance of a charter by the OCC and the payment for the capital stock of the Bank, all of the issued shares of the Bank will be duly authorized and validly issued, fully paid, and, except as may be applicable under the National Bank Act, nonassessable and will be owned beneficially by the Company free and clear of all liens, security interests, pledges, charges, encumbrances, defects, shareholders' agreements, voting trusts, equities or claims of any nature whatsoever. The Company has made application
(i) to the Board of Governors of the Federal Reserve System for approval to become a bank holding company and to acquire all of the shares of the Bank;
(ii) to the OCC, for approval to charter a national bank; and
(iii) to the Federal Deposit Insurance Corporation for approval for Federal Deposit Insurance for Bank deposits (each a "Regulatory Approval" and collectively, the "Regulatory Approvals").
(f) The financial statements and schedules included in the Registration Statement or the Prospectus present fairly the financial condition of the Company as of the respective dates thereof and the results of operations and cash flows of the Company for the respective periods covered thereby, all in conformity with generally accepted accounting principles applied on a consistent basis throughout the entire period involved, except as otherwise disclosed in the Prospectus. No other financial statements or schedules of the Company are required by the Act or the Rules and Regulations to be included in the Registration Statement or the Prospectus. Arthur Andersen LLP (the "Accountants"), who have reported on such financial statements and schedules, are independent accountants with respect to the Company as required by the Act and the Rules and Regulations. The statements included in the Registration Statement with respect to the Accountants pursuant to Rule 509 of Regulation S-B of the Rules and Regulations are true and correct in all material respects.
(g) The Company maintains a system of internal accountings control sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
(h) Subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus and prior to the Closing Date, except as set forth in or contemplated by the Registration Statement and the Prospectus, (i) there has not been and will not have been any change in the capitalization of the Company, or in the business, properties, business prospects, condition (financial or otherwise) or results of operations of the Company and the Bank, arising for any reason whatsoever, (ii) neither the Company nor the Bank has incurred nor will it incur any material liabilities or obligations, direct or contingent, nor has it entered into nor will it enter into any material transactions other than pursuant to this Agreement and the
transactions referred to herein and (iii) the Company has not and will not have paid or declared any dividends or other distributions of any kind on any class of its capital stock.
(i) The Company is not an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended.
(j) Except as set forth in the Registration Statement and the Prospectus, there are no actions, suits or proceedings pending or threatened against or affecting the Company or the Bank or any of their respective officers in their capacity as such, before or by any Federal or state court, commission, regulatory body, administrative agency or other governmental body, domestic or foreign, wherein an unfavorable ruling, decision or finding might materially and adversely affect the Company or the Bank or their respective business, properties, business prospects, condition (financial or otherwise) or results of operations.
(k) Except for the Regulatory Approvals, the Company and the Bank have, and at the Closing Date will have, (i) all governmental licenses, permits, consents, orders, approvals and other authorizations necessary to carry on its business as contemplated in the Prospectus, (ii) complied in all respects with all laws, regulations and orders applicable to it or its business and (iii) performed all its obligations required to be performed by it, and is not, and at the Closing Date will not be, in default, under any indenture, mortgage, deed of trust, voting trust agreement, loan agreement, bond, debenture, note agreement, lease, contract or other agreement or instrument (collectively, a "contract or other agreement") to which it is a party or by which its property is bound or affected. With respect to the Regulatory Approvals, as well as all other material licenses, consents and approvals, and any other similar requirements that the Company or the Bank does not have at this time, (i) all applications therefor are complete, accurate and have been filed with the appropriate regulatory authorities, (ii) the Company has received preliminary notice from the OCC that such application for Regulatory Approval will be approved, and (iii) the Company knows of no reason why all final Regulatory Approvals will not be received prior to the time required. To the best knowledge of the Company, no other party under any contract or other agreement to which it is a party is in default in any respect thereunder. Neither the Company nor the Bank is, nor at the Closing Date will be, in violation of any provision of its certificate of incorporation or by-laws.
(l) No consent, approval, authorization or order of, or any filing or declaration with, any court or governmental agency or body is required in connection with the authorization, issuance, transfer, sale or delivery of the Shares by the Company, in connection with the execution, delivery and performance of this Agreement by the Company or in connection with the taking by the Company of any action contemplated hereby, except such as have been obtained under the Act or the Rules and Regulations and such as may be required under state securities or Blue Sky laws or the by-laws and rules of the National Association of Securities Dealers, Inc. (the "NASD") in connection with the purchase and distribution by the Underwriters of the Shares.
(m) The Company has full corporate power and authority to enter into this Agreement. This Agreement has been duly authorized, executed and delivered by the Company and constitutes a valid and binding agreement of the Company and is enforceable against the Company in accordance with the terms hereof. The performance of this Agreement and the consummation of the transactions contemplated hereby and the application of the net proceeds from the offering and sale of the Shares in the manner set forth in the Prospectus under "Use of Proceeds" will not result in the creation or imposition of any lien, charge or encumbrance upon any of the assets of the Company or the Bank pursuant to the terms or provisions of, or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or give any other party a right to terminate any of its obligations under, or result in the acceleration of any obligation under, the certificate of incorporation or by-laws of the Company or the Bank, any contract or other agreement to which the Company or the Bank is a party or by which the Company or the Bank or any of their respective properties are bound or affected, or violate or conflict with any judgment, ruling, decree, order, statute, rule or regulation of any court or other governmental agency or body applicable to the business or properties of the Company or the Bank.
(n) The Company and the Bank have good and marketable title to all properties and assets described in the Prospectus as owned by them, free and clear of all liens, charges, encumbrances or restrictions, except such as are described in the Prospectus or are not material to the business of the Company or the Bank. The Company and the Bank have valid, subsisting and enforceable leases for the properties described in the Prospectus as leased by them, with such exceptions as are not material and do not materially interfere with the use made and proposed to be made of such properties by the Company and the Bank.
(o) There is no document or contract of a character required to be described in the Registration Statement or the Prospectus or to be filed as an exhibit to the Registration Statement which is not described or filed as required. All such contracts to which the Company or the Bank is a party have been duly authorized, executed and delivered by the Company or the Bank, constitute valid and binding agreements of the Company or the Bank and are enforceable against the Company or the Bank in accordance with the terms thereof.
(p) No statement, representation, warranty or covenant made by the Company in this Agreement or made in any certificate or document required by this Agreement to be delivered to the Representatives was or will be, when made, inaccurate, untrue or incorrect.
(q) Neither the Company nor any of its directors, officers or controlling persons has taken, directly or indirectly, any action intended, or which might reasonably be expected, to cause or result, under the Act or otherwise, in, or which has constituted, stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares.
(r) No holder of securities of the Company has rights to the registration of any securities of the Company because of the filing of the Registration Statement.
(s) The Company and the Bank are in compliance with all federal, state and local employment and labor laws, including, but not limited to, laws relating to non-discrimination in hiring, promotion and pay of employees; no labor dispute with the employees of the Company or the Bank exists or, to the knowledge of the Company, is imminent or threatened; and the Company is not aware of any existing, imminent or threatened labor disturbance by the employees of any of its principal suppliers, manufacturers or contractors that could result in a material adverse effect on the condition (financial or otherwise) or on the earnings, business, properties, business prospects or operations of the Company or the Bank.
(t) The Company and the Bank own, or are licensed or otherwise have the full exclusive right to use, the material patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, services marks and trade names (collectively, "patent and proprietary rights") presently employed by them or which are necessary in connection with the conduct of the business now operated by them, and neither the Company nor the Bank has received any written notice or otherwise has actual knowledge of any infringement of or conflict with asserted rights of others or any other claims with respect to any patent or proprietary rights, or of any basis for rendering any patent and proprietary rights invalid or inadequate to protect the interest of the Company or the Bank.
(u) Neither the Company nor the Bank nor, to the Company's knowledge, any employee or agent of the Company or the Bank has made any payment of funds of the Company or the Bank or received or retained any funds in violation of any law, rule or regulation or of a character required to be disclosed in the Prospectus.
(v) The Company has complied, and until the
completion of the distribution of the Shares will comply, with all of the
provisions of (including, without limitation, filing all forms required by)
Section 517.075 of the Florida Securities and Investor Protection Act and
Regulation 3E-900.001 issued thereunder with respect to the offering and sale of
the Shares.
(w) The Company and the Bank (i) are in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or imposing liability or standards of conduct concerning any Hazardous Material (as hereinafter defined) ("Environmental Laws"), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such
permits, licenses or approvals would not, individually or in the aggregate result in a material adverse effect on the condition (financial or otherwise) or on the earnings, business, properties, business prospects or operations of the Company or the Bank. The term "Hazardous Material" means (A) any "hazardous substance" as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, (B) any "hazardous waste" as defined by the Resource Conservation and Recovery Act, as amended, (C) any petroleum or petroleum product, (D) any polychlorinated biphenyl and (E) any pollutant or contaminant or hazardous, dangerous, or toxic chemical, material, waste or substance regulated under or within the meaning of any other Environmental Law.
(x) In the ordinary course of its business, the Company conducts a periodic review of the effect of Environmental Laws on the business, operations and properties of the Company and the Bank, in the course of which it identifies and evaluates associated costs and liabilities (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties). Except as set forth in the Registration Statement and the Prospectus there are no costs and liabilities associated with or arising in connection with Environmental Laws as currently in effect (including, without limitation, costs of compliance therewith) which would, singly or in the aggregate have a material adverse effect on the condition (financial or otherwise) or on the earnings, business, properties, business prospects or operations of the Company or the Bank.
(y) The Company maintains insurance with respect to its properties and business of the types and in amounts generally deemed adequate for its business and consistent with insurance coverage maintained by similar companies and businesses, all of which insurance is in full force and effect.
(z) The Company and the Bank have filed all material federal, state and foreign income and franchise tax returns and have paid all taxes shown as due thereon, other than taxes which are being contested in good faith and for which adequate reserves have been established in accordance with generally accepted accounting principles ("GAAP"); and the Company has no knowledge of any tax deficiency which has been or might be asserted or threatened against the Company or the Bank. There are no tax returns of the Company or the Bank that are currently being audited by state, local or federal taxing authorities or agencies (and with respect to which the Company or the Bank has received notice), where the findings of such audit, if adversely determined, would result in a material adverse effect on the condition (financial or otherwise) or on the earnings, business, properties, business prospects or operations of the Company or the Bank.
(aa) With respect to each employee benefit plan, program and arrangement (including, without limitation, any "employee benefit plan" as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) maintained or contributed to by the Company, or with respect to which the Company could incur any liability under ERISA (collectively, the "Benefit Plans"), no event has occurred and, to the best knowledge of the Company, there exists no condition or set of circumstances, in connection with which the Company could be subject to any liability under the terms of such Benefit Plan, applicable law (including, without limitation, ERISA and the Internal Revenue Code of 1986, as amended) or any applicable agreement that could materially adversely affect the business, properties, business prospects, condition (financial or otherwise) or results of operations of the Company or the Bank.
4. AGREEMENTS OF THE COMPANY. The Company agrees with the several Underwriters as follows:
(a) The Company will not, either prior to the Effective Date or thereafter during such period as the Prospectus is required by law to be delivered in connection with sales of the Shares by an Underwriter or dealer, file any amendment or supplement to the Registration Statement or the Prospectus, unless a copy thereof shall first have been submitted to the Representatives within a reasonable period of time prior to the filing thereof and the Representatives shall not have objected thereto in good faith.
(b) The Company will use its best efforts to cause the Registration Statement to become effective, and will notify the Representatives promptly, and will confirm such advice in writing, (1) when the Registration Statement has become effective and when any post-effective amendment thereto becomes effective, (2) of any request by the Commission for amendments or supplements to the Registration Statement or the Prospectus or for additional information, (3) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose or the threat thereof, (4) of the happening of any event during the period mentioned in the second sentence of Section 4(e) that in the judgment of the Company makes any statement made in the Registration Statement or the Prospectus untrue or that requires the making of any changes in the Registration Statement or the Prospectus in order to make the statements therein, in light of the circumstances in which they are made, not misleading and (5) of receipt by the Company or any representative or attorney of the Company of any other communication from the Commission relating to the Company, the Registration Statement, any preliminary prospectus or the Prospectus. If at any time the Commission shall issue any order suspending the effectiveness of the Registration Statement, the Company will make every reasonable effort to obtain the withdrawal of such order at the earliest possible moment. The Company will use its best efforts to comply with the provisions of and make all requisite filings with the Commission pursuant to Rule 430A and to notify the Representatives promptly of all such filings.
(c) The Company will furnish to the Representatives, without charge, two signed copies of the Registration Statement and of any post-effective amendment thereto, including financial statements and schedules, and all exhibits thereto, and will furnish to the Representatives, without charge, for transmittal to each of the other
Underwriters, a copy of the Registration Statement and any post-effective amendment thereto, including financial statements and schedules but without exhibits.
(d) The Company will comply with all the provisions of any undertakings contained in the Registration Statement.
(e) On the Effective Date, and thereafter from time to time, the Company will deliver to each of the Underwriters, without charge, as many copies of the Prospectus or any amendment or supplement thereto as the Representatives may reasonably request. The Company consents to the use of the Prospectus or any amendment or supplement thereto by the several Underwriters and by all dealers to whom the Shares may be sold, both in connection with the offering or sale of the Shares and for any period of time thereafter during which the Prospectus is required by law to be delivered in connection therewith. If during such period of time any event shall occur which in the judgment of the Company or counsel to the Underwriters should be set forth in the Prospectus in order to make any statement therein, in the light of the circumstances under which it was made, not misleading, or if it is necessary to supplement or amend the Prospectus to comply with law, the Company will forthwith prepare and duly file with the Commission an appropriate supplement or amendment thereto, and will deliver to each of the Underwriters, without charge, such number of copies thereof as the Representatives may reasonably request.
(f) Prior to any public offering of the Shares by the Underwriters, the Company will cooperate with the Representatives and counsel to the Underwriters in connection with the registration or qualification of the Shares for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Representatives may request; provided, that in no event shall the Company be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action which would subject it to general service of process in any jurisdiction where it is not now so subject.
(g) During the period of five years commencing on the Effective Date, the Company will furnish to the Representatives and each other Underwriter who may so request copies of such financial statements and other periodic and special reports as the Company may from time to time distribute generally to the holders of any class of its capital stock, and will furnish to the Representatives and each other Underwriter who may so request a copy of each annual or other report it shall be required to file with the Commission.
(h) The Company will make generally available to holders of its securities as soon as may be practicable but in no event later than the last day of the fifteenth full calendar month following the calendar quarter in which the Effective Date falls, an earnings statement (which need not be audited but shall be in reasonable detail) for a period of 12 months ended commencing after the Effective Date, and satisfying the provisions of Section 11(a) of the Act (including Rule 158 of the Rules and Regulations).
(i) Whether or not the transactions contemplated by this Agreement are consummated or this Agreement is terminated, the Company will pay, or reimburse if paid by the Representatives, all costs and expenses incident to the performance of the obligations of the Company under this Agreement, including but not limited to costs and expenses of or relating to (1) the preparation, printing and filing of the Registration Statement and exhibits to it, each preliminary prospectus, the Prospectus and any amendment or supplement to the Registration Statement or the Prospectus, (2) the preparation and delivery of certificates representing the Shares, (3) the word processing, printing and reproduction of this Agreement, the Agreement Among Underwriters, any Dealer Agreements and any Underwriters' Questionnaire, (4) furnishing (including costs of shipping, mailing and courier) such copies of the Registration Statement, the Prospectus and any preliminary prospectus, and all amendments and supplements thereto, as may be requested for use in connection with the offering and sale of the Shares by the Underwriters or by dealers to whom Shares may be sold, (5) the quotation of the Shares on the Nasdaq OTC Bulletin Board, (6) any filings required to be made by the Underwriters with the NASD, and the fees, disbursements and other charges of counsel for the Underwriters in connection therewith, (7) the registration or qualification of the Shares for offer and sale under the securities or Blue Sky laws of such jurisdictions designated pursuant to Section 4(f), including the fees, disbursements and other charges of counsel to the Underwriters in connection therewith, and the preparation and printing of preliminary, supplemental and final Blue Sky memoranda, (8) counsel to the Company, (9) the transfer agent for the Shares and (10) the Accountants.
(j) If this Agreement shall be terminated by the
Company pursuant to any of the provisions hereof (otherwise than pursuant to
Section 8) or if for any reason the Company shall be unable to perform its
obligations hereunder, the Company will reimburse the several Underwriters for
all out-of-pocket expenses (including the fees, disbursements and other charges
of counsel to the Underwriters) reasonably incurred by them in connection
herewith.
(k) The Company will not at any time, directly or indirectly, take any action intended, or which might reasonably be expected, to cause or result in, or which will constitute, stabilization of the price of the shares of Common Stock to facilitate the sale or resale of any of the Shares.
(l) The Company will apply the net proceeds from the offering and sale of the Shares to be sold by the Company in the manner set forth in the Prospectus under "Use of Proceeds" and shall file such reports with the Commission with respect to the sale of the Shares and the application of the proceeds therefrom as may be required in accordance with Rule 463 under the Act.
(m) Except as set forth in the Registration Statement and the Prospectus, during the period of 180 days commencing at the Closing Date, the Company will not, without the prior written consent of PaineWebber Incorporated, directly or indirectly, sell, offer to sell, grant any option for the sale of, or otherwise dispose of, any
Common Stock or securities convertible into Common Stock, other than to the Underwriters pursuant to this Agreement and other than pursuant to employee benefit plans, provided, that the Company will not grant options to purchase shares of Common Stock pursuant to such employee benefit plans at a price less than the initial public offering price.
(n) The Company will not, and will cause each of its executive officers, directors and each beneficial owner of more than 5% of the outstanding shares of Common Stock to enter into agreements with the Representatives in the form set forth in Exhibit B to the effect that they will not, for a period of 180 days after the commencement of the public offering of the Shares, without the prior written consent of PaineWebber Incorporated, sell, contract to sell or otherwise dispose of any shares of Common Stock or rights to acquire such shares (other than pursuant to employee stock option plans or in connection with other employee incentive compensation arrangements).
5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. In addition to the execution and delivery of the Price Determination Agreement, the obligations of each Underwriter hereunder are subject to the following conditions:
(a) Notification that the Registration Statement has become effective shall be received by the Representatives not later than 5:00 p.m., New York City time, on the date of this Agreement or at such later date and time as shall be consented to in writing by the Representatives and all filings required by Rule 424 of the Rules and Regulations and Rule 430A shall have been made.
(b) (i) No stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall be pending or threatened by the Commission,
(ii) no order suspending the effectiveness of the Registration Statement or the
qualification or registration of the Shares under the securities or Blue Sky
laws of any jurisdiction shall be in effect and no proceeding for such purpose
shall be pending before or threatened or contemplated by the Commission or the
authorities of any such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or any such authorities
shall have been complied with to the satisfaction of the staff of the Commission
or such authorities and (iv) after the date hereof no amendment or supplement to
the Registration Statement or the Prospectus shall have been filed unless a copy
thereof was first submitted to the Representatives and the Representatives did
not object thereto in good faith, and the Representatives shall have received
certificates, dated the Closing Date and the Option Closing Date and signed by
the Chief Executive Officer or the Chairman of the Board of Directors of the
Company and the Chief Financial Officer of the Company (who may, as to
proceedings threatened, rely upon the best of their information and belief), to
the effect of clauses (i), (ii) and (iii).
(c) Since the respective dates as of which information is given in the Registration Statement and the Prospectus, (i) there shall not have been, and no development shall have occurred which could reasonably be expected to result in, a
material adverse change in the general affairs, business, business prospects, properties, management, condition (financial or otherwise) or results of operations of the Company or the Bank, whether or not arising from transactions in the ordinary course of business, in each case other than as set forth in or contemplated by the Registration Statement and the Prospectus and (ii) neither the Company nor the Bank shall have sustained any material loss or interference with its business or properties from fire, explosion, flood or other casualty, whether or not covered by insurance, or from any labor dispute or any court or legislative or other governmental action, order or decree, which is not set forth in the Registration Statement and the Prospectus, if in the judgment of the Representatives any such development makes it impracticable or inadvisable to consummate the sale and delivery of the Shares by the Underwriters at the initial public offering price.
(d) Since the respective dates as of which information is given in the Registration Statement and the Prospectus, there shall have been no litigation or other proceeding instituted against the Company or the Bank or any of their respective officers or directors in their capacities as such, before or by any Federal, state or local court, commission, regulatory body, administrative agency or other governmental body, domestic or foreign, in which litigation or proceeding an unfavorable ruling, decision or finding would materially and adversely affect the business, properties, business prospects, condition (financial or otherwise) or results of operations of the Company or the Bank.
(e) Each of the representations and warranties of the Company contained herein shall be true and correct in all material respects at the Closing Date and, with respect to the Option Shares, at the Option Closing Date, as if made at the Closing Date and, with respect to the Option Shares, at the Option Closing Date, and all covenants and agreements herein contained to be performed on the part of the Company and all conditions herein contained to be fulfilled or complied with by the Company at or prior to the Closing Date and, with respect to the Option Shares, at or prior to the Option Closing Date, shall have been duly performed, fulfilled or complied with.
(f) The Representatives shall have received an opinion, dated the Closing Date and, with respect to the Option Shares, the Option Closing Date, and satisfactory in form and substance to counsel for the Underwriters, from Powell, Goldstein, Frazer and Murphy, LLP, counsel to the Company, to the effect set forth in Exhibit C.
(g) The Representatives shall have received an opinion, dated the Closing Date and the Option Closing Date, from Waller Lansden Dortch & Davis, A Professional Limited Liability Company, counsel to the Underwriters, with respect to the Registration Statement, the Prospectus and this Agreement, which opinion shall be satisfactory in all respects to the Representatives.
(h) On the date of the Prospectus, the Accountants shall have furnished to the Representatives a letter, dated the date of its delivery, addressed to the Representatives and in form and substance satisfactory to the Representatives, confirming that they are independent accountants with respect to the Company as required by the Act
and the Rules and Regulations and with respect to the financial and other statistical and numerical information contained in the Registration Statement. At the Closing Date and, as to the Option Shares, the Option Closing Date, the Accountants shall have furnished to the Representatives a letter, dated the date of its delivery, which shall confirm, on the basis of a review in accordance with the procedures set forth in the letter from the Accountants, that nothing has come to their attention during the period from the date of the letter referred to in the prior sentence to a date (specified in the letter) not more than five days prior to the Closing Date and the Option Closing Date which would require any change in their letter dated the date of the Prospectus, if it were required to be dated and delivered at the Closing Date and the Option Closing Date.
(i) At the Closing Date and, as to the Option Shares, the Option Closing Date, there shall be furnished to the Representatives an accurate certificate, dated the date of its delivery, signed by each of the Chief Executive Officer and the Chief Financial Officer of the Company, in form and substance satisfactory to the Representatives, to the effect that:
(i) Each signer of such certificate has carefully examined the Registration Statement and the Prospectus and (A) as of the date of such certificate, such documents are true and correct in all material respects and do not omit to state a material fact required to be stated therein or necessary in order to make the statements therein not untrue or misleading and (B) since the Effective Date, no event has occurred as a result of which it is necessary to amend or supplement the Prospectus in order to make the statements therein not untrue or misleading in any material respect;
(ii) Each of the representations and warranties of the Company contained in this Agreement were, when originally made, and are, at the time such certificate is delivered, true and correct in all material respects;
(iii) Each of the covenants required herein to be performed by the Company on or prior to the delivery of such certificate has been duly, timely and fully performed and each condition herein required to be complied with by the Company on or prior to the date of such certificate has been duly, timely and fully complied with; and
(iv) Since the respective dates as of which information is given in the Registration Statement and the Prospectus, (A) there has not been, and no development has occurred which could reasonably be expected to result in, a material adverse change in the general affairs, business, business prospects, properties, management, condition (financial or otherwise) or results of operations of the Company or the Bank, whether or not arising from transactions in the ordinary course of business, in each case other than as set forth in or contemplated by the Registration Statement and the Prospectus and (B) neither the Company nor the Bank has sustained any material loss or interference with its business or properties from fire, explosion, flood or other casualty, whether or not covered by
insurance, or from any labor dispute or any court or legislative or other governmental action, order or decree, which is not set forth in the Registration Statement and the Prospectus,
and such other matters as the Representatives may reasonably request.
(j) On or prior to the Closing Date, the
Representatives shall have received the executed agreements referred to in
Section 4(n).
(k) The Shares shall be qualified for sale in such states as the Representatives may reasonably request, each such qualification shall be in effect and not subject to any stop order or other proceeding on the Closing Date and the Option Closing Date.
(l) Prior to the Closing Date, the Shares shall be approved for quotation on the Nasdaq OTC Bulletin Board when issued.
(m) The National Association of Securities Dealers, Inc. shall have approved the underwriting terms and arrangements and such approval shall not have been withdrawn or limited.
(n) The Company shall have furnished to the Representatives such certificates, in addition to those specifically mentioned herein, as the Representatives may have reasonably requested as to the accuracy and completeness at the Closing Date and the Option Closing Date of any statement in the Registration Statement or the Prospectus, as to the accuracy at the Closing Date and the Option Closing Date of the representations and warranties of the Company herein, as to the performance by the Company of its obligations hereunder, or as to the fulfillment of the conditions concurrent and precedent to the obligations hereunder of the Representatives.
(o) The Company shall have furnished the Representatives with evidence of its receipt of the preliminary conditional approval of the OCC and the applications for each of the Regulatory Approvals.
6. Indemnification.
(a) The Company will indemnify and hold harmless each Underwriter, the directors, officers, employees and agents of each Underwriter and each person, if any, who controls each Underwriter within the meaning of Section 15 of the Act or Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), from and against any and all losses, claims, liabilities, expenses and damages (including, but not limited to, any and all investigative, legal and other expenses reasonably incurred in connection with, and any and all amounts paid in settlement of, any action, suit or proceeding between any of the indemnified parties and any indemnifying parties or between any indemnified party and any third party, or otherwise, or any claim asserted), as and when incurred, to which any Underwriter, or any such person, may become subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, liabilities, expenses or damages arise out of or are based on (i) any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, the Registration Statement or the Prospectus or any
amendment or supplement to the Registration Statement or the Prospectus, or in
any application or other document executed by or on behalf of the Company or
based on written information furnished by or on behalf of the Company filed in
any jurisdiction in order to qualify the Shares under the Securities Laws
thereof or filed with the Commission, (ii) the omission or alleged omission to
state in such document a material fact required to be stated in it or necessary
to make the statements in it not misleading or (iii) any act or failure to act
or any alleged act or failure to act by any Underwriter in connection with, or
relating in any manner to, the Shares or the offering contemplated hereby, and
which is included as part of or referred to in any loss, claim, liability,
expense or damage arising out of or based upon matters covered by clause (i) or
(ii) above (provided that the Company shall not be liable under this clause
(iii) to the extent it is finally judicially determined by a court of competent
jurisdiction that such loss, claim, liability, expense or damage resulted
directly from any such acts or failures to act undertaken or omitted to be taken
by such underwriter through its gross negligence or willful misconduct);
provided that the Company will not be liable to the extent that such loss,
claim, liability, expense or damage arises from the sale of the Shares in the
public offering to any person by an Underwriter and is based on an untrue
statement or omission or alleged untrue statement or omission of a material fact
made in reliance on and in conformity with information relating to any
Underwriter furnished in writing to the Company by the Representatives on behalf
of any Underwriter expressly for inclusion in the Registration Statement, any
preliminary prospectus or the Prospectus. This indemnity agreement will be in
addition to any liability that the Company might otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company, each person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, each director of the Company and each officer of the Company who signs the Registration Statement to the same extent as the foregoing indemnity from the Company to each Underwriter, but only insofar as losses, claims, liabilities, expenses or damages arise out of or are based on any untrue statement or omission or alleged untrue statement or omission of a material fact made in reliance on and in conformity with information relating to any Underwriter furnished in writing to the Company by the Representatives on behalf of such Underwriter expressly for use in the Registration Statement, the Preliminary Prospectus or the Prospectus. This indemnity will be in addition to any liability that each Underwriter might otherwise have; provided, however, that in no case shall any Underwriter be liable or responsible for any amount in excess of the underwriting discounts and commissions received by such Underwriter.
(c) Any party that proposes to assert the right to be indemnified under this Section 6 will, promptly after receipt of notice of commencement of any action against such party in respect of which a claim is to be made against an indemnifying party or parties under this Section 6, notify each such indemnifying party of the commencement
of such action, enclosing a copy of all papers served, but the omission so to notify such indemnifying party will not relieve it from any liability that it may have to any indemnified party under the foregoing provisions of this Section 6 unless, and only to the extent that, such omission results in the forfeiture of substantive rights or defenses by the indemnifying party. If any such action is brought against any indemnified party and it notifies the indemnifying party of its commencement, the indemnifying party will be entitled to participate in and, to the extent that it elects by delivering written notice to the indemnified party promptly after receiving notice of the commencement of the action from the indemnified party, jointly with any other indemnifying party similarly notified, to assume the defense of the action, with counsel satisfactory to the indemnified party, and after notice from the indemnifying party to the indemnified party of its election to assume the defense, the indemnifying party will not be liable to the indemnified party for any legal or other expenses except as provided below and except for the reasonable costs of investigation subsequently incurred by the indemnified party in connection with the defense. The indemnified party will have the right to employ its own counsel in any such action, but the fees, expenses and other charges of such counsel will be at the expense of such indemnified party unless (1) the employment of counsel by the indemnified party has been authorized in writing by the indemnifying party, (2) the indemnified party has reasonably concluded (based on advice of counsel) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, (3) a conflict or potential conflict exists (based on advice of counsel to the indemnified party) between the indemnified party and the indemnifying party (in which case the indemnifying party will not have the right to direct the defense of such action on behalf of the indemnified party) or (4) the indemnifying party has not in fact employed counsel to assume the defense of such action within a reasonable time after receiving notice of the commencement of the action, in each of which cases the reasonable fees, disbursements and other charges of counsel will be at the expense of the indemnifying party or parties. It is understood that the indemnifying party or parties shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm (in addition to local counsel) admitted to practice in such jurisdiction at any one time for all such indemnified party or parties. All such fees, disbursements and other charges will be reimbursed by the indemnifying party promptly as they are incurred. An indemnifying party will not be liable for any settlement of any action or claim effected without its written consent (which consent will not be unreasonably withheld). No indemnifying party shall, without the prior written consent of each indemnified party, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding relating to the matters contemplated by this Section 6 (whether or not any indemnified party is a party thereto), unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising or that may arise out of such claim, action or proceeding. Notwithstanding any other provision of this Section 6(c), if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement effected without its written consent if (i) such settlement
is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement.
(d) In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in the foregoing paragraphs of this Section 6 is applicable in accordance with its terms but for any reason is held to be unavailable from the Company or the Underwriters, the Company and the Underwriters will contribute to the total losses, claims, liabilities, expenses and damages (including any investigative, legal and other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted, but after deducting any contribution received by the Company from persons other than the Underwriters, such as persons who control the Company within the meaning of the Act, officers of the Company who signed the Registration Statement and directors of the Company, who also may be liable for contribution) to which the Company and any one or more of the Underwriters may be subject in such proportion as shall be appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other. The relative benefits received by the Company on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover page of the Prospectus. If, but only if, the allocation provided by the foregoing sentence is not permitted by applicable law, the allocation of contribution shall be made in such proportion as is appropriate to reflect not only the relative benefits referred to in the foregoing sentence but also the relative fault of the Company, on the one hand, and the Underwriters, on the other, with respect to the statements or omissions which resulted in such loss, claim, liability, expense or damage, or action in respect thereof, as well as any other relevant equitable considerations with respect to such offering. Such relative fault shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or the Representatives on behalf of the Underwriters, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contributions pursuant to this Section 6(d) were to be determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, liability, expense or damage, or action in respect thereof, referred to above in this Section 6(d) shall be deemed to include, for purpose of this Section 6(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 6(d), no Underwriter shall be required to
contribute any amount in excess of the underwriting discounts and commissions received by it and no person found guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) will be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations to contribute as provided in this Section 6(d) are several in proportion to their respective underwriting obligations and not joint. For purposes of this Section 6(d), any person who controls a party to this Agreement within the meaning of the Act will have the same rights to contribution as that party, and each officer of the Company who signed the Registration Statement will have the same rights to contribution as the Company, subject in each case to the provisions hereof. Any party entitled to contribution, promptly after receipt of notice of commencement of any action against such party in respect of which a claim for contribution may be made under this Section 6(d), will notify any such party or parties from whom contribution may be sought, but the omission so to notify will not relieve the party or parties from whom contribution may be sought from any other obligation it or they may have under this Section 6(d). Except for a settlement entered into pursuant to the last sentence of Section 6(c) hereof, no party will be liable for contribution with respect to any action or claim settled without its written consent (which consent will not be unreasonably withheld).
(e) The indemnity and contribution agreements contained in this Section 6 and the representations and warranties of the Company contained in this Agreement shall remain operative and in full force and effect regardless of (i) any investigation made by or on behalf of the Underwriters, (ii) acceptance of the Shares and payment therefore or (iii) any termination of this Agreement.
7. TERMINATION. The obligations of the several Underwriters under this Agreement may be terminated at any time on or prior to the Closing Date (or, with respect to the Option Shares, on or prior to the Option Closing Date), by notice to the Company from the Representatives, without liability on the part of any Underwriter to the Company, if, prior to delivery and payment for the Shares (or the Option Shares, as the case may be), in the sole judgment of the Representatives, (i) there has been, since the respective dates as of which information is given in the Registration Statement, any material adverse change in the Company's business, properties, business prospects, condition (financial or otherwise) or results of operations, (ii) trading in any of the equity securities of the Company shall have been suspended by the Commission, the NASD or by the Nasdaq OTC Bulletin Board, (iii) trading in securities generally on the New York Stock Exchange or the Nasdaq Stock Market shall have been suspended or limited or minimum or maximum prices shall have been generally established on such exchange or over the counter market, or additional material governmental restrictions, not in force on the date of this Agreement, shall have been imposed upon trading in securities generally by such exchange or by order of the Commission or the NASD or any court or other governmental authority, (iv) a general banking moratorium shall have been declared by either Federal or New York State authorities or (v) any material adverse change in the financial or securities markets in the United States or in political, financial or economic conditions in the United States or any outbreak or material escalation of hostilities or declaration by the United States of a national emergency or war or other calamity or crisis
shall have occurred the effect of any of which is such as to make it, in the sole judgment of the Representatives, impracticable or inadvisable to market the Shares on the terms and in the manner contemplated by the Prospectus.
8. SUBSTITUTION OF UNDERWRITERS. If any one or more of the Underwriters shall fail or refuse to purchase any of the Firm Shares which it or they have agreed to purchase hereunder, and the aggregate number of Firm Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than one-tenth of the aggregate number of Firm Shares, the other Underwriters shall be obligated, severally, to purchase the Firm Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase, in the proportions which the number of Firm Shares which they have respectively agreed to purchase pursuant to Section 1 bears to the aggregate number of Firm Shares which all such non-defaulting Underwriters have so agreed to purchase, or in such other proportions as the Representatives may specify; provided that in no event shall the maximum number of Firm Shares which any Underwriter has become obligated to purchase pursuant to Section 1 be increased pursuant to this Section 8 by more than one-ninth of the number of Firm Shares agreed to be purchased by such Underwriter without the prior written consent of such Underwriter. If any Underwriter or Underwriters shall fail or refuse to purchase any Firm Shares and the aggregate number of Firm Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase exceeds one-tenth of the aggregate number of the Firm Shares and arrangements satisfactory to the Representatives and the Company for the purchase of such Firm Shares are not made within 48 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting Underwriter or the Company for the purchase or sale of any Shares under this Agreement. In any such case either the Representatives or the Company shall have the right to postpone the Closing Date, but in no event for longer than seven days, in order that the required changes, if any, in the Registration Statement and in the Prospectus or in any other documents or arrangements may be effected. Any action taken pursuant to this Section 8 shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement.
9. MISCELLANEOUS. Notice given pursuant to any of the provisions of this Agreement shall be in writing and, unless otherwise specified, shall be mailed or delivered (a) if to the Company, at the office of the Company, 3401 West End Avenue, Suite 306, Nashville, Tennessee 37203, Attention: Chief Executive Officer, or (b) if to the Underwriters, to the Representatives at the offices of PaineWebber Incorporated, 1285 Avenue of the Americas, New York, New York 10019, Attention: Corporate Finance Department. Any such notice shall be effective only upon receipt. Any notice under Section 7 or 8 may be made by telex or telephone, but if so made shall be subsequently confirmed in writing.
