UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 1, 2016
PINNACLE FINANCIAL PARTNERS, INC.
(Exact name of registrant as specified in charter)
Tennessee | 000-31225 | 62-1812853 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
150 Third Avenue South, Suite 900, Nashville, Tennessee |
37201 | |
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: (615) 744-3700
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01. Entry into a Material Definitive Agreement.
On July 1, 2016, in connection with the consummation of the previously announced acquisition of Avenue Financial Holdings, Inc. (Avenue) by Pinnacle Financial Partners, Inc. (the Company), the Employment Agreement (the Employment Agreement) entered into by the Company and Pinnacle Bank, the Companys wholly owned bank subsidiary, with Ronald L. Samuels, the former chairman and chief executive officer of Avenue, became effective. Mr. Samuels will initially serve, pursuant to the Employment Agreement, as the Companys Vice Chairman.
The Employment Agreement provides for a three-year term. Pursuant to the terms of the Employment Agreement, Mr. Samuels will receive an initial base salary of $424,300 per year and will be eligible to receive an annual bonus as determined by the Compensation Committee (the Compensation Committee) of the Companys Board of Directors (the Board).
The Employment Agreement also provides that Mr. Samuels will receive a payment equal to two times his then current base salary and target bonus amount if his employment is terminated by the Company without cause (as defined in the Employment Agreement) or by Mr. Samuels for cause (as defined in the Employment Agreement) within 12 months following a change in control (as defined in the Employment Agreement). In the event that any payments or benefits paid to Mr. Samuels by the Company would subject him to an excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended, any such payments or benefits shall be reduced (but not below zero) to the extent necessary to avoid an excise tax on any portion of such payments or benefits, but only if the net amount of such payments or benefits, as reduced, is greater than or equal to the net amount of such payments or benefits if such reduction were not made and the tax was paid by Mr. Samuels.
If the Company terminates Mr. Samuels without cause or Mr. Samuels terminates his employment for cause, in each case as those terms are defined in the Employment Agreement, the Company shall continue to pay Mr. Samuels his base salary for the then remaining term of the Employment Agreement.
The foregoing description does not purport to be a complete description of the Employment Agreement. The above description is qualified in its entirety by reference to the Employment Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 2.01. | Completion of Acquisition or Disposition of Assets. |
On July 1, 2016, the Company consummated its previously announced acquisition of Avenue. Pursuant to the terms of the Agreement and Plan of Merger dated as of January 28, 2016, between the Company and Avenue (the Merger Agreement), Avenue merged with and into Pinnacle, with Pinnacle continuing as the surviving corporation (the Merger). In connection with the consummation of the Merger and pursuant to the Agreement and Plan of Merger dated as of January 28, 2016, between Pinnacle Bank and Avenue Bank, Avenues wholly owned bank subsidiary, Avenue Bank merged with and into Pinnacle Bank, with Pinnacle Bank continuing as the surviving corporation, simultaneously with the consummation of the Merger.
By virtue of the consummation of the Merger, each holder of Avenue common stock issued and outstanding (including shares of restricted stock), subject to certain exceptions, is eligible to receive 0.36 shares of the Companys common stock and an amount in cash equal to $2.00 for each share of Avenue common stock owned by them at the effective time of the Merger. Cash will be paid in lieu of any fractional shares based on the average closing price of the Companys common stock for the ten (10)
trading days ending on June 30, 2016, the business day immediately preceding the closing date of the Merger. Additionally, any outstanding options to purchase shares of common stock of Avenue that were not vested were accelerated prior to, but conditioned on the occurrence of, the closing of the Merger and all options that were not exercised prior to the closing of the Merger were cancelled and the holders of any such options will receive an amount in cash equal to the product of (x) the excess, if any, of $20.00 over the exercise price of each such option and (y) the number of shares of Avenue common stock subject to each such option.
As of the consummation of the Merger, Avenue had 10,445,349 shares of common stock issued and outstanding (including shares of restricted stock) and 101,389 outstanding stock options. As a result, the Company is issuing approximately 3.76 million shares of its common stock and paying approximately $20.9 million in cash (including payments related to fractional shares) to the Avenue shareholders and approximately $1.0 million to holders of options to purchase shares of Avenue common stock that were not exercised prior to the consummation of the Merger.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
Upon consummation of the Merger, the Company assumed Avenues obligations under its outstanding $20.0 million subordinated notes issued on December 29, 2014 (the Subordinated Notes). The Subordinated Notes mature on December 29, 2024 and bear interest at a rate of 6.75% per annum until January 1, 2020. Beginning on January 1, 2020, the Subordinated Notes will bear interest at a floating rate equal to the three-month LIBOR determined on the determination date of the applicable interest period plus 495 basis points. Interest on the Subordinated Notes is payable quarterly in arrears on January 1, April 1, July 1 and October 1 of each year, through December 29, 2024 or the earlier date of redemption of all of the Subordinated Notes.
The Subordinated Notes will be redeemable by the Company, in whole or in part, on or after January 1, 2020 or, in whole but not in part, upon the occurrence of certain specified tax events, capital events or investment company events. The Subordinated Notes are not subject to redemption at the option of the holders.
The foregoing description does not purport to be a complete description of the Subordinated Notes. The above description is qualified in its entirety by reference to the form of Subordinated Note, which is filed as Exhibit 4.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(d)
In connection with the consummation of the Merger, on July 1, 2016, upon the recommendation of the Nominating and Corporate Governance Committee of the Board, the Board approved the election to the Board, effective on July 5, 2016, the first business day following the consummation of the Merger, of each of Ronald L. Samuels, Marty Dickens, Joe Galante and David Ingram, each a member of Avenues board of directors prior to the consummation of the Merger, to the Board. None of these individuals have been appointed to a committee of the Companys Board at this time.
None of Messrs. Samuels, Dickens, Galante and Ingram is a party to any arrangement or understanding with any person pursuant to which he was selected as a member of the Board, except that the elections of Messrs. Samuels and Galante to the Board were contemplated by the Merger Agreement. None of Messrs. Samuels, Dickens, Galante and Ingram is a party to any transaction, or series of transactions, with the Company required to be disclosed pursuant to Item 404(a) of Regulation S-K.
Messrs. Dickens, Galante and Ingram each received a grant of 773 shares of restricted stock in connection with their election to the Board, and will be paid a prorata portion of director retainer fees from the date of their election to the Board through February 28, 2017 as well as board and committee meeting attendance fees, in each case as described in the Companys proxy statement on Schedule 14A filed with the Securities and Exchange Commission on March 10, 2016. Thereafter, each will be compensated in accordance with the compensation program applicable to all of the Companys non-employee directors. Since Mr. Samuels is an employee of the Company, he did not receive a grant of shares of restricted stock in connection with his election to the Board, and will not receive any compensation for his service on the Board for so long as he remains an employee of the Company and Pinnacle Bank.
In connection with his employment by the Company and Pinnacle Bank, Mr. Samuels entered into an employment agreement with the Company and Pinnacle Bank, the terms of which are described above in Item 1.01 of this Current Report on Form 8-K. The disclosure in Item 1.01 of this Current Report on Form 8-K regarding Mr. Samuels employment agreement is incorporated herein by reference.
The Compensation Committee approved the grant of $250,000 in value of shares of restricted stock to Mr. Samuels upon the commencement of his employment with the Company. The number of restricted shares granted to Mr. Samuels was determined based on the closing price of the Companys common stock on July 1, 2016 as reported by The Nasdaq Stock Market. The restricted shares granted to Mr. Samuels contain forfeiture restrictions that lapse in prorata increments (beginning on the date that the Companys independent registered public accounting firm issues its report on the Companys financial statements for the fiscal year ending December 31, 2017) if certain return on average tangible assets and nonperforming asset ratio targets are met for the fiscal years ending December 31, 2017, 2018 and 2019. If the performance measures for a performance period are not met, one-third of the restricted shares granted to Mr. Samuels shall be forfeited.
In the event that Mr. Samuels employment by the Company terminates for any reason, other than death, disability or retirement, all shares of restricted stock awarded to him for which the forfeiture restrictions have not lapsed prior to the date of termination shall be immediately forfeited. In the event that Mr. Samuels employment terminates by reason of death or disability, the forfeiture restrictions on all of the restricted shares awarded to him shall automatically lapse. In the event that Mr. Samuels employment terminates by reason of retirement, with the approval of the Compensation Committee, the forfeiture restrictions with respect to that portion of shares that would have vested for the fiscal year his retirement occurs but for the fact that he was not employed for the entire fiscal year shall lapse at the end of such year on a prorata basis based on the number of days Mr. Samuels worked in such year. Any remaining unvested shares of restricted stock upon retirement will be forfeited.
Mr. Samuels has the right to vote the restricted shares and, upon vesting, to receive dividends paid by the Company on shares of its common stock during the forfeiture period.
Upon a change in control of the Company, the Compensation Committee shall determine, based on the performance by the Company in the prior years, the expected performance by the Company in any of the remaining years of the award and the number of shares of restricted stock for which the forfeiture restrictions would be expected to lapse for the years that are not yet completed at such time as the Compensation Committee makes its determination and the forfeiture restrictions with respect to such number of shares of restricted stock shall, immediately prior to the consummation of such change in control, lapse without regard to whether the performance targets with respect to such shares of restricted stock will thereafter be achieved.
The foregoing description does not purport to be a complete description of the restricted shares awarded. The above description is qualified in its entirety by reference to the form of restricted share award agreement for the restricted shares awarded, a copy of which is filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference.