This Agreement has been and is made solely for the benefit of the several Underwriters and the Company and of the controlling persons, directors and officers referred to in Section 6, and their respective successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. The term
"successors and assigns" as used in this Agreement shall not include a purchaser, as such purchaser, of Shares from any of the several Underwriters.
All representations, warranties and agreements of the Company contained herein or in certificates or other instruments delivered pursuant hereto, shall remain operative and in full force and effect regardless of any investigation made by or on behalf of any Underwriter or any of its controlling persons and shall survive delivery of and payment for the Shares hereunder.
Any action required or permitted to be taken by the Representatives under this Agreement may be taken by them jointly or by PaineWebber Incorporated.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE.
This Agreement may be signed in two or more counterparts with the same effect as if the signatures thereto and hereto were upon the same instrument.
In case any provision in this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
The Company and the Underwriters each hereby irrevocably waive any right they may have to a trial by jury in respect of any claim based upon or arising out of this Agreement or the transactions contemplated hereby.
This Agreement may not be amended or otherwise modified or any provision hereof waived except by an instrument in writing signed by the Representatives and the Company.
Please confirm that the foregoing correctly sets forth the agreement among the Company and the several Underwriters.
Very truly yours,
PINNACLE FINANCIAL PARTNERS,
INC.
Confirmed as of the date first
above mentioned:
PAINEWEBBER INCORPORATED
J.C. BRADFORD & CO., L.L.C.
Acting on behalf of
themselves and as the
Representatives of the
other several Underwriters
named in Schedule I hereof.
By: PAINEWEBBER INCORPORATED
By: J.C. BRADFORD & CO., L.L.C.
SCHEDULE I
UNDERWRITERS
Name of Number of
Underwriters Firm Shares
to be Purchased
PaineWebber Incorporated
J.C. Bradford & Co., L.L.C.
Total ......................................................... _____________
2,500,000
=========
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EXHIBIT 3.2
BYLAWS
OF
PINNACLE FINANCIAL PARTNERS, INC.
BYLAWS
OF
PINNACLE FINANCIAL PARTNERS, INC.
INDEX
PAGE
----
ARTICLE ONE - OFFICES............................................................. 1
1.1 Principal Office..................................................... 1
1.2 Other Offices........................................................ 1
ARTICLE TWO - SHAREHOLDERS' MEETINGS.............................................. 1
2.1 Annual Meeting
2.2 Special Meetings..................................................... 1
2.3 Place................................................................ 1
2.4 Notice............................................................... 1
2.5 Quorum............................................................... 2
2.6 Proxies; Required Vote............................................... 2
2.7 Presiding Officer and Secretary ..................................... 2
2.8 Shareholder List .................................................... 2
2.9 Action in Lieu of Meeting ........................................... 2
ARTICLE THREE - DIRECTORS ........................................................ 3
3.1 Management .......................................................... 3
3.2 Number of Directors ................................................. 3
3.3 Vacancies .......................................................... 3
3.4 Election of Directors ............................................... 3
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3.5 Removal ............................................................. 3
3.6 Resignation ......................................................... 3
3.7 Compensation ........................................................ 4
3.8 Honorary and Advisory Directors ..................................... 4
3.9 Nomination of Directors.............................................. 4
ARTICLE FOUR - COMMITTEES ........................................................ 5
4.1 Executive Committee ................................................. 5
4.2 Other Committees .................................................... 6
4.3 Removal ............................................................. 6
ARTICLE FIVE - MEETINGS OF THE BOARD OF DIRECTORS ................................ 6
5.1 Time and Place ...................................................... 6
5.2 Regular Meetings .................................................... 6
5.3 Special Meetings .................................................... 6
5.4 Content and Waiver of Notice ........................................ 6
5.5 Quorum; Participation by Telephone .................................. 7
5.6 Action in Lieu of Meeting ........................................... 7
5.7 Interested Directors and Officers ................................... 7
ARTICLE SIX - OFFICERS, AGENTS AND EMPLOYEES ..................................... 7
6.1 General Provisions .................................................. 7
6.2 Powers and Duties of the Chairman of the Board and the President..... 8
6.3 Powers and Duties of Vice Presidents ................................ 9
6.4 Powers and Duties of the Secretary .................................. 9
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6.5 Powers and Duties of the Treasurer .................................. 8
6.6 Appointment, Powers and Duties of Assistant Secretaries ............. 9
6.7 Appointment, Powers and Duties of Assistant Treasurers .............. 9
6.8 Delegation of Duties ................................................ 9
ARTICLE SEVEN - CAPITAL STOCK .................................................... 10
7.1 Certificates ....................................................... 10
7.2 Shareholder List ................................................... 10
7.3 Transfer of Shares ................................................. 10
7.4 Record Dates ....................................................... 11
7.5 Registered Owner ................................................... 11
7.6 Transfer Agent and Registrars ...................................... 11
7.7 Lost Certificates ................................................. 11
7.8 Fractional Shares or Scrip ......................................... 11
ARTICLE EIGHT - BOOKS AND RECORDS; SEAL; ANNUAL STATEMENTS ..................... 12
8.1 Inspection of Books and Records .................................... 12
8.2 Seal ............................................................... 12
8.3 Annual Statements .................................................. 12
ARTICLE NINE - INDEMNIFICATION .................................................. 13
9.1 Authority to Indemnify ............................................. 13
9.2 Mandatory Indemnification .......................................... 13
9.3 Advances for Expenses .............................................. 13
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9.4 Court-ordered Indemnification and Advances for Expenses ............ 13
9.5 Determination of Indemnification ................................... 13
9.6 Authorization of Indemnification ................................... 14
9.7 Other Rights ...................................................... 14
9.8 Insurance .......................................................... 14
9.9 Continuation of Expenses ........................................... 15
ARTICLE TEN - NOTICES: WAIVERS OF NOTICE ....................................... 15
10.1 Notices ............................................................... 15
10.2 Waivers of Notice ..................................................... 15
ARTICLE ELEVEN - EMERGENCY POWERS ............................................... 15
11.1 Bylaws ................................................................ 15
11.2 Lines of Succession ................................................... 15
11.3 Head Office ........................................................... 16
11.4 Period of Effectiveness .............................................. 16
11.5 Notices ............................................................... 16
11.6 Officers as Directors Pro Tempore ..................................... 16
11.7 Liability of Officers, Directors and Agents ........................... 16
ARTICLE TWELVE - CHECKS, NOTES, DRAFTS, ETC. .................................... 16
ARTICLE THIRTEEN - AMENDMENTS ................................................... 16
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BYLAWS
OF
PINNACLE FINANCIAL PARTNERS, INC.
ARTICLE ONE
OFFICES
1.1 PRINCIPAL OFFICE. The location of the principal office of the corporation in the State of Tennessee shall be in Davidson County, Tennessee.
1.2 OTHER OFFICES. The corporation may, in addition to its principal office in the State of Tennessee, have offices at such other places, either within or without the State of Tennessee, as the Board of Directors may from time to time appoint or as the business of the corporation may require.
ARTICLE TWO
SHAREHOLDERS' MEETINGS
2.1 ANNUAL MEETING. A meeting of shareholders of the corporation entitled to vote shall be held, annually, within six (6) months after the end of each fiscal year of the corporation for the purpose of electing directors and for transacting of any other business authorized or required to be transacted by such shareholders of the corporation. The annual meeting shall be held at such time and place, and on such date, as the directors shall determine from time to time and as shall be specified in the notice of the meeting.
2.2 SPECIAL MEETINGS. Special meetings of the shareholders may be called at any time by the corporation's Board of Directors, its President, or by the corporation's shareholders upon the delivery of a written request to the corporation's Secretary owning an aggregate of not less than twenty-five percent (25%) of the outstanding capital stock of the corporation, then entitled to vote, describing the purpose(s) for the request. Special meetings shall be held at such a time and place and on such date as shall be specified in the notice of the meeting.
2.3 PLACE. Annual or special meetings of shareholders may be held within or without the State of Tennessee.
2.4 NOTICE. Notice of annual or special shareholders meetings stating the
time, date, and place of the meeting shall be given in writing not less than ten
(10) nor more than sixty (60) days before the date of the meeting, either mailed
to the last known address or personally given to each shareholder. Notice of any
special meeting of shareholders shall state the purpose or purposes for which
the meeting is called. The notice of any meeting at which amendments to or
restatements of the charter, merger or share exchange of the corporation, or the
disposition of corporate assets requiring shareholder approval are to be
considered shall state such purpose, and shall further
comply with all requirements of law. Notice of a meeting may be waived by an instrument in writing executed before or after the meeting. The waiver need not specify the purpose of the meeting or the business transacted and shall be delivered to the corporation for inclusion in the corporate minutes or records. Attendance at such meeting in person or by proxy shall constitute a waiver of notice thereof as permitted by law.
2.5 QUORUM. At any meeting of the shareholders, the holders of a majority of the outstanding stock of the corporation then having voting rights, present in person or represented by proxy, shall constitute a quorum for all purposes, including the election of directors, except where otherwise expressly provided by statute or by the corporation's charter, or any amendment thereof. In the absence of a quorum, a majority in interest of the shareholders so present or represented and entitled to vote may adjourn the meeting from time to time, without further notice as permitted by law, until a quorum shall attend, and thereupon, any business may be transacted which might have been transacted at the meeting as originally called.
2.6 PROXIES; REQUIRED VOTE. At every meeting of the shareholders, including meetings of shareholders for the election of directors, any shareholder having the right to vote shall be entitled to vote in person or by proxy, but no proxy shall be voted after eleven months from its date, unless said proxy expressly provides for a longer period. Each shareholder shall have one vote for each share of stock having voting power, registered in his or her name on the books of the corporation. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders, except as otherwise provided by law, by the charter or by these bylaws.
2.7 PRESIDING OFFICER AND SECRETARY. At every meeting of shareholders, the Chairman or the President, or if such officers shall not be present then the person appointed by one of them, shall preside. The Secretary or an Assistant Secretary, or if such officers shall not be present, the appointee of the presiding officer of the meeting, shall act as secretary of the meeting.
2.8 SHAREHOLDER LIST. Beginning two (2) business days after notice of a shareholders' meeting is given, the corporation shall produce for inspection by any shareholder, at its principal office, a complete alphabetical list of shareholders, by voting group or class, showing the address and share holdings of each shareholder. The corporation shall continue to make the shareholders' list available for inspection at the meeting by any shareholder, and such list shall remain available for inspection through the meeting and any adjournment thereof.
2.9 ACTION IN LIEU OF MEETING. Any action to be taken at a meeting of the shareholders of the corporation, or any action that may be taken at a meeting of the shareholders, may be taken without a meeting if a consent in writing setting forth the action so taken shall be signed by all shareholders entitled to vote on such matter(s) upon which the affirmative vote of the shares having voting power to cast not less than the minimum number (or numbers, in the case of voting by class) of votes that would be necessary to authorize or take such action at a meeting shall constitute the act of the shareholders.
ARTICLE THREE
DIRECTORS
3.1 MANAGEMENT. Subject to these bylaws, or any lawful agreement between the shareholders, the full and entire management of the affairs and business of the corporation shall be vested in the Board of Directors, which shall have and may exercise all of the powers that may be exercised or performed by the corporation.
3.2 NUMBER OF DIRECTORS. The Board of Directors shall consist of not less than five (5) nor more than twenty-five (25) members. The number of directors may be fixed or changed from time to time within the minimum and maximum, or the range itself may be fixed or changed from time to time, by the affirmative vote of two-thirds of the issued and outstanding shares of the corporation entitled to vote in an election of directors, or by the affirmative vote of two-thirds of all directors then in office.
3.3 VACANCIES. The directors, even though less than a quorum, may fill any vacancy on the Board of Directors, including a vacancy created by an increase in the number of directors. Such appointment by the directors shall continue until the expiration of the term of the director whose place has become vacant, or, in the case of an increase in the number of directors, until the next meeting of the shareholders.
3.4 ELECTION OF DIRECTORS. The Board of Directors shall be divided into three (3) classes, Class I, Class II and Class III, which shall be nearly equal in number as possible. Each director in Class I shall be elected to an initial term of one (1) year, each director in Class II shall be elected to an initial term of two (2) years and each director in Class III shall be elected to an initial term of three (3) years, and each director shall serve until the election and qualification of his or her successor or until his or her earlier resignation, death or removal from office. Upon the expiration of the initial terms of office for each Class of directors, the directors of each Class shall be elected for terms of three (3) years, to serve until the election and qualification of their successors or until their earlier resignation, death or removal from office. No person shall be eligible to stand for election as a director, nor may be elected as a director, if such person is seventy (70) years of age or greater at the time of such election.
3.5 REMOVAL. Any director may be removed from office with cause upon the affirmative vote of the holders of a majority of the issued and outstanding shares of the corporation at a meeting with respect to which notice of such purpose is given, or upon the affirmative vote of two-thirds of all directors then in office. Any director may be removed from office without cause, at a meeting with respect to which notice of such purpose is given, only upon the affirmative vote of two-thirds of the holders of a majority of the issued and outstanding shares of the corporation.
3.6 RESIGNATION. Any director may resign at any time by so advising the Chairman of the Board or the President or by giving written notice to the corporation. A director who resigns may postpone the effectiveness of his or her resignation to a future date or upon the occurrence of a future event specified in a written tender of resignation. If no time of effectiveness is specified therein, a resignation shall be effective upon tender. A vacancy shall be deemed to exist at the time a
resignation is tendered, and the Board of Directors or the shareholders may, then or thereafter, elect a successor to take office when the resignation by its terms becomes effective.
3.7 COMPENSATION. Directors may be allowed such compensation for their services as directors as may from time to time be fixed by resolution of the Board of Directors.
3.8 HONORARY AND ADVISORY DIRECTORS. When a director of the corporation retires under the retirement policies of the corporation as established from time to time by the Board of Directors, the Board of Directors may appoint such retiring director to be an Honorary Director, Director Emeritus, or member of an advisory board established by the Board of Directors. The Board of Directors of the corporation also may appoint any individual an Honorary Director, Director Emeritus, or member of any advisory board established by the Board of Directors. Any individual appointed an Honorary Director, Director Emeritus, or member of an advisory board as provided by this Section 3.8 may be compensated as provided in Section 3.7, but such individual may not vote at any meeting of the Board of Directors or be counted in determining a quorum as provided in Section 5.5 and shall not have any responsibility or be subject to any liability imposed upon a director, or otherwise be deemed a director.
3.9 NOMINATION OF DIRECTORS.
(a) Only persons who are nominated in accordance with the procedures set forth in these bylaws shall be eligible for election as directors. Nominations of persons for election to the Board of Directors of the corporation may be made at any meeting of shareholders at which directors are to be elected only (i) by or at the direction of the Board of Directors or (ii) by any shareholder of the corporation entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this Section. The Board of Directors shall act as a nominating committee to select the management nominees for election as directors.
(b) Nominations, other than those management nominees made by or at the direction of the Board of Directors, shall be made by timely notice in writing to the Secretary of the corporation. To be timely, a shareholder's notice shall be delivered or mailed to and received at the principal executive offices of the corporation not less than 30 days prior to the date of the meeting; provided, however, that in the event that less than 40 days' notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting is mailed or such public disclosure was made. Such shareholder's notice shall set forth (i) as to each person whom the shareholder proposes to nominate for election or reelection as a director, all information relating to such person as required to be disclosed in solicitation of proxies for election of directors pursuant to Regulation 14A under the Securities and Exchange Act of 1934, as amended (including such person's written consent to being named in a proxy statement as a nominee and to serving as a director if elected); and (ii) as to the shareholder giving the notice (A) the name and address, as they appear on the books of the corporation, of such shareholder and (B) the class and number of shares of the corporation's capital stock that are beneficially owned by such shareholder. At the request of the Board of Directors any person nominated by the Board of Directors for election as a director shall furnish to the Secretary of the corporation that information required to be set forth in a shareholder's notice of
nomination which pertains to the nominee. No person shall be eligible for election as a director of the corporation unless nominated in accordance with the provisions of this Section. The officer presiding at the meeting shall, if the facts so warrant, determine and declare to the meeting that a nomination was not made in accordance with the provisions of this Section and the defective nomination shall be disregarded.
ARTICLE FOUR
COMMITTEES
4.1 EXECUTIVE COMMITTEE. (a) The Board of Directors may, by resolution adopted by a majority of the entire Board, designate an Executive Committee consisting of one or more directors. Each Executive Committee member shall hold office until the first meeting of the Board of Directors after the annual meeting of shareholders and until the member's successor is elected and qualified, or until the member's death, resignation or removal, or until the member shall cease to be a director.
(b) During the intervals between the meetings of the Board of Directors, the Executive Committee may exercise all the authority of the Board of Directors; provided, however, that the Executive Committee shall not have the power to amend or repeal any resolution of the Board of Directors that by its terms shall not be subject to amendment or repeal by the Executive Committee, and the Executive Committee shall not have the authority of the Board of Directors in reference to (i) the amendment of the charter or bylaws of the corporation; (ii) the adoption of a plan of merger or consolidation; (iii) the sale, lease, exchange or other disposition of all or substantially all the property and assets of the corporation; (iv) a voluntary dissolution of the corporation or the revocation of any such voluntary dissolution; (v) the authorization of distributions, except according to a formula or method prescribed by the Board of Directors; or (vi) the filling of vacancies on the Board of Directors or on any of its committees.
(c) The Executive Committee shall meet from time to time on call of the Chairman of the Board or the President or of any two or more members of the Executive Committee. Meetings of the Executive Committee may be held at such place or places, within or without the State of Tennessee, as the Executive Committee shall determine or as may be specified or fixed in the respective notices or waivers of such meetings. The Executive Committee may fix its own rules of procedure, including provision for notice of its meetings. It shall keep a record of its proceedings and shall report these proceedings to the Board of Directors at the meeting thereof held next after they have been taken, and all such proceedings shall be subject to revision or alteration by the Board of Directors except to the extent that action shall have been taken pursuant to or in reliance upon such proceedings prior to any such revision or alteration.
(d) The Executive Committee shall act by majority vote of its members; provided, however, that contracts or transactions of and by the corporation in which officers or Directors of the corporation are interested shall require the affirmative vote of a majority of the disinterested members of the Executive Committee at a meeting of the Executive Committee at which the material facts as to the interest and as to the contract or transaction are disclosed or known to the members of the Executive Committee prior to the vote.
(e) Members of the Executive Committee may participate in committee proceedings by means of conference telephone or similar communications equipment by means of which all persons participating in the proceedings can hear each other, and such participation shall constitute presence in person at such proceedings.
(f) The Board of Directors, by resolution adopted in accordance with paragraph (a) of this section, may designate one or more Directors as alternate members of the Executive Committee who may act in the place and stead of any absent member or members at any meeting of said committee.
4.2 OTHER COMMITTEES. The Board of Directors, by resolution adopted by a majority of the entire Board, may designate one or more additional committees, each committee to consist of one or more of the Directors of the corporation, which shall have such name or names and shall have and may exercise such powers of the Board of Directors, except the powers denied to the Executive Committee, as may be determined from time to time by the Board of Directors. Such committees shall provide for their own rules of procedure, subject to the same restrictions thereon as provided above for the Executive Committee.
4.3 REMOVAL. The Board of Directors shall have power at any time to remove any member of any committee, with or without cause, and to fill vacancies in and to dissolve any such committee.
ARTICLE FIVE
MEETINGS OF THE BOARD OF DIRECTORS
5.1 TIME AND PLACE. Meetings of the Board of Directors may be held at any place either within or without the State of Tennessee.
5.2 REGULAR MEETINGS. Regular meetings of the Board of Directors may be held without notice at such time and place, within or without the State of Tennessee, as shall be determined by the Board of Directors from time to time.
5.3 SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by the Chairman of the Board or the President on not less than two (2) day's notice by mail, telegram, cablegram, personal delivery, telephone, or e-mail (provided the recipient has an e-mail address) to each Director and shall be called by the Chairman of the Board or the President in like manner and on like notice on the written request of any two or more Directors. Any such special meeting shall be held at such time and place, within or without the State of Tennessee, as shall be stated in the notice of the meeting.
5.4 CONTENT AND WAIVER OF NOTICE. No notice of any meeting of the Board of Directors need state the purposes thereof. Notice of any meeting may be waived by an instrument in writing executed before or after the meeting. Attendance in person at any such meeting shall constitute a waiver of notice thereof unless the director at the beginning of the meeting (or promptly upon his or
her arrival) objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting.
5.5 QUORUM; PARTICIPATION BY TELEPHONE. At all meetings of the Board of Directors, the presence of a majority of the number of Directors in office immediately before the meeting begins shall be necessary and sufficient to constitute a quorum for the transaction of business. Directors may participate in any meeting by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting by means of such communications equipment shall constitute the presence in person at such meeting. Except as may be otherwise specifically provided by law, the charter or these bylaws, all resolutions adopted and all business transacted by the Board of Directors shall require the affirmative vote of a majority of the Directors present at the meeting. In the absence of a quorum, a majority of the Directors present at any meeting may adjourn the meeting from time to time until a quorum is present. Notice of any adjourned meeting need only be given by announcement at the meeting at which the adjournment is taken.
5.6 ACTION IN LIEU OF MEETING. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if a written consent thereto is signed by all members of the Board of Directors or of such committee, as the case may be, and such written consent is filed with the minutes of the proceedings of the Board of Directors and upon compliance with any further requirements of law pertaining to such consents.
5.7 INTERESTED DIRECTORS AND OFFICERS. An interested Director or officer is one who is a party to a contract or transaction with the corporation or who is an officer or Director of, or has a financial interest in, another corporation, partnership or association which is a party to a contract or transaction with the corporation. Contracts and transactions between the corporation and one or more interested Directors or officers shall not be void or voidable solely because of the involvement or vote of such interested persons as long as (a) the contract or transaction is approved in good faith by the Board of Directors or appropriate committee by the affirmative vote of a majority of disinterested Directors, even if the disinterested Directors be less than a quorum, at a meeting of the Board or committee at which the material facts as to the interested person or persons and the contract or transaction are disclosed or known to the Board or committee prior to the vote; or (b) the contract or transaction is approved in good faith by the shareholders after the material facts as to the interested person or persons and the contract or transaction have been disclosed to them; or (c) the contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified by the Board, committee or shareholders. Interested Directors may be counted in determining the presence of a quorum at a meeting of the Board or committee which authorizes the contract or transaction.
ARTICLE SIX
OFFICERS, AGENTS AND EMPLOYEES
6.1 GENERAL PROVISIONS. The officers of the corporation shall be a President and a Secretary, and may include a Treasurer, Chairman of the Board, one or more Vice Presidents, one or more Assistant Secretaries, and one or more Assistant Treasurers. The officers shall be elected by the
Board of Directors at the first meeting of the Board of Directors after the annual meeting of the shareholders in each year or shall be appointed as provided in these bylaws. The Board of Directors may elect other officers, agents and employees, who shall have such authority and perform such duties as may be prescribed by the Board of Directors. All officers shall hold office until the meeting of the Board of Directors following the next annual meeting of the shareholders after their election or appointment and until their successors shall have been elected or appointed and shall have qualified. Any two or more offices may be held by the same person, except the offices of President and Secretary. Any officer, agent or employee of the corporation may be removed by the Board of Directors with or without cause. Removal without cause shall be without prejudice to such person's contract rights, if any, but the election or appointment of any person as an officer, agent or employee of the corporation shall not of itself create contract rights. The compensation of officers, agents and employees elected by the Board of Directors shall be fixed by the Board of Directors or by a committee thereof, and this power may also be delegated to any officer, agent or employee as to persons under his or her direction or control. The Board of Directors may require any officer, agent or employee to give security for the faithful performance of his or her duties.
6.2 POWERS AND DUTIES OF THE CHAIRMAN OF THE BOARD AND THE PRESIDENT. The powers and duties of the Chairman of the Board and the President, subject to the supervision and control of the Board of Directors, shall be those usually appertaining to their respective offices and whatever other powers and duties are prescribed by these bylaws or by the Board of Directors.
(a) The CHAIRMAN OF THE BOARD shall preside at all meetings of the Board of Directors and at all meetings of the shareholders. The Chairman of the Board shall perform such other duties as the Board of Directors may from time to time direct.
(b) The PRESIDENT shall, unless otherwise provided by the Board of Directors, be the chief executive officer of the corporation. The President shall have general charge of the business and affairs of the corporation and shall keep the Board of Directors fully advised. The President shall employ and discharge employees and agents of the corporation, except such as shall be elected by the Board of Directors, and he or she may delegate these powers. The President shall have such powers and perform such duties as generally pertain to the office of the President, as well as such further powers and duties as may be prescribed by the Board of Directors. The President may vote the shares or other securities of any other domestic or foreign corporation of any type or kind which may at any time be owned by the corporation, may execute any shareholders' or other consents in respect thereof and may in his or her discretion delegate such powers by executing proxies, or otherwise, on behalf of the corporation. The Board of Directors, by resolution from time to time, may confer like powers upon any other person or persons.
6.3 POWERS AND DUTIES OF VICE PRESIDENTS. Each Vice President shall have such powers and perform such duties as the Board of Directors or the President may prescribe and shall perform such other duties as may be prescribed by these bylaws. In the absence or inability to act of the President, unless the Board of Directors shall otherwise provide, the Vice President who has served in that capacity for the longest time and who shall be present and able to act, shall perform all duties and may exercise any of the powers of the President. The performance of any such duty by a Vice President shall be conclusive evidence of his or her power to act.
6.4 POWERS AND DUTIES OF THE SECRETARY. The Secretary shall have charge of the minutes of all proceedings of the shareholders and of the Board of Directors and shall keep the minutes of all their meetings at which he or she is present. Except as otherwise provided by these bylaws, the Secretary shall attend to the giving of all notices to shareholders and Directors. He or she shall have charge of the seal of the corporation, shall attend to its use on all documents the execution of which on behalf of the corporation under its seal is duly authorized and shall attest the same by his or her signature whenever required. The Secretary shall have charge of the record of shareholders of the corporation, of all written requests by shareholders that notices be mailed to them at an address other than their addresses on the record of shareholders, and of such other books and papers as the Board of Directors may direct. Subject to the control of the Board of Directors, the Secretary shall have all such powers and duties as generally are incident to the position of Secretary or as may be assigned to the Secretary by the President or the Board of Directors.
6.5 POWERS AND DUTIES OF THE TREASURER. The Treasurer shall have charge of all funds and securities of the corporation, shall endorse the same for deposit or collection when necessary and deposit the same to the credit of the corporation in such banks or depositaries as the Board of Directors may authorize. The Treasurer may endorse all commercial documents requiring endorsements for or on behalf of the corporation and may sign all receipts and all commercial documents requiring endorsements for or on behalf of the corporation and may sign all receipts and vouchers for payments made to the corporation. The Treasurer shall have all such powers and duties as generally are incident to the position of Treasurer or as may be assigned to the Treasurer by the President or by the Board of Directors.
6.6 APPOINTMENT, POWERS AND DUTIES OF ASSISTANT SECRETARIES. Assistant Secretaries may be appointed by the President or elected by the Board of Directors. In the absence or inability of the Secretary to act, any Assistant Secretary may perform all the duties and exercise all the powers of the Secretary. The performance of any such duty shall be conclusive evidence of the Assistant Secretary's power to act. An Assistant Secretary shall also perform such other duties as the Secretary or the Board of Directors may assign to him or her.
6.7 APPOINTMENT, POWERS AND DUTIES OF ASSISTANT TREASURERS. Assistant Treasurers may be appointed by the President or elected by the Board of Directors. In the absence or inability of the Treasurer to act, an Assistant Treasurer may perform all the duties and exercise all the powers of the Treasurer. The performance of any such duty shall be conclusive evidence of the Assistant Treasurer's power to act. An Assistant Treasurer shall also perform such other duties as the Treasurer or the Board of Directors may assign to him or her.
6.8 DELEGATION OF DUTIES. In case of the absence of any officer of the corporation, or for any other reason that the Board of Directors may deem sufficient, the Board of Directors (or in the case of Assistant Secretaries or Assistant Treasurers only, the President) may confer for the time being the powers and duties, or any of them, of such officer upon any other officer or elect or appoint any new officer to fill a vacancy created by death, resignation, retirement or termination of any officer. In such latter event such new officer shall serve until the next annual election of officers.
ARTICLE SEVEN
CAPITAL STOCK
7.1 CERTIFICATES. (a) The interest of each shareholder shall be evidenced by a certificate or certificates representing shares of the corporation which shall be in such form as the Board of Directors may from time to time adopt and shall be numbered and shall be entered in the books of the corporation as they are issued. Each certificate representing shares shall set forth upon the face thereof (or upon the back thereof as to (v) below) the following:
(i) the name of this corporation;
(ii) that the corporation is organized under the laws of the State of Tennessee;
(iii) the name or names of the person or persons to whom the certificate is issued;
(iv) the number and class of shares, and the designation of the series, if any, which the certificate represents; and
(v) that the corporation will furnish the shareholder, in writing and without charge, information concerning the relative rights, preferences, designations and limitations of the class of shares which the certificate represents.
(b) Each certificate shall be signed by the President or a Vice President and the Secretary or an Assistant Secretary and may be sealed with the seal of the corporation or a facsimile thereof. If a certificate is countersigned by a transfer agent or registered by a registrar, other than the corporation itself or an employee of the corporation, the signature of any such officer of the corporation may be a facsimile. In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall have been used on, any such certificate or certificates shall cease to be such officer or officers of the corporation, whether because of death, resignation or otherwise, before or after such certificate or certificates shall be issued by the corporation, such certificate or certificates may nevertheless be issued and delivered as though the person or persons who signed such certificate or certificates or whose facsimile signatures shall have been used thereon had not ceased to be such officer or officers.
7.2 SHAREHOLDER LIST. The corporation shall keep or cause to be kept a record of the shareholders of the corporation which readily shows, in alphabetical order or by alphabetical index, by voting group or class, the names of the shareholders entitled to vote, with the address of and the number of shares held by each. Said record shall be presented and kept open at all meetings of the shareholders in accordance with Section 2.8 hereof.
7.3 TRANSFER OF SHARES. Transfers of stock shall be made on the books of the corporation only by the person named in the certificate, or by power of attorney lawfully constituted in writing,
and upon surrender of the certificate, or in the case of a certificate alleged
to have been lost, stolen or destroyed, upon compliance with the provisions of
Section 7.7 of these bylaws.
7.4 RECORD DATES. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date to be not more than seventy (70) days and, in case of a meeting of shareholders, not less than ten (10) days, prior to the date on which the particular action requiring such determination of shareholders is to be taken.
7.5 REGISTERED OWNER. The corporation shall be entitled to treat the holder of record of any share of stock of the corporation as the person entitled to vote such share, to receive any dividend or other distribution with respect to such share, and for all other purposes and accordingly shall not be bound to recognize any equitable or other claim or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law.
7.6 TRANSFER AGENT AND REGISTRARS. The Board of Directors may appoint one or more transfer agents and one or more registrars and may require each stock certificate to bear the signature or signatures of a transfer agent or a registrar or both.
7.7 LOST CERTIFICATES. Any person claiming a certificate of stock to be lost, stolen or destroyed shall make an affidavit or affirmation of the fact in such manner as the Board of Directors may require and, if the Directors so require, shall give the corporation a bond of indemnity in form and amount and with one or more sureties satisfactory to the Board of Directors, whereupon an appropriate new certificate may be issued in lieu of the certificate alleged to have been lost, stolen or destroyed.
7.8 FRACTIONAL SHARES OR SCRIP. The corporation may, when and if authorized so to do by its Board of Directors, issue certificates for fractional shares or scrip in order to effect share transfers, share distributions or reclassifications, mergers, consolidations or reorganizations. Holders of fractional shares shall be entitled, in proportion to their fractional holdings, to exercise voting rights, receive dividends and participate in any of the assets of the corporation in the event of liquidation. Holders of scrip shall not, unless expressly authorized by the Board of Directors, be entitled to exercise any rights of a shareholder of the corporation, including voting rights, dividend rights or the right to participate in any assets of the corporation in the event of liquidation. In lieu of issuing fractional shares or scrip, the corporation may pay in cash the fair value of fractional interests as determined by the Board of Directors; and the Board of Directors may adopt resolutions regarding rights with respect to fractional shares or scrip as it may deem appropriate, including without limitation the right for persons entitled to receive fractional shares to sell such fractional shares or purchase such additional fractional shares as may be needed to acquire one full share, or sell such fractional shares or scrip for the account of such persons.
ARTICLE EIGHT
BOOKS AND RECORDS; SEAL; ANNUAL STATEMENTS
8.1 INSPECTION OF BOOKS AND RECORDS. (a) Any person who is a holder of record of, or authorized in writing by a holder of record of, any outstanding shares of any class or series of the corporation, shall have the right, upon written demand stating the purpose thereof, to examine in person or by agent or attorney at any reasonable time or times for any proper purpose, the books and records of account, minutes and record of shareholders and to make extracts therefrom.
(b) A shareholder may inspect and copy the records described in the immediately preceding paragraph only if (i) his or her demand is made in good faith and for a proper purpose that is reasonably relevant to his or her legitimate interest as a shareholder; (ii) the shareholder describes with reasonable particularity his or her purpose and the records he or she desires to inspect; (iii) the records are directly connected with the stated purpose; and (iv) the records are to be used only for that purpose.
(c) If the Secretary or a majority of the corporation's Board of Directors or Executive Committee members find that the request is proper, the Secretary shall promptly notify the shareholder of the time and place at which the inspection may be conducted.
(d) If said request is found by the Secretary, the Board of Directors or the Executive Committee to be improper, the Secretary shall so notify the requesting shareholder on or prior to the date on which the shareholder requested to conduct the inspection. The Secretary shall specify in said notice the basis for the rejection of the shareholder's request.
(e) The Secretary, the Board of Directors and the Executive Committee shall at all times be entitled to rely on the corporate records in making any determination hereunder.
8.2 SEAL. The corporate seal shall be in such form as the Board of Directors may from time to time determine. In the event it is inconvenient to use such a seal at any time, the signature of the corporation followed by the word "Seal" enclosed in parentheses or scroll shall be deemed the seal of the corporation.
8.3 ANNUAL STATEMENTS. Not later than four (4) months after the close of each fiscal year, and in any case prior to the next annual meeting of shareholders, the corporation shall prepare:
(a) A balance sheet showing in reasonable detail the financial condition of the corporation as of the close of its fiscal year, and
(b) A profit and loss statement showing the results of its operations during its fiscal year. Upon written request, the corporation promptly shall mail to any shareholder of record a copy of its most recent balance sheet and profit and loss statement.
ARTICLE NINE
INDEMNIFICATION
9.1 AUTHORITY TO INDEMNIFY. The corporation shall indemnify, in the case of any Director or officer of the corporation, and may indemnify, in the case of any employee or agent of the corporation, an individual made a party to a proceeding because he or she is or was a director, officer, employee or agent of the corporation (or was serving at the request of the corporation as a director, officer or employee or agent of another corporation, partnership, joint venture, trust or other enterprise) for reasonable expenses, judgments, fines, penalties and amounts paid in settlement (including attorneys' fees), incurred in connection with the proceeding if the individual acted in manner he or she believed in good faith to be in or not opposed to the best interests of the corporation and, in the case of any criminal proceeding, he or she had no reasonable cause to believe his or her conduct was unlawful. The termination of a proceeding by judgment, order, settlement, or conviction, or upon a plea of NOLO CONTENDERE or its equivalent is not, of itself, determinative that the director, officer, employee or agent did not meet the standard of conduct set forth above. Indemnification permitted under this action in connection with a proceeding by or in the right of the corporation is limited to reasonable expenses incurred in connection with the proceeding.
9.2 MANDATORY INDEMNIFICATION. The extent that a director or officer of the corporation has been successful, on the merits or otherwise, in the defense of any proceeding to which he or she was a party, or in defense of any claim, issue, or matter therein , because he or she is or was a director or officer of the corporation, the corporation shall indemnify the director or officer against reasonable expenses incurred by him or her in connection therewith.
9.3 ADVANCE FOR EXPENSES. The corporation shall pay for or reimburse, in the case of any director or officer of the corporation, and may pay for or reimburse, in the case of any employee or agent of the corporation, the reasonable expenses incurred by a director, officer, employee or agent of the corporation who is a party to a proceeding in advance of final disposition of the proceeding if (a) he or she furnishes the corporation written affirmation of his or her good faith belief that he or she has met the standard of conduct set forth in Section 9.1 of this section, and (b) he or she furnishes the corporation a written undertaking, executed personally or on his or her behalf, to repay any advances if it is ultimately determined that he or she is not entitled to indemnification. The undertaking required by this section must be an unlimited general obligation but need not be secured and may be accepted without reference to financial ability to make repayment.