In addition, in connection with his employment with the Company and Pinnacle Bank, the Company assumed the Supplemental Executive Retirement Plan Agreement dated as of October 26, 2007, between Mr. Samuels and Avenue Bank (the SERP Agreement), and the benefits and obligations thereunder. Under the SERP Agreement, upon Mr. Samuels separation from service with the Company or Pinnacle Bank, annual benefits shall be distributed to Mr. Samuels for the greater of (i) 15 years, or (ii) his lifetime, at an amount equal to 60% of the average base salary for the 60 full months immediately preceding such separation from service. These benefits were fully vested effective October 31, 2011. The foregoing description does not purport to be a complete description of the SERP Agreement. The above description is qualified in its entirety by reference to the SERP Agreement, a copy of which is filed as Exhibit 10.3 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
4.1 | Form of Certificate for Avenue Financial Holdings, Inc. Fixed/Floating Rate Subordinated Note due December 29, 2024 | |
10.1 | Employment Agreement, effective July 1, 2016, by and among Pinnacle Financial Partners, Inc., Pinnacle Bank and Ronald L. Samuels | |
10.2 | Form of Pinnacle Financial Partners, Inc. 2016 Restricted Stock Award Agreement | |
10.3 | Supplemental Executive Retirement Plan Agreement between Avenue Bank and Ronald Samuels, dated October 26, 2007 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PINNACLE FINANCIAL PARTNERS, INC. | ||
By: | /s/ Harold R. Carpenter | |
Name: | Harold R. Carpenter | |
Title: |
Executive Vice President and Chief Financial Officer |
Date: July 7, 2016
EXHIBIT INDEX
Exhibit
|
Description |
|
4.1 | Form of Certificate for Avenue Financial Holdings, Inc. Fixed/Floating Rate Subordinated Note due December 29, 2024 | |
10.1 | Employment Agreement, effective July 1, 2016, by and among Pinnacle Financial Partners, Inc., Pinnacle Bank and Ronald L. Samuels | |
10.2 | Form of Pinnacle Financial Partners, Inc. 2016 Restricted Stock Award Agreement | |
10.3 | Supplemental Executive Retirement Plan Agreement between Avenue Bank and Ronald Samuels, dated October 26, 2007 |
Exhibit 4.1
AVENUE FINANCIAL HOLDINGS, INC.
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.
THIS SECURITY IS NOT A DEPOSIT, BANK ACCOUNT OR OBLIGATION OF ANY BANK. THIS SECURITY IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER AGENCY, AND IS SUBJECT TO INVESTMENT RISK, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
AVENUE FINANCIAL HOLDINGS, INC.
FIXED/FLOATING RATE SUBORDINATED NOTE DUE 2024
Certificate No.: [ ]
U.S. $[ ] | Dated: December 29, 2014 |
FOR VALUE RECEIVED, the undersigned, AVENUE FINANCIAL HOLDINGS, INC. a Tennessee corporation (the Company ), promises to pay to the order of [ ], or registered assigns (collectively, the Holder ), the principal amount of $[ ], in the lawful currency of the United States of America, or such lesser or greater amount as shall then remain outstanding under this Note, at the times and in the manner provided herein, but no later than December 29, 2024 (the Maturity Date ), or such other date upon which this Note shall become due and payable, whether by reason of extension, acceleration or otherwise.
Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.
[Signatures follow on the next page.]
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
AVENUE FINANCIAL HOLDINGS, INC. | ||
By: | ||
Name: G. Kent Cleaver Title: President |
ATTEST:
|
Jeremy Yeagle Corporate Secretary |
[REVERSE SIDE OF NOTE]
AVENUE FINANCIAL HOLDINGS, INC.
Fixed/Floating Rate Subordinated Note due 2024
The Company promises to pay interest on the principal amount of this Subordinated Note (the Note ), commencing on December 29, 2014 until December 29, 2024 (the Maturity Date ), or such earlier date as this Note is paid in full, at the interest rate set forth below. The unpaid principal balance of this Note plus all accrued but unpaid interest thereon shall be due and payable on the Maturity Date, or such earlier date on which such amount shall become due and payable. This Note is one of the Subordinated Notes referred to in that certain Note Purchase Agreement, dated December 22, 2014, among the Company, the Holder and the other Purchasers and is entitled to the benefits thereof (the Purchase Agreement ). Capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the Purchase Agreement.
1. Computation and Payment of Interest . From and including the date on which the Subordinated Notes are issued to, but excluding, January 1, 2020 the rate at which the Subordinated Notes including this Note shall bear interest at a rate of 6.75% per annum, computed on the basis of a 360-day year consisting of twelve 30-day months, and payable quarterly in arrears; from and including January 1, 2020 to but excluding the Maturity Date, the rate at which the Subordinated Notes shall bear interest shall be a floating rate equal to Three-Month LIBOR determined on the determination date of the applicable Interest Period plus 495 basis points, computed on the basis of a 360-day year and the actual number of days elapsed, and payable quarterly in arrears. The date from which interest shall accrue on the Subordinated Notes shall be December 29, 2014 or the most recent Interest Payment Date to which interest has been paid or duly provided for; the Interest Payment Dates for the Subordinated Notes shall be January 1, April 1, July 1 and October 1 of each year, beginning on April 1, 2015 through the Maturity Date or earlier date of redemption of all of the Subordinated Notes. In the event that any scheduled Interest Payment Date for the Notes falls on a day that is not a business day, then payment of interest payable on such Interest Payment Date will be postponed to the next succeeding day which is a business day (and no interest on such payment will accrue for the period from and after such scheduled Interest Payment Date). Interest Period means each three-month period beginning on a scheduled Interest Payment Date. Interest on this Note shall be paid in arrears on each Interest Payment Date to holders of record (each a Holder ) on the Applicable Record Date. The initial Interest Payment Date shall be April 1, 2015. Applicable Record Date shall mean December 15 with respect to any Interest Payment Date on January 1, March 15 with respect to any Interest Payment Date on April 1, June 15 with respect to any Interest Payment Date on July 1, and September 15 with respect to any Interest Payment Date on October 1. For purposes of this Subordinated Note, the Three-Month LIBOR shall mean that rate for deposits in United States dollars for a three-month period as published by Reuters on Reuters Screen LIBOR03 (or such other page that may replace that page on that service or a successor service) as of 11:00 a.m., London, England, time on the day that is two LIBOR Business Days preceding the first day of such Interest Period (or if not so reported, then as determined by the Company from another recognized source or interbank quotation, and disclosed to the Holders of the Subordinated Notes). If such rate cannot be so determined for any reason, the Company will request the principal London offices of at least two banks to
provide a quotation of their rates for deposits in United States dollars for a period comparable to the applicable Interest Period and the Three-Month LIBOR for such Interest Period shall be the arithmetic mean of such quotations. A LIBOR Business Day shall mean a day on which the office of the Company is open for business and on which dealings in United States dollar deposits are carried out on the London interbank market.
2. Payment Procedures . Unless and until the Subordinated Notes shall be evidenced by a global note held by Depository Trust Company, payment of the principal and interest payable on the Maturity Date will be made by check, or by wire transfer in immediately available funds to a bank account in the United States designated by the registered Holder of this Note if such Holder shall have previously provided wire instructions to the Company, upon presentation and surrender of this Note at the principal executive office of the Company located at 111 11 th Avenue South, Suite 400, Nashville, Tennessee 37203 (the Payment Office), or at such other place or places as the Company shall designate by notice to the registered Holders as the Payment Office, provided that this Note is presented to the Company in time for the Company to make such payments in such funds in accordance with its normal procedures. Payments of interest (other than interest payable on the Maturity Date) shall be made by wire transfer in immediately available funds or check mailed to the registered Holder, as such persons address appears on the Security Register. Interest payable on any Interest Payment Date shall be payable to the Holder in whose name this Note is registered at the close of business on the Applicable Record Date, next preceding such Interest Payment Date for such Interest Payment Date, except that interest not paid on the Interest Payment Date, if any, will be paid to the Holder in whose name this Note is registered at the close of business on a Special Record Date fixed by the Company (a Special Record Date ) notice of which shall be given to the Holder not less than ten (10) calendar days prior to such Special Record Date. (The Applicable Record Date and Special Record Date are referred to herein collectively as the Record Dates ). To the extent permitted by applicable law, interest shall accrue, at the rate at which interest accrues on the principal of this Note, on any amount of principal or interest on this Note not paid when due. All payments on this Note shall be applied first to accrued interest and then the balance, if any, to principal.
3. Late Payments . If any payment of interest or principal is not paid in full when the same becomes due and payable and such default continues for a period of fifteen (15) or more business days, the Company shall pay an additional amount equal to four percent (4%) of such late payment to the Holder.
4. Non-Business Days . Whenever any payment to be made by the Company hereunder shall be stated to be due on a day which is not a business day, such payment shall be made on the next succeeding business day without change in any computation of interest with respect to such payment (or any succeeding payment).
5. Subordinated Notes . This Note is one of a duly authorized issue of Subordinated Notes of the Company designated as Fixed/Floating Rate Subordinated Notes due 2024 (the Subordinated Notes ), to be issued from time to time by the Company. This Note is entitled to the benefits and subject to the terms of the Purchase Agreement.
2
6. Subordination . The indebtedness of Company evidenced by the Subordinated Notes, including the principal and interest on this Note, shall be subordinate and junior in right of payment to the following, whether now outstanding or subsequently created, assumed or incurred (collectively, Senior Indebtedness ): (a) all indebtedness of the Company for money borrowed, whether or not evidenced by bonds, debentures, securities, notes or other written instruments; (b) any deferred obligations of the Company for the payment of the purchase price of property or assets acquired other than in the ordinary course of business; (c) all obligations, contingent or otherwise, of the Company in respect of any letters of credit, bankers acceptances, security purchase facilities and similar credit transactions; (d) any capital lease obligations of the Company; (e) all obligations of the Company in respect of interest rate swap, cap or other agreements, interest rate future or option contracts, currency swap agreements, currency future or option contacts, commodity contracts and other similar arrangements; (f) all obligations of the type referred to in clauses (a) through (e) of other persons for the payment of which Company is responsible or liable as obligor, guarantor or otherwise; (g) all indebtedness of any Subsidiary of Company including, but not limited to, all obligations and indebtedness referred to clauses (a) through (f) (but in each case referring to such Subsidiary of Company); and (h) all obligations of the types referred to in clauses (a) through (g) of other persons secured by a lien on any property or asset of the Company; provided, that Senior Indebtedness does not include (i) the Subordinated Notes, (ii) any obligation that by its terms is on parity with the Subordinated Notes, (iii) any indebtedness between Company and any of its Subsidiaries or affiliates, or (iv) the Junior Subordinated Indebtedness (as defined below).
In the event of any insolvency, dissolution, assignment for the benefit of creditors, reorganization, restructuring of debt, marshaling of assets and liabilities or similar proceedings or any liquidation or winding up of or relating to the Company, whether voluntary or involuntary, holders of Senior Indebtedness shall be entitled to be paid in full before any payment shall be made on account of the principal of or interest on the Subordinated Notes, including this Note. In the event of any such proceeding, after payment in full of all sums owing with respect to the Senior Indebtedness, the registered holders of the Subordinated Notes from time to time, together with the holders of any obligations of the Company ranking on a parity with the Subordinated Notes, shall be entitled to be paid from the remaining assets of the Company the unpaid principal thereof, and the unpaid interest thereon before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any capital stock or any present or future obligations of the Company ranking junior to the Subordinated Notes (collectively, Junior Subordinated Indebtedness ), which includes any obligation that by its terms is subordinated to the Subordinated Notes.
If there shall have occurred and be continuing (a) a default in any payment with respect to any Senior Indebtedness or (b) an event of default with respect to any Senior Indebtedness as a result of which the maturity thereof is accelerated, unless and until such payment default or event of default shall have been cured or waived or shall have ceased to exist, no payments shall be made by the Company with respect to the Subordinated Notes. The provisions of this paragraph shall not apply to any payment with respect to which the immediately preceding paragraph of this Section 6 would be applicable.
3
Nothing herein shall impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note in accordance with its terms. Nothing herein shall act to prohibit, limit or impede the Company from issuing additional debt of the Company having the same rank as the Subordinated Notes or which may be junior or senior in rank to the Subordinated Notes.
7. Transfer . Except as otherwise provided herein, this Note is transferable in whole or in part, and may be exchanged for a like aggregate principal amount of Subordinated Notes of other authorized denominations, by the Holder in person, or by his attorney duly authorized in writing, at the Payment Office. The Company shall maintain a register providing for the registration of the Subordinated Notes and any exchange or transfer thereof (the Security Register ). Upon surrender or presentation of this Note for exchange or registration of transfer, the Company shall execute and deliver in exchange therefor a Subordinated Note or Subordinated Notes of like aggregate principal amount, each in a minimum denomination of $50,000 or any amount in excess thereof which is an integral multiple of $1,000 (and, in the absence of an opinion of counsel satisfactory to the Company to the contrary, bearing the restrictive legend(s) set forth hereinabove) and that is or are registered in such name or names requested by the Holder. Any Note presented or surrendered for registration of transfer or for exchange shall be duly endorsed and accompanied by a written instrument of transfer in such form as is attached hereto and incorporated herein, duly executed by the Holder or his attorney duly authorized in writing, with such tax identification number or other information for each person in whose name a Subordinated Note is to be issued, and accompanied by evidence of compliance with any restrictive legend(s) appearing on such Subordinated Note or Subordinated Notes as the Company may reasonably request to comply with applicable law. No exchange or registration of transfer of this Note shall be made on or after the fifteenth day immediately preceding the Maturity Date. This Note is subject to the restrictions on transfer of the Purchase Agreement between the Company and the original Holders, a copy of which is on file with the Company.
NOTWITHSTANDING ANY PROVISIONS CONTAINED HEREIN TO THE CONTRARY, THIS NOTE WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN MINIMUM DENOMINATIONS OF $50,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS NOTE IN A DENOMINATION OF LESS THAN $50,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF THIS NOTE FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PAYMENTS ON THIS NOTE, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS NOTE.
8. Optional Redemption . The Company, in its discretion, shall have the right to redeem or prepay any or all of the Subordinated Notes, including this Note, without premium or penalty prior to the Maturity Date: (a) in whole or in part, at any time on or after January 1, 2020 and prior to the Maturity Date, but in all cases in a principal amount with integral multiples of $1,000, on any Interest Payment Date; or (b) in whole, at any time, or in part from time to time, upon the occurrence of a Tier 2 Capital Event or a Tax Event, or if the Company is required to register as an investment company pursuant to the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.) Any such redemption will be at a price equal to 100% of the principal amount of the Note to be redeemed or prepaid on such date, plus interest accrued and unpaid to, but excluding, the date of redemption or prepayment. Any such redemption or prepayment shall be subject to receipt of any and all required regulatory approvals.
4
In the case of any redemption or prepayment of this Note, the Company will give the Holders of the Subordinated Notes to be redeemed or prepaid notice not less than 30 nor more than 45 calendar days prior to the redemption or prepayment date as to the aggregate principal amount to be redeemed or prepaid. In a case where the Company is making a redemption or prepayment with respect to the Subordinated Notes in an amount less than the aggregate principal amount of all of the Subordinated Notes then outstanding, the Company shall make such redemption or prepayment on a pro rata basis among all outstanding Subordinated Notes based on the relative outstanding principal amounts of each such Subordinated Note; provided, however that the Company may elect to redeem in full any Subordinated Note with an outstanding principal amount less than $1,000.
Tax Event shall mean the receipt by the Company of an opinion of independent tax counsel experienced in such matters to the effect that, as a result of any amendment to, or change (including any announced prospective change) in, the laws or any regulations thereunder of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or which pronouncement or decision is announced on or after the date of original issuance of the Notes, there is more than an insubstantial risk that the interest payable by the Company on the Subordinated Notes is not, or within 90 days of the date of such opinion will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes.
Tier 2 Capital Event shall mean the receipt by the Company of an opinion of independent bank regulatory counsel experienced in such matters to the effect that, as a result of (a) any amendment to, or change (including any announced prospective change) in, the laws or any regulations thereunder of the United States or any rules, guidelines or policies of an applicable regulatory authority for the Company or (b) any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or which pronouncement or decision is announced on or after the date of original issuance of the Subordinated Notes, the Subordinated Notes do not constitute, or within 90 days of the date of such opinion will not constitute, Tier 2 Capital (or its then equivalent if the Company were subject to such capital requirement) for purposes of capital adequacy guidelines of the Board of Governors of the Federal Reserve System (or any successor regulatory authority with jurisdiction over bank holding companies), as then in effect and applicable to the Company. Tier 2 Capital has the meaning in Appendix A to 12 C.F.R. Part 222 ( Capital Adequacy Guidelines for Bank Holding Companies: Risk-Based Measure ), as amended, modified and supplemented and in effect from time to time or any replacement thereof.
The Company shall have the right to purchase any of the Subordinated Notes at any time in the open market, private transactions or otherwise. If the Company purchases any Subordinated Notes, it may, in its discretion, hold, resell or cancel any of the purchased Subordinated Notes.
5
9. Merger and Sale of Assets . The Company shall not merge into another entity or convey, transfer or lease its properties and assets substantially as an entirety to any person, unless:
(a) the continuing entity into which the Company is merged or the person which acquires by conveyance or transfer or which leases the properties and assets of the Company substantially as an entirety shall be a corporation, association or other legal entity organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and expressly assumes the due and punctual payment of the principal of and any premium and interest on the Subordinated Notes according to their terms, and the due and punctual performance of all covenants and conditions hereof on the part of the Company to be performed or observed; and
(b) immediately after giving effect to such transaction, no Event of Default (as defined below), and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing.
10. Affirmative Covenants of the Company . During the time that any portion of the principal balance of this Note is unpaid and outstanding, the Company shall take or cause to be taken the actions set forth below.
(a) Notice of Certain Events . The Company shall provide written notice to the Holder of the occurrence of the following events as soon as practicable but in no event later than fifteen (15) business days following the Companys becoming aware of the occurrence of such event:
(i) the ratio of Tier I capital to average assets (the Leverage Ratio ) of the Company or the Leverage Ratio of any of the Companys banking subsidiaries becomes less than six percent (6.0%);
(ii) the Company or any of its banking subsidiaries become less than well capitalized under the then-current regulations of the appropriate federal banking agency;
(iii) the Company, any of the Companys banking subsidiaries, or any officer of the Company or the Companys banking subsidiaries becomes subject to a formal, written regulatory enforcement action from the appropriate federal banking agency; or
(iv) the ratio of (A) non-accrual loans and any other loans that are 90 days or more past due plus other real estate owned (excluding any such loans that are guaranteed or covered by any governmental agency or government-sponsored entity) to (B) total assets of any banking subsidiary of the Company becomes greater than two and one-half percent (2.5%).