9.4 COURT-ORDERED INDEMNIFICATION AND ADVANCES FOR EXPENSES. A director or officer of the corporation who is a party to a proceeding may apply for indemnification or advances for expenses to the court conducting the proceeding or to another court of competent jurisdiction.
9.5 DETERMINATION OF INDEMNIFICATION. Except as provided in Section 9.2
and except as may be ordered by the court, the corporation may not indemnify a
director, officer, employee or agent under Section 9.1 unless authorized
thereunder and a determination has been made in the specific case that
indemnification of the director, officer, employee or agent is permissible in
the circumstances because he or she has met the standard of conduct set forth in
Section 9.1. The determination shall be made:
(a) By the board of directors by majority vote of a quorum consisting of directors not at the time parties to the proceedings;
(b) If a quorum cannot be obtained, by majority vote of a committee duly designated by the board of directors (in which designation directors who are parties may participate), consisting solely of two or more directors not at the time parties to the proceeding;
(c) By special legal counsel:
(i) Selected by the board of directors or its committee in the manner prescribed in paragraph (a) or (b) of this section; or
(ii) If a quorum of the board of directors cannot be obtained and a committee cannot be designated, selected by majority vote of the full board of directors (in which selection directors who are parties may participate); or
(d) By the shareholders, but shares owned by or voted under the control of directors who are at the time parties to the proceeding may not be voted on the determination.
9.6 AUTHORIZATION OF INDEMNIFICATION. Authorization of indemnification or an obligation to indemnify and evaluation as the reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible, except that if the determination is made by special legal counsel, authorization of indemnification and evaluation as to reasonableness of expenses shall be made by those entitled under subsection (c) of Section 9.5 to select counsel.
9.7 OTHER RIGHTS. The indemnification and advancement of expenses provided by or granted pursuant to this Article Nine shall not be deemed exclusive of any other rights, in respect of indemnification or otherwise, to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, resolution, agreement or contract either specifically or in general terms approved by the affirmative vote of the holders of a majority of the shares entitled to vote thereon taken at a meeting the notice of which specified that such bylaw, resolution or agreement would be placed before the stockholders, both as to action by a director, trustee, officer, employee or agent in his or her official capacity and as to action in another capacity while holding such office or position; except that no such other rights, in respect to indemnification or otherwise, may be provided or granted to a director, trustee, officer, employee, or agent pursuant to this Section 9.7 by the corporation for liability for (a) a breach of his or her duty of loyalty to the corporation or its shareholders; (b) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; or (c) the types of liability set forth in Section 48-18-304 of the Tennessee Business Corporation Act dealing with illegal or unauthorized distributions of corporate assets, whether as dividends or in liquidation of the corporation or otherwise.
9.8 INSURANCE. The corporation may purchase and maintain insurance on behalf of an individual who is or was a director, officer, employee, or agent of the corporation or who, while a director, officer, employee, or agent of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise against
liability asserted against or incurred by him or her in that capacity or arising from his or her status as a director, officer, employee, or agent whether or not the corporation would have power to indemnify him or her against the same liability under this Article Nine.
9.9 CONTINUATION OF EXPENSES. The indemnification and advancement of expenses provided by or granted pursuant to this Article Nine shall continue as to a person who has ceased to be a director, trustee, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of such a person.
ARTICLE TEN
NOTICES: WAIVERS OF NOTICE
10.1 NOTICES. Except as otherwise specifically provided in these bylaws, whenever under the provisions of these bylaws notice is required to be given to any shareholder, Director or officer, it shall not be construed to mean personal notice, but such notice may be given by personal notice, by e-mail (provided the recipient has an e-mail address), by telegram or cablegram, or by mail by depositing the same in the post office or letter box in a postage prepaid sealed wrapper, addressed to such shareholder, Director or officer at such address as appears on the books of the corporation, and such notice shall be deemed to be given at the time when the same shall be thus sent or mailed.
10.2 WAIVERS OF NOTICE. Except as otherwise provided in these bylaws, when any notice is required to be given by law, by the charter or by these bylaws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. In the case of a shareholder, such waiver of notice may be signed by the shareholder's attorney or proxy duly appointed in writing.
ARTICLE ELEVEN
EMERGENCY POWERS
11.1 BYLAWS. The Board of Directors may adopt emergency bylaws, subject to repeal or change by action of the shareholders, which shall, notwithstanding any provision of law, the charter or these bylaws, be operative during any emergency in the conduct of the business of the corporation resulting from an attack on the United States or on a locality in which the corporation conducts its business or customarily holds meeting of its Board of Directors or its shareholders, or during any nuclear or atomic disaster, or during the existence of any catastrophe, or other similar emergency condition, as a result of which a quorum of the Board of Directors or a standing committee thereof cannot readily be convened for action. The emergency bylaws may make any provision that may be practical and necessary for the circumstances of the emergency.
11.2 LINES OF SUCCESSION. The Board of Directors, either before or during any such emergency, may provide, and from time to time modify, lines of succession in the event that during such an emergency any or all officers or agents of the corporation shall for any reason be rendered incapable of discharging their duties.
11.3 HEAD OFFICE. The Board of Directors, either before or during any such emergency, may (effective during the emergency) change the head office or designate several alternative head offices or regional offices, or authorize the officers to do so.
11.4 PERIOD OF EFFECTIVENESS. To the extent not inconsistent with any emergency bylaws so adopted, these bylaws shall remain in effect during any such emergency and upon its termination, the emergency bylaws shall cease to be operative.
11.5 NOTICES. Unless otherwise provided in emergency bylaws, notice of any meeting of the Board of Directors during any such emergency may be given only to such of the Directors as it may be feasible to reach at the time, and by such means as may be feasible at the time, including publication, radio or television.
11.6 OFFICERS AS DIRECTORS PRO TEMPORE. To the extent required to constitute a quorum at any meeting of the Board of Directors during any such emergency, the officers of the corporation who are present shall, unless otherwise provided in emergency bylaws, be deemed, in order of rank and within the same rank in order of seniority, Directors for such meeting.
11.7 LIABILITY OF OFFICERS, DIRECTORS AND AGENTS. No officer, Director, agent or employee acting in accordance with any emergency bylaw shall be liable except for willful misconduct. No officer, Director, agent or employee shall be liable for any action taken by him or her in good faith in such an emergency in furtherance of the ordinary business affairs of the corporation even though not authorized by the bylaws then in effect.
ARTICLE TWELVE
CHECKS, NOTES, DRAFTS, ETC.
Checks, notes, drafts, acceptances, bills of exchange and other orders or obligations for the payment of money shall be signed by such officer or officers or person or persons as the Board of Directors by resolution shall from time to time designate.
ARTICLE THIRTEEN
AMENDMENTS
The bylaws of the corporation may be altered or amended and new bylaws may be adopted by the shareholders at any annual or special meeting of the shareholders or by the Board of Directors at any regular or special meeting of the Board of Directors; provided, however, that, if such action is to be taken at a meeting of the shareholders, notice of the general nature of the proposed change in the bylaws shall be given in the notice of meeting. The shareholders may provide by resolution that any bylaw provision repealed, amended, adopted, or altered by them may not be repealed, amended, adopted or altered by the Board of Directors. Except as otherwise provided in the charter, action by the shareholders with respect to bylaws shall be taken by an affirmative vote of a majority of all shares entitled to elect Directors, and action by the Board of Directors with respect to bylaws shall be taken by an affirmative vote of a majority of all Directors then holding office.
EXHIBIT 4.1
SEE REVERSE SIDE FOR
CERTAIN DEFINITIONS
CUSIP_______________
PINNACLE FINANCIAL PARTNERS, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF TENNESSEE
THIS CERTIFIES that____________________________________________________________
Is the owner of _______________________________________________________________
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK ($1.00 PAR VALUE) OF
PINNACLE FINANCIAL PARTNERS, INC.
transferable on the books of the Corporation by the holder hereof in person or by duly authorized attorney on surrender of this certificate properly endorsed. This certificate is not valid until countersigned and registered by the Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.
Dated:
[SEAL]
Countersigned and Registered:
Registrar and Transfer Company, Canford, New Jersey
TRANSFER AGENT AND REGISTRAR
PINNACLE FINANCIAL PARTNERS, INC.
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable law or regulations:
TEN COM - as tenants UNIF GIFT MIN ACT --..........Custodian.......
in common (Cust) (Minor)
TEN ENT - as tenants by under Uniform Gift to Minor
the entireties
JT TEN - as joint tenants Act ............
with right of (State)
survivorship and
not as tenants
in common
|
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, __________________ HEREBY SELLS, ASSIGNS AND TRANSFERS UNTO
------------------------------------------------------------------------- SHARES
OF THE COMMON STOCK REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY IRREVOCABLY CONSTITUTE AND APPOINT _________________ ATTORNEY TO TRANSFER THE SAID STOCK ON THE BOOKS OF THE WITHIN NAMED CORPORATION WITH FULL POWER OF SUBSTITUTION IN THE PREMISES.
KEEP THIS CERTIFICATE IN A SAFE PLACE, IF IT IS LOST, STOLEN, MUTILATED OR DESTROYED, THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE OF A REPLACEMENT CERTIFICATE. UPON WRITTEN REQUEST, PINNACLE FINANCIAL PARTNERS, INC. WILL FURNISH TO ANY SHAREHOLDER, WITHOUT CHANRGE, INFORMATION CONCERNING THE DESIGNATIONS, RIGHTS, PREFERENCES AND LIMITATIONS APPLICABLE TO THE SECURITIES INDICATED ON THE REVERSE SIDE HEREOF.
EXHIBIT 5.1
POWELL, GOLDSTEIN, FRAZER & MURPHY LLP
191 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30303
(404) 572-6600
July 11, 2000
Pinnacle Financial Partners, Inc.
3401 West End Avenue, Suite 306
Nashville, Tennessee 37203
RE: REGISTRATION OF 2,816,500 SHARES OF COMMON STOCK AND WARRANTS TO
PURCHASE 195,500 SHARES OF COMMON STOCK
Ladies and Gentlemen:
We have acted as counsel to Pinnacle Financial Partners, Inc. (the "Company"), a Tennessee corporation, in connection with the registration under the Securities Act of 1933, as amended, pursuant to the Company's Registration Statement on Form SB-2 (the "Registration Statement"), of up to 2,816,500 shares (the "Shares") of common stock, $1.00 par value (the "Common Stock"), of the Company and warrants (the "Warrants") to purchase up to 195,500 shares of Common Stock.
In this capacity, we have examined (1) the Registration Statement in the form filed by the Company with the Securities and Exchange Commission (the "Commission") on May 30, 2000, as amended by Pre-Effective Amendment No. 1 thereto, which is to be filed with the Commission on the date hereof, (2) the proposed form of Underwriting Agreement (the "Underwriting Agreement") between the Company and J. C. Bradford & Company, LLC and PaineWebber Incorporated to be used in effecting the sale of the Shares, (3) originals or copies, certified or otherwise identified to our satisfaction, of corporate records, agreements, documents and other instruments of the Company relating to the authorization and issuance of the Shares and the Warrants, and (4) such other matters as we have deemed relevant and necessary as a basis for the opinion hereinafter set forth.
In conducting our examination, we have assumed the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such documents.
Based upon the foregoing, and in reliance thereon, and subject to the limitations and qualifications set forth herein, we are of the opinion that the Shares, when issued and delivered
Pinnacle Financial Partners, Inc.
July 11, 2000
against payment therefor in accordance with the terms of the Underwriting Agreement, and the Warrants, when issued and delivered to the organizers, will be duly authorized, legally and validly issued, fully paid and non-assessable.
We hereby consent to the use of this opinion as Exhibit 5.1 to the Registration Statement and to the reference to our firm under the heading "Legal Matters" in the Prospectus, which is a part of the Registration Statement.
Very truly yours,
/s/ POWELL, GOLDSTEIN, FRAZER & MURPHY LLP |
EXHIBIT 10.7
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 1st day of August, 2000, by and among PINNACLE NATIONAL BANK (Proposed) (the "Bank"), a proposed national bank; PINNACLE FINANCIAL CORPORATION (Proposed), a bank holding company incorporated under the laws of the State of Tennessee (the "Company") (collectively, the Bank and the Company are referred to hereinafter as the "Employer"), and ROBERT A. McCABE, JR., a resident of the State of Tennessee (the "Executive").
RECITALS:
The Employer desires to employ the Executive as Chairman of the Board of the Bank and the Company and the Executive desires to accept such employment.
In consideration of the above premises and the mutual agreements hereinafter set forth, the parties hereby agree as follows:
1. DEFINITIONS. Whenever used in this Agreement, the following terms and their variant forms shall have the meaning set forth below:
1.1 "AGREEMENT" shall mean this Agreement and any exhibits incorporated herein together with any amendments hereto made in the manner described in this Agreement.
1.2 "AFFILIATE" shall mean any business entity which controls the Company, is controlled by or is under common control with the Company.
1.3 "BUSINESS OF THE EMPLOYER" shall mean the business conducted by the Employer, which is the business of commercial banking.
1.4 "CAUSE" shall mean:
1.4.1 With respect to termination by the Employer:
(a) a material breach of the terms of this Agreement by the Executive, including, without limitation, failure by the Executive to perform his duties and responsibilities in the manner and to the extent required under this Agreement, which remains uncured after the expiration of thirty (30) days following the delivery of written notice of such breach to the Executive by Employer. Such notice shall (i) specifically identify the duties that the Board of Directors of either the Company or the Bank believes the Executive has failed to perform, (ii) state the facts upon which such Board of Directors made such determination, and (iii) be approved by a resolution passed by two-thirds (2/3) of the directors then in office;
(b) conduct by the Executive that amounts to fraud, dishonesty or willful misconduct in the performance of his duties and responsibilities hereunder;
(c) arrest for, charged in relation to (by criminal information, indictment or otherwise), or conviction of the Executive during the Term of this Agreement of a crime involving breach of trust or moral turpitude;
(d) conduct by the Executive that amounts to gross and willful insubordination or inattention to his duties and responsibilities hereunder; or
(e) conduct by the Executive that results in removal from his position as an officer or executive of Employer pursuant to a written order by any regulatory agency with authority or jurisdiction over Employer.
1.4.2 With respect to termination by the Executive:
(a) a material modification to the Executive's job title(s) or position(s) of responsibility or the scope of his authority or responsibilities under this Agreement without the Executive's written consent, which modification is not cured to the reasonable satisfaction of the Executive within thirty (30) days after written notice thereof from the Executive to the Board of Directors of either the Bank or the Company;
(b) a change in supervision so that the Executive no longer reports to the person(s) or entity to whom he reported immediately after the Effective Date, which change in supervision is effected without the Executive's written consent;
(c) a change in supervisory authority so that the holder of any position who normally reported to the Executive immediately after the Effective Date no longer reports to the Executive on a regular basis, which change in supervisory authority is effected without the Executive's written consent;
(d) any change in the Executive's office location such that the Executive is required to report regularly to a location that is beyond a 25-mile radius from the Executive's office location determined immediately after the Effective Date, which change in office location is effected without the Executive's written consent; and
(e) any material reduction in salary, bonus opportunity or other benefits provided for in Section 4 below from the level in effect immediately prior to the Change of Control.
1.5 "CHANGE OF CONTROL" means any one of the following events:
(a) the acquisition by any person or persons acting in concert of the then outstanding voting securities of either the Bank or the Company, if, after the transaction, the acquiring person (or persons) owns, controls or holds with power to vote forty
percent (40%) or more of any class of voting securities of either the Bank or the Company, as the case may be;
(b) within any twelve-month period (beginning on or after the Effective Date) the persons who were directors of either the Bank or the Company immediately before the beginning of such twelve-month period (the "Incumbent Directors") shall cease to constitute at least a majority of such board of directors; provided that any director who was not a director as of the Effective Date shall be deemed to be an Incumbent Director if that director were elected to such board of directors by, or on the recommendation of or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors; and provided further that no director whose initial assumption of office is in connection with an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act of 1934) relating to the election of directors shall be deemed to be an Incumbent Director;
(c) a reorganization, merger or consolidation, with respect to which persons who were the stockholders of the Bank or the Company, as the case may be, immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than fifty percent (50%) of the combined voting power entitled to vote in the election of directors of the reorganized, merged or consolidated company's then outstanding voting securities; or
(d) the sale, transfer or assignment of all or substantially all of the assets of the Company and its subsidiaries to any third party.
1.6 "COMPANY INFORMATION" means Confidential Information and Trade Secrets.
1.7 "CONFIDENTIAL INFORMATION" means data and information relating to the business of the Bank or the Company (which does not rise to the status of a Trade Secret) which is or has been disclosed to the Executive or of which the Executive became aware as a consequence of or through the Executive's relationship to the Employer and which has value to the Employer and is not generally known to its competitors. Confidential Information shall not include any data or information that has been voluntarily disclosed to the public by the Employer (except where such public disclosure has been made by the Executive without authorization) or that has been independently developed and disclosed by others, or that otherwise enters the public domain through lawful means.
1.8 "DISABILITY" shall mean the inability of the Executive to perform each of his material duties under this Agreement for the duration of the short-term disability period under the Employer's policy then in effect as certified by a physician chosen by the Employer and reasonably acceptable to the Executive.
1.9 "EFFECTIVE DATE" shall mean the date August 1, 2000.
1.10 "INITIAL TERM" shall mean that period of time commencing on August 1, 2000 (the "Beginning Date") and running until the close of business on the last business day immediately preceding the third anniversary of the Beginning Date.
1.11 "TERM" shall mean the last day of the Initial Term or most recent subsequent renewal period.
1.12 "TRADE SECRETS" means Employer information including, but not limited to, technical or nontechnical data, formulas, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data, financial plans, product plans or lists of actual or potential customers or suppliers which:
(a) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and
(b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
2. DUTIES.
2.1 POSITION. The Executive is employed initially as Chairman of the Board of the Bank and the Company and, subject to the direction of the Board of Directors of the Bank or the Company, shall perform and discharge well and faithfully the duties which may be assigned to him from time to time by the Bank or the Company in connection with the conduct of its business. The duties and responsibilities of the Executive are set forth on EXHIBIT A attached hereto.
2.2 FULL-TIME STATUS. In addition to the duties and responsibilities specifically assigned to the Executive pursuant to Section 2.1 hereof, the Executive shall:
(a) devote substantially all of his time, energy and skill during regular business hours to the performance of the duties of his employment (reasonable vacations and reasonable absences due to illness excepted) and faithfully and industriously perform such duties;
(b) diligently follow and implement all reasonable and lawful management policies and decisions communicated to him by the Board of Directors of either the Bank or the Company; and
(c) timely prepare and forward to the Board of Directors of either the Bank or the Company all reports and accountings as may be requested of the Executive.
2.3 PERMITTED ACTIVITIES. The Executive shall devote his entire business time, attention and energies to the Business of the Employer and shall not during the Term be engaged (whether or not during normal business hours) in any other business or professional activity,
whether or not such activity is pursued for gain, profit or other pecuniary advantage; but this shall not be construed as preventing the Executive from:
(a) investing his personal assets in businesses which (subject to clause (b) below) are not in competition with the Business of the Employer and which will not require any services on the part of the Executive in their operation or affairs and in which his participation is solely that of an investor;
(b) purchasing or otherwise acquiring an ownership interest in any entity provided that such interest shall not result in him collectively owning beneficially at any time five percent (5%) or more of any entity or, to the extent applicable, five percent (5%) or more of the stock, capital or profits of any entity in competition with the Business of the Employer; and
(c) participating in civic and professional affairs and organizations and conferences, preparing or publishing papers or books or teaching so long as the Board of Directors of either the Bank or the Company approves of such activities prior to the Executive's engaging in them.
Notwithstanding the foregoing provisions of this Section 2.3, the Executive may provide services to any entity and may engage in such additional investment activities to the extent such services and such additional investment activities have been expressly approved in writing by the Board of Directors of either the Bank or the Company.
3. TERM AND TERMINATION.
3.1 TERM. This Agreement shall remain in effect for the Term. While this Agreement remains in effect it shall automatically renew each day after the Effective Date so that the Term remains a three-year term from day-to-day hereafter unless the Employer or the Executive gives written notice to the other of its intent that the automatic renewals shall cease. In the event such notice of non-renewal is properly given, this Agreement and the Term shall expire on the third anniversary of the thirtieth (30th) day following the date such written notice is received.
3.2 TERMINATION. During the Term, the employment of the Executive under this Agreement may be terminated only as follows:
3.2.1 By the Employer:
(a) In the event that the Bank fails to receive its regulatory
charter, or the Company fails to raise the necessary capital required
to open the Bank, and should the Company's Founders decide to forgo
future efforts to open the Bank, in which event the Employer shall be
required to continue to meet its obligation to the Executive under
Section 4.1 until December 31, 2000;
(b) For Cause, upon written notice to the Executive pursuant to
Section 1.4.1 hereof, where the notice has been approved by a
resolution passed by two-thirds of the directors of either the Bank or
the Company then in office;
(c) Without Cause at any time, provided that the Bank shall give the Executive thirty (30) days' prior written notice of its intent to terminate, in which event the Employer shall be required to continue to meet its obligations to the Executive under Section 4.1 for a period equal to the remaining Term of the Agreement; or
(d) Upon the Disability of Executive at any time, provided that the Employer shall give the Executive thirty (30) days' prior written notice of its intent to terminate, in which event, the Employer shall be required to continue to meet its obligations under Section 4.1 for a period of six (6) months or until the Executive begins receiving payments under the Company's long-term disability policy, whichever occurs first.
3.2.2 By the Executive:
(a) For Cause, in which event the Employer shall be required to
continue to meet its obligations under Section 4.1 for a period equal
to the lesser of (i) twelve (12) months following the termination or
(ii) the remaining Term of the Agreement; or
(b) Without Cause or upon the Disability of the Executive, provided that the Executive shall give the Employer sixty (60) days' prior written notice of his intent to terminate.
3.2.3 At any time upon mutual, written agreement of the parties.
3.2.4 Notwithstanding anything in this Agreement to the contrary, the Term shall end automatically upon the Executive's death.
3.3 CHANGE OF CONTROL. If the Executive terminates his employment with the Employer under this Agreement for Cause within twelve (12) months following a Change of Control, the Executive, or in the event of his subsequent death, his designated beneficiaries or his estate, as the case may be, shall receive, as liquidated damages, in lieu of all other claims, a severance payment equal to three (3) times the Executives then current Base Salary and target bonus amount to be paid in full on the last day of the month following the date of termination. The Executive and his immediate family will continue to receive the health insurance plan benefits then in effect for employees of the Company and/or the Bank for a period of three years to include payment of the Employer funded portion of the plan. The Executive will also receive tax assistance, advice and filing preparation services from a qualified accounting firm of his choice for a period of three years at a cost to the Company and/or the Bank not to exceed $2,500 per year.
3.4 EFFECT OF TERMINATION. Upon termination of the Executive's employment hereunder, the Employer shall have no further obligations to the Executive or the Executive's estate with respect to this Agreement, except for the payment of salary and bonus amounts, if any, accrued pursuant to Sections 4.1 and 4.2 hereof and unpaid as of the effective date of the termination of employment and payments set forth in Sections 3.2.1(a),(c) or (d); Section 3.2.2(a); Section 3.3; Section 3.5 and/or Section 4.4, as applicable. Nothing contained herein shall limit or impinge upon any other rights or remedies of the Employer or the Executive under any other agreement or plan to which the Executive is a party or of which the Executive is a beneficiary.
3.5 TAX INDEMNITY. In the event it shall be determined that any payment or benefits by the Employer to the Executive (a "Payment") would subject the Executive to an excise tax under Section 4999 of the Internal Revenue Code (the "Code") (or any successor federal tax law), or any interest or penalties are incurred or paid by the Executive with respect to such excise tax (any such excise tax, together with any interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to an additional payment from the Employer as is necessary (after taking into account all federal, state and local taxes (regardless of type, whether income, excise or otherwise) imposed upon the Executive as a result of the receipt of the payment contemplated by this Agreement) and any reduction in such taxes of the Executive as a result of the payment of the related Excise Tax) to place the Executive in the same after-tax position the Executive would have been in had no Excise Tax been imposed upon or incurred or paid by the Executive (the "Tax Indemnity"). The Employer's outside auditor shall determine, utilizing such reasonable assumptions as it considers necessary, whether a Payment would subject the Executive to the Excise Tax within thirty (30) days after receipt of a written request from the Employer or the Executive in which the requesting party verifies that a Payment has been made and requests an appropriate determination. The requesting party shall provide the other party with a copy of any such written request. The outside auditor shall determine whether a Tax Indemnity obligation exists and, if so, the amount of the Tax Indemnity and shall provide supporting documentation to both the Employer and the Executive. The Employer shall pay the Executive any Tax Indemnity so determined in a lump sum in cash within thirty (30) days following the release of the related determination by the outside auditor; provided, however, that any such payment may be reduced by applicable legal withholdings. In the event that the Internal Revenue Service subsequently assesses an Excise Tax that is greater than the tax previously calculated by the outside auditor, the Employer shall make an additional Tax Indemnity payment, as calculated by the outside auditor in a manner consistent with the provisions of this Section 3.5, to the Executive within thirty (30) days of the date of such assessment.
4. COMPENSATION. The Executive shall receive the following salary and benefits during the Term, except as otherwise provided below:
4.1 BASE SALARY. During the Initial Term, the Executive shall be compensated at a base rate of $220,000 per year (the "Base Salary"). The obligation for payment of Base Salary shall be apportioned between the Company and the Bank as they may agree from time to time in their sole discretion. The Executive's Base Salary shall be reviewed by the Board of Directors of the Bank and the Company at least annually, and the Executive shall be entitled to receive annually an increase in such amount, if any, as may be determined by the Board of Directors of the Bank or the
Company based on its evaluation of Executive's performance. Base Salary shall be payable in accordance with the Employer's normal payroll practices.
4.2 INCENTIVE COMPENSATION. The Executive shall be entitled to annual bonus compensation, if any, as determined by the Board of Directors of the Company or the Bank pursuant to any incentive compensation program as may be adopted from time to time by the Company or the Bank.
4.3 STOCK OPTIONS. The Company will establish a stock incentive plan contemporaneously with the initial public offering of the Company's common stock. The Company will grant to the Executive pursuant to such stock incentive plan, consistent with applicable provisions of the Internal Revenue Code, an incentive stock option to purchase, at a per share purchase price equal to $10.00, 45,000 shares of the Company's common stock. The option generally will become vested and exercisable in twenty percent (20%) increments, commencing on the first anniversary of the option grant date, which shall be the closing date for the Company's initial public offering, and continuing for the next four successive anniversaries; provided, however, that, in the event of a Change of Control, the option shall become fully vested and exercisable; provided further, that in the event of a Change of Control prior to the third anniversary of the date the Bank opens for business, the option shall become vested and exercisable at a rate no more rapidly than thirty-three and one-third percent (33 1/3%) per year over the first three anniversaries of the date the Bank opens for business. The option shall expire generally upon the earlier of one (1) year following termination of employment or upon the tenth anniversary of the option grant date. The option will be issued by the Employer pursuant to the Company's stock incentive plan and subject to the terms of a related stock option agreement. The Executive shall be eligible for future option grants so long as the Company maintains a stock incentive plan and shall participate in future grants at a level that is commensurate with the relative levels of participation by all other senior management employees of the Employer.
4.4 HEALTH INSURANCE.
(a) The Employer shall reimburse the Executive for the cost of premium payments paid by the Executive for the Executive's current health insurance covering the Executive and the members of his immediate family until the first to occur of the following:
(i) such time as the Company adopts a health insurance plan for employees of the Company and/or the Bank;
(ii) the Company and the Bank abandon their organizational efforts; or
(iii) December 31, 2000.
(b) In the event of termination by the Executive for Cause (Section 3.2.3(a)), the Employer shall reimburse Executive for the cost of premium payments paid by the Executive to continue his then existing health insurance for himself and his eligible
dependents as provided by the Employer for a period of three (3) months following the date of termination of employment.
(c) In the event of a termination by the Employer without Cause (Section 3.2.1(c)), the Employer shall reimburse the Executive for the cost of premium payments paid by the Executive to continue his then existing health insurance for himself and his eligible dependents as provided by Employer for a period of twelve (12) months following the date of termination of employment.
4.5 AUTOMOBILE. Beginning as of the month in which the Bank receives preliminary charter approval, the Employer will provide Executive with an automobile allowance of $750 per month.
4.6 BUSINESS EXPENSES; MEMBERSHIPS. The Employer specifically agrees to reimburse the Executive for:
(a) reasonable and necessary business (including travel) expenses incurred by him in the performance of his duties hereunder, as approved by the Board of Directors of either the Bank or the Company; and
(b) beginning as of the Effective Date, the dues and business related expenditures, including initiation fees, associated with membership in a single civic association both as selected by the Executive and in professional associations which are commensurate with his position; provided, however, that the Executive shall, as a condition of reimbursement, submit verification of the nature and amount of such expenses in accordance with reimbursement policies from time to time adopted by the Employer and in sufficient detail to comply with rules and regulations promulgated by the Internal Revenue Service.
4.7 VACATION. On a non-cumulative basis, the Executive shall be entitled to four (4) weeks of vacation in each successive twelve-month period during the Term, during which his compensation shall be paid in full.
4.8 LIFE INSURANCE. The Employer will provide the Executive with access to term life insurance coverage at competitive group rates at such time as the Company develops a life plan for employees of the Company and/or Bank, providing a death benefit of not less than $1,000,000, payable to such beneficiary or beneficiaries as the Executive may designate.
4.9 TAX PREPARATION SERVICES. The Employer will provide the Executive with tax preparation services annually through a qualified accounting firm of the Executive's choice at an annual cost not to exceed $2,500.
4.10 BENEFITS. In addition to the benefits specifically described in this Agreement, the Executive shall be entitled to such benefits as may be available from time to time to executives of the Bank similarly situated to the Executive. All such benefits shall be awarded and administered in accordance with the Bank's standard policies and practices. Such benefits may include, by way
of example only, profit-sharing plans, retirement or investment funds, dental, health, life and disability insurance benefits and such other benefits as the Bank deems appropriate.
4.11 WITHHOLDING. The Employer may deduct from each payment of compensation hereunder all amounts required to be deducted and withheld in accordance with applicable federal and state income, FICA and other withholding requirements.
5. COMPANY INFORMATION.
5.1 OWNERSHIP OF COMPANY INFORMATION. All Company Information received or developed by the Executive while employed by the Employer will remain the sole and exclusive property of the Employer.
5.2 OBLIGATIONS OF THE EXECUTIVE. The Executive agrees:
(a) to hold Company Information in strictest confidence;
(b) not to use, duplicate, reproduce, distribute, disclose or otherwise disseminate Company Information or any physical embodiments of Company Information; and
(c) in any event, not to take any action causing or fail to take any action necessary in order to prevent any Company Information from losing its character or ceasing to qualify as Confidential Information or a Trade Secret.
In the event that the Executive is required by law to disclose any Company Information, the Executive will not make such disclosure unless (and then only to the extent that) the Executive has been advised by independent legal counsel that such disclosure is required by law and then only after prior written notice is given to the Company when the Executive becomes aware that such disclosure has been requested and is required by law. This Section 5 shall survive for a period of twelve (12) months following termination of this Agreement for any reason with respect to Confidential Information, and shall survive termination of this Agreement for any reason for so long as is permitted by applicable law, with respect to Trade Secrets.
5.3 DELIVERY UPON REQUEST OR TERMINATION. Upon request by the Employer, and in any event upon termination of his employment with the Employer, the Executive will promptly deliver to the Employer all property belonging to the Employer, including, without limitation, all Company Information then in his possession or control. The Executive agrees that the covenant contained in Section 5 of this Agreement are of the essence of this Agreement; that the covenant is reasonable and necessary to protect the business, interests and properties of the Employer.
6. SEVERABILITY. The parties agree that each of the provisions included in this Agreement is separate, distinct and severable from the other provisions of this Agreement and that the invalidity or unenforceability of any Agreement provision shall not affect the validity or enforceability of any other provision of this Agreement. Further, if any provision of this Agreement is ruled invalid or unenforceable by a court of competent jurisdiction because of a conflict between the provision and
any applicable law or public policy, the provision shall be redrawn to make the provision consistent with and valid and enforceable under the law or public policy.
7. NO SET-OFF BY THE EXECUTIVE. The existence of any claim, demand, action or cause of action by the Executive against the Employer, or any Affiliate of the Employer, whether predicated upon this Agreement or otherwise, shall not constitute a defense to the enforcement by the Employer of any of its rights hereunder.
8. NOTICE. All notices and other communications required or permitted under this Agreement shall be in writing and, if mailed by prepaid first-class mail or certified mail, return receipt requested, shall be deemed to have been received on the earlier of the date shown on the receipt or three (3) business days after the postmarked date thereof. In addition, notices hereunder may be delivered by hand or overnight courier, in which event the notice shall be deemed effective when delivered. All notices and other communications under this Agreement shall be given to the parties hereto at the following addresses:
(i) If to the Employer, to it at:
(ii) If to the Executive, to him at:
9. ASSIGNMENT. Neither party hereto may assign or delegate this Agreement or any of its rights and obligations hereunder without the written consent of the other party to this Agreement.
10. WAIVER. A waiver by one party to this Agreement of any breach of this Agreement by the other party to this Agreement shall not be effective unless in writing, and no waiver shall operate or be construed as a waiver of the same or another breach on a subsequent occasion.
11. ARBITRATION. Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by binding arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Judgment upon the award rendered by the arbitrator may be entered only in a state court of Tennessee or the federal court for the Middle District of Tennessee. The Employer and the Executive agree to share equally the fees and expenses associated with the arbitration proceedings.
12. ATTORNEYS' FEES. In the event that the parties have complied with this Agreement with respect to arbitration of disputes and litigation ensues between the parties concerning the enforcement of an arbitration award, the party prevailing in such litigation shall be entitled to
receive from the other party all reasonable costs and expenses, including without limitation attorneys' fees, incurred by the prevailing party in connection with such litigation, and the other party shall pay such costs and expenses to the prevailing party promptly upon demand by the prevailing party.
13. APPLICABLE LAW. This Agreement shall be construed and enforced under and in accordance with the laws of the State of Tennessee.
14. INTERPRETATION. Words importing any gender include all genders. Words importing the singular form shall include the plural and vice versa. The terms "herein", "hereunder", "hereby", "hereto", "hereof" and any similar terms refer to this Agreement. Any captions, titles or headings preceding the text of any article, section or subsection herein are solely for convenience of reference and shall not constitute part of this Agreement or affect its meaning, construction or effect.
15. ENTIRE AGREEMENT. This Agreement embodies the entire and final agreement of the parties on the subject matter stated in this Agreement. No amendment or modification of this Agreement shall be valid or binding upon the Employer or the Executive unless made in writing and signed by both parties. All prior understandings and agreements relating to the subject matter of this Agreement are hereby expressly terminated.
16. RIGHTS OF THIRD PARTIES. Nothing herein expressed is intended to or shall be construed to confer upon or give to any person, firm or other entity, other than the parties hereto and their permitted assigns, any rights or remedies under or by reason of this Agreement.
17. SURVIVAL. The obligations of the Executive pursuant to Section 5 shall survive the termination of the employment of the Executive hereunder for the period designated under each of those respective sections.
18. JOINT AND SEVERAL. The obligations of the Bank and the Company to Executive hereunder shall be joint and several.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Employer and the Executive have executed and delivered this Agreement as of the date first shown above.
THE BANK:
PINNACLE NATIONAL BANK (PROPOSED)
By:__________________________________________
Print Name:__________________________________
Title:_______________________________________
THE COMPANY:
PINNACLE FINANCIAL CORPORATION
By:__________________________________________
Print Name:__________________________________
Title:_______________________________________
THE EXECUTIVE:
EXHIBIT A
INITIAL DUTIES OF THE EXECUTIVE
CHAIRMAN OF THE BOARD
FUNCTION:
Has overall responsibility for Balance Sheet management to include formation of capital, business development and asset/liability management. Also has responsibility for shareholder/ investor relations and site procurement.
AREAS OF ACCOUNTABILITY:
1. Develops and implements an integrated capital plan to include the formation and maintenance of capital.
2. Responsible for overall business development to include active involvement in community and civic activities in such a manner as to create a positive public perception of the bank. Also, to be actively involved in business development activities to solicit and maintain sufficient business to meet or exceed established goals.
3. Responsible for managing the interest rate risk exposure of the bank by monitoring the bank's liquidity position, net interest margin, deposit levels and pricing, asset levels and pricing and portfolio investment decisions.
4. Develops and implements an effective investor relations and communications plan.
5. Negotiates and procures all real estate and selects sites.
6. Originates and approves loans, acting within the approved loan limits and guidelines approved by the Board of Directors.
7. Coordinates Board agenda and chairs meetings.
EXHIBIT 10.8
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 1st day of April, 2000, by and among PINNACLE NATIONAL BANK (Proposed) (the "Bank"), a proposed national bank; PINNACLE FINANCIAL CORPORATION (proposed), a bank holding company incorporated under the laws of the State of Tennessee (the "Company") (collectively, the Bank and the Company are referred to hereinafter as the "Employer"), and HUGH M. QUEENER, a resident of the State of Tennessee (the "Executive").
RECITALS:
The Employer desires to employ the Executive as Executive Vice President and Chief Administrative Officer of the Bank and the Company and the Executive desires to accept such employment.
The parties previously entered into an employment agreement, also dated as of April 1, 2000, that they wish to restate primarily for the purpose of revising certain change-in-control provisions.
In consideration of the above premises and the mutual agreements hereinafter set forth, the parties hereby agree as follows:
1. DEFINITIONS. Whenever used in this Agreement, the following terms and their variant forms shall have the meaning set forth below:
1.1 "AGREEMENT" shall mean this Agreement and any exhibits incorporated herein together with any amendments hereto made in the manner described in this Agreement.
1.2 "AFFILIATE" shall mean any business entity which controls the Company, is controlled by or is under common control with the Company.
1.3 "BUSINESS OF THE EMPLOYER" shall mean the business conducted by the Employer, which is the business of commercial banking.
1.4 "CAUSE" shall mean:
1.4.1 With respect to termination by the Employer:
(a) a material breach of the terms of this Agreement by the
Executive, including, without limitation, failure by the Executive to
perform his duties and responsibilities in the manner and to the
extent required under this Agreement, which remains uncured after the
expiration of thirty (30) days following the delivery of written
notice of such breach to the Executive by Employer. Such notice shall
(i) specifically identify the duties that the Board of Directors of
either the Company or the Bank
believes the Executive has failed to perform, (ii) state the facts upon which such Board of Directors made such determination, and (iii) be approved by a resolution passed by two-thirds (2/3) of the directors then in office;
(b) conduct by the Executive that amounts to fraud, dishonesty or willful misconduct in the performance of his duties and responsibilities hereunder;
(c) arrest for, charged in relation to (by criminal information, indictment or otherwise), or conviction of the Executive during the Term of this Agreement of a crime involving breach of trust or moral turpitude;
(d) conduct by the Executive that amounts to gross and willful insubordination or inattention to his duties and responsibilities hereunder; or
(e) conduct by the Executive that results in removal from his position as an officer or executive of Employer pursuant to a written order by any regulatory agency with authority or jurisdiction over Employer.
1.4.2 With respect to termination by the Executive:
(a) a material modification to the Executive's job title(s) or position(s) of responsibility or the scope of his authority or responsibilities under this Agreement without the Executive's written consent, which modification is not cured to the reasonable satisfaction of the Executive within thirty (30) days after written notice thereof from the Executive to the Board of Directors of either the Bank or the Company;
(b) a change in supervision so that the Executive no longer reports to the person(s) or entity to whom he reported immediately after the Effective Date, which change in supervision is effected without the Executive's written consent;
(c) a change in supervisory authority so that the holder of any position who normally reported to the Executive immediately after the Effective Date no longer reports to the Executive on a regular basis, which change in supervisory authority is effected without the Executive's written consent;
(d) any change in the Executive's office location such that the Executive is required to report regularly to a location that is beyond a 25-mile radius from the Executive's office location determined immediately after the Effective Date, which change in office location is effected without the Executive's written consent; and
(e) any material reduction in salary, bonus opportunity or other benefits provided for in Section 4 below from the level in effect immediately prior to the Change of Control.
1.5 "CHANGE OF CONTROL" means any one of the following events:
(a) the acquisition by any person or persons acting in concert of the then outstanding voting securities of either the Bank or the Company, if, after the transaction, the acquiring person (or persons) owns, controls or holds with power to vote forty percent (40%) or more of any class of voting securities of either the Bank or the Company, as the case may be;
(b) within any twelve-month period (beginning on or after the Effective Date) the persons who were directors of either the Bank or the Company immediately before the beginning of such twelve-month period (the "Incumbent Directors") shall cease to constitute at least a majority of such board of directors; provided that any director who was not a director as of the Effective Date shall be deemed to be an Incumbent Director if that director were elected to such board of directors by, or on the recommendation of or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors; and provided further that no director whose initial assumption of office is in connection with an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act of 1934) relating to the election of directors shall be deemed to be an Incumbent Director;
(c) a reorganization, merger or consolidation, with respect to which persons who were the stockholders of the Bank or the Company, as the case may be, immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than fifty percent (50%) of the combined voting power entitled to vote in the election of directors of the reorganized, merged or consolidated company's then outstanding voting securities; or
(d) the sale, transfer or assignment of all or substantially all of the assets of the Company and its subsidiaries to any third party.
1.6 "COMPANY INFORMATION" means Confidential Information and Trade Secrets.
1.7 "CONFIDENTIAL INFORMATION" means data and information relating to the business of the Bank or the Company (which does not rise to the status of a Trade Secret) which is or has been disclosed to the Executive or of which the Executive became aware as a consequence of or through the Executive's relationship to the Employer and which has value to the Employer and is not generally known to its competitors. Confidential Information shall not include any data or information that has been voluntarily disclosed to the public by the Employer (except where such public disclosure has been made by the Executive without authorization) or that has been independently developed and disclosed by others, or that otherwise enters the public domain through lawful means.
1.8 "DISABILITY" shall mean the inability of the Executive to perform each of his material duties under this Agreement for the duration of the short-term disability period under the Employer's policy then in effect as certified by a physician chosen by the Employer and reasonably acceptable to the Executive.
1.9 "EFFECTIVE DATE" shall mean the date April 1, 2000.
1.10 "INITIAL TERM" shall mean that period of time commencing on April 1, 2000 (the "Beginning Date") and running until the close of business on the last business day immediately preceding the third anniversary of the Beginning Date.
1.11 "TERM" shall mean the last day of the Initial Term or most recent subsequent renewal period.
1.12 "TRADE SECRETS" means Employer information including, but not limited to, technical or nontechnical data, formulas, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data, financial plans, product plans or lists of actual or potential customers or suppliers which:
(a) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and
(b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
2. DUTIES.
2.1 POSITION. The Executive is employed initially as Executive Vice President and Chief Administrative Officer of the Bank and the Company and, subject to the direction of the Board of Directors of the Bank or the Company or its designees, shall perform and discharge well and faithfully the duties which may be assigned to him from time to time by the Bank or the Company in connection with the conduct of its business. The duties and responsibilities of the Executive are set forth on EXHIBIT A attached hereto.
2.2 FULL-TIME STATUS. In addition to the duties and responsibilities specifically assigned to the Executive pursuant to Section 2.1 hereof, the Executive shall:
(a) devote substantially all of his time, energy and skill during regular business hours to the performance of the duties of his employment (reasonable vacations and reasonable absences due to illness excepted) and faithfully and industriously perform such duties;
(b) diligently follow and implement all reasonable and lawful management policies and decisions communicated to him by the Board of Directors of either the Bank or the Company; and
(c) timely prepare and forward to the Board of Directors of either the Bank or the Company all reports and accountings as may be requested of the Executive.
2.3 PERMITTED ACTIVITIES. The Executive shall devote his entire business time, attention and energies to the Business of the Employer and shall not during the Term be engaged (whether or not during normal business hours) in any other business or professional activity, whether or not such activity is pursued for gain, profit or other pecuniary advantage; but this shall not be construed as preventing the Executive from:
(a) investing his personal assets in businesses which (subject to clause (b) below) are not in competition with the Business of the Employer and which will not require any services on the part of the Executive in their operation or affairs and in which his participation is solely that of an investor;
(b) purchasing or otherwise acquiring an ownership interest in any entity provided that such interest shall not result in him collectively owning beneficially at any time five percent (5%) or more of any entity or, to the extent applicable, five percent (5%) or more of the stock, capital or profits of any entity in competition with the Business of the Employer; and
(c) participating in civic and professional affairs and organizations and conferences, preparing or publishing papers or books or teaching so long as the Board of Directors of either the Bank or the Company approves of such activities prior to the Executive's engaging in them.
Notwithstanding the foregoing provisions of this Section 2.3, the Executive may provide services to any entity and may engage in such additional investment activities to the extent such services and such additional investment activities have been expressly approved in writing by the Board of Directors of either the Bank or the Company.
3. TERM AND TERMINATION.
3.1 TERM. This Agreement shall remain in effect for the Term. While this Agreement remains in effect it shall automatically renew each day after the Effective Date so that the Term remains a three-year term from day-to-day hereafter unless the Employer or the Executive gives written notice to the other of its intent that the automatic renewals shall cease. In the event such notice of non-renewal is properly given, this Agreement and the Term shall expire on the third anniversary of the thirtieth (30th) day following the date such written notice is received.
3.2 TERMINATION. During the Term, the employment of the Executive under this Agreement may be terminated only as follows:
3.2.1 By the Employer:
(a) In the event that the Bank fails to receive its regulatory charter, or the Company fails to raise the necessary capital required to open the Bank, and should the Company's Founders decide to forgo future efforts to open the Bank,
in which event the Employer shall be required to continue to meet its obligation to the Executive under Section 4.1 until December 31, 2000;
(b) For Cause, upon written notice to the Executive pursuant to
Section 1.4.1 hereof, where the notice has been approved by a
resolution passed by two-thirds of the directors of either the Bank or
the Company then in office;
(c) Without Cause at any time, provided that the Bank shall give the Executive thirty (30) days' prior written notice of its intent to terminate, in which event the Employer shall be required to continue to meet its obligations to the Executive under Section 4.1 for a period equal to the remaining Term of the Agreement; or
(d) Upon the Disability of Executive at any time, provided that the Employer shall give the Executive thirty (30) days' prior written notice of its intent to terminate, in which event, the Employer shall be required to continue to meet its obligations under Section 4.1 for a period of six (6) months or until the Executive begins receiving payments under the Company's long-term disability policy, whichever occurs first.
3.2.2 By the Executive:
(a) For Cause, in which event the Employer shall be required to
continue to meet its obligations under Section 4.1 for a period equal
to the lesser of (i) twelve (12) months following the termination or
(ii) the remaining Term of the Agreement; or
(b) Without Cause or upon the Disability of the Executive, provided that the Executive shall give the Employer sixty (60) days' prior written notice of his intent to terminate.
3.2.3 At any time upon mutual, written agreement of the parties.
3.2.4 Notwithstanding anything in this Agreement to the contrary, the Term shall end automatically upon the Executive's death.
3.3 CHANGE OF CONTROL. If the Executive terminates his employment with the Employer under this Agreement for Cause within twelve (12) months following a Change of Control, the Executive, or in the event of his subsequent death, his designated beneficiaries or his estate, as the case may be, shall receive, as liquidated damages, in lieu of all other claims, a severance payment equal to three (3) times the Executives then current Base Salary and target bonus amount to be paid in full on the last day of the month following the date of termination. The Executive and his immediate family will continue to receive the health insurance plan benefits then in effect for employees of the Company and/or the Bank for a period of three years to include payment of the Employer funded portion of the plan. The Executive will also receive tax assistance, advice and filing preparation services from a qualified accounting firm of his
choice for a period of three years at a cost to the Company and/or the Bank not to exceed $2,500 per year.
3.4 EFFECT OF TERMINATION. Upon termination of the Executive's employment hereunder, the Employer shall have no further obligations to the Executive or the Executive's estate with respect to this Agreement, except for the payment of salary and bonus amounts, if any, accrued pursuant to Sections 4.1 and 4.2 hereof and unpaid as of the effective date of the termination of employment and payments set forth in Sections 3.2.1(a),(c) or (d); Section 3.2.2(a); Section 3.3; Section 3.5 and/or Section 4.4, as applicable. Nothing contained herein shall limit or impinge upon any other rights or remedies of the Employer or the Executive under any other agreement or plan to which the Executive is a party or of which the Executive is a beneficiary.
3.5 TAX INDEMNITY. In the event it shall be determined that any payment or benefits by the Employer to the Executive (a "Payment") would subject the Executive to an excise tax under Section 4999 of the Internal Revenue Code (the "Code") (or any successor federal tax law), or any interest or penalties are incurred or paid by the Executive with respect to such excise tax (any such excise tax, together with any interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to an additional payment from the Employer as is necessary (after taking into account all federal, state and local taxes (regardless of type, whether income, excise or otherwise) imposed upon the Executive as a result of the receipt of the payment contemplated by this Agreement) and any reduction in such taxes of the Executive as a result of the payment of the related Excise Tax) to place the Executive in the same after-tax position the Executive would have been in had no Excise Tax been imposed upon or incurred or paid by the Executive (the "Tax Indemnity"). The Employer's outside auditor shall determine, utilizing such reasonable assumptions as it considers necessary, whether a Payment would subject the Executive to the Excise Tax within thirty (30) days after receipt of a written request from the Employer or the Executive in which the requesting party verifies that a Payment has been made and requests an appropriate determination. The requesting party shall provide the other party with a copy of any such written request. The outside auditor shall determine whether a Tax Indemnity obligation exists and, if so, the amount of the Tax Indemnity and shall provide supporting documentation to both the Employer and the Executive. The Employer shall pay the Executive any Tax Indemnity so determined in a lump sum in cash within thirty (30) days following the release of the related determination by the outside auditor; provided, however, that any such payment may be reduced by applicable legal withholdings. In the event that the Internal Revenue Service subsequently assesses an Excise Tax that is greater than the tax previously calculated by the outside auditor, the Employer shall make an additional Tax Indemnity payment, as calculated by the outside auditor in a manner consistent with the provisions of this Section 3.5, to the Executive within thirty (30) days of the date of such assessment.
4. COMPENSATION. The Executive shall receive the following salary and benefits during the Term, except as otherwise provided below:
4.1 BASE SALARY. During the Initial Term, the Executive shall be compensated at a base rate of $160,000 per year (the "Base Salary"). The obligation for payment of Base Salary shall be apportioned between the Company and the Bank as they may agree from time to time in their sole
discretion. The Executive's Base Salary shall be reviewed by the Board of Directors of the Bank and the Company at least annually, and the Executive shall be entitled to receive annually an increase in such amount, if any, as may be determined by the Board of Directors of the Bank or the Company based on its evaluation of Executive's performance. Base Salary shall be payable in accordance with the Employer's normal payroll practices.
4.2 INCENTIVE COMPENSATION. The Executive shall be entitled to annual bonus compensation, if any, as determined by the Board of Directors of the Company or the Bank pursuant to any incentive compensation program as may be adopted from time to time by the Company or the Bank.
4.3 STOCK OPTIONS. The Company will establish a stock incentive plan contemporaneously with the initial public offering of the Company's common stock. The Company will grant to the Executive pursuant to such stock incentive plan, consistent with applicable provisions of the Internal Revenue Code, an incentive stock option to purchase, at a per share purchase price equal to $10.00, 30,000 shares of the Company's common stock. The option generally will become vested and exercisable in twenty percent (20%) increments, commencing on the first anniversary of the option grant date, which shall be the closing date for the Company's initial public offering, and continuing for the next four successive anniversaries; provided, however, that, in the event of a Change of Control, the option shall become fully vested and exercisable; provided further, that in the event of a Change of Control prior to the third anniversary of the date the Bank opens for business, the option shall become vested and exercisable at a rate no more rapidly than thirty-three and one-third percent (33 1/3%) per year over the first three anniversaries of the date the Bank opens for business. The option shall expire generally upon the earlier of one (1) year following termination of employment or upon the tenth anniversary of the option grant date. The option will be issued by the Employer pursuant to the Company's stock incentive plan and subject to the terms of a related stock option agreement. The Executive shall be eligible for future option grants so long as the Company maintains a stock incentive plan and shall participate in future grants at a level that is commensurate with the relative levels of participation by all other senior management employees of the Employer.
4.4 HEALTH INSURANCE.
(a) The Employer shall reimburse the Executive for the cost of premium payments paid by the Executive for the Executive's current health insurance covering the Executive and the members of his immediate family until the first to occur of the following:
(i) such time as the Company adopts a health insurance plan for employees of the Company and/or the Bank;
(ii) the Company and the Bank abandon their organizational efforts; or
(iii) December 31, 2000.
(b) In the event of termination by the Executive for Cause (Section 3.2.3(a)), the Employer shall reimburse Executive for the cost of premium payments paid by the Executive to continue his then existing health insurance for himself and his eligible dependents as provided by the Employer for a period of three (3) months following the date of termination of employment.
(c) In the event of a termination by the Employer without Cause (Section 3.2.1(c)), the Employer shall reimburse the Executive for the cost of premium payments paid by the Executive to continue his then existing health insurance for himself and his eligible dependents as provided by Employer for a period of twelve (12) months following the date of termination of employment.
4.5 AUTOMOBILE. Beginning as of the month in which the Bank receives preliminary charter approval, the Employer will provide Executive with an automobile allowance of $750 per month.
4.6 BUSINESS EXPENSES; MEMBERSHIPS. The Employer specifically agrees to reimburse the Executive for:
(a) reasonable and necessary business (including travel) expenses incurred by him in the performance of his duties hereunder, as approved by the Board of Directors of either the Bank or the Company; and
(b) beginning as of the Effective Date, the dues and business related expenditures, including initiation fees, associated with membership in a single civic association both as selected by the Executive and in professional associations which are commensurate with his position; provided, however, that the Executive shall, as a condition of reimbursement, submit verification of the nature and amount of such expenses in accordance with reimbursement policies from time to time adopted by the Employer and in sufficient detail to comply with rules and regulations promulgated by the Internal Revenue Service.
4.7 VACATION. On a non-cumulative basis, the Executive shall be entitled to four (4) weeks of vacation in each successive twelve-month period during the Term, during which his compensation shall be paid in full.
4.8 LIFE INSURANCE. The Employer will provide the Executive with access to term life insurance coverage at competitive rates at such time as the Company develops a life plan for employees of the Company and/or Bank, providing a death benefit of not less than $650,000, payable to such beneficiary or beneficiaries as the Executive may designate.
4.9 TAX PREPARATION SERVICES. The Employer will provide the Executive with tax preparation services annually through a qualified accounting firm of the Executive's choice at an annual cost not to exceed $2,500.
4.10 BENEFITS. In addition to the benefits specifically described in this Agreement, the Executive shall be entitled to such benefits as may be available from time to time to executives of the Bank similarly situated to the Executive. All such benefits shall be awarded and administered in accordance with the Bank's standard policies and practices. Such benefits may include, by way of example only, profit-sharing plans, retirement or investment funds, dental, health, life and disability insurance benefits and such other benefits as the Bank deems appropriate.
4.11 WITHHOLDING. The Employer may deduct from each payment of compensation hereunder all amounts required to be deducted and withheld in accordance with applicable federal and state income, FICA and other withholding requirements.
5. COMPANY INFORMATION.
5.1 OWNERSHIP OF COMPANY INFORMATION. All Company Information received or developed by the Executive while employed by the Employer will remain the sole and exclusive property of the Employer.
5.2 OBLIGATIONS OF THE EXECUTIVE. The Executive agrees:
(a) to hold Company Information in strictest confidence;
(b) not to use, duplicate, reproduce, distribute, disclose or otherwise disseminate Company Information or any physical embodiments of Company Information; and
(c) in any event, not to take any action causing or fail to take any action necessary in order to prevent any Company Information from losing its character or ceasing to qualify as Confidential Information or a Trade Secret.
In the event that the Executive is required by law to disclose any Company Information, the Executive will not make such disclosure unless (and then only to the extent that) the Executive has been advised by independent legal counsel that such disclosure is required by law and then only after prior written notice is given to the Company when the Executive becomes aware that such disclosure has been requested and is required by law. This Section 5 shall survive for a period of twelve (12) months following termination of this Agreement for any reason with respect to Confidential Information, and shall survive termination of this Agreement for any reason for so long as is permitted by applicable law, with respect to Trade Secrets.
5.3 DELIVERY UPON REQUEST OR TERMINATION. Upon request by the Employer, and in any event upon termination of his employment with the Employer, the Executive will promptly deliver to the Employer all property belonging to the Employer, including, without limitation, all Company Information then in his possession or control. The Executive agrees that the covenant contained in Section 5 of this Agreement are of the essence of this Agreement; that the covenant is reasonable and necessary to protect the business, interests and properties of the Employer.
6. SEVERABILITY. The parties agree that each of the provisions included in this Agreement is separate, distinct and severable from the other provisions of this Agreement and that the invalidity or unenforceability of any Agreement provision shall not affect the validity or enforceability of any other provision of this Agreement. Further, if any provision of this Agreement is ruled invalid or unenforceable by a court of competent jurisdiction because of a conflict between the provision and any applicable law or public policy, the provision shall be redrawn to make the provision consistent with and valid and enforceable under the law or public policy.
7. NO SET-OFF BY THE EXECUTIVE. The existence of any claim, demand, action or cause of action by the Executive against the Employer, or any Affiliate of the Employer, whether predicated upon this Agreement or otherwise, shall not constitute a defense to the enforcement by the Employer of any of its rights hereunder.
8. NOTICE. All notices and other communications required or permitted under this Agreement shall be in writing and, if mailed by prepaid first-class mail or certified mail, return receipt requested, shall be deemed to have been received on the earlier of the date shown on the receipt or three (3) business days after the postmarked date thereof. In addition, notices hereunder may be delivered by hand or overnight courier, in which event the notice shall be deemed effective when delivered. All notices and other communications under this Agreement shall be given to the parties hereto at the following addresses:
(i) If to the Employer, to it at:
(ii) If to the Executive, to him at:
9. ASSIGNMENT. Neither party hereto may assign or delegate this Agreement or any of its rights and obligations hereunder without the written consent of the other party to this Agreement.
10. WAIVER. A waiver by one party to this Agreement of any breach of this Agreement by the other party to this Agreement shall not be effective unless in writing, and no waiver shall operate or be construed as a waiver of the same or another breach on a subsequent occasion.
11. ARBITRATION. Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by binding arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Judgment upon the award rendered by the arbitrator may be entered only in a state court of Tennessee or the federal court for the Middle
District of Tennessee. The Employer and the Executive agree to share equally the fees and expenses associated with the arbitration proceedings.
12. ATTORNEYS' FEES. In the event that the parties have complied with this Agreement with respect to arbitration of disputes and litigation ensues between the parties concerning the enforcement of an arbitration award, the party prevailing in such litigation shall be entitled to receive from the other party all reasonable costs and expenses, including without limitation attorneys' fees, incurred by the prevailing party in connection with such litigation, and the other party shall pay such costs and expenses to the prevailing party promptly upon demand by the prevailing party.
13. APPLICABLE LAW. This Agreement shall be construed and enforced under and in accordance with the laws of the State of Tennessee.
14. INTERPRETATION. Words importing any gender include all genders. Words importing the singular form shall include the plural and vice versa. The terms "herein", "hereunder", "hereby", "hereto", "hereof" and any similar terms refer to this Agreement. Any captions, titles or headings preceding the text of any article, section or subsection herein are solely for convenience of reference and shall not constitute part of this Agreement or affect its meaning, construction or effect.
15. ENTIRE AGREEMENT. This Agreement embodies the entire and final agreement of the parties on the subject matter stated in this Agreement. No amendment or modification of this Agreement shall be valid or binding upon the Employer or the Executive unless made in writing and signed by both parties. All prior understandings and agreements relating to the subject matter of this Agreement, including, but not limited to, that certain employment agreement between the Bank and the Executive previously signed by the parties and also dated as of April 1, 2000, are hereby expressly terminated and superseded.
16. RIGHTS OF THIRD PARTIES. Nothing herein expressed is intended to or shall be construed to confer upon or give to any person, firm or other entity, other than the parties hereto and their permitted assigns, any rights or remedies under or by reason of this Agreement.
17. SURVIVAL. The obligations of the Executive pursuant to Section 5 shall survive the termination of the employment of the Executive hereunder for the period designated under each of those respective sections.
18. JOINT AND SEVERAL. The obligations of the Bank and the Company to Executive hereunder shall be joint and several.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Employer and the Executive have executed and delivered this Agreement as of the date first shown above.
THE BANK:
PINNACLE NATIONAL BANK (PROPOSED)
THE COMPANY:
PINNACLE FINANCIAL CORPORATION
By: /S/ M. TERRY TURNER
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Print Name: M. TERRY TURNER
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Title:PRESIDENT & CEO
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THE EXECUTIVE:
/S/ HUGH M. QUEENER
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HUGH M. QUEENER
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EXHIBIT A
INITIAL DUTIES OF THE EXECUTIVE
CHIEF ADMINISTRATIVE OFFICER
FUNCTION:
Has overall responsibility for the bank's operations and fiscal record keeping. Also has responsibility for the bank's consumer loan portfolio and asset quality. Maintains cash accounts, oversees budget preparation, regulatory agency reporting, and shareholder reporting. Prepares financial and other reports on a periodic basis for the Board and Senior Management.
AREAS OF ACCOUNTABILITY:
OPERATIONS:
1. Responsible for due from and due to banking activities including balance levels and incoming and outgoing wire transfers. Also, manages the bank's daily reserve and cash position.
2. Responsible for the accounts payable function for the bank.
3. Keeps informed of new developments in technology and ideas affecting the overall operating efficiency of the bank and makes modifications as appropriate.
4. Has overall responsibility for maintaining appropriate risk tolerance levels to include final approval and override authority on requests made by bank officers for payment of the NSF items, overdrafts, and cash items. Also responsible for the identification of kite suspects and the review of items drawn against uncollected funds.
5. Has overall responsibility for the bank's consumer loan portfolio and asset quality.
6. Responsible for all loan operation functions to include consumer, commercial and real estate loan operations.
7. Serves as the bank's CRA Officer and, as such, formulates and maintains a program designed to ensure optimum compliance with the Community Reinvestment Act (CRA) and the Home Mortgage Disclosure Act (HMDA).
8. Keeps informed of new and pending laws and regulations affecting the bank's policies and procedures and initiates changes as appropriate.
9. Responsible for all deposit operation functions to include item processing, courier services, and data processing.
10. Supervises Human Resource Administration.
COMPLIANCE:
1. Manages the audit function to ensure proper operational and functional controls, and adherence to corporate policies and procedures.
2. Coordinates all regulatory examinations and audit and accounting work.
3. Establishes and implements all operating procedures to insure proper internal controls.
4. Develops, implements, and maintains an effective compliance program to insure that the bank is in full compliance with all applicable laws and regulations.
5. Acts as the bank's Security Officer to insure compliance with the requirements of the Bank Security Act.
FINANCIAL REPORTS AND PLANNING:
1. Responsible for the preparation of financial statements, including balance sheets, profit and loss statements and statements of sources and uses of funds as required by external auditors, SEC, OCC, and other regulatory agencies.
2. Manages the accounting practices of the bank, keeping proper ledger records in order to determine an accurate financial picture.
3. Responsible for the preparation of financial reports, which monitor Asset/Liability management and interest rate risk. These monthly reports should include at a minimum the bank's liquidity position and liquidity ratios, net interest margin, deposit and loan volume trends and interest rates, and an inventory of securities.
4. Along with the CEO, manages the bank's investment portfolio to maximize yield and insure adequate liquidity. This includes proper pledging of securities for public funds.
5. Develops, implements, and controls the profit plan including the tax planning for the year in order to maximize cash management and funds available for investment. Also, analyzes results compared to the profit plan to identify potential problems and develops possible revenue producing strategies.
EXHIBIT 10.10
[GRAPHIC OMMITED]
AGREEMENT OF SALE FOR HARDWARE AND THIRD PARTY SOFTWARE
Date: June 19, 2000
SELLER PURCHASER
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SER MACROSOFT, INC. PINNACLE FINANCIAL PARTNERS
2523 PRODUCT COURT 3401 WEST END AVE. SUITE 306
ROCHESTER HILLS, MI 48309 NASHVILLE, TN 37203
PHONE: (248) 853-5353 PHONE: (615) 250-1801
FAX: (248) 853-7140 E-MAIL: HQ37027@AOL.COM
ATTN: DAN SMITH ATTN: HUGH QUEENER
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1. SELLER agrees to sell, and the PURCHASER agrees to purchase, the equipment listed below (the "Equipment")
QTY PART NO. DESCRIPTION PURCHASE PRICE TOTAL
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1 MSH-xxxx CHECK, DOCUMENT, AND REPORTS MANAGER DATABASE SERVER-DELL 5,460.00 5,460.00
PowerEdge 2400, 667 MHz, 512 MB RAM, 9 GB HD, Windows NT
Server(10 users), kbrd, mouse, 15"monitor, CD-ROM, 10/100
Base-T NIC, APC Smart UPS 1400 Watt
1 MSH-xxxx DELL 35/70 DLT Tape Drive 4,595.00 4,595.00
1 MSR1518-54 MacroStor 1500 54GB usable -Desktop with (5) 18GB Disks, 7,995.00 7,995.00
PCI RAID card, Cable
1 MSH-4410 Backup Exec V8 CD NT 795.00 795.00
1 MSH-4412 Backup Exec V8 NT SQL Server Option 795.00 795.00
1 MSW-3282 Microsoft SQL Server v7.0 with 10 user licenses 1,999.00 1,999.00
1 MSH-5700 Plextor 820T CD Recorder 525.00 525.00
1 MSH-4152 Adaptec 2940 SCSI card with software 275.00 275.00
1 MSH-4100 HP 8100 Laser Printer (32ppm) 3,299.00 3,299.00
1 MSH-xxxx CHECK MANAGER AUTOFILE/STATEMENTS PC - DELL Optiplex GX110 1,160.00 1,160.00
Desktop PC: Pentium -Registered Trademark- III processor
667MHz, 256K Cache, 64MB, 17" Monitor, 6.4GB Hard Drive,
1.44MB Floppy Drive, Keyboard, Mouse, CD-ROM, NIC,
Windows 98
1 MSH-xxxx DOCUMENT MANAGER SCAN PC - DELL Optiplex GX110 Desktop 1,160.00 1,160.00
PC: Pentium -Registered Trademark- III processor
667MHz, 256K Cache, 64MB, 17" Monitor, 6.4GB Hard
Drive, 1.44MB Floppy Drive, Keyboard,
Mouse, CD-ROM, NIC, Windows 98
1 MSH-6050 MacroSoft ISIS Interface Kit - includes SCSI card & cable 395.00 395.00
1 MSH-0320 Panasonic KV-ss25 Duplex Scanner 3,195.00 3,195.00
2 MSH-6100 MacroSoft Remote Support Kit (includes Carbon Copy32, 400.00 800.00
External 56K Modem & cable)
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EQUIPMENT TOTAL: $32,448.00
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PAYMENT SCHEDULE 1. 10% of Total Upon Placement of the Order $3,244.80 2. 10% of Total Upon Preliminary OCC Approval $3,244.80 3. 40% of Total Due August 21,2000 $12,979.20 4. 40% Upon Installation $12,979.20 EQUIPMENT TOTAL $32,448.00 |
2. TERMS OF PAYMENT. Terms of payment are as indicated above.
3. DELIVERY, INSTALLATION AND INSURANCE. SELLER shall deliver and PURCHASER shall accept delivery of the Equipment at the present Equipment location. All transportation, rigging and drayage charges, installation and insurance costs will be paid by PURCHASER.
4. TAXES. In addition to all charges specified in this Agreement, PURCHASER shall pay or reimburse SELLER for all federal, state, local or other taxes not based on SELLER's net income or net worth, including, but not limited to, sales, use, privilege and property taxes, or amounts levied in lieu thereof, based on charges payable under this Agreement or based on the Equipment, its use or any services performed hereunder, whether such taxes are not or hereafter imposed under the authority of any federal, state, local or other taxing jurisdiction. In the event PURCHASER is purchasing for resale, a duly executed resale tax exemption certificate for the state where delivery takes place shall be delivered to SELLER on or before the anticipated delivery date set out above.
5. REMEDIES, RISK OR LOSS, DAMAGES. Failure to pay the purchase price of any Equipment when due shall give SELLER the right, without liability, to repossess that Equipment with or without notice, and to avail itself of any legal remedy. The risk of loss or damage shall be upon the PURCHASER after delivery of the Equipment to the carrier. In the event that PURCHASER fails to pay for the Equipment when due, and SELLER elects to repossess the Equipment, SELLER shall be entitled, at its option, to liquidated damages of twenty percent (20%) of the purchase price of such Equipment and, if it shall so elect, in addition, may recover its actual loss. If the amounts due to SELLER from the PURCHASER hereunder are not paid when due, there shall be added to the amount due to SELLER hereunder a service charge of two percent (2%) of the remaining balance for each month or fraction thereof that said monies are past due, and the amount of all attorney's fees actually incurred by SELLER in collecting such amounts or in repossessing any Equipment.
6. TITLE. SELLER warrants and represents that at the time of delivery it will have good title to the aforementioned Equipment free and clear of all liens and encumbrances of whatever kind and description and that there will exist no liens or property interests against or in such Equipment other than SELLER's. Title to the Equipment is to remain vested in SELLER until the full purchase price thereof shall have been paid.
7. WARRANTY. (a) SELLER passes through to PURCHASER all manufacturer's warranties, if any, which warrant the Equipment against defect in material and workmanship for a period as specified by the manufacturer, from date of original installation under normal use and service. (b) PURCHASER's exclusive remedy for breach of the Equipment warranty above is with the manufacturer, who will either repair of replace, at its option, any item of Equipment which fails during the warranty period because of a defect in workmanship or material during the warranty period (provided PURCHASER has promptly reported the failure to SELLER in writing).
8. LIMITATION OF LIABILITY, DISCLAIMER OR WARRANTIES. SELLER SHALL HAVE NO LIABILITY TO PURCHASER FOR ANY CLAIM, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY, INDIRECTLY, INCIDENTALLY OR CONSEQUENTLY BY THE EQUIPMENT, BY ANY INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN, BY ANY INCIDENT WHATSOEVER IN CONNECTION THEREWITH, ARISING IN STRICT LIABILITY, NEGLIGENCE OR OTHERWISE, OR IN ANY WAY RELATED TO OR ARISING OUT OF THIS AGREEMENT, DURABILITY AND FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE EQUIPMENT AND EXPRESSLY DISCLAIMS THE SAME.
9. SECURITY INTEREST. SELLER reserves and PURCHASER grants a purchase money security interest in the Equipment in the amount of the purchase price. This interest will be satisfied by payment in full. A copy of this Agreement may be filed with appropriate authorities at any time after signature of the PURCHASER on a financing statement in order to perfect SELLER's security interest. Such filing does not constitute acceptance of this Agreement by SELLER. Prior to payment in full of the purchase price, at the request of SELLER, PURCHASER will execute financing statements satisfactory to SELLER covering the Equipment. PURCHASER will not, and will not attempt to, sell or transfer any of the Equipment prior to payment in full of the purchase price.
10. OPTION TO TERMINATE. In the event the PURCHASER refuses or is unable to accept delivery of the Equipment SELLER shall have the right (a) to terminate this Agreement on five (5) days notice to the PURCHASER, (b) to take immediate possession of
the Equipment and (c) to retain and apply all money paid hereunder to the date of said notice toward liquidated damages; and, if it shall so elect, in addition, it may recover its actual losses.
11. SUBSTITUTION. SELLER may substitute comparable equipment for the Equipment shown above if it is in the best interest of both PURCHASER and SELLER to do so. Any such substituted Equipment will meet or exceed the specifications of the Equipment.
12. NON-SPECIFIED FEATURES. If the Equipment delivered contains any features not specified herein, PURCHASER grants SELLER, at SELLER's option and expense, the right to remove or deactivate any such features.
13. APPLICABLE LAW. The laws of the State of Michigan shall govern this Agreement.
14. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the PURCHASER and SELLER with respect to the purchase and sale of the Equipment and any representations or statements not contained in this Agreement shall not be binding upon MACRO as a warranty or otherwise. The foregoing terms and conditions shall prevail notwithstanding any variance with the terms and conditions of any order submitted by the PURCHASER in respect of the Equipment. This Agreement shall not be binding upon SELLER unless signed on its behalf by a duly authorized officer at its principal office in Rochester Hills, Michigan.