(b) Compliance with Laws . The Company and each of its subsidiaries shall comply with the requirements of all laws, regulations, orders, and decrees applicable to it or its properties, except for such noncompliance which would not reasonably be expected to result in a material adverse effect (i) in the condition (financial or otherwise), or in the earnings of the Company and its subsidiaries considered as one enterprise, without or not arising in the ordinary course of business or (ii) on the ability of the Company to perform its obligations under this Note.
6
(c) Taxes and Assessments . The Company and each of its subsidiaries shall punctually pay and discharge all taxes, assessments, and other governmental charges or levies imposed upon it or upon its income or upon any of its properties; provided, that no such taxes, assessments or other governmental charges need be paid if they are being contested in good faith by the Company.
(d) Compliance Certificate . Not later than forty-five (45) days following the end of each fiscal quarter (or, in the case of any fiscal quarter ending on December 31, not later than ninety (90) days from the end of such quarter), the Company shall provide the Holder with a certificate (the Compliance Certificate ), executed by the principal executive officer and principal financial officer of the Company in their capacities as such, stating whether (i) the Company has complied with all notice provisions and covenants contained in this Note; (ii) whether an Event of Default has occurred or not; (iii) whether an event of default has occurred or not under any other indebtedness of the Company; and (iv) whether an event or events have occurred or not that in the reasonable judgment of the management of the Company would have a material adverse effect on the ability of the Company to perform its obligations under this Note.
11. Events of Default . An Event of Default shall occur under this Note only if:
(a) there shall be entered a decree or order by a court having jurisdiction in the premises constituting an order for relief in respect of the Company under Title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable federal or state bankruptcy law or other similar law, or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator, or similar official of the Company or of any substantial part of its properties, or ordering the winding-up or liquidation of the affairs of the Company and any such decree or order shall continue in effect for a period of forty-five (45) consecutive days; or
(b) the Company shall file a petition, answer, or consent seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable federal or state bankruptcy law or other similar law, or the Company shall consent to the institution of proceedings thereunder or to the filing of any such petition or to the appointment of or taking of possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator, or other similar official of the Company or of any substantial part of properties, or the Company shall fail generally to pay its debts as such debts become due, or the Company shall take any corporate action in furtherance of any such action.
12. General Remedies of Holders . Upon the occurrence of an Event of Default, the Holders of this Note may at any time thereafter, at the Holders option, by written notice delivered to the Company, declare the principal of this Note to be immediately due and payable, whereupon all such amounts shall immediately become absolute and due and payable, without presentment, demand, protest, or notice of any kind, all of which are hereby expressly waived, anything in this Note to the contrary notwithstanding. The Company, within 30 calendar days after the receipt of written notice from any Holder of the occurrence of an Event of Default with respect to this Note, shall mail to all Holders of Subordinated Notes, at their addresses shown on the security register, such written notice of Event of Default, unless such Event of Default shall have been cured or waived before the giving of such notice as certified by the Company in writing.
7
13. Failure to Make Payment . In the event of failure by the Company to make any required payment of principal or interest when due on this Note (and, in the case of payment of interest, such failure to pay shall have continued for 30 calendar days), the Company will, upon demand of the Holder, pay to the Holder the whole amount then due and payable on this Note for principal and interest (without acceleration), with interest on the overdue principal and interest at the rate borne by this Note, to the extent permitted by applicable law. If the Company fails to pay such amount upon such demand, the Holder may, among other things, institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company and collect the amounts adjudged or decreed to be payable in the manner provided by law out of the property of the Company.
Upon the occurrence of a failure by the Company to make any required payment of principal or interest on the Note, the Company shall not (a) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Companys capital stock, (b) make any payment of principal or interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank equal with or junior to the Subordinated Notes, or (c) make any payments under any guarantee that ranks equal with or junior to the Subordinated Notes, other than: (i) any dividends or distributions in shares of, or options, warrants or rights to subscribe for or purchase shares of, any class of Companys common stock; (ii) any declaration of a dividend in connection with the implementation of a shareholders rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto; (iii) as a result of a reclassification of Companys capital stock or the exchange or conversion of one class or series of Companys capital stock for another class or series of Companys capital stock; (iv) the purchase of fractional interests in shares of Companys capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged; or (v) purchases of any class of Companys common stock related to the issuance of common stock or rights under any of benefit plans for Companys directors, officers or employees or any of Companys dividend reinvestment plans.
14. Successors to the Company .
(a) Conditions Applicable to Successors . The Company shall not merge with or into, nor sell all or substantially all of its assets to, any Person unless:
(i) such person executes, and delivers to the Holder, a copy of an instrument pursuant to which such person assumes the due and punctual payment of the principal of and interest on this Note and the performance and observance of all the obligations of the Company under this Note, and
(ii) immediately after giving effect to the transaction, no Event of Default and no event which after notice or lapse of time or both would become an Event of Default shall have occurred.
8
(b) Successor As Company . Upon compliance with this Section 14, the Successor shall succeed to and be substituted for the Company under this Note with the same effect as if the Successor had been named as the Company herein, and the Company shall be released from the obligation to pay the principal of and interest accrued on the Note.
15. Amendments and Waivers .
(a) Amendment of Notes . Except as otherwise provided in Section 14 hereof, and subject to any necessary regulatory approval, the Subordinated Notes may, with the consent of the Company and the Holders of at least 51% of the aggregate outstanding principal amount of the Subordinated Notes then outstanding, be amended or any provision, past default, or non-compliance thereof waived; provided , however , that, without the consent of each Holder of an affected Note, no such amendment or waiver may:
(i) reduce the principal amount of the Note;
(ii) reduce the rate of or change the time for payment of interest on any Note;
(iii) reduce the amount of principal or extend the maturity of any Note;
(iv) make any change in this Section 15 or in Sections 8 through 13 hereof;
(v) make any change in Section 6 hereof that adversely affects the rights of any Holder of a Note; or
(vi) disproportionately affect any of the Holders of the then outstanding Notes.
(b) Effectiveness of Amendments . An amendment or waiver becomes effective in accordance with its terms and thereafter binds every Holder of the Subordinated Notes, unless otherwise provided by Section 15(a) above. After an amendment or waiver becomes effective, the Company shall mail to each Holder a copy of such amendment or waiver. The Company may require each Holder to surrender this Note so that an appropriate notation concerning the amendment or waiver may be placed thereon or a new Note, reflecting the amendment or waiver, exchanged therefor. Even if such a notation is not made or such a new Note is not issued, such amendment or waiver and any consent given thereto by a Holder of this Note shall be binding according to its terms on any subsequent Holder of this Note.
(c) Amendments Without Consent of Holders . Notwithstanding Section 15(a) hereof, the Company may amend or supplement this Note without the consent of the Holders of the Subordinated Notes to cure any ambiguity, defect or inconsistency or to provide for uncertificated Notes in addition to or in place of certificated Notes, or to make any change that does not adversely affect the rights of any Holder of one of the Subordinated Notes.
9
16. Order of Payments . Any payments made hereunder shall be applied first against costs and expenses of each Holder hereunder; then against interest due hereunder; and then against principal due hereunder.
17. Notices . All notices and other communications hereunder shall be in writing and, for purposes of this Note, shall be delivered in accordance with, and effective as provided in, the Purchase Agreement.
18. Conflicts; Governing Law; Venue . In the case of any conflict between the provisions of this Note and the Purchase Agreement, the provisions of this Note shall control. This Note shall be construed in accordance with, and be governed by the laws of, the State of Tennessee without giving effect to any conflicts of law provisions of such laws. The jurisdiction and venue with respect to any disputes related to this Note shall be as set forth in the Purchase Agreement.
19. Successors and Assigns . This Note shall be binding upon the Company and inure to the benefit of the Holder and its respective successors and permitted assigns. The Holder may assign all, or any part of, or any interest in, the Holders rights and benefits hereunder only to the extent and in the manner permitted in the Purchase Agreement. To the extent of any such assignment, such assignee shall have the same rights and benefits against the Company and shall agree to be bound by and to comply with the terms and conditions of the Purchase Agreement as it would have had if it were the Holder hereunder.
20. Waivers . Neither any failure nor any delay on the part of the Holder in exercising any right, power or privilege under this Note shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any other right, power or privilege.
21. Priority . The Subordinated Notes rank pani passu among themselves and pani passu , in the event of any insolvency proceeding, dissolution, assignment for the benefit of creditors, reorganization, restructuring of debt, marshaling of assets and liabilities or similar proceeding or any liquidation or winding up of the Company, with all other present or future unsecured subordinated debt obligations of the Company, except any unsecured subordinated debt that may be expressly stated to be senior to or subordinate to the Subordinated Notes.
10
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to:
(Print or type assignees name, address and zip code)
(Insert assignees social security or tax I.D. No.)
and irrevocably appoint agent to transfer this Note on the books of the Company. The agent may substitute another to act for him.
Date: | Your Signature: |
Signature Guarantee: |
(Signature must be guaranteed)
Sign exactly as your name appears on the other side of this Note.
The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (the Exchange Act ).
The undersigned hereby certifies that it is / is not an Affiliate of the Company and that, to its knowledge, the proposed transferee is / is not an Affiliate of the Company.