ACCEPTED BY PURCHASER: ACCEPTED BY SELLER: PINNACLE FINANCIAL PARTNERS SER MACROSOFT, INC. By: ________________________________ By: ______________________________ Title: ________________________________ Title:______________________________ Date: ________________________________ Date: ______________________________ |
[GRAPHIC OMITTED]
2523 PRODUCT COURT (248) 853-5353
ROCHESTER HILLS, MI 48309 FAX (248) 853-7140
Reference Number: 1226MF061900
|
GENERAL TERMS AND CONDITIONS
SECTION 1. DEFINITIONS
(a) AGREEMENT. This agreement consists of these Terms and Conditions and
License Agreement attached hereto. These Terms and Conditions are general terms
and conditions for the licensing of Licensor's (SER MacroSoft) proprietary
computer software products. More than one License Agreement may incorporate
these Terms and Conditions by reference. Each License Agreement, taken together
with these Terms and Conditions, shall constitute a separate Agreement and shall
be considered independent of any other agreements between the parties which
incorporate these Terms and Conditions.
(b) PRODUCT. The term "Product" means one or more of Licensor's (SER
Macrosoft's) proprietary computer software programs identified in the License
Agreement, all related materials, documentation and information received by
Licensee from Licensor and the published specifications of the Product. The
License Agreement may identify more than one Product or more than one copy of
any Product.
SECTION 2. LICENSE
(a) GRANT OF LICENSE. Licensor hereby grants to Licensee and Licensee
hereby accepts from Licensor a non-exclusive, nontransferable license to use the
Product in accordance with this Agreement during the term specified in Section
3. Licensee acknowledges and agrees that the Product is the proprietary
information and trade secret of the Licensor and that this Agreement grants
Licensee no title or rights of ownership in the Product.
(b) RESTRICTIONS ON USE. Licensee is authorized to use the Product only for
Licensee's internal purposes and only on one network at a time (including
Internet access to the same network) at the sites specified in the License
Agreement. Licensee agrees that it will not use or permit the Product to be used
in any manner, whether directly or indirectly, that would enable Licensee's
customers or any other person or entity to use the Product on more than one
network at a time.
(c) DOCUMENTATION. Licensor shall provide Licensee with the Product in a
machine readable form and the User Guide for the Product.
(d) PROPRIETARY MARKINGS. Licensee agrees not to remove or destroy any
proprietary markings or confidential legends placed upon or contained within the
Product or any related materials or documentation.
SECTION 3. TERM
The license granted under this Agreement shall commence upon the delivery
of the Product to Licensee and shall continue for the license term specified on
the License Agreement hereof unless sooner terminated in accordance with the
provisions of this Agreement.
SECTION 4. MAINTENANCE AND SUPPORT
(a) MAINTENANCE AND SUPPORT SERVICES. Subject to the terms, conditions and
charges set forth in this Section, Licensor will provide Licensee with
maintenance and support services for the Product as follows: (i) Licensor will
provide such assistance as is necessary to cause the Product to perform in
accordance with its current published specifications; (ii) Licensor will provide
such improvements, enhancements, extensions and other changes to the Product
developed by Licensor as are determined by Licensor to be suitable to the uses
made of the Product by Licensee ("Improvements"); and (iii) Licensor will
provide updates to the Product if and as required to cause it to operate under
new versions or releases of the operating system(s) specified in the Products
current published specifications so long as such updates are technically
practical.
(b) MAINTENANCE AND SUPPORT CHARGES FOR SUBSEQUENT YEARS. Licensor will
continue to provide Licensee with maintenance and support services as described
in subsection (a) above, provided Licensee pays Licensor in advance the annual
maintenance and support charges then in effect.
(c) RENEWAL. For each such subsequent year, Licensor's obligation to
provide maintenance and support services and Licensee's obligation to pay
maintenance and support charges then in effect shall be automatically renewed,
unless either Licensor or Licensee has given the other at least 30 days prior
written notice canceling Licensor's maintenance and support. If there is an
increase in annual maintenance and support charges over the preceding year,
Licensee may also prevent such automatic renewal by giving Licensor written
notice of cancellation within 15 days of receipt of Licensor's invoice showing
such increase.
(d) LIMITATIONS ON LICENSOR'S OBLIGATIONS. Licensee understands and agrees
that Licensor may develop and market new or different computer programs, which
use part or all of the Product and which performs all or part of the functions,
performed by the Product. Nothing contained in this Agreement gives Licensee any
rights with respect to such new or different computer programs. Any failure by
Licensor to provide ongoing annual maintenance and support shall not constitute
grounds for terminating this Agreement but shall be only a basis for terminating
the party's future obligations with respect to maintenance and support.
SECTION 5. WARRANTY
(a) Unless stated otherwise in the License Agreement, Licensor hereby
warrants that the Product, as delivered by
Licensor, if properly installed, is capable of operating in substantial conformance with the Product's current published specifications.
EXCEPT AS SPECIFICALLY PROVIDED IN THIS SECTION, LICENSOR MAKES NO
WARRANTIES EITHER EXPRESS OR IMPLIED AS TO ANY MATTER WHATSOEVER, INCLUDING,
WITHOUT LIMITATION, THE CONDITION OF THE PRODUCT, ITS MERCHANTABILITY, OR ITS
FITNESS FOR ANY PARTICULAR PURPOSE.
(b) MILLENIUM COMPLIANCE. Licensor warrants
that the (1) Product's to be provided under this Agreement are Year 2000
Compliant, that (2) the Product's provided under this Agreement will not be
adversely affected by Year 2000 Compliance and that (3) Licensor has taken all
good faith and necessary steps to insure that it is in compliance with the
foregoing warranties. "Year 2000 Compliance" means that the Product will be able
to (i) consistently accept date input, provide date output and perform
calculations on dates before, during, and after January 1, 2000; (ii) the
Product will operate accurately and without interruption before, during and
after January 1, 2000 without any change in operations associated with the
advent of the new century; (iii) the Product will respond to two digit date
input in a way that resolves any ambiguity as to century in a disclosed, defined
and predetermined manner; (iv) and the Product will be capable of storing and
providing output of date information in ways that are unambiguous as to century.
SECTION 6. TRADE SECRET, PATENT AND COPYRIGHT INDEMNIFICATION
Licensor agrees to pay Licensee all damages awarded by a court of competent
jurisdiction against Licensor for infringement of any existing United States
patent or copyright and for misuse of any existing trade secret asserted against
Licensee by virtue of Licensee's use of the Product as delivered and maintained
by Licensor, provided Licensor is given prompt written notice of the particulars
of any such claim and the right to control and direct the investigation,
preparation and defense and settlement of each such claim and further provided
that Licensee shall fully cooperate with Licensor in connection with the
foregoing and provide Licensor with all information and documentation within its
possession. Should the Product as delivered by Licensor become or in Licensor's
opinion, be likely to become, the subject or a claim of infringement of a patent
or copyright, Licensor may at its option and expense either (a) procure for
Licensee the right to continue to use the Product as contemplated hereunder, or
(b) replace or modify the Product and/or modify its use to make its use
hereunder non-infringing. If neither option is reasonably available to Licensor,
then this Agreement may be terminated at the option of either party hereto
without further obligation or liability except as provided in Sections 8, 9, and
10 (c) hereof. Licensor shall have no liability for any claim of infringement of
any patent or copyright or misuse of trade secret based on Licensee's use or
combination of the Product with products not supplied by Licensor as part of the
Product.
SECTION 7. LIMITATION OF LIABILITY AND UPON TIME TO SUE
(a) MODIFICATION OF PRODUCT BY LICENSEE. Any modification of the
Product by Licensee or any failure by Licensee to implement any improvements or
Updates to the Product as supplied by Licensor shall void Licensor's maintenance
and support obligations under Section 4, Licensor's warranty under Section 5 and
Licensor's indemnity under Section 6 above, unless Licensee has obtained prior
written authorization from Licensor permitting modification or failure to
implement.
(b) LIMITATIONS ON LICENSOR'S LIABILITY, EXCEPT AS PROVIDED IN SECTION
6 ABOVE.
LICENSOR SHALL NOT BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL, CONSEQUENTIAL
OR ANY OTHER DAMAGES ARISING OUT OF LICENSEE'S USE OF THE PRODUCT OR THE
MARKETING, DELIVERY, INSTALLATION, FURNISHING, MAINTAINENCE OR SUPPORT OF THE
PRODUCT BY LICENSOR. SOME STATES DO NOT ALLOW THE EXCLUSION OR LIMITATION OF
INCIDENTAL OR CONSEQUENTIAL DAMAGES, SO ABOVE LIMITATION MAY NOT APPLY TO YOU.
If for any reason any of the foregoing limitations of liability is voided or is
not effective, or if any remedy hereunder fails of its essential purpose,
Licensee agrees that (except as provided in Section 6 above) Licensor's
liability for damages, if any, shall not exceed the charges paid to Licensor by
Licensee for use of the Product under this Agreement. No action, regardless of
form, arising out of any of the transactions under this Agreement may be brought
by Licensee more than one year after such action occurred.
SECTION 8. PAYMENT; TAXES
(a) PAYMENT. Licensor will invoice Licensee for the amount due on delivery
of the Product as specified in the License Agreement. Subsequent charges will be
invoiced at the beginning of the period to which they apply. All other payments
shall be due and payable within 30 days after Licensee's receipt of an invoice
from Licensor. Licensee's obligation to pay all accrued charges shall survive
the expiration or termination of this Agreement.
(b) TAXES. In addition to all charges specified in this Agreement, Licensee
shall pay or reimburse Licensor for all federal, state, local or other taxes not
based on Licensor's net income or net worth, including, but not limited to,
sales, use, privilege and property taxes, or amounts levied in lieu thereof,
based on charges payable under this Agreement or based on the Product, its use
or any services performed hereunder, whether such taxes are not or hereafter
imposed under the authority of any federal, state, local or other taxing
jurisdiction.
SECTION 9. CONFIDENTIALITY; NONDISCLOSURE
Licensee hereby agrees that (a) the Product received by Licensee from
Licensor under this Agreement, whether received orally, in writing, or in any
other medium, is and shall be treated as the confidential property or Licensor:
(b) Licensee shall exercise at least the same degree of care to safeguard the
confidentiality of the Product as Licensee would exercise to safeguard
Licensee's confidential property, provided said safeguard is reasonable
according to industry standards: and (c) neither the Product nor any part
thereof received by Licensee from Licensor under this Agreement shall be
duplicated (except for normal security backup purposes) or in any way disclosed
to others, in whole or in part without the prior written permission of Licensor.
Such prohibition on disclosure shall not apply to disclosures by Licensee to its
employees provided such disclosures are reasonably necessary to Licensee's use
of the Product, and provided further that Licensee shall take all reasonable
steps to ensure that the Product is not duplicated or disclosed by such
employees in contravention of this Agreement. It is expressly understood and
agreed that the obligations of this Section shall survive the expiration or
termination of the Agreement or any provision thereof.
SECTION 10. TERMINATION
(a) BASIS FOR TERMINATION BY LICENSOR. Licensor shall have the right to
terminate this Agreement without further obligation or liability to Licensee if
(i) Licensee is delinquent in making payments of any sum due under this
Agreement, with the exception of maintenance and support fees covered in Section
4 herein, and continues to be delinquent for a period of thirty (30) days after
the last day on which such payment is due, (ii) Licensee commits any other
breach of this Agreement and fails to remedy such breach within thirty (30) days
after written notice by Licensor of such breach.
(b) BASIS FOR TERMINATION BY LICENSEE. Licensee shall have the right,
without further obligation or liability to Licensor (except as specified in
Section 4, 8, 9, and 10(c) hereof) to terminate this Agreement; (i) if Licensor
commits any breach of this Agreement and fails to remedy such breach within
thirty (30) days after written notice by Licensee of such breach.
(c) DISPOSITION OF PRODUCT ON TERMINATION. Upon the termination of this
Agreement for any reason, the license and all other rights granted to Licensee
hereunder shall immediately cease, and Licensee shall immediately; (i) return
the Product to Licensor together with all reproductions and modifications of the
Product and all copies of any documentation, notes and other materials
respecting the Product; (ii) purge all copies of the Product or any portion
thereof from all CPU's and from any computer storage device or medium on which
Licensee has placed the Product; and (iii) give Licensor a written certification
that Licensee has complied with all of its obligations under this Section.
Licensor's cancellation of this Agreement and/or repossession of the Product
shall be without prejudice to any other remedies that Licensor may lawfully
have.
SECTION 11. GENERAL
(a) WAIVER, AMENDMENT OR MODIFICATION. The waiver, amendment or
modification of any provision of this Agreement or any right, power or remedy
hereunder shall not be effective unless made in writing and signed by the party
against whom enforcement of such waiver, amendment or modification is sought.
The terms of this Agreement shall not be amended or changed by the terms of any
purchase order or acknowledgment even though Licensor may have accepted or
signed such documents. No failure or delay by either party in exercising any
right, power or remedy with respect to any of its rights hereunder shall operate
as a waiver thereof or as to any future breach.
(b) NOTICE. Any notice or communication required or permitted hereunder
shall be given in writing to the other party at the address stated in the
License Agreement, or at such other address as shall be given by either party to
the other in writing. Such notice shall be deemed to have been given or made
when delivered personally or when received as evidenced by a return receipt,
properly addressed and postage prepaid, certified with return receipt, in the
United States mail.
(c) ENTIRE AGREEMENT. This agreement constitutes the entire agreement
between the parties in connection with the subject matter hereof and supersedes
all prior and contemporaneous agreements, understandings, negotiations and
discussions, whether oral or written, of the parties, and there are not
warranties, representations and/or agreements between the parties in connection
with the subject matter hereof except as specifically set forth or referred to
herein.
(d) SUCCESSORS AND ASSIGNS. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto,
and their successors and assigns and legal representatives, except that Licensee
may not assign this Agreement nor any right granted hereunder, in whole or in
part, without Licensor's prior written consent.
(e) GOVERNING LAW; SERVICEABILITY. The validity, construction and
performance of this Agreement and the legal relations among the parties to this
Agreement shall be governed by and construed in accordance with the laws of the
State of Michigan. If any provision of this Agreement or the applications of any
such provision shall be held by a tribunal of competent jurisdiction to be
contrary to law, the remaining provision of this Agreement shall continue in
full force and effect.
(f) COMPLIANCE WITH THE LAW. Licensee agrees that it will comply with
all federal, state and local laws and regulations governing the use of the
Product.
Agreed: PINNACLE FINANCIAL PARTNERS Signature: _______________________________________ Position: _______________________________________ Date: _______________________________________ |
[GRAPHIC OMITTED] 2523 PRODUCT COURT (248) 853-5353 ROCHESTER HILLS, MI 48309 FAX (248) 853-7140 SALESPERSON: DAN SMITH DATE: JUNE 19, 2000 |
LICENSE AGREEMENT
This License Agreement between SER MacroSoft, Inc. (Licensor), a Delaware Corporation and the Licensee identified below consists of this License Agreement, Attachments A and B to License Agreement, and Licensor's General Terms and Conditions Reference Number: 1226MF0619, which are incorporated by this reference.
In accordance with the provisions of this Agreement, Licensor will provide Licensee with the Products listed below, as specified in Licensor's current Product Documentation, for use by Licensee only in its computing facilities at the following site(s): PINNACLE FINANCIAL PARTNERS, 3401 WEST END AVE.
SUITE 306, NASHVILLE, TN 37203.
TERM OF LICENSE: Perpetual
SOFTWARE LICENSED AND LICENSE FEES:
QTY PRODUCT NUMBER SOFTWARE DESCRIPTION LICENSE FEE TOTAL ANNUAL
MAINTENANCE
-------------------------------------------------------------------------------------------------------------------------
1 SYN-D003 Synergy 2000 Document Manager- SA (This is an $13,000.00 $13,000.00 $1,950.00
entry level system which does not support more than
10 concurrent users)
2 SYN-D002 Synergy 2000 Document Manager- Client Access 3,000.00 3,000.00 900.00
License for (10) concurrent users
1 SYN-D032 Synergy 2000/ Smart Indexes 2,490.00 2,490.00 375.00
1 SYN-D041 Synergy 2000/ DSIS-25 Scanner Interface LIST 495.00 495.00 225.00
$1,495.00
1 SYN-R003 Synergy 2000 Report Manager-SA includes Reports 13,000.00 13,000.00 1,950.00
Squeeze and Reports Log (This is an entry level
system which does not support more than 10
concurrent users)
2 SYN-R002 Synergy 2000 Reports Manager-Client Access License 3,000.00 3,000.00 900.00
for (10) concurrent users
1 SYN-C003 Synergy 2000 Check Manager-SA (This is an entry 10,000.00 10,000.00 1,500.00
level system which does not support more than 10
concurrent users)
2 SYN-C002 Synergy 2000 Check Manager-Client Access License 3,000.00 3,000.00 900.00
for (10) concurrent users
1 SYN-C020 Check Manager Autofile 2,000.00 2,000.00 300.00
1 SYN-C010 Check Manager Statement Print LIST $24,000.00 17,500.00 17,500.00 3,600.00
-------------------------------------------------------------------------------------------------------------------------
TOTAL LICENSE FEE $ 67,485.00
SYSTEM PREPARATION, INSTALLATION AND TRAINING (14 DAYS ON SITE) $ 14,000.00
CONSULTING SERVICES $ 10,000.00
TOTAL $ 91,485.00
ANNUAL MAINTENANCE AND SUPPORT SERVICES:
The first ninety days of Maintenance and Support Services are included in the License Fees. $12,600.00
First payment due ninety days after installation and annually thereafter.
|
LICENSE FEE PAYMENT SCHEDULE:
1. 10% of Total Upon Placement of the Order $ 9,148.50
2. 10% of Total Upon Preliminary OCC Approval $ 9,148.50
or August 21, 2000, whichever occurs first.
3. 40% of Total Due August 21,2000 $ 36,594.00
4. 40% Upon Installation $ 36,594.00
Total License Fee $ 91,485.00
|
ADDITIONAL TERMS AND CONDITIONS
1. Upon written customer acceptance of Program Products herein, Licensor agrees to place source code for said program products on deposit with an acceptable escrow agent. The Licensee shall have access to the source code if Licensor or its successor should cease to market and support the licensed program products. The Licensee's usage of the source code shall be limited solely to the support of their usage of the program product.
2. Transportation, meal and lodging expenses for installation/training personnel are additional and will be billed separately. If additional support days are required, they will be billed at the rate of $1,000.00 per day plus per diem expenses.
LICENSEE: PINNACLE FINANCIAL PARTNERS LICENSOR: SER MACROSOFT, INC.
3401 WEST END AVE. SUITE 306 2523 PRODUCT COURT
NASHVILLE, TN 37203 ROCHESTER HILLS, MI 48309
---------------------------------- ----------------------------------
Signature Signature
---------------------------------- ----------------------------------
Name Name
---------------------------------- ----------------------------------
Position Position
Date: _________________________ Date: _________________________
|
EXHIBIT 10.11
BROKERAGE PROGRAM AGREEMENT
(DUAL EMPLOYEE)
THIS BROKERAGE PROGRAM AGREEMENT (this "Program Agreement") is made as of the below date, by and among LM Financial Partners, Inc., a Maryland corporation ("LMFP"), Legg Mason Financial Services, Inc., a Maryland corporation ("LMFS"), and Pinnacle Bank (the "Bank").
BACKGROUND
LMFP is a registered broker-dealer and investment advisor which desires to provide certain securities and related services to customers of the Bank and the general public at sales areas located in Bank branches ("Sales Areas").
LMFS is a licensed insurance agency, which, in conjunction with LMFP, desires to provide certain insurance products and related services to customers of the Bank and the general public at Sales Areas.
The Bank desires to make LMFP's securities products and services and LMFS's insurance products and services as described in this Program Agreement available to the Bank's customers and other members of the public by leasing the Sales Areas to LMFP and LMFS pursuant to a lease of even date herewith (the "Lease").
PROGRAM AGREEMENT
The Bank, LMFP and LMFS agree as follows:
1. LMFP PROGRAM. LMFP and LMFS agree to provide the LMFP Program in the Sales Areas pursuant to the terms of this Program Agreement. The LMFP Program consists of the following services:
1.1 BROKERAGE SERVICES. Throughout the term of this Program Agreement, LMFP, through its clearing affiliate, Legg Mason Wood Walker Incorporated ("LMWW"), shall establish and maintain brokerage accounts for customers introduced to the LMFP Program through Financial Advisors (as defined in Section 3.1 hereof) and shall accept and arrange for the timely execution, clearance and settlement of orders received from such customers. These orders may be taken either by telephone, through a computer, or in person by one or more Financial Advisors located on the Bank's premises. Either directly or through its clearing affiliate, LMFP shall be responsible for providing customers with periodic brokerage account statements and mailing annual dividend and distribution information as contained in IRS Form 1099 and any other information required by federal, state or local tax laws.
1.2 LMFP PRODUCTS. Securities and insurance products which may be sold by LMFP and LMFS through the LMFP Program ("LMFP Products") may include equities, mutual funds, unit investment trusts, limited partnerships, corporate, government or municipal bonds, variable rate annuities, fixed rate annuities, and other life and health insurance products and other investment products and instruments, as permitted by law. Unless the Bank and LMFP agree in writing to vary the following restrictions, LMFP Products shall not include: (i) commodities (including options for or contracts for future delivery of commodities); (ii) options (other than covered call or protected put options); (iii) futures; and (iv) debt securities issued by the Bank or its affiliates ("Bank Bonds"). Financial Advisors may provide investment advice and recommendations regarding securities and insurance products in accordance with each customer's investment goals and objectives. However, Financial Advisors may not recommend or solicit the purchase or sale of equity securities of the Bank or any affiliate of the Bank ("Bank Securities"). Unsolicited transactions in Bank Securities shall be executed only if the customer signs an affidavit affirming the unsolicited basis of the transaction and that the customer has been informed that the Bank Securities are not insured by the Bank or any affiliate, the FDIC, or any other state or federal deposit guarantee fund. Subject to the limitations with respect to Bank Bonds and Bank Securities, LMFP may accept a sell order for any security.
1.3 INVESTMENT ADVISORY SERVICES. Financial Advisors may make available to customers certain investment advisory services provided through LMFP or its affiliates.
1.4 REFERRALS. LMFP may refer customers to its affiliates from time to time for a variety of financial needs, including, but not limited to, estate valuation, retirement planning, and IRA Lump Sum distribution analysis.
2. MARKETING, TRAINING AND TECHNICAL ASSISTANCE. As part of the LMFP Program, LMFP and LMFS, at their sole expense, shall provide the following services:
2.1 Advice and assistance regarding the identification of employees who will act as Financial Advisors;
2.2 Initial and ongoing training of Financial Advisors with respect to the LMFP Program;
2.3 Sponsoring and arranging for NASD Series 7 securities licenses, and all other licenses required by state, federal and self-regulatory agencies, for all Financial Advisors;
2.4 Providing National Association of Securities Dealers ("NASD") registered principals to assist and supervise Financial Advisors;
2.5 Access by Financial Advisors to LMFP's national and regional offices and support staff, including a toll-free phone for use in connection with the LMFP Program;
2.6 Make available to the Bank, upon its request, either directly or through its clearing affiliate: (i) monthly summaries of all transactions and commissions generated in connection with customer accounts; (ii) a list of written customer complaints, if any, and their resolution; and (iii) a list of sales by product and, if applicable, by Financial Advisor.
2.7 Advice and assistance to the Bank in connection with structuring or implementing any referral based compensation program(s) for Bank Employees (as defined in Section 4.1);
2.8 Advice and assistance to the Bank regarding the preparation by the Bank of materials relating to the LMFP Program, including a prior review of any such materials;
2.9 Development of compliance procedures for the implementation of the LMFP Program and on-going monitoring of compliance procedures. The supervisory and compliance requirements applicable to the LMFP Program shall be set forth in a manual (the "Compliance Manual") prepared by LMFP. The Compliance Manual shall be made available to the Bank and each Financial Advisor;
2.10 Performing appropriate due diligence in connection with LMFP Products; and
2.11 Design and lay-out of signage, advertising and promotional materials regarding the LMFP Program.
3. FINANCIAL ADVISORS
3.1 DEFINED. Securities and insurance products marketed through the LMFP Program shall be offered and sold, and transactions in those products shall be effected, only by Financial Advisors of LMFP, who (i) shall be registered and qualified as necessary with the SEC, the NASD and appropriate state regulatory authorities, (ii) shall be employed by both LMFP and the Bank, and (iii) shall be licensed as insurance agents as necessary with appropriate state regulatory authorities. Each Financial Advisor shall be designated by the Bank subject to approval and acceptance by LMFP, and shall enter into a Financial Advisor Employment Agreement with LMFP.
3.2 COMPENSATION. The Bank shall pay the compensation of the Financial Advisors out of the payments made by LMFP and/or LMFS to the Bank. The amount of such compensation will be set from time to time by LMFP after consultation with the Bank. LMFP and/or LMFS shall not be liable to any Financial Advisor for any additional compensation, in any form whatsoever, including, without limitation, any fringe benefits.
3.3 TRAINING. A Financial Advisors shall be required to pass those examinations and to undergo any training period as prescribed by law in order to qualify to act as a Financial Advisor. Additional training of Financial Advisors may be required with respect to the LMFP Program and LMFP Products. The Bank shall make Financial Advisors available from time to time to participate in such training.
3.4 CONTROL BY LMFP AND LMFS. LMFP and LMFS shall exercise exclusive control of the Financial Advisors with respect to their conduct as Financial Advisors of LMFP; and their conduct in such capacity shall be governed in all respects by the Compliance Manual and instructions provided by LMFP and LMFS, and by applicable laws, rules and regulations. The Bank shall strictly honor such control relationship and shall not have any involvement whatsoever in any of the securities brokerage, investment advisory and insurance services performed by Financial Advisors on behalf of the LMFP Program.
3.5 DISCIPLINE. Financial Advisors shall be subject to discipline by LMFP and by various federal and state regulatory authorities, associations of securities brokers and dealers and certain other entities having jurisdiction over the operation of LMFP and the conduct of the Financial Advisors. The Bank shall cooperate with LMFP in all respects in connection with the enforcement of any sanctions imposed by LMFP or by any of such entities against any Financial Advisor. Such disciplinary measures may include suspension or dismissal of any Financial Advisor by LMFP. In the event LMFP elects to suspend or dismiss a Financial Advisor, the Bank shall immediately transfer said employee to duties with the Bank unrelated to the LMFP Program, and may take such other disciplinary steps in connection with such employee's employment by the Bank as it deems appropriate. The Bank shall report to LMFP any violation of any law, rule or regulation or of the Compliance Manual of which the Bank has knowledge; provided, however, that the Bank shall not have any obligation to LMFP or LMFS to monitor the activities of the Financial Advisors or to cause compliance by the Financial Advisors with the Compliance Manual. The Bank shall transmit any such report to LMFP in a manner calculated to give LMFP immediate notice of any such violation and shall promptly thereafter confirm any such report in writing to LMFP's compliance officer.
3.6 RECOVERY OF COMMISSIONS FROM FINANCIAL ADVISORS. In the event that LMFP incurs a loss due to a Financial Advisor's act or omission which was negligent or in violation of LMFP's written instructions or guidelines, the Bank will act as LMFP's agent, pursuant to the grant of authority in each Financial Advisor's Employment Agreement with LMFP, in recovering the loss from the Financial Advisor's compensation arising out of the sale of securities and/or insurance products under the terms of this Program Agreement. Nothing herein shall be deemed to imply any liability on the part of the Bank for such losses.
3.7 CONDUCT OF BANK'S BUSINESS. In accordance with their employment by both LMFP and the Bank, a Financial Advisors may conduct business on behalf of the Bank when not acting as a Financial Advisor of LMFP. The conduct of the Bank's business by Financial Advisors shall be consistent with, and subject to, the provisions of SECTION 6 hereof.
3.8 IDENTIFICATION OF FINANCIAL ADVISORS. Each Financial Advisor shall be clearly identified as a representative of LMFP (and not of the Bank) at all times when such Financial Advisor is performing duties related to the LMFP Program. No Financial Advisor shall engage in any activity that would cause a customer reasonably to believe that LMFP is engaged in the banking business or that the Bank is engaged in the securities or insurance business.
3.9 ACTIVITIES OF FINANCIAL ADVISORS. Each Financial Advisor shall inform each customer that LMFP Products are being offered through LMFP, and not by the Bank, and that LMFP Products are neither guaranteed nor insured by the Bank or any governmental agency. Each Financial Advisor shall obtain a written acknowledgment of the foregoing relationships from each person who opens an account with LMFP.
4. BANK EMPLOYEES
4.1 SUPPORT SERVICES. The Bank shall provide reception, secretarial and support services for the LMFP Program satisfactory to LMFP through Bank employees who are not also Financial Advisors of LMFP ("Bank Employees"). The Bank and LMFP shall agree from time to time on the level of support services necessary to support the LMFP Program.
4.2 TRAINING. LMFP shall provide materials, including a Bank Employee Compliance Manual, to assist the Bank to train Bank Employees regarding standards of conduct and permissible activities in connection with the LMFP Program. The Bank shall make Bank Employees available at reasonable times and from time to time to participate in such training.
4.3 LIMITED ACTIVITIES. Bank Employees may distribute literature regarding the LMFP Program and LMFP Products, direct persons to Financial Advisors and provide certain other limited types of assistance of a clerical or ministerial nature (such as filling literature racks, making appointments or directing customers to other representatives of LMFP when no Financial Advisor is available) but may not engage in any securities brokerage, insurance agent or securities investment advisory activities on behalf of LMFP or LMFS. Bank Employees shall not recommend any security or insurance product, give any form of advice or discuss the merits of any security or insurance product with a customer, qualify a customer as eligible for such products, or accept orders for such products even if unsolicited.
4.4 CONTROL BY BANK. The Bank shall monitor the activities of, and cause compliance by, Bank Employees with the Bank Employee Compliance Manual and shall report to LMFP any known or suspected violations of the Bank Employee Compliance Manual in a manner calculated to give LMFP and LMFS immediate notice of such suspected violation.
5. CONFIDENTIALITY
5.1 "BANK CUSTOMER INFORMATION" DEFINED. The Bank, to the fullest extent permitted under applicable law, shall provide to LMFP and/or LMFS information, excluding confidential and privileged financial information, concerning the then-existing customers of the Bank (the "Bank Customer Information").
5.2 PROTECTION OF BANK CUSTOMER INFORMATION. LMFP and LMFS recognize the proprietary and confidential nature of the Bank Customer Information and will utilize the Bank Customer Information only in accordance with, or as required to carry out the provisions of, this Program Agreement.
5.3 OBLIGATIONS OF LMFP AND LMFS. The obligations of LMFP and LMFS to the Bank with respect to the Bank Customer Information shall include (but not be limited to) the following:
5.3.1 To obey any and all instructions of the Bank with respect to the Bank Customer Information, and to exercise due care, skill and diligence in carrying out those instructions;
5.3.2 Upon request, and after reasonable notice, to disclose to the Bank all material facts concerning use of the Bank Customer Information by LMFP and/or LMFS; and
5.3.3 To establish and enforce procedures to ensure that the Bank Account information is made available only as authorized herein and is not utilized in connection with any activities not permitted pursuant to the Program Agreement.
5.4 "LMFP ACCOUNT INFORMATION" DEFINED. LMFP shall provide to the Bank the information specified herein concerning the LMFP accounts maintained pursuant to the Program Agreement ("LMFP Account Information"). Each business day LMFP shall provide a list of (i) accounts maintained pursuant to the Program Agreement, (ii) the securities held in each such account, and (iii) a valuation of each securities holding. LMFP does not guarantee the accuracy of the LMFP Account Information provided pursuant to this provision.
5.5 PROTECTION OF LMFP ACCOUNT INFORMATION. The Bank recognizes the proprietary and confidential nature of the LMFP Account Information and agrees that this information shall not be made available to anyone other than Financial Advisors without the prior written consent of LMFP.
5.6 OBLIGATIONS OF THE BANK. The obligations of the Bank to LMFP with respect to the LMFP Account Information shall include (but not be limited to) the following:
5.6.1 To establish and enforce procedures to ensure that the LMFP Account Information is made available only as authorized herein and is not utilized in connection with any activities not permitted pursuant to the Program Agreement.
5.6.2 Upon request, and after reasonable notice, to disclose to LMFP all material facts concerning dissemination and use of the LMFP Account Information by the Bank.
6. SEPARATION OF BUSINESSES
6.1 SEPARATION OF BANK OPERATIONS. The Bank shall maintain total separation of its business from the businesses of LMFP and LMFS, including separation of records, and shall conduct its business at all times so as not to lead to confusion between its business and the businesses conducted by LMFP and LMFS.
6.2 SEPARATION OF LMFP AND LMFS OPERATIONS. LMFP and LMFS shall maintain total separation of their businesses from the business of the Bank, including separation of records, and shall conduct their businesses at all times so as not to lead to confusion between their businesses and the business conducted by the Bank.
7. ACCESS. The Bank's supervisory personnel, LMFP's supervisory personnel, LMFS's supervisory personnel, representatives of state and federal banking, securities and insurance regulatory authorities, the NASD and any other entity having jurisdiction over the operation of LMFP and the conduct of the Financial Advisors shall have unimpeded access during the Bank's business hours to the Sales Areas, to all records maintained in connection with the operation of the LMFP Program which are required to be maintained pursuant to banking, securities and insurance laws and regulations, and to the Financial Advisors and their LMFP personnel records. The Bank shall have unimpeded access during the Bank's business hours to the Sales Areas and records maintained in connection with the operation of the LMFP Program to verify that LMFP, LMFS and the Financial Advisors are complying with this Program Agreement.
8. BANK COSTS AND EXPENSES. The Bank shall be directly responsible for the costs and expenses associated with the following items in connection with the operation of the LMFP Program:
8.1 All Financial Advisor compensation, expenses and costs, including recruitment costs, fringe benefits, travel expenses, errors and omissions insurance premiums, training (other than training conducted by LMFP with respect to the LMFP Program), costs associated with obtaining any licenses (including NASD Series 7 licenses), and all costs associated with quote machines and other equipment necessary to conduct a securities brokerage business;
8.2 Salary and benefits for the Bank Employees;
8.3 Production and printing of signage regarding the LMFP Program in the Bank;
8.4 All costs incurred in connection with the preparation, printing and distribution of advertising and promotional materials regarding the LMFP Program which have been approved by an authorized officer of the Bank; and
8.5 All costs incurred in connection with the
preparation and distribution of LMFP Account Information to the Bank and any
other reports requested by the Bank, other than those reports enumerated in
Section 2.6.
9. ADVERTISING AND PROMOTION
9.1 RESPONSIBILITY. The Bank shall be responsible for the promotion of the LMFP Program and LMFP Products. LMFP and LMFS shall advise and assist the Bank in the promotion of the LMFP Program. Nothing herein obligates LMFP or LMFS or the Bank to conduct any media advertising.
9.2 PREPARATION. Advertising, direct mail, marketing material and other publicity regarding the LMFP Program and LMFP Products shall be prepared by LMFP and LMFS, or by the Bank with the advice and assistance of LMFP, or, in the case of material relating to a specific LMFP Product, by the issuer thereof. LMFP or the issuer, as the case may be, shall be responsible for ensuring that all materials conform to applicable federal and state laws and regulations. The Bank may not print or distribute any advertising, marketing material or sales literature relating to the LMFP Program or LMFP Products unless it has received prior written approval from an authorized LMFP principal. LMFP and LMFS may use the name of the Bank and/or its affiliates only to identify the locations where information regarding the LMFP Program or LMFP Products may be obtained. All advertising and promotional materials and telemarketing scripts shall disclose clearly and conspicuously that the Bank is not a registered broker/dealer, that the customer will be dealing solely with LMFP and/or LMFS, that LMFP and/or LMFS are not affiliated with the Bank or its affiliates and that the LMFP Products offered are not insured by the FDIC or any other federal or state agency, are not deposits or other obligations of the Bank, and are subject to investment risks, including possible loss of the principal amount invested. Where applicable, the existence of an advisory or any other material relationship between the Bank or an affiliate of the Bank and any mutual funds whose shares are sold by LMFP or any material relationship between the Bank or any affiliate of the Bank with LMFP and/or LMFS shall be disclosed.
10. LMFP, LMFS AND LMWW SERVICE MARKS. The Bank acknowledges that (i) LMFP is the owner of the "LM Financial Partners, Incorporated" service mark, and all derivatives thereof, (ii) LMFS is the owner of the "Legg Mason Financial Services, Inc." service mark, and all derivatives thereof, and (iii) LMWW is the owner of the Leg Mason Wood Walker, Incorporated" service mark, and all derivatives thereof. The Bank is not granted a license or right to use the LMFP, LMFS or LMWW service marks in any manner without the prior written consent of LMFP, LMFS or LMWW service marks pursuant to a written consent shall comply in all respects with the terms of that written consent.