In connection with any transfer or exchange of this Note occurring prior to the date that is one year after the later of the date of original issuance of this Note and the last date, if any, on which this Note was owned by the Company or any Affiliate of the Company, the undersigned confirms that this Note is being:
CHECK ONE BOX BELOW:
(1) | acquired for the undersigneds own account, without transfer; or | |||
(2) | transferred to the Company; or | |||
(3) | transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended (the Securities Act ); or | |||
(4) | transferred pursuant to an effective registration statement under the Securities Act; or | |||
(5) | transferred pursuant to and in compliance with Regulation S under the Securities Act; or | |||
(6) | transferred to an institutional accredited investor (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) or an accredited investor (as defined in Rule 501(a)(4) under the Securities Act), that has furnished to Company a signed letter containing certain satisfactory representations and agreements establishing such status; or | |||
(7) | transferred pursuant to another available exemption from the registration requirements of the Securities Act. |
Unless one of the boxes is checked, the Company will refuse to register this Note in the name of any person other than the registered Holder thereof; provided, however , that if box (5), (6) or (7) is checked, the Company may require, prior to registering any such transfer of this Note, in its sole discretion, such legal opinions, certifications and other information as the
11
Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act such as the exemption provided by Rule 144 under such Act.
|
Signature |
Signature Guarantee:
(Signature must be guaranteed) |
Signature |
The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to Exchange Act Rule 17Ad-15.
TO BE COMPLETED BY PURCHASER IF BOX (1) OR (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a qualified institutional buyer within the meaning of Rule 144A under the Securities Act and it is aware that the sale to it is being made in reliance on Rule 144A, and it acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigneds foregoing representations in order to claim the exemption from registration provided by Rule 144A.
|
Signature |
|
Date |
12
Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (Agreement) is entered into as of this 28th day of January, 2016, and effective as the Effective Date, as defined in Paragraph 1.9 below, by and among PINNACLE BANK (the Bank), a Tennessee state bank; PINNACLE FINANCIAL PARTNERS, INC., 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 Ronald L. Samuels, a resident of the State of Tennessee (the Executive).
RECITALS:
The Bank desires to employ the Executive as its Vice Chairman 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 the Company, 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, and that 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 that 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 of such board 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, charge 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;
1
(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 Executives job title(s) or position(s) of responsibility or the scope of his authority or responsibilities under this Agreement without the Executives written consent;
(b) an adverse 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 Executives written consent;
(c) an adverse change in supervisory authority which change in supervisory authority is effected without the Executives written consent;
(d) any change in the Executives office location such that the Executive is required to report regularly to a location that is beyond a 25-mile radius from the Executives office location determined immediately after the Effective Date, which change in office location is effected without the Executives 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 such reduction;
provided, that within 30 days following the initial occurrence of any of the conditions listed in 1.4.2(a) to (e) above, the Executive shall have provided notice to the Employer of the existence of such condition, and the Employer shall not have remedied the condition to the reasonable satisfaction of Executive within 30 days of receiving such notice.
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 Company or the Bank, 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;
2
(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 Companys 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 Executives 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 definition of Disability required by Section 409A of the Code.
1.9 EFFECTIVE DATE shall mean the date the merger between the Company and Avenue Financial Holdings, Inc. is consummated.
1.10 TERM shall mean that period of time commencing on the Effective Date and running until the third (3rd) anniversary of the Effective Date.
1.11 TRADE SECRETS means information of the Bank or the Company 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 the Vice Chairman of the Bank and, subject to the direction of the Board of Directors of the Bank 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 in connection with the conduct of its business.
3
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 Companys and the Banks Chief Executive Officer approves of such activities prior to the Executives 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.
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:
4
(a) 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;
(b) Without Cause at any time, provided that the Bank or the Company shall give the Executive thirty (30) days prior written notice of its intent to terminate Executives employment, in which event the Employer shall be required to continue to pay Executives then current base salary for the remainder of the Term as a severance benefit in accordance with Employers normal payroll practices; or
(c) 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 Executives Employment, in which event, the Employer shall be required to continue to pay Executives then current base salary for a period of six (6) months or until the Executive begins receiving payments under the Employers 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 pay Executives then current base salary for the remainder of the Term as a severance benefit in accordance with the Employers normal payroll practices; 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 Executives death.
3.3 CHANGE OF CONTROL. If, within twelve (12) months following a Change of Control, the Employer terminates the Executives employment with the Employer under this Agreement without Cause or the Executive terminates his employment with the Employer under this Agreement for Cause, 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 two (2) times the Executives then current Base Salary and target bonus amount for the year in which the Executives employment terminates, to be paid in full on the last day of the month following the date of termination.
If it shall be determined that any payment or benefit (within the meaning of Code Section 280G(b)(2)) to the Executive or for the Executives benefit paid or payable or distributed or distributable (including, but not limited to, the acceleration of the time for the vesting or payment of such benefit or payment) pursuant to the terms of this Agreement or otherwise in connection with, or arising out of, the Executives employment with the Employer or a Change of Control within the meaning of Code Section 280G (a Payment or Payments), would be subject to the excise tax imposed by Code § 4999 (the Excise Tax), (i) then the Payments shall be reduced (but not below zero) to the extent necessary that no portion thereof shall be subject to the excise tax imposed by Code § 4999 (the Section 4999 Limit), but only if (ii) the net amount of such Payment, as so reduced, is greater than or equal to the net amount of such Payment if such reduction were not made and had the Executive paid such Excise Tax.
5
Unless the Executive shall have given prior written notice specifying a different order to the Bank and the Company to effectuate the limitations described in the immediately preceding paragraph, the Employer shall reduce or eliminate the Payments by first reducing or eliminating those Payments or benefit which are not payable in cash and then by reducing or eliminating cash Payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time. Any notice given by the Executive pursuant to the preceding sentence shall take precedent over the provisions of any other plan, arrangement or agreement governing the Executives rights and entitlements to any benefits or compensation.
3.4 EFFECT OF TERMINATION. Upon termination of the Executives employment hereunder, the Employer shall have no further obligations to the Executive or the Executives 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(b) or (c); Section 3.2.2(a); and/or Section 3.3; 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 SECTION 409A MATTERS. It is intended that (i) each payment or installment of payments provided under this Agreement is a separate payment for purposes of Code Section 409A and (ii) that the payments satisfy, to the greatest extent possible, the exemptions from the application of Code Section 409A, including those provided under Treasury Regulations 1.409A-1(b)(4) (regarding short-term deferrals), 1.409A-1(b)(9)(iii) (regarding the two-times, two year exception), and 1.409A-1(b)(9)(v) (regarding reimbursements and other separation pay). Notwithstanding anything to the contrary in this Agreement, if the Employer determines (i) that on the date of Executives separation from service or at such other time that the Employer determines to be relevant, the Executive is a specified employee (as such term is defined under Treasury Regulation 1.409A-1(i)(1)) of the Employer and (ii) that any payments to be provided to the Executive pursuant to this Agreement are or may become subject to the additional tax under Code Section 409A(a)(1)(B) or any other taxes or penalties imposed under Code Section 409A (Section 409A Taxes) if provided at the time otherwise required under this Agreement, then such payments shall be delayed until the date that is six (6) months after the date of the Executives separation from service with the Employer, or such shorter period that, as determined by the Employer, is sufficient to avoid the imposition of Section 409A Taxes. Any payments delayed pursuant to this Section 3.5 shall be made in a lump sum on the first day of the seventh month following the Executives separation from service, or such earlier date that, as determined by the Employer, is sufficient to avoid the imposition of any Section 409A Taxes
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 Term, the Executive shall be compensated at a base rate of $424,300 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 Executives Base Salary shall be reviewed by the Human Resources and Compensation Committee of the board of directors of the Bank and the Company at least annually,
6
and the Executive shall be entitled to receive annually an increase in such amount, if any, as may be determined by the Human Resources and Compensation Committee of the board of directors of the Bank and the Company based on its evaluation of Executives performance. Base Salary shall be payable in accordance with the Employers normal payroll practices.
4.2 INCENTIVE COMPENSATION. The Executive shall be entitled to annual bonus compensation, if any, as determined by the Human Resources and Compensation Committee of 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 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 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.
4.4 PERSONAL DAYS. On a non-cumulative basis, the Executive shall be entitled to thirty (30) personal days in each successive twelve-month period during the Term, during which his compensation shall be paid in full.
4.5 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 Banks 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.
4.6 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;
7
(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 Employer 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 covenants contained in Section 5 of this Agreement are of the essence of this Agreement; that the covenants are reasonable and necessary to protect the business, interests and properties of the Employer.
6. NONCOMPETITION AND NONSOLICITATION. The Executive acknowledges that the services to be rendered by the Executive to the Employer are of a special and unique character. The Executive agrees that, in consideration of the benefits provided for herein and his continued employment, the Executive will not, for three (3) years following the date of termination of Executives employment whether by Executive or the Employer or at any time during which the Employer is making payments to Executive under the terms of this Agreement, either on the Executives own account or for any other person or entity, directly or indirectly, within the Nashville-Davidson-Murfreesboro-Columbia, TN Combined Statistical Area, (i) engage, whether as principal, agent, investor, representative, shareholder, officer, employee, consultant or otherwise, with or without remuneration in any form, in any activity or business venture that is competitive with the Business of the Employer, (ii) solicit or endeavor to solicit away from the Employer any person who was, during any portion of the Executives employment with the Employer, a director, officer, employee, agent or consultant of the Employer, whether or not such person would commit a breach of such persons contract of employment by reason of leaving the service of the Employer, or (iii) service, solicit or endeavor to solicit away any of the clients or customers of the Employer.