11. COMPENSATION TO THE BANK
11.1 PROGRAM PAYMENTS. LMFP shall make Program Payments to the Bank with respect to all securities transactions which are attributable to customer accounts established with LMFP through the operation of the LMFP Program in accordance with SCHEDULE A attached hereto and made a part hereof. Program Payments shall be made to the Bank on or around the 15th day of the following calendar month with respect to all securities transactions settled through the end of the immediately preceding calendar month. Each Program Payment shall be accompanied by a record of transactions.
11.2 RENTAL PAYMENTS. LMFP or LMFS shall make Rental Payments pursuant to the Lease.
12. REPRESENTATIONS AND WARRANTIES OF LMFP AND LMFS. LMFP and LMFS represent, warrant and agree that:
12.1 LMFP is duly registered as a broker-dealer and investment advisor with the SEC, and any other applicable state or federal agency or self regulatory organization having jurisdiction over LMFP and is in good standing with the NASD and the Securities Investor Protection Corporation ("SIPC");
12.2 During the term of this Program Agreement, LMFP will remain duly licensed and in good standing as a securities broker-dealer and an investment advisor under all applicable federal and state laws and regulations;
12.3 LMFS is duly licensed with applicable state insurance regulatory bodies;
12.4 During the term of this Program Agreement, LMFS will remain duly licensed and in good standing as an insurance agency under all applicable state laws and regulations;
12.5 LMFP and LMFS have all requisite authority, in conformity with applicable laws and regulations, to enter into and perform this Program Agreement; and
12.6 LMFP and LMFS shall keep confidential any information not generally available to the public, which they may acquire as a result of this Program Agreement, regarding the business and affairs of the Bank and its customers. Such requirement shall survive the termination of the Program Agreement for so long as such information remains confidential information and/or a trade secret of the Bank;
12.7 This Program Agreement has been duly authorized, executed and delivered by LMFP and LMFS and constitutes legal, valid and binding obligations of LMFP and LMFS; and
12.8 LMFP and LMFS shall conduct their activities in conformity with all material provisions of the Compliance Manual and all applicable laws, regulations, and rules, including the Interagency Statement on Retail Sales of Nondeposit Investment Products and NASD Rule 2350 (Broker-Dealer Conduct on the Premises of Financial Institutions).
13. REPRESENTATIONS AND WARRANTIES OF THE BANK. The Bank represents, warrants and agrees that:
13.1 The Bank has all requisite authority, in conformity with applicable laws and regulations, to enter into this Program Agreement, to retain the services of LMFP and LMFS and to provide the services required of it under this Program Agreement;
13.2 The Bank, is and will remain, in compliance with all applicable laws, rules and regulations that may apply to it from time to time by any regulatory bodies or agencies having jurisdiction over the Bank with respect to the performance of the Bank's obligations under this Program Agreement;
13.3 The Bank and its subsidiaries shall keep confidential any information not generally available to the public, which it may acquire as a result of this Program Agreement, regarding the business and affairs of LMFP and LMFS. Such requirement shall survive termination of this Program Agreement for so long as such information remains confidential and/or a trade secret of LMFP and LMFS;
13.4 This Program Agreement has been duly authorized, executed and delivered by the Bank and constitutes the legal, valid and binding obligation of the Bank;
13.5 All records of LMFP and LMFS that by law or regulation must be maintained on the premises of the Bank and/or its affiliates shall be maintained by the Bank in accordance with the instructions of LMFP and LMFS; and
13.6 The Bank shall conduct its activities in connection with the LMFP Program in accordance with all material provisions of the Compliance Manual and all applicable laws, regulations and rules including the Interagency Statement on Retail Sales of Nondeposit Investment Products and NASD Rule 2350 (Broker-Dealer Conduct on the Premises of Financial Institutions).
14. INDEMNIFICATION
14.1 BY LMFP. LMFP shall defend, reimburse, indemnify and hold harmless the Bank, its affiliates, officers, directors, employees and agents against any and all losses, claims, damages, liabilities, actions, costs or expenses, joint or several, to which any indemnified party may become subject (including any amounts paid in settlement or compromise, provided LMFP shall have given its prior written approval of such settlement or compromise), insofar as such losses, claims, damages, liabilities, actions, costs or expenses arise in connection with or are based upon: (i) the breach by LMFP or LMFS of any material provision of the Program
Agreement, including (but not limited to) any representation, warranty or covenant made by LMFP or LMFS herein; (ii) any act or omission to act, whether negligent, reckless or intentional, by LMFP or LMFS or any Financial Advisor acting in his or her capacity as a Financial Advisor; (iii) the failure of LMFP or LMFS to comply with securities and other laws, rules and regulations applicable to the LMFP Program; or (iv) the failure of LMFP or LMFS to comply with insurance and other laws, rules and regulations applicable to the LMFP Program.
14.2 BY THE BANK. The Bank shall defend, reimburse, indemnify and hold harmless LMFP, LMFS, LMWW, their affiliates, officers, directors, employees and agents against any and all losses, claims, damages, liabilities, actions, costs or expenses, joint or several, to which any indemnified party may become subject (including any legal or other expenses reasonably incurred by it in connection with investigating any claim against it and any amounts paid in settlement or compromise, provided the Bank shall have given its prior written approval of such settlement or compromise), insofar as such losses, claims, damages, liabilities, actions, costs or expenses arise in connection with or are based upon: (i) the breach by the Bank of any material provision of this Program Agreement, including (but not limited to) any representation, warranty or covenant made by the Bank herein; (ii) any act or omission to act, whether negligent, reckless or intentional, by the Bank or its affiliates in connection with either the LMFP Program or unrelated banking activities; (iii) any act or omission to act, whether negligent, reckless or intentional, by any Financial Advisor, which is done pursuant to Bank instruction or direction; or (iv) the failure of the Bank or its affiliates to comply with all banking laws, rules and regulations applicable to the LMFP Program.
14.3 NOTICE OF INDEMNIFICATION. In the event any legal proceeding is threatened or instituted or any claim or demand is asserted by any person for which payment may be sought by one party hereto from the other party under the provisions of this SECTION 14, the party seeking indemnification (the "Indemnitee") will promptly cause written notice of the assertion of any such claim of which it has knowledge to be forwarded to the other party (the "Indemnitor"). Any notice of a claim will state specifically the material provision, representation, warranty or covenant with respect to which the claim is made (if applicable), the facts giving rise to an alleged basis for the claim and the amount of the liability asserted against the Indemnitor by reason of the claim.
14.4 INDEMNIFICATION PROCEDURE FOR THIRD-PARTY CLAIMS. In the event of the assertion of a claim or the initiation of any legal proceeding against an Indemnitee by a third party, the Indemnitor will have the absolute right after the receipt of notice, at its option and at its own expense, to be represented by counsel of its choice, and to defend against, negotiate, settle or otherwise deal with any proceeding, claim or demand which relates to any loss, liability or damage indemnified against hereunder; provided, however, that the Indemnitee may participate in any such proceeding with counsel of its choice and at its expense. The parties hereto agree to cooperate fully with each other in connection with the defense, negotiation or settlement of any such legal proceeding, claim or demand. To the extent the Indemnitor elects not to defend such proceeding, claim or demand, and the Indemnitee defends against or otherwise deals with any such proceeding, claim or demand, the Indemnitee may retain counsel, at the Indemnitor's expense, and control the defense of such proceeding. Neither the Indemnitor nor the Indemnitee may settle any such proceeding without the consent of the other party, such consent not to be unreasonably withheld. In the event a claim, demand or legal proceeding arises in connection with events or allegations such that LMFP and the Bank each seek indemnification from the other by reason of the claim, the parties agree that each party shall be liable for a share of all costs and expenses incurred in the defense, settlement and resolution of the claim in proportion to each party's relative fault in the matter. After any final judgment or award has been rendered by a court, arbitration board or administrative agency of competent jurisdiction and the time in which to appeal therefrom has expired, or a settlement has been consummated, or the Indemnitee and the Indemnitor have arrived at a mutually binding agreement with respect to each separate matter alleged to be indemnified by the Indemnitor hereunder, the Indemnitee will forward to the Indemnitor notice of any sums due and owing by it with respect to such matter and the Indemnitor will pay all of the sums so owing to the Indemnitee by wire transfer, certified or bank cashier's check within thirty (30) days after the date of such notice.
15. TERM AND TERMINATION
15.1 TERM. The term of this Program Agreement shall commence on the Effective Date (as defined in SECTION 17.1) and shall continue for an initial period of one (1) year, and shall automatically continue for additional one (1) year renewal periods thereafter, unless terminated at the option of either party pursuant to sixty (60) days prior written notice to the other party at or before the expiration of the initial one (1) year
period or any one (1) year renewal period, or unless this Program Agreement is earlier terminated as provided herein. Provided however, that termination of this Program Agreement following written notice shall not become effective until the late of (i) sixty (60) days following notice or (ii) the completion of the conversion of the LMFP Program Accounts to a successor brokerage firm. Each party agrees to cooperate fully so as to expedite the conversion process.
15.2 TERMINATION UPON LEASE TERMINATION. This Program Agreement shall terminate concurrently with the termination of the Lease.
15.3 TERMINATION FOR CAUSE.
15.3.1 BY LMFP AND LMFS. LMFP and LMFS may terminate this Program Agreement immediately in the event the Bank is enjoined, disabled, suspended or otherwise unable to engage in the banking business or any part of it as a result of any administrative or judicial proceeding or action.
15.3.2 BY THE BANK. The Bank may terminate this Program Agreement immediately in the event LMFP or LMFS are enjoined, disabled, suspended or otherwise unable to engage in the securities or insurance business or any part of it as a result of any administrative or judicial proceeding or action.
15.3.3 BY EITHER PARTY. Either the Bank or LMFP and LMFS may terminate this Program Agreement immediately if the other has materially breached any material provision of this Program Agreement and, after written notice thereof, the breaching party has not cured or commenced a cure within thirty (30) days of it's receipt of notice.
16. NOTICES. Any notice required or permitted under this Program Agreement shall be in writing and either hand delivered or mailed by certified mail, return receipt requested, to the following addresses:
LMFP: LM Financial Partners, Inc.
100 Light Street, 27th Floor
Baltimore, Maryland 21202
Attention: Mr. John Houston
LMFS: Legg Mason Financial Services, Inc.
100 Light Street
Baltimore, Maryland 21202
Attention: Mr. Laurens N. Sullivan
THE BANK: Pinnacle Bank
3401 West End Avenue, Suite 306
Nashville, TN 37203
Attention: Mr. Robert A. McCabe, Jr.
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Notice shall be deemed given on the date of receipt, in the case of hand delivery, or on the date delivered, as shown on the U.S. Postal Service return receipt, in the case of mailing. Any party may change the address to which notice is to be delivered to it under this Program Agreement by giving notice to that effect to the other parties hereto in the manner provided in this Section.
17. GENERAL PROVISIONS
17.1 AMENDMENT AND BINDING NATURE OF PROGRAM AGREEMENT. Except as otherwise provided herein, this Program Agreement may be amended, modified or supplemented only by a writing signed by all parties hereto. This Program Agreement shall be binding upon all approved successors and assigns of the parties. This Program Agreement may not be assigned to any entity other than an affiliate of a party without the prior written consent of the non-assigning parties and any requisite review and/or approval of any regulatory agency or self-regulatory body.
17.2. NO AGENCY. Neither this Program Agreement nor any operation hereunder is intended to be, shall be deemed to be, or shall be treated as a general or limited partnership or a joint venture or as creating an agency relationship between LMFP, LMFS and the Bank and/or their affiliates.
17.3. CONTROLLING LAW. Except regarding matters controlled by federal law, this Program Agreement shall be governed by and construed in accordance with the laws of the State of Maryland.
17.4. HEADINGS. The headings preceding the text hereof have been inserted for convenience and reference only and shall not be construed to affect the meaning, construction or effect of this Program Agreement.
17.5. SEVERABILITY. If any term, provision or condition of this Program Agreement is held to be invalid, unenforceable or illegal by any court, regulatory agency or self-regulatory body, such invalidity, unenforceability or illegality shall attach only to that term, provision or condition, and the validity and enforceability of the remaining portions of this Program Agreement shall not be affected.
17.6. WAIVER. The failure by any party to exercise any right, power, remedy or privilege contained herein, or existing under controlling law, now or hereafter in effect, shall not be construed to be a waiver of that right, power, remedy or privilege or to preclude further exercise thereof.
17.7. ARBITRATION. The Bank, LMFP and LMFS agree that any claim or controversy arising from or under this Program Agreement will be settled by arbitration before the National Association of Securities Dealers, Inc.; but any party may file an action for and obtain temporary injunctive relief before being compelled to arbitrate.
17.8. FIDUCIARY OBLIGATION. This Program Agreement creates no fiduciary obligation or responsibilities between the parties or between the Bank and any third parties purchasing products under the LMFP Program.
17.9. SURVIVABILITY. The obligations of the parties under SECTIONS 5.2, 10, 14 AND 17.7 shall survive the termination of this Program Agreement.
17.10. EFFECTIVE DATE. The Effective Date of this Program Agreement is ______________, _______.
IN WITNESS WHEREOF, each of the parties hereto has caused this Program Agreement to be executed on its behalf as of the date first above written.
ATTEST: LM FINANCIAL PARTNERS, INC.
/s/ GREGORY B. MCSHEA By: /s/ HORACE M. LOWMAN, JR. (SEAL)
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Gregory B. McShea, Secretary Name: Horace M. Lowman, Jr.
Title: Chairman
ATTEST: LEGG MASON FINANCIAL SERVICES, INC.
By: /s/ LAURENS N. SULLIVAN (SEAL)
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Name: Laurens N. Sullivan
Title: President
ATTEST: PINNACLE BANK
/s/ HUGH M. QUEENER By: /s/ ROBERT A. MCCABE, JR. (SEAL)
------------------------------ ----------------------------------------
Hugh M. Queener, Secretary Name: Robert A. McCabe, Jr.
Title: Chairman
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SCHEDULE A
LMFP shall pay to the Bank an amount equal to that percentage of (i) Commissions Credits received or retained by LMFP with respect to securities transactions attributable to brokerage accounts established through the operation of the LMFP Program (excluding Bank Securities and any securities which are also insurance products, and (ii) fees received or retained by LMFP with respect to referrals made by LMFP Financial Advisors to LMFP affiliates ("fees"), as follows: 87.5% of Commission Credits and Fees during the initial twelve (12) month period. Upon reaching $1,000,001 in Gross Production, payout will be 90%, retroactive to the first dollar of Commission Credits and Fees. Upon reaching $1,500,001 in Gross Production, payout will be 92.5%, retroactive to the first dollar of Commission Credits and Fees. For all periods thereafter, LMFP shall pay as follows: 77.5% of Commission Credits and Fees for Gross Production up to $250,000, 85% of Commission Credits and Fees for Gross Production from $250,001 to $500,000, 87.5% of Commission Credits and Fees for Gross Production from $500,001 to $2,500,000; and 90% of Commission Credits and Fees for Gross Production in excess of $2,500,001. The payout on the first $25,000 of Gross Production after the initial twelve month period will be adjusted retroactively to 80% when $250,000 is exceeded. LMFP shall deduct from Bank's share of Commission Credits and Fees any clearing or other charges incurred by the LMFP Program at the Bank.
As used herein, "Commission Credits" means (i) with respect to shares of mutual funds, the amount reallowable to dealers as shown in the current prospectuses of such mutual funds pursuant to Item 7(b)(iv) of Form N-1A under the Investment Company Act of 1940 (the "1940 Act"), plus all amounts received by LMFP from the principal underwriter (as that term is defined under the 1940 Act) of such mutual funds pursuant to Rule 12B-1 under the 1940 Act, and (ii) with respect to other securities, all commissions, fees, discounts, and other sales compensation. Any applicable LMWW postage and handling fees shall be deducted from the items set forth in the definition of Commission Credits prior to the calculation of the total amount of Commission Credits. Additionally, as used herein, "Gross Production" means the cumulative total of all Commission Credits, Fees and any commissions and other sales compensation related to sales of insurance products attributable to the LMFP Program. However, commissions and other sales compensation with respect to sales of insurance products under the LMFP Program shall be added to Commission Credits earned hereunder solely for the purpose of determining whether the Gross Production thresholds under this Schedule A has been met.
LMFP shall have the right to cancel transactions in its sole discretion. If transactions are canceled after LMFP has paid monthly Program Payments with respect to Commission Credits earned on the canceled transactions, LMFP either may deduct the appropriate percentage of the canceled commission from the Program Payment owed to the Bank for the next Program Payment period, or may request, in writing, that the Bank pay LMFP the appropriate percentage of canceled commission within fifteen (15) days of such written request.
LEASE
THIS LEASE (the "Lease") is made this __th day of _______, _______, by and among LM Financial Partners, Inc., a Maryland corporation ("LMFP"), Legg Mason Financial Services, Inc., a Maryland corporation ("LMFS") (with LMFP and LMFS collectively referred to as "Tenant"), and Pinnacle Bank ("Landlord").
IN CONSIDERATION of the covenants and agreements hereinafter set forth, Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the premises (the "Sales Area" or "Sales Areas") within the offices of the Landlord described on Exhibit A attached hereto and made a part hereof, upon the following terms and conditions:
1. TERM.
1.1 This Lease shall commence and terminate concurrently and in accordance with the provisions of the Brokerage Program Agreement, of even date herewith, between Landlord and Tenant (the "Program Agreement"), the terms of which (including the definitions set forth therein) are hereby incorporated by reference.
1.2 Upon the termination of the Lease, all of Tenant's rights herein, including, but not limited to, the right to use and occupy the Sales Areas, shall immediately cease, and such rights shall vest solely in Landlord.
1.3 As to each Sales Area, this Lease shall terminate, upon thirty (30) days prior written notice to Tenant, in the event Landlord ceases to provide banking services to the public at the building in which a Sales Area is located.
2. RENT. Tenant shall pay to Landlord Rent in the amount
specified in Exhibit A. Any other sum of money which this Lease requires Tenant
to pay shall be treated as Rent, and is hereafter referred to as "Additional
Rent". Rent and Additional Rent shall be payable on or before the fifteenth
(15th) day of each calendar month.
3. SALES AREA.
3.1 If required by applicable regulations, the Sales Area shall be deemed a branch of Tenant. Although the Sales Area is owned or leased by Landlord, it shall be a segregated and distinct area within the branch of Bank and shall be maintained in accordance with applicable state and federal laws and regulations relating to the separation of space within a bank for the sale of insurance and securities products. Landlord shall be responsible for maintenance of the Sales Area in a satisfactory condition.
3.2 If Landlord occupies the banking premises in which the Sales Area is located pursuant to a lease (the "Master Lease"), this Lease shall be subject and subordinate to all terms and conditions of the Master Lease.
4. USE OF SALES AREA AND EQUIPMENT.
4.1 The Sales Area shall be used by Tenant exclusively for the offering and sale of LMFP Products through the efforts of Program Representatives.
4.2 The Sales Areas shall be occupied by Tenant promptly after the Effective Date, and Tenant shall conduct the business permitted under this Lease and keep the Sales Areas open for business during the days and hours agreed to by Landlord and Tenant from time-to-time.
4.3 Landlord agrees to provide, at its sole expense, one clean, voice grade telephone line which does not go through a switchboard and is capable of direct dialing for modem transmission of information to LMFP's central computer. All telephone expenses shall be paid by Landlord; provided, however, Landlord shall not be responsible for long distance charges unless LMFP provides a toll free number to its home office for use by Sales Agents. Landlord shall not be responsible for long distance charges which are not related to the sale of LMFP Products. Landlord shall provide a facsimile machine, desks, chairs, literature racks, point-of-sale display furnishings and equipment, telephones and normal office business supplies in each of the Sales Areas as well as access to a photocopy machine.
5. COMMON AREAS. During the Term, Tenant shall have a nonexclusive license to use, in common with others, the corridors, restroom facilities and other interior and exterior common areas of Landlord's premises in which the Sales Areas are located (the "Common Areas"). Tenant's use of the Common Areas shall be subject to such reasonable rules and regulations as Landlord may issue from time to time. Landlord shall, at all times, have full and exclusive control, management and direction of the Common Areas.
6. PRODUCTS. Tenant shall offer and sell any or all securities and insurance products as from time to time are included in the LMFP Program.
7. SIGNS AND ADVERTISING. At all times when a Sales Area is in use by Tenant, Tenant agrees to maintain a sign or signs in the Sales Area which shall display the name or names of Tenant and any other data conventionally or traditionally used for its signs, provided that the form and content of each sign shall be first approved by Landlord. Each sign shall expressly disclose that Tenant is a distinct and separate entity from, and not affiliated with, Landlord or any affiliate of Landlord. No other sign or advertising display may be installed in a Sales Area without first obtaining Landlord's prior approval. Landlord may not advertise, promote or announce publicly in any fashion the availability of insurance products or any information regarding such insurance, including, without limitation, the name of insurance companies represented by Tenant and premium rates.
8. ASSIGNMENT AND SUBLETTING. Tenant shall (i) not assign or encumber the Lease or Tenant's interest hereunder, in whole or in part, and (ii) not sublet or permit the occupancy or use by any other party of all or any part of any of the Sales Areas without the prior written consent of Landlord. Landlord shall not assign this Lease without the prior written consent of Tenant. For purposes of this Section, "assign" shall include any transfer of this Lease, including, but not limited to, by sale or assignment, but shall not include an implied assignment by merger or other disposition of ownership interests.
9. DAMAGE TO PREMISES. Tenant shall reimburse Landlord, as Additional Rent, for (i) the cost to repair any damage to the Sales Areas caused by Tenant, and (ii) the installation or removal in the Sales Area of any property for Tenant's use, regardless of fault or by whom such damage shall be caused, unless caused by Landlord, its agents, employees or contractors.
10. TENANT'S ALTERATIONS.
10.1 Tenant shall not make any structural alterations or additions on or to any Sales Areas without first obtaining Landlord's written approval, which approval may be granted or denied in Landlord's sole, but reasonable, discretion. Tenant agrees that any improvements made by it shall become the property of Landlord and remain upon the Sales Area; provided that, upon the termination of the Lease by either party and upon notice by Tenant to Landlord within thirty (30) days after the date on which the Lease is terminated, Tenant shall have the right to remove any or all of those improvements and to restore the Sales Area to its condition as of the Effective Date, excluding ordinary wear and tear. All property not removed by Tenant within thirty (30) days after Tenant gives notice to Landlord of its intent to remove any improvements shall remain Landlord's property.
10.2 Tenant shall not permit any mechanic's or materialman's lien to be established against Tenant's leasehold interest in the Sales Area.
11. REPAIRS TO BE MADE BY TENANT. Tenant shall surrender the Sales Areas at the expiration of the lease, or at such other time as it may vacate the Sales Areas, in as good condition as existed on the Effective Date, except for ordinary wear and tear and damage by fire or other hazard covered by Landlord's insurance. In connection with the surrender to Landlord of the Sales Areas, Tenant shall remove from the Sales Areas all trade fixtures and equipment, all trademarks, trade insignia and signs. Any such removal shall be done in a workmanlike manner, leaving the Sales Areas in the same condition and appearance which existed immediately prior to the Effective Date, ordinary wear and tear excepted.
12. INSURANCE.
12.1 Tenant shall maintain, at its expense, public liability insurance coverage with limits of not less than One Million Dollars ($1,000,000) per occurrence. The insurance policy or policies shall name Landlord and Tenant as insureds, as their interests may appear, and cover them from and against claims for personal injuries, death or property damage occurring in, upon or about the Sales Area.
12.2 Tenant shall not cancel or reduce the coverage of any insurance policy maintained by it under this Section without thirty (30) days prior written notice to Landlord.
12.3 Tenant shall, prior to its entry onto any Sales Area,
and annually thereafter, upon request by Landlord, furnish Landlord with a
certificate or endorsement showing that the insurance referred to in this
Section is in full force and effect and a copy of all policies in reference
thereto.
12.4 As to any Sales Area which is subject to a Master Lease, Tenant's obligations under this Section are owed also to the Master Lessor under each Master Lease.
13. TENANT'S UTILITIES AND TAXES. Landlord shall pay all charges for all utilities, including but not limited to, water, fuel, telephone (except as otherwise provided in Section 4.3), postage and electricity consumed in the Sales Area. Tenant shall be responsible for, and shall pay when due, all taxes assessed against any leasehold interest or personal property owned by or placed in, upon or about the Sales Area by Tenant. If Tenant fails to pay any of the aforementioned taxes, Landlord may, but is not required to, pay any such tax, and Tenant agrees to reimburse Landlord for same ten (10) days after written demand therefore. Any payment hereunder shall be deemed collectible by Landlord as Additional Rent.
14. DEFAULT AND REMEDIES.
14.1 Tenant covenants and agrees to pay the Rent, together with all other sums of money which under the provisions hereof may be considered as Additional Rent, at the times and in the manner hereinabove set forth.
14.2 If Tenant shall fail to pay any installment of Rent or Additional Rent when due, then Landlord shall deliver written notice to Tenant identifying the Rent or Additional Rent in arrears and Tenant shall, within thirty (30) days after delivery of Landlord's notice (the "Cure Period"), pay to Landlord that amount which is due. If Tenant fails to make payment within the Cure Period, Landlord may, at its option, re-enter and resume possession of the Sales Areas, declare this Lease, and the tenancy hereby created, terminated, and thereupon remove all persons and property from the Sales Areas, with or without resort to process of any court, and by force or otherwise; and notwithstanding such re-entry, Tenant shall remain liable for any Rent and other amounts due or accred to Landlord or damages caused to Landlord prior thereto.
15. WASTE. Tenant shall not commit, or suffer to be committed, any waste upon the Sales Area, or any nuisance or other act or thing which may disturb the quiet enjoyment of the branches in which the Sales Areas are located.
16. NOTICES. All payment of Rent and Additional Rent shall be made to Landlord at 3401 West End Avenue, Suite 306, Nashville, TN 37203 or at such other place as Landlord shall designate in writing to Tenant. Any notice required or permitted under this Lease shall be deemed effective if sent in accordance with the notice provisions of the Program Agreement.
17. COMPLETE AGREEMENT. This Lease and the Program Agreement are intended by the parties as a final and complete expression of their agreement and as an exclusive statement of the terms thereof, and may not be amended except in a writing signed by all the parties hereto or their respective successors or assigns. This Lease and the covenants and conditions herein contained shall inure to the benefit of, and be binding upon, Landlord, its successors and assigns, and shall inure to the benefit of, and be binding upon, Tenant, its successors and assigns.
18. NO AGENCY, PARTNERSHIP OR JOINT VENTURE AND NO LIABILITY FOR DEBTS. The relationship of the parties hereto shall be solely that of landlord and tenant. In the performance of Tenant's duties or obligations under this Lease, or any other contract, commitment, undertaking or agreement made pursuant to this Lease, Tenant shall not be deemed to be, or permit itself to be understood to be, the employee, servant or agent of Landlord and shall, at all times, take whatever measures are necessary to ensure that its status shall be that of tenant, operating the Sales Area as a separate entity. Nothing in this Lease shall be construed as creating a partnership or joint venture between Landlord and Tenant, or any other party hereto. Neither Landlord nor Tenant shall be liable for any debts or obligations of the other.
19. CONTROLLING LAW. Except regarding matters controlled by federal law, this Lease shall be governed by and construed in accordance with the laws of the State of Maryland.
20. HEADINGS. The headings preceding the text hereof have been inserted for convenience and reference only and shall not be construed to affect the meaning, construction or effect of this Lease.
21. SEVERABILITY. If any term, provision or condition of this Lease is held to be invalid, unenforceable or illegal by any court, regulatory agency or self-regulatory body, such invalidity, unenforceability or illegality shall attach only to that term, provision or condition, and the validity and enforceability of the remaining portions of this Lease shall not be affected.
22. WAIVER. The failure by either party to exercise any right, power, remedy or privilege contained herein, or existing under controlling law, now or hereafter in effect, shall not be construed to be a waiver of that right, power, remedy or privilege or to preclude further exercise thereof.
23. ARBITRATION. Landlord and Tenant agree that any claim or controversy arising from or under this Lease will be settled by arbitration before the National Association of Securities Dealers, Inc.; but either party may file an action for and obtain temporary injunctive relief before being compelled to arbitrate.
IN WITNESS WHEREOF, each of the parties hereto has caused this Lease to be executed on its behalf as of the date first above written.
ATTEST: LANDLORD:
/s/ HUGH M. QUEENER By: /s/ ROBERT A. MCCABE, JR. (SEAL)
------------------------------ ---------------------------------------
Hugh M. Queener, Secretary Name: Robert A. McCabe, Jr.
Title: Chairman
ATTEST: TENANT:
LM FINANCIAL PARTNERS, INC.
/s/ GREGORY B. MCSHEA By: /s/ HORACE M. LOWMAN, JR. (SEAL)
------------------------------ ---------------------------------------
Gregory B. McShea, Secretary Name: Horace M. Lowman, Jr.
Title: Chairman
ATTEST: LEGG MASON
FINANCIAL SERVICES, INC.
By: /s/ LAURENS N. SULLIVAN (SEAL)
------------------------------ ---------------------------------------
Name: Laurens N. Sullivan
Title: President
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EXHIBIT A
RENT: LMFP shall pay to the bank $105 per month ($5 per business day per Sales Area) plus an amount equal to that percentage of Commission Credits received or retained by LMFP with respect to sales of insurance products attributable to brokerage accounts established through the operation of the LMFP program at the Sales Areas as follows: 87.5% during the initial twelve (12) month period. Upon reaching $1,000,001 in Gross Production, payout will be 90%, retroactive to the first dollar of Insurance Commissions. Upon reaching $1,500,001 in Gross Production, payout will be 92.5%, retroactive to the first dollar of Insurance Commissions. For all periods thereafter, LMFP shall pay as follows: 77.5% of Insurance Commissions for Gross Production up to $250,000; 85% of Insurance Commissions for Gross Production from $250,0001 to $500,000; 87.5% of Insurance Commissions for Gross Production from $500,001 to $2,500,000; and 90% of Insurance Commissions for Gross Production in excess of $2,500,000.
SALES AREAS:
3401 West End Avenue
Suite 306
Nashville, TN 37203
EXHIBIT 10.12
Interior Design Services, Inc.
UNDERSTANDING OF
TERMS AND CONDITIONS
CUSTOMER P.O. REFERENCE #
Your purchase of office furnishings provides for the following:
Your purchase of furniture includes a separate fee for design and specification of your furniture, If applicable. Your design and furniture layout should be completed and approved prior to the furniture order placement. Any redesign time after order placement will be billed at a $50.00 per hour rate.
Any additional labor service requirements which are not on the original approved installation plan will be billed separately at $40.00 per man hour, $60.00 if non-business hours, however, all additional labor services will be discussed with the client before completing.
Payment of your furniture and the design fee will be due within 10 days from the receipt of your furniture product at your job site or at a storage facility, if so directed by you.
You will be billed for interest charges at a rate of 18% per annum for any payments not paid in full within 30 days of billing. If any item no your billing does not meet your satisfaction, you may withhold payment on that particular item only, until the issue has been resolved. The balance of the invoice is due in full within the original 30 day billing period to avoid finance charges.
In consideration of the terms and conditions of sale herein set forth on this page, Interior Design Services, Inc., (Seller) agrees to sell and PINNACLE BANK (Buyer) agrees to buy the goods and services described in the following attached proposal number 126659 for the total agreed price of $100,141.07. This price does not include sales tax, however, sales tax (if applicable) will be added to your invoice.
All of the above meets with my understanding of my purchase of furniture. Your furniture order will not be entered until this document has been signed and returned.
APPROVED:
INTERIOR DESIGN SERVICES, INC. /S/ HUGH M. QUEENER
(SELLER) -----------------------------------
(BUYER)
/s/ Elizabeth Wash
Elizabeth Wash HUGH M. QUEENER
-----------------------------------
NAME
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06/21/2000 CHIEF ADMINISTRATIVE OFFICER
-----------------------------------
TITLE
JUNE 27, 2000
-----------------------------------
DATE
209 Powell Place
Brentwood TN 37027 . (615) 376-1200
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UNDERSTANDING OF
TERMS AND CONDITIONS
CUSTOMER P.O. REFERENCE #
Your purchase of office furnishings provides for the following:
Your purchase of furniture includes a separate fee for design and specification of your furniture, If applicable. Your design and furniture layout should be completed and approved prior to the furniture order placement. Any redesign time after order placement will be billed at a $50.00 per hour rate.
Any additional labor service requirements which are not on the original approved installation plan will be billed separately at $40.00 per man hour, $60.00 if non-business hours, however, all additional labor services will be discussed with the client before completing.
Payment of your furniture and the design fee will be due within 10 days from the receipt of your furniture product at your job site or at a storage facility, if so directed by you.
You will be billed for interest charges at a rate of 18% per annum for any payments not paid in full within 30 days of billing. If any item no your billing does not meet your satisfaction, you may withhold payment on that particular item only, until the issue has been resolved. The balance of the invoice is due in full within the original 30 day billing period to avoid finance charges.
In consideration of the terms and conditions of sale herein set forth on this page, Interior Design Services, Inc., (Seller) agrees to sell and PINNACLE BANK (Buyer) agrees to buy the goods and services described in the following attached proposal number 126688for the total agreed price of $275,631.90. This price does not include sales tax, however, sales tax (if applicable) will be added to your invoice.
All of the above meets with my understanding of my purchase of furniture. Your furniture order will not be entered until this document has been signed and returned.
APPROVED:
INTERIOR DESIGN SERVICES, INC. ----------------------------------
(SELLER) (BUYER)
Elizabeth Wash ----------------------------------
NAME
06/21/2000 ----------------------------------
TITLE
----------------------------------
DATE
209 Powell Place
Brentwood TN 37027 . (615) 376-1200
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EXHIBIT 10.13
---------------------------------------------------
BORROWER
SUNTRUST PINNACLE FINANCIAL PARTNERS, INC. COMMERCIAL
VARIABLE RATE
REVOLVING OR
SunTrust Bank DRAW NOTE
Nashville, TN 37230-5110 3401 WEST END AVENUE, SUITE 306
(615) 748-4000 "LENDER" NASHVILLE, TN 37203
TELEPHONE NO. IDENTIFICATION NO.
62-1812853
-------------------- -------------- --------------- ---------------- ------------------ ------------ ---------------
OFFICER INTEREST PRINCIPAL FUNDING MATURITY DATE CUSTOMER LOAN
IDENTIFICATION RATE AMOUNT AGREEMENT DATE NUMBER NUMBER
CREDIT LINE
-------------------- -------------- --------------- ---------------- ------------------ ------------ ---------------
00229 VARIABLE $1,500,000.00 06/28/00 12/31/00
-------------------- -------------- --------------- ---------------- ------------------ ------------ ---------------
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Purpose: PAY OFF LOAN AT OTHER BANK AND COVER COST INCCURRED WITH ORGANIZING DE NOVO BANK
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PROMISE TO PAY: For value received, Borrower promises to pay to the order of Lender the principal amount of ONE MILLION FIVE HUNDRED THOUSAND AND NO/100 Dollars ($1,500,000.00 ) or, if less, the aggregate unpaid principal amount of all loans or advances made by the Lender to the Borrower under this Note, plus interest on the unpaid principal balance at the rate and in the manner described below, until all amounts owing under this Note are paid in full. All amounts received by Lender shall be applied first to any unpaid late charges and expenses, then to accrued, unpaid interest, and then to unpaid principal or in any other order as determined by Lender, in Lender's sole discretion, as permitted by law.
REVOLVING OR DRAW FEATURE: /X/ This Note possesses a revolving feature. Upon satisfaction of the conditions set forth in this Note, Borrower shall be entitled to borrow up to the full principal amount of the Note and to repay and reborrow from time to time during the term of this Note. / / This Note possesses a draw feature. Upon satisfaction of the conditions set forth in this Note, Borrower shall be entitled to draw one or more times under this Note. Any repayment may not be reborrowed. The aggregate amount of such draws shall not exceed the full principal amount of this Note.
Information with regard to any loans or advances under this Note shall be recorded and maintained by Lender in its internal records and such records shall be conclusive of the principal and interest owed by Borrower under this Note unless there is a material error in such records. The Lender's failure to record the date and amount of any loan or advance shall not limit or otherwise affect the obligations of the Borrower under this Note to repay the principal amount of the loans or advances together with all interest accruing thereon. Borrower shall be entitled to inspect or obtain a copy of the records during Lender's business hours.
CONDITIONS FOR ADVANCES: If no Event of Default has occurred under this Note, Borrower shall be entitled to borrow monies under this Note (subject to the limitations described above) under the following conditions:
INTEREST RATE: This Note has a variable rate feature. The interest on this Note may change from time to time if the Index Rate identified below changes. Interest shall be computed on the basis of THE ACTUAL NUMBER OF DAYS OVER 360 DAYS per year. Interest on this Note shall be calculated and payable at a variable rate equal to 0.000% per annum OVER the Index Rate. The initial interest rate on this Note shall be 9.500 % per annum. Any change in the interest rate resulting from a change in the Index Rate will be effective on:
each day of the Index Rate changes
RATE LIMITATIONS: Subject to applicable law, the minimum interest rate on this Note shall be N/A % per annum. The maximum interest rate on this Note shall not exceed 24.000% per annum, or if less, or if a maximum rate is not indicated, the maximum interest rate Lender is permitted to charge by law. The maximum rate increase at any one time will be N/A %. The maximum rate decrease at any one time will be N/A %.
INDEX RATE: : The Index Rate for this Note shall be:
the rate of interest from time to time designated by the Lender as its "Prime Rate," which rate is not necessarily the Lender's best or lowest rate of interest.
If the Index Rate is redefined or becomes unavailable, then Lender may select another index which is substantially similar.
DEFAULT RATE: If there is an Event of Default under this Note, the Lender may, in its discretion, increase the interest rate on this Note to: 24.00% or the maximum interest rate Lender is permitted to charge by law, whichever is less. PAYMENT SCHEDULE: Borrower shall pay the principal and interest according to the following schedule:
Interest only payments beginning July 28, 2000 and continuing at monthly time intervals thereafter. A final payment of the unpaid principal balance plus accrued interest is due and payable on December 31, 2000.
PREPAYMENT: This note may be prepaid in part or in full on or before its
maturity date. If this Note contains more than one installment, any partial
prepayment will not affect the due date or the amount of any subsequent
installment, unless agreed to, in writing, by Borrower and Lender. If this
Note is prepaid in full, there will be: : /X/ No minimum finance charge. :
/ / A minimum finance charge of $_______________________.
LATE CHARGE: If a payment is received more than 15 days late, Borrower will be charged a late charge of: : / / _______% of the unpaid payment: : /X/ $100.00 or 5.00% of the unpaid payment, whichever is : / / greater : /X/ less.
COLLATERAL To secure the payment and performance of obligations incurred under this Note, Borrower grants Lender a security interest in all of Borrower's right, title, and interest in all monies, instruments, savings, checking and other accounts of Borrower (excluding IRA, Keogh, trust accounts and other accounts subject to tax penalties if so assigned) that are now or in the future in Lender's custody or control. : / / If checked, the obligations under this Note are also secured by the collateral described in any security instrument(s) executed in connection with this Note, and any collateral described in any other security instrument(s) securing this Note or all of Borrower's obligations to Lender.
RENEWAL: : / / If checked, this Note is a renewal, but not a satisfaction, of Loan Number _______________________.
Dated: June 28, 2000
BORROWER: PINNACLE FINANCIAL BORROWER: PINNACLE FINANCIAL
PARTNERS, INC. PARTNERS, INC.
BY: /S/ M. TERRY TURNER BY: /S/ HUGH M. QUEENER
-------------------------- -------------------------
M. TERRY TURNER HUGH M. QUEENER
PRESIDENT/CEO CHIEF ADMIN. OFFICER
BORROWER BORROWER
-------------------------- -------------------------
BORROWER: BORROWER
-------------------------- -------------------------
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EXHIBIT 10.13
TERMS AND CONDITIONS
1. EVENTS OF DEFAULT. An Event of Default will occur under this Note in the event that Borrower, any guarantor or any other third party pledging collateral to secure this Note:
(a) fails to make any payment on this Note or any other indebtedness to Lender when due:
(b) fails to perform any obligation or breaches any warranty or covenant to Lender contained in this Note, any security instrument, or any other present or future written agreement regarding this or any other indebtedness of Borrower to Lender;
(c) provides or causes any false or misleading signature or representation to be provided to Lender;
(d) sells, conveys, or transfers rights in any collateral securing this Note without the written approval of Lender; destroys, loses or damages such collateral in any material respect; or subjects such collateral to seizure, confiscation or condemnation.
(e) has a garnishment, judgment, tax levy, attachment or lien entered or served against Borrower, any guarantor, or any third party pledging collateral to secure this Note or any of their property;
(f) dies, becomes legally incompetent, is dissolved or terminated, ceases to operate its business, becomes insolvent, makes an assignment for the benefit of creditors, fails to pay debts as they become due, or becomes the subject of any bankruptcy, insolvency or debtor relief proceeding; fails to provide Lender evidence of satisfactory financial condition;
(g) has a majority of its outstanding voting securities sold, transferred or conveyed to any person or entity other than any person or entity that has
(h) the majority ownership as of the date of the execution of this Note; or causes Lender to deem itself insecure due to a significant decline in the value of any real or personal property securing payment of this Note, or
(i) Lender in good faith, believes the prospect of payment or performance is impaired.
2. RIGHTS OF LENDER ON EVENT OF DEFAULT. If there is an Event of Default under this Note, Lender will be entitled to exercise one or more of the following remedies without notice or demand (except as required by law):
(a) to declare the principal amount plus accrued interest under this Note and all other present and future obligations of Borrower immediately due and payable in full, such acceleration shall be automatic and immediate in the Event of Default is a filing under the Bankruptcy Code;
(b) to collect the outstanding obligations of Borrower with or without resorting to judicial process;
(c) to cease making advances under this Note or any other agreement between Borrower and Lender;
(d) to take possession of any collateral in any manner permitted by law;
(e) to require Borrower to deliver and make available to Lender any collateral at a place reasonably convenient to Borrower and Lender;
(f) to sell, lease or otherwise dispose of any collateral and collect any deficiency balance with or without resorting to legal process;
(g) to set-off Borrower's obligations against any amounts due to Borrower including, but not limited to, monies, instruments, and deposit accounts maintained with Lender; and
(h) to exercise all other rights available to Lender under any other written agreement or applicable law. Lender's rights are cumulative and may be exercised together; separately, and in order. Lender's remedies under this paragraph are in addition to those available at common law, including, but not limited to, the right of set-off.
3. DEMAND FEATURE. : / / If checked, this Note contains a demand feature. Lender's right to demand payment, at any time, and from time to time, shall be in Lender's sole and absolute discretion, whether or not any default has occurred.
4. FINANCIAL INFORMATION. Borrower will at all times keep proper books of record and account in which full, true and correct entries shall be made in accordance with generally accepted accounting principles and will deliver to Lender, within ninety (90) days after the end of each fiscal year of Borrower, a copy of the annual financial statements of Borrower relating to such fiscal year, such statements to include (i) the balance sheet of Borrower as at the end of such fiscal year and (ii) the related income statement, statement of retained earnings and statement of cash flow of Borrower for such fiscal year, prepared by such certified public accountants as may be reasonably satisfactory to Lender. Borrower also agrees to deliver to Lender within fifteen (15) days after filing same, a coy of Borrower's income tax returns and also, from time to time, such other financial information with respect to Borrower as Lender may request.
5. MODIFICATION AND WAIVER. The modification or waiver of any of Borrower's obligations or Lender's rights under this Note must be contained in a writing signed by Lender. Lender may perform any of Borrower's obligations or delay or fail to exercise any of its rights without causing a wavier of those obligations or rights. A wavier on one occasion will not constitute a waiver on any other occasion. Borrower's obligations under this Note shall not be affected if Lender extends, increases, amends, compromises, exchanges, fails to exercise, impairs or releases any of the obligations belonging to any co-borrower or guarantor or any of its rights against any co-borrower, guarantor, the collateral or any of the property securing the obligations.
6. SEVERABILITY. If any provision of this Note is invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
7. ASSIGNMENT. Borrower agrees not to assign any of Borrower's rights, remedies or obligations described in this Note without the prior written consent of Lender, which consent may be withheld by Lender in its sole discretion. Borrower agrees that Lender is entitled to assign some or all of its rights and remedies described in this Note without notice to or the prior consent of Borrower.
8. NOTICE. Any notice or other communication to be provided to Borrower or Lender under this Note shall be in writing and sent to the parties at the addresses described in this Note or such other address as the parties may designate in writing from time to time.
9. APPLICABLE LAW. This Note shall be governed by the laws of the state of Tennessee. Unless applicable law provides otherwise, Borrower consents to the jurisdiction and venue of any court located in Tennessee selected by Lender, in its discretion, in the event of any legal proceeding under this Note.
10. COLLECTION COSTS. To the extent permitted by law, Borrower agrees to pay on demand Lender's reasonable fees and costs, including, but not limited to, fees and costs of attorneys and other agents (including without limitation paralegals, clerks and consultants), whether or not such attorney or agent is an employee of Lender, which are incurred by Lender in collecting any amount due or enforcing or protecting any right or remedy under this Note, whether or not suit is brought, including, but not limited to, all fees and costs incurred on appeal, in bankruptcy, and for post-judgment collection actions.
11. MISCELLANEOUS. This Note is being executed primarily for commercial, agricultural, or business purposes. Time is of the essence in the performance of this agreement. Borrower agrees to make all payments to Lender at any address designated by Lender and in lawful United States currency. Borrower and any person who endorses this Note waives presentment, demand for payment, notice of dishonor and protest and further waives any right to require Lender to proceed against anyone else before proceeding against Borrower or said person. All references to Borrower in this Note shall include all of the parties signing this Note, and this Note shall be binding upon the heirs, personal representatives, successors and assigns of Borrower and Lender. If there is more than one Borrower their obligations under this Note shall be joint and several. Information concerning this Note may be reported to credit reporting agencies and will be made available when requested by proper legal process. This Note represents the complete and integrated understanding between Borrower and Lender regarding the terms hereof.
12. JURY TRIAL, WAIVER, LENDER AND BORROWER HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY CIVIL ACTION ARISING OUT OF, OR BASED UPON, THIS NOTE OR THE COLLATERAL SECURING THIS NOTE.
13. ADDITIONAL TERMS: [NONE]
GUARANTY
SUN TRUST (Bank)
------------------------------------------------------------------
to: PINNACLE FINANCIAL PARTNERS, INC. .
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hereinafter called the (Borrower), the undersigned hereby guarantee(s) prompt payment when due or at any time thereafter of any and all indebtedness or obligations upon which the Borrower now is or may hereafter, at any time and from time to time, and for any one or more purposes, become obligated or bound to said Bank, of every kind and character, direct or indirect, absolute or contingent, and whether such indebtedness is from time to time reduced and thereafter increased or entirely extinguished and thereafter reincurred, or whether said obligations arise with our without notice to Guarantor, and whether by reason of loans, overdrafts or other extensions of credit made by or with the consent of said Borrower, together with the unpaid accrued interest thereon.
2. This Guaranty, is, and is intended to be, an absolute, unconditional and continuing guaranty which shall not be affected by any act or thing whatsoever except as herein provided, and which shall be independent of and in addition to any other guaranty, endorsement or collateral held by Bank with respect to any or all of the indebtedness to the Bank covered hereby. This Guaranty shall remain in full force and effect as to any indebtedness owed by Borrower to Bank at any time even though the initial credit or any subsequent credit extended has been paid. The undersigned, or any of the undersigned, may give to any Bank officer notice in writing of cancellation of this Guaranty, which cancellation notice is effective only when acknowledged in writing by the Bank officer to whom given. The obligation of any of the undersigned or any other Guarantor who shall not have given notice of cancellation shall, as to all indebtedness created, incurred or arising after the giving of such notice, remain and continues as if the Guarantors who have not given notice of cancellation had been the only persons signing this Guaranty. It is understood however, that no termination or cancellation of said Guaranty, whether by lapse of time or as a result of notice, shall relieve the parties hereto of any liability or any indebtedness incurred by Borrower or committed or promised by the Bank prior to the time of said termination or cancellation.
3. No modification, amendment or waiver of any provision of this Guaranty shall be effective unless in writing and subscribed by a duly authorized officer of Bank. The Bank shall have the right, without affecting the undersigned's obligations hereunder, and without demand or notice, from time to time: (a) to release any one or more of the undersigned or any other Guarantor in whole or in part without in any way impairing or affecting its right against the other or others; (b) to extend, increase, renew, accelerate or otherwise change the time for payment, (with or without the use of new notes or amendments) the terms of or the interest on any part or all of the indebtedness; (c) to receive, exchange or release any collateral from any party securing payment of the indebtedness or any part thereof; and (d) to collect first and to exercise its rights of setoffs against any asset of Borrower for any indebtedness of Borrower to the Bank not covered by this Guaranty, if any such indebtedness shall exist because of limitations of paragraph 6. Subrogation rights or any other rights of any kind of the undersigned against the Borrower, if any, shall not become available hereunder until all of the indebtedness is paid in full. The undersigned also agree to pay all costs and expenses of Bank in attempting to collect the indebtedness due from Borrower and in enforcing this Guaranty, including, but not limited to, reasonable attorney's fees. This guaranty shall inure to the benefit of the Bank, its successors in interest and assigns and shall be binding upon the heirs, executors, administrators, and successors and assigns, of the undersigned, each of whom does hereby expressly waive all types of notice relative to this Guaranty and of any of the Borrower's transactions, including demand, notice or protest of any note, draft or other items on which said Borrower may be bound or liable for payment.
4. The undersigned are jointly and severally liable; and the Bank may enforce this obligation against any one or more of them whenever the indebtedness hereby secured becomes due or at any time thereafter without being first required to proceed against the principal obligor or to realize upon any collateral security for the debt. The failure of any other person to sign this or another Guaranty shall not release any of the undersigned and discontinuance of this or another Guaranty as to one of the undersigned shall not operate as a discontinuance as to any other Guarantor.
5. In the event of the death of any Guarantor the obligation of the deceased shall continue in full force and effect against his estate as to all indebtedness which shall have been created or incurred by the Borrower or committed or promised by the Bank (whether evidenced by notes, executed before or after such death or in any other manner) prior to the time when the Bank shall have received notice in writing of such death; and the executor or administrator of such estate shall be obligated and authorized to pay such debt and, if acceptable to the Bank, to execute renewal guaranties or endorsements, from time to time, with respect to any unpaid portion. Further, this Guaranty shall continue in full force as a Guaranty by the surviving Guarantors as if such Guarantors had been the only persons who guaranteed said indebtedness.
6. Unless specific indebtedness is described, in the space below, the indebtedness covered hereby shall have the unlimited meaning provided in paragraphs 1 and 2; but if the space below is filled in, such covered indebtedness shall be limited to the extent set forth below, together with all renewals or extensions of such indebtedness, or any part thereof:
EXECUTED this _______ day of , 19________.
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WITNESSES GUARANTOR(S)
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Bank Officer
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EXHIBIT 10.14
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 1st day of March, 2000, by and among PINNACLE NATIONAL BANK (Proposed) (the "Bank"), a proposed national bank; PINNACLE FINANCIAL PARTNERS, INC. (formerly known as TMP, Inc.), a proposed bank holding company incorporated under the laws of the State of Tennessee (the "Company") (collectively, the Bank and the Company are referred to hereinafter as the "Employer"), and MICHAEL TERRY TURNER, a resident of the State of Tennessee (the "Executive").
RECITALS:
The Employer desires to employ the Executive as President and Chief Executive Officer of the Bank and the Company and the Executive desires to accept such employment.
The parties previously entered into an employment agreement, also dated as of March 1, 2000, that they wish to restate primarily for the purpose of revising certain change-in-control provisions.
In consideration of the above premises and the mutual agreements hereinafter set forth, the parties hereby agree as follows:
1. DEFINITIONS. Whenever used in this Agreement, the following terms and their variant forms shall have the meaning set forth below:
1.1 "AGREEMENT" shall mean this Agreement and any exhibits incorporated herein together with any amendments hereto made in the manner described in this Agreement.
1.2 "AFFILIATE" shall mean any business entity which controls the Company, is controlled by or is under common control with the Company.
1.3 "BUSINESS OF THE EMPLOYER" shall mean the business conducted by the Employer, which is the business of commercial banking.
1.4 "CAUSE" shall mean:
1.4.1 With respect to termination by the Employer:
(a) a material breach of the terms of this Agreement by the Executive, including, without limitation, failure by the Executive to perform his duties and responsibilities in the manner and to the extent required under this Agreement, which remains uncured after the expiration of thirty (30) days following the delivery of written notice of such breach to the Executive by Employer. Such notice shall (i) specifically identify the duties that the Board of Directors of either the Company or the Bank
believes the Executive has failed to perform, (ii) state the facts
upon which such Board of Directors made such determination, and
(iii) be approved by a resolution passed by two-thirds (2/3) of the
directors then in office;
(b) conduct by the Executive that amounts to fraud, dishonesty or willful misconduct in the performance of his duties and responsibilities hereunder;
(c) arrest for, charged in relation to (by criminal information, indictment or otherwise), or conviction of the Executive during the Term of this Agreement of a crime involving breach of trust or moral turpitude;
(d) conduct by the Executive that amounts to gross and willful insubordination or inattention to his duties and responsibilities hereunder; or
(e) conduct by the Executive that results in removal from his position as an officer or executive of Employer pursuant to a written order by any regulatory agency with authority or jurisdiction over Employer.
1.4.2 With respect to termination by the Executive:
(a) a material modification to the Executive's job title(s) or position(s) of responsibility or the scope of his authority or responsibilities under this Agreement without the Executive's written consent, which modification is not cured to the reasonable satisfaction of the Executive within thirty (30) days after written notice thereof from the Executive to the Board of Directors of either the Bank or the Company;
(b) a change in supervision so that the Executive no longer reports to the person(s) or entity to whom he reported immediately after the Effective Date, which change in supervision is effected without the Executive's written consent;
(c) a change in supervisory authority so that the holder of any position who normally reported to the Executive immediately after the Effective Date no longer reports to the Executive on a regular basis, which change in supervisory authority is effected without the Executive's written consent;
(d) any change in the Executive's office location such that the Executive is required to report regularly to a location that is beyond a 25-mile radius from the Executive's office location determined immediately after the Effective Date, which change in office location is effected without the Executive's written consent; and
(e) any material reduction in salary, bonus opportunity or other benefits provided for in Section 4 below from the level in effect immediately prior to the Change of Control.
1.5 "CHANGE OF CONTROL" means any one of the following events:
(a) the acquisition by any person or persons acting in concert of the then outstanding voting securities of either the Bank or the Company, if, after the transaction, the acquiring person (or persons) owns, controls or holds with power to vote forty percent (40%) or more of any class of voting securities of either the Bank or the Company, as the case may be;
(b) within any twelve-month period (beginning on or after the Effective Date) the persons who were directors of either the Bank or the Company immediately before the beginning of such twelve-month period (the "Incumbent Directors") shall cease to constitute at least a majority of such board of directors; provided that any director who was not a director as of the Effective Date shall be deemed to be an Incumbent Director if that director were elected to such board of directors by, or on the recommendation of or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors; and provided further that no director whose initial assumption of office is in connection with an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act of 1934) relating to the election of directors shall be deemed to be an Incumbent Director;
(c) a reorganization, merger or consolidation, with respect to which persons who were the stockholders of the Bank or the Company, as the case may be, immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than fifty percent (50%) of the combined voting power entitled to vote in the election of directors of the reorganized, merged or consolidated company's then outstanding voting securities; or
(d) the sale, transfer or assignment of all or substantially all of the assets of the Company and its subsidiaries to any third party.
1.6 "COMPANY INFORMATION" means Confidential Information and Trade Secrets.
1.7 "CONFIDENTIAL INFORMATION" means data and information relating to the business of the Bank or the Company (which does not rise to the status of a Trade Secret) which is or has been disclosed to the Executive or of which the Executive became aware as a consequence of or through the Executive's relationship to the Employer and which has value to the Employer and is not generally known to its competitors. Confidential Information shall not include any data or information that has been voluntarily disclosed to the public by the Employer (except where such public disclosure has been made by the Executive without authorization) or that has been independently developed and disclosed by others, or that otherwise enters the public domain through lawful means.
1.8 "DISABILITY" shall mean the inability of the Executive to perform each of his material duties under this Agreement for the duration of the short-term disability period under the
Employer's policy then in effect as certified by a physician chosen by the Employer and reasonably acceptable to the Executive.
1.9 "EFFECTIVE DATE" shall mean the date March 1, 2000.
1.10 "INITIAL TERM" shall mean that period of time commencing on March 1, 2000 (the "Beginning Date") and running until the close of business on the last business day immediately preceding the third anniversary of the Beginning Date.
1.11 "TERM" shall mean the last day of the Initial Term or most recent subsequent renewal period.
1.12 "TRADE SECRETS" means Employer information including, but not limited to, technical or nontechnical data, formulas, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data, financial plans, product plans or lists of actual or potential customers or suppliers which:
(a) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and
(b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
2. DUTIES.
2.1 POSITION. The Executive is employed initially as President and Chief Executive Officer of the Bank and the Company and, subject to the direction of the Board of Directors of the Bank or the Company or its designee(s), shall perform and discharge well and faithfully the duties which may be assigned to him from time to time by the Bank or the Company in connection with the conduct of its business. The duties and responsibilities of the Executive are set forth on EXHIBIT A attached hereto.
2.2 FULL-TIME STATUS. In addition to the duties and responsibilities specifically assigned to the Executive pursuant to Section 2.1 hereof, the Executive shall:
(a) devote substantially all of his time, energy and skill during regular business hours to the performance of the duties of his employment (reasonable vacations and reasonable absences due to illness excepted) and faithfully and industriously perform such duties;
(b) diligently follow and implement all reasonable and lawful management policies and decisions communicated to him by the Board of Directors of either the Bank or the Company; and
(c) timely prepare and forward to the Board of Directors of either the Bank or the Company all reports and accountings as may be requested of the Executive.
2.3 PERMITTED ACTIVITIES. The Executive shall devote his entire business time, attention and energies to the Business of the Employer and shall not during the Term be engaged (whether or not during normal business hours) in any other business or professional activity, whether or not such activity is pursued for gain, profit or other pecuniary advantage; but this shall not be construed as preventing the Executive from:
(a) investing his personal assets in businesses which (subject to clause (b) below) are not in competition with the Business of the Employer and which will not require any services on the part of the Executive in their operation or affairs and in which his participation is solely that of an investor;
(b) purchasing or otherwise acquiring an ownership interest in any entity provided that such interest shall not result in him collectively owning beneficially at any five percent (5%) or more of any entity, or to the extent applicable, five percent (5%) or more of the stock, capital or profits of any entity in competition with the Business of the Employer; and
(c) participating in civic and professional affairs and organizations and conferences, preparing or publishing papers or books or teaching so long as the Board of Directors of either the Bank or the Company approves of such activities prior to the Executive's engaging in them.
Notwithstanding the foregoing provisions of this Section 2.3, the Executive may provide services to any entity and may engage in such additional investment activities to the extent such services and such additional investment activities have been expressly approved in writing by the Board of Directors of either the Bank or the Company.
3. TERM AND TERMINATION.
3.1 TERM. This Agreement shall remain in effect for the Term. While this Agreement remains in effect it shall automatically renew each day after the Effective Date so that the Term remains a three-year term from day-to-day hereafter unless the Employer or the Executive gives written notice to the other of its intent that the automatic renewals shall cease. In the event such notice of non-renewal is properly given, this Agreement and the Term shall expire on the third anniversary of the thirtieth (30th) day following the date such written notice is received.
3.2 TERMINATION. During the Term, the employment of the Executive under this Agreement may be terminated only as follows:
3.2.1 By the Employer:
(a) In the event that the Bank fails to receive its regulatory charter, or the Company fails to raise the necessary capital required to open the Bank, and
should the Company's Founders decide to forgo future efforts to open the Bank, in which event the Employer shall be required to continue to meet its obligation to the Executive under Section 4.1 until December 31, 2000;
(b) For Cause, upon written notice to the Executive pursuant to Section 1.4.1 hereof, where the notice has been approved by a resolution passed by two-thirds of the directors of either the Bank or the Company then in office;
(c) Without Cause at any time, provided that the Bank shall give the Executive thirty (30) days' prior written notice of its intent to terminate, in which event the Employer shall be required to continue to meet its obligations to the Executive under Section 4.1 for a period equal to the remaining Term of the Agreement; or
(d) Upon the Disability of Executive at any time, provided that the Employer shall give the Executive thirty (30) days' prior written notice of its intent to terminate, in which event, the Employer shall be required to continue to meet its obligations under Section 4.1 for a period of six (6) months or until the Executive begins receiving payments under the Company's long-term disability policy, whichever occurs first.
3.2.2 By the Executive:
(a) For Cause, in which event the Employer shall be required to continue to meet its obligations under Section 4.1 for a period equal to the lesser of (i) twelve (12) months following the termination or (ii) the remaining Term of the Agreement; or
(b) Without Cause or upon the Disability of the Executive, provided that the Executive shall give the Employer sixty (60) days' prior written notice of his intent to terminate.
3.2.3 At any time upon mutual, written agreement of the parties. 3.2.4 Notwithstanding anything in this Agreement to the |
contrary, the Term shall end automatically upon the Executive's death.
3.3 CHANGE OF CONTROL. If the Executive terminates his employment with the Employer under this Agreement for Cause within twelve (12) months following a Change of Control, the Executive, or in the event of his subsequent death, his designated beneficiaries or his estate, as the case may be, shall receive, as liquidated damages, in lieu of all other claims, a severance payment equal to three (3) times the Executives then current Base Salary and target bonus amount to be paid in full on the last day of the month following the date of termination. The Executive and his immediate family will continue to receive the health insurance plan benefits then in effect for employees of the Company and/or the Bank for a period of three years
to include payment of the Employer funded portion of the plan. The Executive will also receive tax assistance, advice and filing preparation services from a qualified accounting firm of his choice for a period of three years at a cost to the Company and/or the Bank not to exceed $2,500 per year.
3.4 EFFECT OF TERMINATION. Upon termination of the Executive's employment hereunder, the Employer shall have no further obligations to the Executive or the Executive's estate with respect to this Agreement, except for the payment of salary and bonus amounts, if any, accrued pursuant to Sections 4.1 and 4.2 hereof and unpaid as of the effective date of the termination of employment and payments set forth in Sections 3.2.1(a),(c) or (d); Section 3.2.2(a); Section 3.3; Section 3.5 and/or Section 4.4, as applicable. Nothing contained herein shall limit or impinge upon any other rights or remedies of the Employer or the Executive under any other agreement or plan to which the Executive is a party or of which the Executive is a beneficiary.
3.5 TAX INDEMNITY. In the event it shall be determined that any payment or benefits by the Employer to the Executive (a "Payment") would subject the Executive to an excise tax under Section 4999 of the Internal Revenue Code (the "Code") (or any successor federal tax law), or any interest or penalties are incurred or paid by the Executive with respect to such excise tax (any such excise tax, together with any interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to an additional payment from the Employer as is necessary (after taking into account all federal, state and local taxes regardless of type, whether income, excise or otherwise) imposed upon the Executive as a result of the receipt of the payment contemplated by this Agreement) and any reduction in such taxes of the Executive as a result of the payment of the related Excise Tax) to place the Executive in the same after-tax position the Executive would have been in had no Excise Tax been imposed upon or incurred or paid by the Executive (the "Tax Indemnity"). The Employer's outside auditor shall determine, utilizing such reasonable assumptions as it considers necessary, whether a Payment would subject the Executive to the Excise Tax within thirty (30) days after receipt of a written request from the Employer or the Executive in which the requesting party verifies that a Payment has been made and requests an appropriate determination. The requesting party shall provide the other party with a copy of any such written request. The outside auditor shall determine whether a Tax Indemnity obligation exists and, if so, the amount of the Tax Indemnity and shall provide supporting documentation to both the Employer and the Executive. The Employer shall pay the Executive any Tax Indemnity so determined in a lump sum in cash within thirty (30) days following the release of the related determination by the outside auditor; provided, however, that any such payment may be reduced by applicable legal withholdings. In the event that the Internal Revenue Service subsequently assesses an Excise Tax that is greater than the tax previously calculated by the outside auditor, the Employer shall make an additional Tax Indemnity payment, as calculated by the outside auditor in a manner consistent with the provisions of this Section 3.5, to the Executive within thirty (30) days of the date of such assessment.
4. COMPENSATION. The Executive shall receive the following salary and benefits during the Term, except as otherwise provided below:
4.1 BASE SALARY. During the Initial Term, the Executive shall be compensated at a base rate of $220,000 per year (the "Base Salary"). The obligation for payment of Base Salary shall be apportioned between the Company and the Bank as they may agree from time to time in their sole discretion. The Executive's Base Salary shall be reviewed by the Board of Directors of the Bank and the Company at least annually, and the Executive shall be entitled to receive annually an increase in such amount, if any, as may be determined by the Board of Directors of the Bank or the Company based on its evaluation of Executive's performance. Base Salary shall be payable in accordance with the Employer's normal payroll practices.
4.2 INCENTIVE COMPENSATION. The Executive shall be entitled to annual bonus compensation, if any, as determined by the Board of Directors of the Company or the Bank pursuant to any incentive compensation program as may be adopted from time to time by the Company or the Bank.
4.3 STOCK OPTIONS. The Company will establish a stock incentive plan contemporaneously with the initial public offering of the Company's common stock. The Company will grant to the Executive pursuant to such stock incentive plan, consistent with applicable provisions of the Internal Revenue Code, an incentive stock option to purchase, at a per share purchase price equal to $10.00, 45,000 shares of the Company's common stock. The option generally will become vested and exercisable in twenty percent (20%) increments, commencing on the first anniversary of the option grant date, which shall be the closing date for the Company's initial public offering, and continuing for the next four successive anniversaries; provided, however, that, in the event of a Change of Control, the option shall become fully vested and exercisable; provided further, that in the event of a Change of Control prior to the third anniversary of the date the Bank opens for business, the option shall become vested and exercisable at a rate no more rapidly than thirty-three and one-third percent (33 1/3%) per year over the first three anniversaries of the date the Bank opens for business. The option shall expire generally upon the earlier of ninety (90) days following termination of employment or upon the tenth anniversary of the option grant date. The option will be issued by the Employer pursuant to the Company's stock incentive plan and subject to the terms of a related stock option agreement. The Executive shall be eligible for future option grants so long as the Company maintains a stock incentive plan and shall participate in future grants at a level that is commensurate with the relative levels of participation by all other senior management employees of the Employer.
4.4 HEALTH INSURANCE.
(a) The Employer shall reimburse the Executive for the cost of premium payments paid by the Executive for the Executive's current health insurance covering the Executive and the members of his immediate family until the first to occur of the following:
(i) such time as the Company adopts a health insurance plan for employees of the Company and/or the Bank;
(ii) the Company and the Bank abandon their organizational efforts; or
(iii) December 31, 2000.
(b) In the event of termination by the Executive for Cause (Section 3.2.3(a)), the Employer shall reimburse Executive for the cost of premium payments paid by the Executive to continue his then existing health insurance for himself and his eligible dependents as provided by the Employer for a period of three (3) months following the date of termination of employment.
(c) In the event of a termination by the Employer without Cause (Section 3.2.1(c)), the Employer shall reimburse the Executive for the cost of premium payments paid by the Executive to continue his then existing health insurance for himself and his eligible dependents as provided by Employer for a period of twelve (12) months following the date of termination of employment.
4.5 AUTOMOBILE. Beginning as of the month in which the Bank receives preliminary charter approval, the Employer will provide Executive with an automobile allowance of $750 per month.
4.6 BUSINESS EXPENSES; MEMBERSHIPS. The Employer specifically agrees to reimburse the Executive for:
(a) reasonable and necessary business (including travel) expenses incurred by him in the performance of his duties hereunder, as approved by the Board of Directors of either the Bank or the Company; and
(b) beginning as of the Effective Date, the dues and business related expenditures, including initiation fees, associated with membership in a single civic
association both as selected by the Executive and in professional associations which are commensurate with his position; provided, however, that the Executive shall, as a condition of reimbursement, submit verification of the nature and amount of such expenses in accordance with reimbursement policies from time to time adopted by the Employer and in sufficient detail to comply with rules and regulations promulgated by the Internal Revenue Service.
4.7 VACATION. On a non-cumulative basis, the Executive shall be entitled to four (4) weeks of vacation in each successive twelve-month period during the Term, during which his compensation shall be paid in full.
4.8 LIFE INSURANCE. The Employer will provide the Executive with access to term life insurance coverage at competitive group rates at such time as the Company develops a life plan for employees of the Company and/or Bank, providing a death benefit of not less than $1,000,000, payable to such beneficiary or beneficiaries as the Executive may designate.
4.9 TAX PREPARATION SERVICES. The Employer will provide the Executive with tax preparation services annually through a qualified accounting firm of the Executive's choice at an annual cost not to exceed $2,500.
4.10 BENEFITS. In addition to the benefits specifically described in this Agreement, the Executive shall be entitled to such benefits as may be available from time to time to executives of the Bank similarly situated to the Executive. All such benefits shall be awarded and administered in accordance with the Bank's standard policies and practices. Such benefits may include, by way of example only, profit-sharing plans, retirement or investment funds, dental, health, life and disability insurance benefits and such other benefits as the Bank deems appropriate.
4.11 WITHHOLDING. The Employer may deduct from each payment of compensation hereunder all amounts required to be deducted and withheld in accordance with applicable federal and state income, FICA and other withholding requirements.
5. COMPANY INFORMATION.
5.1 OWNERSHIP OF COMPANY INFORMATION. All Company Information received or developed by the Executive while employed by the Employer will remain the sole and exclusive property of the Employer.
5.2 OBLIGATIONS OF THE EXECUTIVE. The Executive agrees:
(a) to hold Company Information in strictest confidence;
(b) not to use, duplicate, reproduce, distribute, disclose or otherwise disseminate Company Information or any physical embodiments of Company Information; and
(c) in any event, not to take any action causing or fail to take any action necessary in order to prevent any Company Information from losing its character or ceasing to qualify as Confidential Information or a Trade Secret.
In the event that the Executive is required by law to disclose any Company Information, the Executive will not make such disclosure unless (and then only to the extent that) the Executive has been advised by independent legal counsel that such disclosure is required by law and then only after prior written notice is given to the Company when the Executive becomes aware that such disclosure has been requested and is required by law. This Section 5 shall survive for a period of twelve (12) months following termination of this Agreement for any reason with respect to Confidential Information, and shall survive termination of this Agreement for any reason for so long as is permitted by applicable law, with respect to Trade Secrets.
5.3 DELIVERY UPON REQUEST OR TERMINATION. Upon request by the Employer, and in any event upon termination of his employment with the Employer, the Executive will promptly deliver to the Employer all property belonging to the Employer, including, without limitation, all Company Information then in his possession or control. The Executive agrees that the covenant
contained in Section 5 of this Agreement are of the essence of this Agreement; that the covenant is reasonable and necessary to protect the business, interests and properties of the Employer.
6. SEVERABILITY. The parties agree that each of the provisions included in this Agreement is separate, distinct and severable from the other provisions of this Agreement and that the invalidity or unenforceability of any Agreement provision shall not affect the validity or enforceability of any other provision of this Agreement. Further, if any provision of this Agreement is ruled invalid or unenforceable by a court of competent jurisdiction because of a conflict between the provision and any applicable law or public policy, the provision shall be redrawn to make the provision consistent with and valid and enforceable under the law or public policy.
7. NO SET-OFF BY THE EXECUTIVE. The existence of any claim, demand, action or cause of action by the Executive against the Employer, or any Affiliate of the Employer, whether predicated upon this Agreement or otherwise, shall not constitute a defense to the enforcement by the Employer of any of its rights hereunder.
8. NOTICE. All notices and other communications required or permitted under this Agreement shall be in writing and, if mailed by prepaid first-class mail or certified mail, return receipt requested, shall be deemed to have been received on the earlier of the date shown on the receipt or three (3) business days after the postmarked date thereof. In addition, notices hereunder may be delivered by hand or overnight courier, in which event the notice shall be deemed effective when delivered. All notices and other communications under this Agreement shall be given to the parties hereto at the following addresses:
(i) If to the Employer, to it at:
(ii) If to the Executive, to him at:
812 Jones Parkway Brentwood, TN 37027
9. ASSIGNMENT. Neither party hereto may assign or delegate this Agreement or any of its rights and obligations hereunder without the written consent of the other party to this Agreement.
10. WAIVER. A waiver by one party to this Agreement of any breach of this Agreement by the other party to this Agreement shall not be effective unless in writing, and no waiver shall operate or be construed as a waiver of the same or another breach on a subsequent occasion.