The Employers obligation to make payments or provide for any benefits under this Agreement will cease upon a violation by Executive of the preceding provisions of this Section 6. The Executive acknowledges that the Employer may be severely and irreparably damaged in the event the Executive violates the provisions of this Section 6, and that the extent of the damage may be difficult or impossible to determine. Therefore, the Executive agrees that, in addition to the remedies provided above, the Employer will be entitled to equitable relief, including a preliminary as well as a permanent injunction (without the necessity of posting a bond). The Executives agreement as set forth in this Section 6 will (i) continue throughout the duration of the Executives employment with the Employer; and (ii) survive the termination of this Agreement and/or the termination of the Executives employment with the Employer, whether or not such termination is voluntary or is the result of termination of the Executive by the Employer with or without Cause.
8
Executive acknowledges that he is also a party to that certain Amended and Restated Employment Agreement dated as of August 20, 2014 by and between Executive and Avenue Financial Holdings, Inc. (the Employment Agreement) pursuant to which he has agreed to restrictions on his ability to compete with Avenue Financial Holdings, Inc. or solicit, among others, Avenue Financial Holdings, Inc.s customers and employees. Executive further acknowledges that the restrictions contained in the Employment Agreement shall survive the termination of the Employment Agreement, are in addition to those contained herein, may be more restrictive than those contained herein and that the Employer, as successor to Avenue Financial Holdings, Inc. shall be entitled to the protections afforded under both this Agreement and the Employment Agreement.
If any restriction in this Section 6 is adjudicated to exceed the time, geographic, service or other limitations permitted by applicable law in the applicable jurisdiction, then the Executive agrees that such may be modified and narrowed, either by a court or the Employer, to the maximum time, geographic, service or other limitations permitted by applicable law, so as to preserve and protect the Employers legitimate business interest, without negating or impairing any other restrictions or undertaking set forth in this Agreement.
7. 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.
8. 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.
9. SERP ASSUMPTION. Employer acknowledges that Executive is also a party to that certain Supplemental Executive Retirement Plan Agreement dated as of October 26, 2007 by and between Executive and Avenue Bank, and the Bank hereby agrees, in connection with the merger between Avenue Bank and the Bank, to assume such agreement and the benefits and obligations thereunder effective as of the Effective Date.
10. 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:
Hugh M. Queener
Chief Administrative Officer
150 Third Avenue South, Suite 900
Nashville, Tennessee 37201
9
(ii) If to the Executive, to him at the most recent mailing address of the Executive that the Employer has on record.
Either party may notify the other in writing in the event of a change in the address for such notice.
11. 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.
12. 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.
13. 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 district 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.
14. 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.
15. APPLICABLE LAW. This Agreement shall be construed and enforced under and in accordance with the laws of the State of Tennessee.
16. 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.
17. 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. Except as set forth in Section 6 hereof with respect to the survival of the non-competition and non-solicitation provisions of the Employment Agreement, which shall continue to be in full force and effect from and after the date hereof, all prior understandings and agreements relating to the subject matter of this Agreement, including the Employment Agreement, are hereby expressly terminated and superseded as of the Effective Date.
10
18. 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.
19. BINDING AGREEMENT. This Agreement shall inure to the benefit of and be binding upon the Executive, his heirs and personal representatives, and the Bank and the Company and their respective successors and permitted assigns.
20. SURVIVAL. The obligations of the Executive pursuant to Section 5 and Section 6 shall survive the termination of the employment of the Executive hereunder for the period designated under each of those respective sections.
21. JOINT AND SEVERAL. The obligations of the Bank and the Company to the Executive hereunder shall be joint and several.
[Remainder of Page Intentionally Left Blank]
11
IN WITNESS WHEREOF, the Employer and the Executive have executed and delivered this Agreement as of the date first shown above.
THE EMPLOYER: | ||
PINNACLE BANK | ||
By: | /s/ Hugh Queener |
Print Name: | Hugh Queener | |
Title: | ||
PINNACLE FINANCIAL PARTNERS, INC. |
By: | /s/ Hugh Queener |
Print Name: | Hugh Queener |
Title: | Chief Administrative Officer | |
THE EXECUTIVE: | ||
/s/ Ronald L. Samuels | ||
Ronald L. Samuels |
12
Exhibit 10.2
PINNACLE FINANCIAL PARTNERS, INC.
2016 RESTRICTED STOCK AWARD AGREEMENT
Avenue Leadership
THIS RESTRICTED STOCK AWARD AGREEMENT (the Agreement) is by and between Pinnacle Financial Partners, Inc., a Tennessee corporation (the Company), and (the Grantee). Capitalized terms used but not defined in this Agreement shall have the meaning ascribed to such terms in the Pinnacle Financial Partners, Inc. 2014 Equity Incentive Plan, as amended (the Plan).
Section 1. Restricted Stock Award . The Grantee is hereby granted the right to receive shares (the Restricted Stock) of the Companys common stock, $1.00 par value per share (the Common Stock), subject to the terms and conditions of this Agreement and the Plan.
Section 2. Lapse of Restrictions . (a) Subject to Sections 5 and 8 hereof, the restrictions associated with the shares of Restricted Stock granted pursuant to Section 1 hereof shall lapse at such times (each, a Vesting Date) and in the amounts set forth below based on the Company achieving levels of Return on Average Tangible Assets (ROATA) as described in more detail in Exhibit A for each of the fiscal years ending December 31, 2017, December 31, 2018 and December 31, 2019 (each such period a Performance Period) established by the Human Resources and Compensation Committee (the Compensation Committee) of the Board of Directors of the Company not later than the last day of the first 25% of the applicable Performance Period:
(i) the restrictions with respect to up to shares of Restricted Stock granted hereunder shall lapse on the date that the Companys independent auditors issue their report on the Companys financial statements for the fiscal year ending December 31, 2017, with the actual number of shares for which the forfeiture restrictions shall lapse being based on the Companys actual ROATA (calculated in accordance with Exhibit A ) for that Performance Period in relation to the levels of ROATA established by the Compensation Committee for that Performance Period and provided further that the Companys Nonperforming Asset Ratio (as described in Exhibit A ) is less than or equal to [ ]% as of December 31, 2017 (collectively, the ROATA and the Nonperforming Asset Ratio comprise the 2017 Performance Measurements);
(ii) the restrictions with respect to up to shares of Restricted Stock granted hereunder shall lapse on the date that the Companys independent auditors issue their report on the Companys financial statements for the fiscal year ending December 31, 2018, with the actual number of shares for which the forfeiture restrictions shall lapse being based on the Companys actual ROATA (calculated in accordance with Exhibit A ) for that Performance Period in relation to the levels of ROATA established by the Compensation Committee for that Performance Period and provided further that the Companys Nonperforming Asset Ratio (as described in Exhibit A ) is less than or equal to [ ]% as of December 31, 2018 (collectively, the ROATA and the Nonperforming Asset Ratio comprise the 2018 Performance Measurements); and
(iii) the restrictions with respect to up to shares of Restricted Stock granted hereunder shall lapse on the date that the Companys independent auditors issue their report on the Companys financial statements for the fiscal year ending December 31, 2019, with the actual number of shares for which the forfeiture restrictions shall lapse being based on the Companys actual ROATA (calculated in accordance with Exhibit A ) for that Performance Period in relation to the levels of ROATA established by the Compensation Committee for that Performance Period and provided further that the Companys Nonperforming Asset Ratio (as described in Exhibit A ) is less than or equal to [ ]% as of December 31, 2019 (collectively, the ROATA and the Nonperforming Asset Ratio comprise the 2017 Performance Measurements and together with the 2016 Performance Measurements and the 2017 Performance Measurements, the Performance Measurements).
(c) Any shares of Restricted Stock for which the Performance Measurements identified above are not met shall be immediately forfeited and the Grantee shall have no further rights with respect to such shares of Restricted Stock.
(e) In the event that the Compensation Committee determines that an event has occurred during any fiscal year which has impacted the Companys Performance Measurements for such fiscal year, the Compensation Committee shall have the right, in its sole and absolute discretion, to increase or decrease the Performance Measurements to reflect such event for purposes of calculating the vesting of shares of Restricted Stock under this Section 2 for such fiscal year and for any or all future fiscal years; provided, however, that the Compensation Committee shall not make such changes as would cause the award hereunder to be in violation of Section 162(m) of the Internal Revenue Code of 1986, as amended.
Section 3. Distribution of Restricted Stock . Certificates representing the shares of Restricted Stock that have vested under Section 2 will be distributed to the Grantee as soon as practicable after each Vesting Date.
Section 4 Voting Rights and Dividends . Prior to the distribution of unrestricted shares pursuant to Section 3 , certificates representing shares of the Restricted Stock issued pursuant to this Agreement will be held by the Company or such other person as the Company may designate (the Custodian) in the name of the Grantee. The Custodian will take such action as is necessary and appropriate to enable the Grantee to vote the Restricted Stock. All dividends (whether paid in cash, shares of Common Stock or other property) paid by the Company prior to the Vesting Date with respect to any shares of Restricted Stock granted hereunder shall be paid to the Custodian to be held in escrow for the benefit of the Grantee, and shall not be remitted to the Grantee until such time as the forfeiture restrictions with respect to the shares of the Restricted Stock on which such dividends were paid lapse in accordance with Sections 2(a)(i) , (a)(ii) or (a)(iii) , as applicable, of this Agreement. Stock dividends issued with respect to the shares of the Restricted Stock prior to the Vesting Date for such shares of Restricted Stock shall be treated as additional shares of the Restricted Stock that are subject to the same restrictions and other terms and conditions that apply to the shares of Restricted Stock on which such dividends were paid. Notwithstanding the foregoing, no dividend rights shall inure to the Grantee with respect to shares of Restricted Stock that are forfeited pursuant to Section 1(c) of this Agreement and any dividends or other distributions previously paid on shares of Restricted Stock prior to the forfeiture thereof shall be forfeited by the Grantee and promptly remitted to the Company by the Custodian.