11. ARBITRATION. Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by binding arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Judgment upon the award rendered by
the arbitrator may be entered only in a state court of Tennessee or the federal court for the Middle District of Tennessee. The Employer and the Executive agree to share equally the fees and expenses associated with the arbitration proceedings.
12. ATTORNEYS' FEES. In the event that the parties have complied with this Agreement with respect to arbitration of disputes and litigation ensues between the parties concerning the enforcement of an arbitration award, the party prevailing in such litigation shall be entitled to receive from the other party all reasonable costs and expenses, including without limitation attorneys' fees, incurred by the prevailing party in connection with such litigation, and the other party shall pay such costs and expenses to the prevailing party promptly upon demand by the prevailing party.
13. APPLICABLE LAW. This Agreement shall be construed and enforced under and in accordance with the laws of the State of Tennessee.
14. INTERPRETATION. Words importing any gender include all genders. Words importing the singular form shall include the plural and vice versa. The terms "herein", "hereunder", "hereby", "hereto", "hereof" and any similar terms refer to this Agreement. Any captions, titles or headings preceding the text of any article, section or subsection herein are solely for convenience of reference and shall not constitute part of this Agreement or affect its meaning, construction or effect.
15. ENTIRE AGREEMENT. This Agreement embodies the entire and final agreement of the parties on the subject matter stated in this Agreement. No amendment or modification of this Agreement shall be valid or binding upon the Employer or the Executive unless made in writing and signed by both parties. All prior understandings and agreements relating to the subject matter of this Agreement, including, but not limited to, that certain employment agreement between the Bank and the Executive previously signed by the parties and also dated as of March 1, 2000, are hereby expressly terminated and superseded.
16. RIGHTS OF THIRD PARTIES. Nothing herein expressed is intended to or shall be construed to confer upon or give to any person, firm or other entity, other than the parties hereto and their permitted assigns, any rights or remedies under or by reason of this Agreement.
17. SURVIVAL. The obligations of the Executive pursuant to Section 5 shall survive the termination of the employment of the Executive hereunder for the period designated under each of those respective sections.
18. JOINT AND SEVERAL. The obligations of the Bank and the Company to Executive hereunder shall be joint and several.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Employer and the Executive have executed and delivered this Agreement as of the date first shown above.
THE BANK:
PINNACLE NATIONAL BANK (PROPOSED)
THE COMPANY:
PINNACLE FINANCIAL PARTNERS, INC.
THE EXECUTIVE:
EXHIBIT A
INITIAL DUTIES OF THE EXECUTIVE
PRESIDENT/
CHIEF EXECUTIVE OFFICER
FUNCTION:
Has overall responsibility for the leadership of the organization in all aspects of its activities to insure safety and soundness, maximize return to the shareholders, and meet the needs of its various constituencies (shareholders, Board of Directors, customers, employees, regulators, and communities).
PRINCIPAL ACCOUNTABILITIES:
1. Develops and implements the overall business strategy of the bank, its culture and mission statement. Responsible for the planning, implementation and control of long-term and short-term goals, as well as strategic plans.
2. Provides leadership and direction in establishing, implementing, monitoring, and achieving the annual business plan.
3. Oversees employee selection, training, professional development and performance at all levels within the bank. Ensures each employee has clarity of job responsibilities and defined standards and goals.
4. Provides leadership in establishing overall policies and procedures such as credit policy, investment policy, risk tolerance levels, and operational procedures.
5. Works closely with the Chief Administrative Officer to insure appropriate financial reporting and that proper accounting procedures are utilized.
6. Works closely with the Senior Lending Officer/Senior Credit Officer to monitor quality of loan portfolio and that loans comply with the Bank's lending policy.
7. Provides active leadership in the development and implementation of an effective CRA program including active involvement in ascertaining the communities' credit needs.
8. Originates and approves loans, acting within the approved loan limits and guidelines approved by the Board of Directors.
9. Participates actively in community and civic activities so as to create a positive public perception of the bank. Also, to be actively involved in business development activities to solicit and maintain sufficient business to meet and/or exceed established goals.
10. Responsible for maintaining sound relationships with the various regulatory agencies and managing the bank to meet or exceed all
regulatory guidelines.
EXHIBIT 10.15
PINNACLE FINANCIAL PARTNERS, INC.
2000 STOCK INCENTIVE PLAN
TABLE OF CONTENTS
PAGE
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SECTION 1 DEFINITIONS............................................................................................1
1.1 DEFINITIONS..............................................................................................1
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SECTION 2 THE STOCK INCENTIVE PLAN...............................................................................4
2.1 PURPOSE OF THE PLAN......................................................................................4
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2.2 STOCK SUBJECT TO THE PLAN................................................................................4
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2.3 ADMINISTRATION OF THE PLAN...............................................................................4
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2.4 ELIGIBILITY AND LIMITS...................................................................................5
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SECTION 3 TERMS OF STOCK INCENTIVES..............................................................................5
3.1 GENERAL TERMS AND CONDITIONS.............................................................................5
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3.2 TERMS AND CONDITIONS OF OPTIONS..........................................................................6
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(A) OPTION PRICE..........................................................................................7
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(B) OPTION TERM...........................................................................................7
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(C) PAYMENT...............................................................................................7
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(D) CONDITIONS TO THE EXERCISE OF AN OPTION...............................................................8
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(E) TERMINATION OF INCENTIVE STOCK OPTION STATUS..........................................................8
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(F) SPECIAL PROVISIONS FOR CERTAIN SUBSTITUTE OPTIONS.....................................................8
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3.3 TREATMENT OF AWARDS UPON TERMINATION OF SERVICE..........................................................8
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SECTION 4 RESTRICTIONS ON STOCK..................................................................................9
4.1 ESCROW OF SHARES.........................................................................................9
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4.2 RESTRICTIONS ON TRANSFER.................................................................................9
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SECTION 5 GENERAL PROVISIONS.....................................................................................9
5.1 WITHHOLDING..............................................................................................9
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5.2 CHANGES IN CAPITALIZATION; MERGER; LIQUIDATION..........................................................10
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5.3 CASH AWARDS.............................................................................................11
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5.4 COMPLIANCE WITH CODE....................................................................................11
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5.5 RIGHT TO TERMINATE SERVICE..............................................................................11
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5.6 RESTRICTIONS ON DELIVERY AND SALE OF SHARES; LEGENDS....................................................11
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5.7 NON-ALIENATION OF BENEFITS..............................................................................11
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5.8 TERMINATION AND AMENDMENT OF THE PLAN...................................................................11
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5.9 STOCKHOLDER APPROVAL....................................................................................12
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5.10 CHOICE OF LAW...........................................................................................12
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PINNACLE FINANCIAL PARTNERS, INC.
2000 STOCK INCENTIVE PLAN
SECTION 1 DEFINITIONS
1.1 DEFINITIONS. Whenever used herein, the masculine pronoun shall be deemed to include the feminine, and the singular to include the plural, unless the context clearly indicates otherwise, and the following capitalized words and phrases are used herein with the meaning thereafter ascribed:
(a) "BANK" means Pinnacle National Bank, a proposed national bank.
(b) "BOARD OF DIRECTORS" means the board of directors of the Company.
(c) "CAUSE" has the same meaning as provided in the employment agreement between the Participant and the Company or affiliate(s) on the date of Termination of Service, or if no such definition or employment agreement exists, "Cause" means conduct amounting to (1) fraud or dishonesty against the Company or affiliate(s); (2) Participant's willful misconduct, repeated refusal to follow the reasonable directions of the Board of Directors or knowing violation of law in the course of performance of the duties of Participant's service with the Company or affiliate(s); (3) repeated absences from work without a reasonable excuse; (4) repeated intoxication with alcohol or drugs while on the Company or affiliate(s)' premises during regular business hours; (5) a conviction or plea of guilty or NOLO CONTENDERE to a felony or a crime involving dishonesty; or (6) a breach or violation of the terms of any agreement to which Participant and the Company or affiliate(s) are party.
(d) "CHANGE IN CONTROL" means any one of the following events which may occur after the date the Stock Incentive is granted:
(1) the acquisition by any person or persons acting in concert of the then outstanding voting securities of either the Bank or the Company, if, after the transaction, the acquiring person (or persons) owns, controls or holds with power to vote forty percent (40%) or more of any class of voting securities of either the Bank or the Company, as the case may be;
(2) within any twelve-month period the persons who were directors of either the Bank or the Company immediately before the beginning of such twelve-month period (the "Incumbent Directors") shall cease to constitute at least a majority of such board of directors; provided that any director who was not a director as of the beginning of such twelve-month period shall be deemed to be an Incumbent Director if that director were elected to such board of directors by, or on the recommendation of or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors; and provided further that no director whose initial assumption of office is in connection with an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act of 1934) relating to the election of directors shall be deemed to be an Incumbent Director;
(3) a reorganization, merger or consolidation, with respect to which persons who were the stockholders of either the Bank or the Company, as the case may be, immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than fifty percent (50%) of the combined voting power entitled to vote in the election of directors of the reorganized, merged or consolidated company's then outstanding voting securities; or
(4) the sale, transfer or assignment of all or substantially all of the assets of the Company and its subsidiaries to any third party.
(e) "COMPANY" means Pinnacle Financial Partners, Inc., a corporation organized as a bank holding company under the laws of the State of Tennessee.
(f) "CODE" means the Internal Revenue Code of 1986, as amended.
(g) "COMMITTEE" means the committee appointed by the Board of Directors to administer the Plan pursuant to Plan Section 2.3.
(h) "DISABILITY" has the same meaning as provided in the long-term disability plan or policy maintained or, if applicable, most recently maintained, by the Company or affiliate for the Participant. If no long-term disability plan or policy was ever maintained on behalf of the Participant or, if the determination of Disability relates to an Incentive Stock Option, Disability shall mean that condition described in Code Section 22(e)(3), as amended from time to time. In the event of a dispute, the determination of Disability shall be made by the Board of Directors and shall be supported by advice of a physician competent in the area to which such Disability relates.
(i) "DISPOSITION" means any conveyance, sale, transfer, assignment, pledge or hypothecation, whether outright or as security, inter vivos or testamentary, with or without consideration, voluntary or involuntary.
(j) "FAIR MARKET VALUE" refers to the determination of value of a share of Stock. If the Stock is actively traded on any national securities exchange or any Nasdaq quotation or market system, Fair Market Value shall mean the closing price at which sales of Stock shall have been sold on the most recent trading date immediately prior to the date of determination, as reported by any such exchange or system selected by the Committee on which the shares of Stock are then traded. If the shares of Stock are not actively traded on any such exchange or system, Fair Market Value shall mean the arithmetic mean of the bid and asked prices for the shares of Stock on the most recent trading date within a reasonable period prior to the determination date as reported by such exchange or system. If there are no bid and asked prices within a reasonable period or if the shares of Stock are not traded on any exchange or system as of the determination date, Fair Market Value shall mean the fair market value of a share of Stock as determined by the Committee taking into account such facts and circumstances deemed to be material by the Committee to the value of the Stock in the hands of the Participant; provided that, for purposes of granting awards other than Incentive Stock Options, Fair Market Value of a share of Stock may be determined by the Committee by reference to the average market value determined over a period certain or as of specified dates, to a tender offer price for
the shares of Stock (if settlement of an award is triggered by such an event) or to any other reasonable measure of fair market value and provided further that, for purposes of granting Incentive Stock Options, Fair Market Value of a share of Stock shall be determined in accordance with the valuation principles described in the regulations promulgated under Code Section 422.
(k) "INCENTIVE STOCK OPTION" means an incentive stock option, as defined in Code Section 422, described in Plan Section 3.2.
(l) "NON-QUALIFIED STOCK OPTION" means a stock option, other
than an option qualifying as an Incentive Stock Option, described in Plan
Section 3.2.
(m) "OPTION" means a Non-Qualified Stock Option or an Incentive Stock Option.
(n) "OVER 10% OWNER" means an individual who at the time an Incentive Stock Option is granted owns Stock possessing more than 10% of the total combined voting power of the Company or one of its Parents or Subsidiaries, determined by applying the attribution rules of Code Section 424(d).
(o) "PARENT" means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if, with respect to Incentive Stock Options, at the time of granting of the Incentive Stock Option, each of the corporations other than the Company owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in the chain.
(p) "PARTICIPANT" means an individual who receives a Stock Incentive hereunder.
(q) "PLAN" means the Pinnacle Financial Partners, Inc. 2000 Stock Incentive Plan.
(r) "STOCK" means the Company's common stock, $1.00 par value per share.
(s) "STOCK INCENTIVE AGREEMENT" means an agreement between the Company and a Participant or other documentation evidencing an award of a Stock Incentive.
(t) "STOCK INCENTIVES" means, collectively, Incentive Stock Options and Non-Qualified Stock Options.
(u) "SUBSIDIARY" means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, with respect to Incentive Stock Options, at the time of the granting of the Incentive Stock Option, each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in the chain.
(v) "TERMINATION OF SERVICE" means the termination of the service relationship, whether employment or otherwise, between a Participant and the Company and any affiliates, regardless of the fact that severance or similar payments are made to the Participant for any reason, including, but not by way of limitation, a termination by resignation, discharge, death, Disability or retirement. The Committee shall, in its absolute discretion, determine the effect of all matters and questions relating to a Termination of Service, including, but not by way of limitation, the question of whether a leave of absence constitutes a Termination of Service, or whether a Termination of Service is for Cause.
SECTION 2 THE STOCK INCENTIVE PLAN
2.1 PURPOSE OF THE PLAN. The Plan is intended to (a) provide incentives
to officers, employees, directors and organizers of the Company and affiliates
to stimulate their efforts toward the continued success of the Company and to
operate and manage the business in a manner that will provide for the long-term
growth and profitability of the Company; (b) encourage stock ownership by
officers, employees, directors and organizers by providing them with a means to
acquire a proprietary interest in the Company by acquiring shares of Stock; and
(c) provide a means of obtaining and rewarding key personnel.
2.2 STOCK SUBJECT TO THE PLAN. Subject to adjustment in accordance with
Section 5.2, 520,000 shares of Stock (the "Maximum Plan Shares") are hereby
reserved exclusively for issuance pursuant to Stock Incentives. At such time as
the Company becomes subject to Section 16 of the Exchange Act, at no time shall
the Company have outstanding Stock Incentives subject to Section 16 of the
Exchange Act and shares of Stock issued in respect of Stock Incentives in excess
of the Maximum Plan Shares. The shares of Stock attributable to the nonvested,
unpaid, unexercised, unconverted or otherwise unsettled portion of any Stock
Incentive that is forfeited or cancelled or expires or terminates for any reason
without becoming vested, paid, exercised, converted or otherwise settled in full
will again be available for purposes of the Plan.
2.3 ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Committee. The members of the Committee shall consist solely of at least two
members of the Board of Directors. During those periods that the Company is
subject to the provisions of Section 16 of the Securities Exchange Act of 1934,
the Board of Directors shall consider the advisability of whether each Committee
member shall qualify as an "outside director" as defined in Treasury Regulations
Section 1.162-27(e) as promulgated by the Internal Revenue Service and a
"non-employee director" as defined in Rule 16b-3(b)(3) as promulgated under the
Exchange Act. The Committee shall have full authority in its discretion to
determine the officers, employees, directors and organizers of the Company or
its affiliates to whom Stock Incentives shall be granted and the terms and
provisions of Stock Incentives subject to the Plan. Subject to the provisions of
the Plan, the Committee shall have full and conclusive authority to interpret
the Plan; to prescribe, amend and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of the respective Stock Incentive
Agreements and to make all other determinations necessary or advisable for the
proper administration of the Plan. The Committee's determinations under the Plan
need not be uniform and may be made by it selectively among persons who receive,
or are eligible to receive, awards under the Plan
(whether or not such persons are similarly situated). The Committee's decisions shall be final and binding on all Participants. Each member of the Committee shall serve at the discretion of the Board of Directors and the Board of Directors may from time to time remove members from or add members to the Committee. Vacancies on the Committee shall be filled by the Board of Directors.
The Committee shall select one of its members as chairman and shall hold meetings at the times and in the places as it may deem advisable. Acts approved by a majority of the Committee in a meeting at which a quorum is present, or acts reduced to or approved in writing by a majority of the members of the Committee, shall be the valid acts of the Committee.
2.4 ELIGIBILITY AND LIMITS. Stock Incentives may be granted only to officers, employees, directors and organizers of the Company or any affiliate; provided, however, that an Incentive Stock Option may only be granted to an employee of the Company or any Subsidiary. In the case of Incentive Stock Options, the aggregate Fair Market Value (determined as of the date an Incentive Stock Option is granted) of stock with respect to which stock options intended to meet the requirements of Code Section 422 become exercisable for the first time by an individual during any calendar year under all plans of the Company and its Parents and Subsidiaries shall not exceed $100,000; provided further, that if the limitation is exceeded, the Incentive Stock Option(s) which cause the limitation to be exceeded shall be treated as Non-Qualified Stock Option(s). To the extent required under Code Section 162(m) of the Code and the regulations thereunder for compensation to be treated as qualified performance based compensation, the maximum number of shares of Stock with respect to which Options may be granted during any calendar year to any individual may not exceed 75,000, subject to adjustment in accordance with Section 5.2. In applying this limitation, if an Option, or any portion thereof, granted to an employee is cancelled or repriced for any reason, then the shares of Stock attributable to such cancellation or repricing either shall continue to be counted as an outstanding grant or shall be counted as a new grant, as the case may be, against the affected employee's 75,000 limit for the appropriate calendar year.
SECTION 3 TERMS OF STOCK INCENTIVES
3.1 GENERAL TERMS AND CONDITIONS.
(a) The number of shares of Stock as to which a Stock Incentive shall be granted shall be determined by the Committee in its sole discretion, subject to the provisions of Section 2.2, as to the total number of shares available for grants under the Plan.
(b) Each Stock Incentive shall be evidenced by a Stock Incentive Agreement in such form and containing such terms, conditions and restrictions as the Committee may determine is appropriate. Each Stock Incentive Agreement shall be subject to the terms of the
Plan and any provision in a Stock Incentive Agreement that is inconsistent with the Plan shall be null and void.
(c) The date a Stock Incentive is granted shall be the date on which the Committee has approved the terms of, and satisfaction of any conditions applicable to, the grant of the Stock Incentive and has determined the recipient of the Stock Incentive and the number of shares covered by the Stock Incentive and has taken all such other action necessary to complete the grant of the Stock Incentive.
(d) The Committee may provide in any Stock Incentive Agreement (or subsequent to the award of a Stock Incentive but prior to its expiration or cancellation, as the case may be) that, in the event of a Change in Control, the Stock Incentive shall or may be cashed out on the basis of any price not greater than the highest price paid for a share of Stock in any transaction reported by any market or system selected by the Committee on which the shares of Stock are then actively traded during a specified period immediately preceding or including the date of the Change in Control or offered for a share of Stock in any tender offer occurring during a specified period immediately preceding or including the date the tender offer commences; provided that, in no case shall any such specified period exceed three (3) months (the "Change in Control Price"). For purposes of this Subsection, any Option shall be cashed out on the basis of the excess, if any, of the Change in Control Price over the Exercise Price to the extent the Option is then exercisable in accordance with the terms of the Option and the Plan.
(e) Any Stock Incentive may be granted in connection with all or any portion of a previously or contemporaneously granted Stock Incentive. Exercise or vesting of a Stock Incentive granted in connection with another Stock Incentive may result in a pro rata surrender or cancellation of any related Stock Incentive, as specified in the applicable Stock Incentive Agreement.
(f) Unless otherwise permitted by the Committee with respect to Non-Qualified Stock Options, Stock Incentives shall not be transferable or assignable except by will or by the laws of descent and distribution and shall be exercisable, during the Participant's lifetime, only by the Participant; in the event of the Disability of the Participant, by the legal representative of the Participant; or in the event of the death of the Participant, by the personal representative of the Participant's estate or if no personal representative has been appointed, by the successor in interest determined under the Participant's will.
(g) No Stock Incentive shall have a term that extends beyond the tenth anniversary of the date the Stock Incentive was granted.
3.2 TERMS AND CONDITIONS OF OPTIONS. Each Option granted under the Plan shall be evidenced by a Stock Incentive Agreement. At the time any Option is granted, the Committee shall determine whether the Option is to be an Incentive Stock Option or a Non-Qualified Stock Option, and the Option shall be clearly identified as to its status as an Incentive Stock Option or a Non-Qualified Stock Option. At the time any Incentive Stock Option is exercised, the Company shall be entitled to place a legend on the certificates representing the shares of Stock purchased pursuant to the Option to clearly identify them as shares of Stock purchased upon
exercise of an Incentive Stock Option. An Incentive Stock Option may only be granted within ten (10) years from the earlier of the date the Plan is adopted by the Board of Directors or approved by the Company's stockholders. All Options shall provide that the primary Federal regulator of the Bank may require a Participant to exercise an Option in whole or in part if the capital of the Bank falls below minimum requirements and shall further provide that, if the Participant fails to so exercise any such portion of the Option, that portion of the Option shall be forfeited.
(a) OPTION PRICE. Subject to adjustment in accordance with
Section 5.2 and the other provisions of this Section 3.2, the exercise price
(the "Exercise Price") per share of Stock purchasable under any Option shall be
as set forth in the applicable Stock Incentive Agreement. With respect to each
grant of an Incentive Stock Option to a Participant who is not an Over 10%
Owner, the Exercise Price per share shall not be less than the Fair Market Value
on the date the Option is granted. With respect to each grant of an Incentive
Stock Option to a Participant who is an Over 10% Owner, the Exercise Price shall
not be less than 110% of the Fair Market Value on the date the Option is
granted. With respect to each grant of a Non-Qualified Stock Option prior to the
third anniversary of the date the Bank opens for business, the Exercise Price
per share shall be no less than the Fair Market Value. With respect to each
grant of a Non-Qualified Stock Option after the third anniversary of the date
the Bank opens for Business, the Exercise Price per share shall be no less than
eighty-five percent (85%) of Fair Market Value.
(b) OPTION TERM. The term of an Option shall be as specified in the applicable Stock Incentive Agreement; provided, however that any Incentive Stock Option granted to a Participant who is not an Over 10% Owner shall not be exercisable after the expiration of ten (10) years after the date the Option is granted and any Incentive Stock Option granted to an Over 10% Owner shall not be exercisable after the expiration of five (5) years after the date the Option is granted.
(c) PAYMENT. Payment for all shares of Stock purchased pursuant to the exercise of an Option shall be made in cash, or if authorized by the Committee in the Stock Incentive Agreement or by amendment thereto, in a cashless exercise through a broker. In its discretion, the Committee also may authorize (at the time an Option is granted or thereafter) Company financing to assist the Participant as to payment of the Exercise Price on such terms as may be offered by the Committee in its discretion. Payment shall be made at the time that the Option or any part thereof is exercised, and no shares shall be issued or delivered upon exercise of an Option until full payment has been made by the Participant. The holder of an Option, as such, shall have none of the rights of a stockholder.
(d) CONDITIONS TO THE EXERCISE OF AN OPTION. Each Option granted under the Plan shall be exercisable by whom, at such time or times, or upon the occurrence of such event or events, and in such amounts, as the Committee shall specify in the Stock Incentive Agreement; provided, however, that subsequent to the grant of an Option, the Committee, at any time before complete termination of such Option, may accelerate the time or times at which such Option may be exercised in whole or in part, including, without limitation, upon a Change in Control and may permit the Participant or any other designated person to exercise the Option, or any portion thereof, for all or part of the remaining Option term notwithstanding any provision of the Stock Incentive Agreement to the contrary. Notwithstanding the foregoing, no Option granted prior to the third anniversary of the date the Plan is adopted by the Board of Directors shall contain provisions which allow the Option to become vested and exercisable at a rate faster than in equal, annual one-third increments commencing with the first anniversary of the Option's grant date.
(e) TERMINATION OF INCENTIVE STOCK OPTION STATUS. With respect
to an Incentive Stock Option, in the event of the Termination of Service of a
Participant, the Option's status as an Incentive Stock Option shall expire no
later than three (3) months after the date of Termination of Service; provided,
however, that in the case of a holder whose Termination of Service is due to
death or Disability, up to one (1) year may be substituted for such three (3)
month period. For purposes of this Subsection (e), Termination of Service of the
Participant shall not be deemed to have occurred if the Participant is employed
by another corporation (or a parent or subsidiary corporation of such other
corporation) which has assumed the Incentive Stock Option of the Participant in
a transaction to which Code Section 424(a) is applicable.
(f) SPECIAL PROVISIONS FOR CERTAIN SUBSTITUTE OPTIONS. Notwithstanding anything to the contrary in this Section 3.2, any Option issued in substitution for an option previously issued by another entity, which substitution occurs in connection with a transaction to which Code Section 424(a) is applicable, may provide for an exercise price computed in accordance with such Code Section and the regulations thereunder and may contain such other terms and conditions as the Committee may prescribe to cause such substitute Option to contain as nearly as possible the same terms and conditions (including the applicable vesting and termination provisions) as those contained in the previously issued option being replaced thereby.
3.3 TREATMENT OF AWARDS UPON TERMINATION OF SERVICE. Except as otherwise provided by Plan Section 3.2(e), any award under this Plan to a Participant who suffers a Termination of Service may be cancelled, accelerated, paid or continued, as provided in the Stock Incentive Agreement or, in the absence of such provision, as the Committee may determine. The portion of any award exercisable in the event of continuation or the amount of any payment due under a continued award may be adjusted by the Committee to reflect the Participant's period of service from the date of grant through the date of the Participant's Termination of Service or such other factors as the Committee determines are relevant to its decision to continue the award.
SECTION 4 RESTRICTIONS ON STOCK
4.1 ESCROW OF SHARES. Any certificates representing the shares of Stock issued under the Plan shall be issued in the Participant's name, but, if the Stock Incentive Agreement so provides, the shares of Stock shall be held by a custodian designated by the Committee (the "Custodian"). Each applicable Stock Incentive Agreement providing for transfer of shares of Stock to the Custodian shall appoint the Custodian as the attorney-in-fact for the Participant for the term specified in the applicable Stock Incentive Agreement, with full power and authority in the Participant's name, place and stead to transfer, assign and convey to the Company any shares of Stock held by the Custodian for such Participant, if the Participant forfeits the shares under the terms of the applicable Stock Incentive Agreement. During the period that the Custodian holds the shares subject to this Section, the Participant shall be entitled to all rights, except as provided in the applicable Stock Incentive Agreement, applicable to shares of Stock not so held. Any dividends declared on shares of Stock held by the Custodian shall, as the Committee may provide in the applicable Stock Incentive Agreement, be paid directly to the Participant or, in the alternative, be retained by the Custodian until the expiration of the term specified in the applicable Stock Incentive Agreement and shall then be delivered, together with any proceeds, with the shares of Stock to the Participant or to the Company, as applicable.
4.2 RESTRICTIONS ON TRANSFER. The Participant shall not have the right to make or permit to exist any Disposition of the shares of Stock issued pursuant to the Plan except as provided in the Plan or the applicable Stock Incentive Agreement. Any Disposition of the shares of Stock issued under the Plan by the Participant not made in accordance with the Plan or the applicable Stock Incentive Agreement shall be void. The Company shall not recognize, or have the duty to recognize, any Disposition not made in accordance with the Plan and the applicable Stock Incentive Agreement, and the shares so transferred shall continue to be bound by the Plan and the applicable Stock Incentive Agreement.
SECTION 5 GENERAL PROVISIONS
5.1 WITHHOLDING. The Company shall deduct from all cash distributions under the Plan any taxes required to be withheld by federal, state or local government. Whenever the Company proposes or is required to issue or transfer shares of Stock under the Plan, the Company shall have the right to require the recipient to remit to the Company an amount sufficient to satisfy any federal, state and local withholding tax requirements prior to the delivery of any certificate or certificates for such shares. A Participant may pay the withholding tax in cash, by tendering shares of Stock which have been owned by the holder for at least six (6) months prior to the date of exercise or, if the applicable Stock Incentive Agreement provides, a Participant may elect to have the number of shares of Stock he is to receive reduced by the smallest number of whole shares of Stock which, when multiplied by the Fair Market Value of the shares of Stock determined as of the Tax Date (defined below), is sufficient to satisfy federal, state and local, if any, withholding taxes arising from exercise or payment of a Stock Incentive (a "Withholding Election"). A Participant may make a Withholding Election only if both of the following conditions are met:
(a) The Withholding Election must be made on or prior to the date on which the amount of tax required to be withheld is determined (the "Tax Date") by executing and delivering to the Company a properly completed notice of Withholding Election as prescribed by the Committee; and
(b) Any Withholding Election made will be irrevocable; however, the Committee may, in its sole discretion, disapprove and give no effect to the Withholding Election.
5.2 CHANGES IN CAPITALIZATION; MERGER; LIQUIDATION.
(a) The number of shares of Stock reserved for the grant of Options, the maximum number of shares of Stock for which Options may be granted to any individual during any calendar year, the number of shares of Stock reserved for issuance upon the exercise of each outstanding Option, and the Exercise Price of each outstanding Option shall be proportionately adjusted for any increase or decrease in the number of issued shares of Stock resulting from a subdivision or combination of shares or the payment of an ordinary stock dividend in shares of Stock to holders of outstanding shares of Stock or any other increase or decrease in the number of shares of Stock outstanding effected without receipt of consideration by the Company.
(b) In the event of any merger, consolidation, extraordinary dividend (including a spin-off), reorganization or other change in the corporate structure of the Company or its Stock or tender offer for shares of Stock, the Committee, in its sole discretion, may make such adjustments with respect to awards and take such other action as it deems necessary or appropriate to reflect or in anticipation of such merger, consolidation, extraordinary dividend (including a spin-off), reorganization, other change in corporate structure or tender offer, including, without limitation, the assumption of other awards, the substitution of new awards, the termination or adjustment of outstanding awards (with or without the payment of any consideration), the acceleration of awards or the removal of restrictions on outstanding awards, all as may be provided in the applicable Stock Incentive Agreement or, if not expressly addressed therein, as the Committee subsequently may determine in the event of any such merger, consolidation, extraordinary dividend (including a spin-off), reorganization or other change in the corporate structure of the Company or its Stock or tender offer for shares of Stock. The Committee's general authority under this Section 5.2 is limited by and subject to all other express provisions of the Plan. Any adjustment pursuant to this Section 5.2 may provide, in the Committee's discretion, for the elimination without payment therefor of any fractional shares that might otherwise become subject to any Stock Incentive.
(c) The existence of the Plan and the Stock Incentives granted pursuant to the Plan shall not affect in any way the right or power of the Company to make or authorize any adjustment, reclassification, reorganization or other change in its capital or business structure, any merger or consolidation of the Company, any issue of debt or equity securities having preferences or priorities as to the Stock or the rights thereof, the dissolution or liquidation of the Company, any sale or transfer of all or any part of its business or assets, or any other corporate act or proceeding.
5.3 CASH AWARDS. The Committee may, at any time and in its discretion, grant to any holder of a Stock Incentive the right to receive, at such times and in such amounts as determined by the Committee in its discretion, a cash amount which is intended to reimburse such person for all or a portion of the federal, state and local income taxes imposed upon such person as a consequence of the receipt of the Stock Incentive or the exercise of rights thereunder.
5.4 COMPLIANCE WITH CODE. All Incentive Stock Options to be granted hereunder are intended to comply with Code Section 422, and all provisions of the Plan and all Incentive Stock Options granted hereunder shall be construed in such manner as to effectuate that intent.
5.5 RIGHT TO TERMINATE SERVICE. Nothing in the Plan or in any Stock Incentive Agreement shall confer upon any Participant the right to continue as an officer, employee, director or organizer of the Company or affect the right of the Company to terminate the Participant's service at any time.
5.6 RESTRICTIONS ON DELIVERY AND SALE OF SHARES; LEGENDS. Each Stock Incentive is subject to the condition that if at any time the Committee, in its discretion, shall determine that the listing, registration or qualification of the shares covered by such Stock Incentive upon any securities exchange or under any state or federal law is necessary or desirable as a condition of or in connection with the granting of such Stock Incentive or the purchase or delivery of shares thereunder, the delivery of any or all shares pursuant to such Stock Incentive may be withheld unless and until such listing, registration or qualification shall have been effected. If a registration statement is not in effect under the Securities Act of 1933 or any applicable state securities laws with respect to the shares of Stock purchasable or otherwise deliverable under Stock Incentives then outstanding, the Committee may require, as a condition of exercise of any Option or as a condition to any other delivery of Stock pursuant to a Stock Incentive, that the Participant or other recipient of a Stock Incentive represent, in writing, that the shares received pursuant to the Stock Incentive are being acquired for investment and not with a view to distribution and agree that the shares will not be disposed of except pursuant to an effective registration statement, unless the Company shall have received an opinion of counsel that such disposition is exempt from such requirement under the Securities Act of 1933 and any applicable state securities laws. The Company may include on certificates representing shares delivered pursuant to a Stock Incentive such legends referring to the foregoing representations or restrictions or any other applicable restrictions on resale as the Company, in its discretion, shall deem appropriate.
5.7 NON-ALIENATION OF BENEFITS. Other than as specifically provided with regard to the death of a Participant, no benefit under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge; and any attempt to do so shall be void. No such benefit shall, prior to receipt by the Participant, be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of the Participant.
5.8 TERMINATION AND AMENDMENT OF THE PLAN. The Board of Directors at any time may amend or terminate the Plan without stockholder approval; provided, however, that the Board of Directors may condition any amendment on the approval of stockholders of the Company if such approval is necessary or advisable with respect to tax, securities or other
applicable laws. No such termination or amendment without the consent of the holder of a Stock Incentive shall adversely affect the rights of the Participant under such Stock Incentive.
5.9 STOCKHOLDER APPROVAL. The Plan must be submitted to the stockholders of the Company for their approval within twelve (12) months before or after the adoption of the Plan by the Board of Directors. If such approval is not obtained, any Stock Incentive granted hereunder will be void.
5.10 CHOICE OF LAW. The laws of the State of Tennessee shall govern the Plan, to the extent not preempted by federal law.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed as of this ___ day of ___________________, 2000.
PINNACLE FINANCIAL PARTNERS, INC.
[SEAL]
EXHIBIT 23.3
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our report dated May 19, 2000, accompanying the financial statements of Pinnacle Financial Partners, Inc. (a Tennessee corporation, a Company in the development stage and formerly TMP, Inc.) and reference to our Firm under the caption "Experts" included in this Form SB-2 Registration Statement and Prospectus, as amended on July 11, 2000.
/s/ ARTHUR ANDERSEN LLP
Nashville, Tennessee
July 11, 2000
|
| ARTICLE 9 |
| PERIOD TYPE | 4 MOS |
| FISCAL YEAR END | DEC 31 2000 |
| PERIOD START | FEB 28 2000 |
| PERIOD END | JUN 30 2000 |
| CASH | 3,497 |
| INT BEARING DEPOSITS | 0 |
| FED FUNDS SOLD | 0 |
| TRADING ASSETS | 0 |
| INVESTMENTS HELD FOR SALE | 0 |
| INVESTMENTS CARRYING | 0 |
| INVESTMENTS MARKET | 0 |
| LOANS | 0 |
| ALLOWANCE | 0 |
| TOTAL ASSETS | 103,322 |
| DEPOSITS | 0 |
| SHORT TERM | 472,660 |
| LIABILITIES OTHER | 45,281 |
| LONG TERM | 0 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 0 |
| COMMON | 10 |
| OTHER SE | (414,619) |
| TOTAL LIABILITIES AND EQUITY | 103,322 |
| INTEREST LOAN | 0 |
| INTEREST INVEST | 0 |
| INTEREST OTHER | 0 |
| INTEREST TOTAL | 0 |
| INTEREST DEPOSIT | 0 |
| INTEREST EXPENSE | 0 |
| INTEREST INCOME NET | 0 |
| LOAN LOSSES | 0 |
| SECURITIES GAINS | 0 |
| EXPENSE OTHER | 414,629 |
| INCOME PRETAX | (414,629) |
| INCOME PRE EXTRAORDINARY | (414,629) |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | (414,629) |
| EPS BASIC | (414,629) |
| EPS DILUTED | (414,620) |
| YIELD ACTUAL | 0 |
| LOANS NON | 0 |
| LOANS PAST | 0 |
| LOANS TROUBLED | 0 |
| LOANS PROBLEM | 0 |
| ALLOWANCE OPEN | 0 |
| CHARGE OFFS | 0 |
| RECOVERIES | 0 |
| ALLOWANCE CLOSE | 0 |
| ALLOWANCE DOMESTIC | 0 |
| ALLOWANCE FOREIGN | 0 |
| ALLOWANCE UNALLOCATED | 0 |