Section 5. Termination/Change of Status . In the event that the Grantees employment by the Company (or any Subsidiary or Affiliate of the Company) terminates for any reason, other than death, Disability or Retirement, all shares of Restricted Stock for which the forfeiture restrictions have not lapsed prior to the termination of the Grantees employment (including, after giving effect to any pro rata lapsing of the forfeiture restrictions as provided for in the penultimate and final sentences of this Section 5 ) shall be immediately forfeited and the Grantee shall have no further rights with respect to such shares of Restricted Stock. Moreover, in the event that the Grantees employment by the Company (or any Subsidiary or Affiliate of the Company) terminates for any reason other than death, Disability or Retirement, the Company will recoup, recover, and recapture from the Grantee any dividends previously paid, or declared but not yet paid, on any shares of Restricted Stock for which the forfeiture restrictions had not yet lapsed (including, after giving effect to any pro rata lapsing of the forfeiture restrictions as provided for in the penultimate and final sentences of this Section 5 ) prior to the termination of the Grantees employment and the Company shall be entitled to set off (out of amounts otherwise payable or paid to the Grantee by the Company or any Subsidiary or Affiliate thereof) or otherwise require the Grantee or the Custodian to repay to the Company the amount of any such dividends. In the event that the Grantees employment terminates by reason of death or Disability all Restricted Stock shall be deemed vested as of the date that the Grantee dies or the Company determines that the Grantee was disabled and, the restrictions under the Plan and this Agreement with respect to the Restricted Stock shall automatically expire and shall be of no further force or effect as of such date. In the event that the Grantees employment by the Company (or any Subsidiary or Affiliate of the Company) terminates by reason of Retirement, with the prior approval of the Committee, or its designee, (which may be withheld in its absolute discretion), the forfeiture restrictions with respect to that portion of the Grantees shares of Restricted Stock that would have vested for the Performance Period in which the Grantees Retirement occurred but for the fact that the Grantee was not employed for the entire Performance Period shall lapse as of the date described in Section 2(a)(i) , (a)(ii) or (a)(iii) , as applicable, and such shares shall be deemed vested in an amount equal to the product of (i) the number of shares of Restricted Stock granted under this Agreement for the Performance Period in which the Grantees employment terminates by reason of Retirement that would have vested based on the Companys actual performance for the Performance Period and (ii) the quotient, expressed as a percentage, resulting from dividing (A) the number of days that have lapsed as of the Grantees date of Retirement from the first day of the applicable Performance Period and (B) 365, and, the Grantee shall be entitled to receive in settlement of such Restricted Stock a like number of shares of the Companys Common Stock. Any remaining unvested Restricted Stock (and any related dividends held by the Custodian or previously paid to the Grantee) will be immediately forfeited in accordance with this Section 5 .
Section 6. No Transfer or Pledge of Restricted Stock . No shares of Restricted Stock may be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered or disposed of prior to the date the forfeiture restrictions with respect to such shares have lapsed, if at all, on the Vesting Date applicable to such shares.
Section 7. Withholding of Taxes . If the Grantee makes an election under section 83(b) of the Code with respect to the shares of Restricted Stock granted hereunder, the award made pursuant to this Agreement shall be conditioned upon the Grantee making prompt payment to the Company of any applicable withholding obligations or withholding taxes by the Grantee (Withholding Taxes). Failure by the Grantee to pay such Withholding Taxes will render this Agreement and the award granted hereunder null and void ab initio and the Restricted Stock granted hereunder will be immediately cancelled. If the Grantee does not make an election under section 83(b) of the Code with respect to the award of Restricted Stock granted under this Agreement, upon a Vesting Date with respect to any portion of the Restricted Stock (or property distributed with respect thereto), the Company shall cancel such shares of the Restricted Stock (or withhold property) having an aggregate Fair Market Value, on the date next preceding the Vesting Date, in an amount required to satisfy the required Withholding Taxes as set forth by Internal Revenue Service guidelines for the employer`s minimum statutory withholding with respect to the Grantee. The Company shall deduct from any distribution of cash (whether or not related to the award of Restricted Stock granted under this Agreement including, without limitation, salary payments) to the Grantee an amount as shall be reasonably required to satisfy the required Withholding Taxes as set forth by Internal Revenue Service guidelines for the employer`s minimum statutory withholding with respect to the Grantee pertaining to cash payments under the award of Restricted Stock granted under this Agreement (including any cash dividends made in respect of the shares of Restricted Stock subject to this award).
Section 8. Change in Control . In the event that a Change in Control (as defined in the Plan) occurs prior to the lapsing of the forfeiture restrictions with respect to any portion of the shares of Restricted Stock awarded hereunder, the Compensation Committee, prior to consummation of such Change in Control, shall determine, based on the Companys actual performance in respect of the Performance Measurements for the period from the date of this Agreement through the date the Compensation Committee makes such determination, the number of shares of Restricted Stock for which the forfeiture restrictions would be expected to lapse for the Performance Periods that are not yet completed at such time as the Compensation Committee makes its determination and the forfeiture restrictions with respect to such number of shares of Restricted Stock shall, immediately prior to the consummation of such Change in Control, lapse without regard to whether the Performance Measurements with respect to such shares of Restricted Stock will thereafter be achieved.
Section 9. No Right to Continued Employment . This Agreement shall not be construed as giving the Grantee the right to be retained in the employ of the Company (or any Subsidiary or Affiliate of the Company), and the Company (or any Subsidiary or Affiliate of the Company) may at any time dismiss the Grantee from employment, free from any liability or any claim under the Plan or this Agreement.
Section 10. Stock Subject to Award . In the event that the shares of Common Stock of the Company should, as a result of a stock split or stock dividend or combination of shares or any other change, redesignation, merger, consolidation, recapitalization or otherwise, be increased or decreased or changed into or exchanged for a different number or kind of shares of stock or other securities of the Company or of another corporation, the number of shares of Restricted Stock that have been awarded to Grantee shall be adjusted in an equitable and proportionate manner to reflect such action. If any such adjustment shall result in a fractional share, such fraction shall be disregarded.
Section 11. Stock Power . Concurrently with the execution of this Agreement, the Grantee shall deliver to the Company a stock power, endorsed in blank, relating to the shares of Restricted Stock. Such stock power shall be in the form attached hereto as Exhibit B .
Section 12. Legend . Each certificate representing shares of the Restricted Stock shall bear a legend in substantially the following form:
THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING FORFEITURE AND RESTRICTIONS AGAINST TRANSFER) CONTAINED IN THE PINNACLE FINANCIAL PARTNERS, INC. 2014 EQUITY INCENTIVE PLAN, AS AMENDED (THE PLAN) AND THE RESTRICTED STOCK AGREEMENT (THE AGREEMENT) BETWEEN THE OWNER OF THE RESTRICTED STOCK REPRESENTED HEREBY AND PINNACLE FINANCIAL PARTNERS, INC. (THE COMPANY). THE RELEASE OF SUCH STOCK FROM SUCH TERMS AND CONDITIONS SHALL BE MADE ONLY IN ACCORDANCE WITH THE PROVISIONS OF THE PLAN AND THE AGREEMENT, COPIES OF WHICH ARE ON FILE AT THE COMPANY.
Section 13. Governing Provisions . This Agreement is made under and subject to the provisions of the Plan, and all of the provisions of the Plan are also provisions of this Agreement. If there is a difference or conflict between the provisions of this Agreement and the provisions of the Plan, the provisions of the Plan will govern. By signing this Agreement, the Grantee confirms that he or she has received a copy of the Plan.
Section 14. Miscellaneous .
14.1 Entire Agreement . This Agreement and the Plan contain the entire understanding and agreement between the Company and the Grantee concerning the Restricted Stock and the shares of the Companys Common Stock that may be issued pursuant to this Agreement, and supersede any prior or contemporaneous negotiations and understandings. The Company and the Grantee have made no promises, agreements, conditions or understandings relating to the Restricted Stock or the shares of the Companys Common Stock that may be issued pursuant to this Agreement, either orally or in writing, that are not included in this Agreement or the Plan.
14.2 Captions . The captions and section numbers appearing in this Agreement are inserted only as a matter of convenience. They do not define, limit, construe or describe the scope or intent of the provisions of this Agreement.
14.3 Counterparts . This Agreement may be executed in counterparts, each of which when signed by the Company and the Grantee will be deemed an original and all of which together will be deemed the same Agreement.
14.4 Compliance With Laws and Regulations . The award of Restricted Stock (and, if issued in settlement of Restricted Stock, shares of the Companys Common Stock) evidenced hereby shall be subject to all applicable federal and state laws, rules, and regulations, and to such approvals by any governmental or regulatory agency as may be required.
14.5 Notice . Any notice or communication having to do with this Agreement must be given by personal delivery or by certified mail, return receipt requested, addressed, if to the Company, to the principal office of the Company, and, if to the Grantee, to the Grantees last known address provided by the Grantee to the Company.
14.6 Amendment . This Agreement may be amended by the Company, provided that unless the Grantee consents in writing, the Company cannot amend this Agreement if the amendment will materially change or impair the Grantees rights under this Agreement and such change is not to the Grantees benefit.
14.7 Successors and Assignment . Each and all of the provisions of this Agreement are binding upon and inure to the benefit of the Company and the Grantee and their heirs, successors, and assigns. However, the Restricted Stock may not be assigned or transferred except as otherwise set forth in this Agreement or the Plan.
14.8 Governing Law . This Agreement shall be governed and construed exclusively in accordance with the laws of the State of Tennessee applicable to agreements to be performed in the State of Tennessee.
[Signature page to follow.]
IN WITNESS WHEREOF, the Company and the Grantee have executed this Agreement to be effective as of July , 2016.
PINNACLE FINANCIAL PARTNERS, INC.: | ||
By: | ||
Name: | Hugh M. Queener | |
Title: | Chief Administrative Officer and Corporate Secretary | |
GRANTEE: | ||
By: | ||
Name: |
EXHIBIT A
Performance Measurements
The Performance Measurements shall be established by the Compensation Committee and once established shall thereafter be communicated to the Grantee. The Performance Measurements shall consist of the Companys Return on Average Tangible Assets for each Performance Period and the Companys NPA Ratio as of the last day of each Performance Period.
Return on Average Tangible Assets . For purposes of this Exhibit A, Return on Average Tangible Assets means the quotient, expressed as a percentage rounded to two decimal points, of (I) the Companys net income for the applicable Performance Period as reported in the Companys Annual Report on Form 10-K for the applicable Performance Period divided by (II) the Companys average tangible assets for the applicable Performance Period as reflected in the Companys Annual Report on Form 10-K for the applicable Performance Period, as adjusted to eliminate the effects of the following: (a) gains or losses on the sale of a business or a business segment, (b) gains or losses on the extinguishment of debt or the sale of investment securities, (c) asset or investment impairment charges (other than those related to the Companys loan portfolio in the ordinary course of business), (d) restructuring charges, (e) changes in law or accounting principles, and (f) any other expenses or losses resulting from significant, unusual and/or nonrecurring events, as described in managements discussion and analysis of financial condition and results of operations appearing in the Companys annual report to shareholders for the Performance Period, in each case as determined in good faith by the Compensation Committee. Moreover, and without limiting the foregoing, Return on Average Tangible Assets shall be adjusted to exclude the effects of any costs or expenses associated with any merger or acquisition affecting the Company or any of its Subsidiaries or any other corporate transaction affecting the shares of the Companys Common Stock as described in Section 4.2 of the Plan.
NPA Ratio . The Nonperforming Assets Ratio (the NPA Ratio) for the Company shall be the quotient resulting from dividing the sum of the unpaid principal balance of nonaccrual loans and other real estate by the sum of total loans and other real estate in each case as reported on the Companys Annual Report on Form 10-K for the applicable Performance Period. When calculating the NPA Ratio for purposes of the Agreement, in the event that the Company or a subsidiary of the Company acquires a finance company, financial institution or a holding company of a financial institution or a branch office thereof, by way of merger or otherwise, or in the event the Company or a subsidiary of the Company shall acquire in an arms-length purchase from a third party any low-quality asset, such acquired non-performing assets or purchased low-quality assets shall be excluded from the calculation.
EXHIBIT B
Stock Power
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and transfer to Pinnacle Financial Partners, Inc. (the Company), shares of the Company`s common stock represented by Certificate No. . The undersigned authorizes the Secretary of the Company to transfer the stock on the books of the Company in the event of the forfeiture of any shares issued under the Restricted Stock Agreement dated , 2015 between the Company and the undersigned.
Dated: ,
Exhibit 10.3
Avenue Bank
Supplemental Executive Retirement Plan Agreement
AVENUE BANK
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT
THIS SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT (this Agreement) is adopted this 26 day of October, 2007, by and between AVENUE BANK, a state-chartered commercial bank located in Nashville, Tennessee (the Bank), and RONALD SAMUELS (the Executive).
The purpose of this Agreement is to provide specified benefits to the Executive, a member of a select group of management or highly compensated employees who contribute materially to the continued growth, development and future business success of the Bank. This Agreement shall be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974 (ERISA), as amended from time to time.
Article 1
Definitions
Whenever used in this Agreement, the following words and phrases shall have the meanings specified:
1.1 | Base Salary means the annualized cash compensation relating to services performed during any calendar year, excluding distributions from nonqualified deferred compensation plans, bonuses, commissions, overtime, fringe benefits, stock options, relocation expenses, incentive payments, non-monetary awards, and other fees, and automobile and other allowances paid to the Executive for employment rendered (whether or not such allowances are included in the Executives gross income). Base Salary shall be calculated before reduction for compensation voluntarily deferred or contributed by the Executive pursuant to all qualified or non-qualified plans of the Bank and shall be calculated to include amounts not otherwise included in the Executives gross income under Code Sections 125, 402(e)(3), 402(h), or 403(b) pursuant to plans established by the Bank; provided, however, that all such amounts will be included in compensation only to the extent that had there been no such plan, the amount would have been payable in cash to the Executive. |
1.2 | Beneficiary means each designated person or entity, or the estate of the deceased Executive, entitled to any benefits upon the death of the Executive pursuant to Article 4. |
1.3 | Beneficiary Designation Form means the form established from time to time by the Plan Administrator that the Executive completes, signs and returns to the Plan Administrator to designate one or more Beneficiaries. |
1.4 | Board means the Board of Directors of the Bank as from time to time constituted. |
Avenue Bank
Supplemental Executive Retirement Plan Agreement
1.5 | Change in Control means a change in the ownership or effective control of the Bank, or in the ownership of a substantial portion of the assets of the Bank, as such change is defined in Code Section 409A and regulations thereunder. |
1.6 | Code means the Internal Revenue Code of 1986, as amended, and all regulations and guidance thereunder, including such regulations and guidance as may be promulgated after the Effective Date. |
1.7 | Disability means the Executive: (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Bank. The Executive shall be deemed to be disabled if determined to be totally disabled by the Social Security Administration. The Executive will also be deemed to be disabled if determined to be disabled in accordance with a disability insurance program covering employees of the Bank provided that the definition of disability applied under such insurance program complies with the requirements of the preceding sentence. Upon the request of the Plan Administrator, the Executive must submit proof to the Plan Administrator of the Social Security Administrations or the providers determination. |
1.8 | Early Termination means Separation from Service before attainment of Normal Retirement Age except when such Separation from Service occurs within twenty-four (24) months following a Change in Control or due to death or Termination for Cause. |
1.9 | Effective Date means September 1, 2007. |
1.10 | Normal Retirement Age means November 1, 2011. |
1.11 | Normal Retirement Date means the later of Normal Retirement Age or Separation from Service. |
1.12 | Plan Administrator means the Board or such committee or person as the Board shall appoint. |
1.13 | Plan Year means each twelve (12) month period commencing on January 1 and ending on December 31 of each year. The initial Plan Year shall commence on the Effective Date of this Agreement and end on the following December 31. |
1.14 |
Separation from Service means termination of the Executives employment with the Bank for reasons other than death. Whether a Separation from Service has occurred is determined in accordance with the requirements of Code Section 409A based on whether the facts and circumstances indicate that the Bank and Executive reasonably anticipated |
Avenue Bank
Supplemental Executive Retirement Plan Agreement
that no further services would be performed after a certain date or that the level of bona fide services the Executive would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than twenty percent (20%) of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding thirty-six (36) month period (or the full period of services to the Bank if the Executive has been providing services to the Bank less than thirty-six (36) months). |
1.15 | Specified Employee means an employee who at the time of Separation from Service is a key employee of the Bank, if any stock of the Bank is publicly traded on an established securities market or otherwise. For purposes of this Agreement, an employee is a key employee if the employee meets the requirements of Code Section 416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with the regulations thereunder and disregarding section 416(i)(5)) at any time during the twelve (12) month period ending on December 31 (the identification period). If the employee is a key employee during an identification period, the employee is treated as a key employee for purposes of this Agreement during the twelve (12) month period that begins on the first day of April following the close of the identification period. |
1.16 | Termination for Cause means Separation from Service for: |
(a) | Gross negligence or gross neglect of duties to the Bank; |
(b) | Conviction of a felony or of a gross misdemeanor involving moral turpitude in connection with the Executives employment with the Bank; or |
(c) | Fraud, disloyalty, dishonesty or willful violation of any law or significant Bank policy committed in connection with the Executives employment and resulting in a material adverse effect on the Bank. |
Article 2
Distributions During Lifetime
2.1 | Normal Retirement Benefit . Upon Separation from Service on or after attaining Normal Retirement Age, the Bank shall distribute to the Executive the benefit described in this Section 2.1 in lieu of any other benefit under this Article. |
2.1.1 | Amount of Benefit . The annual benefit under this Section 2.1 is an amount equal to sixty percent (60%) of the average Base Salary for the sixty (60) full months immediately preceding Separation from Service. If Separation from Service is prior to sixty (60) full months of employment, then Base Salary is the average of Base Salary for the period served. |
2.1.2 | Distribution of Benefit . The Bank shall distribute the annual benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following the Separation from Service. The annual benefit shall be distributed to the Executive for the greater of: (i) fifteen (15) years; or (ii) the Executives lifetime. |
Avenue Bank
Supplemental Executive Retirement Plan Agreement
2.2 | Early Termination Benefit . If Early Termination occurs, the Bank shall distribute to the Executive the benefit described in this Section 2.2 in lieu of any other benefit under this Article. |
2.2.1 | Amount of Benefit . The annual benefit under this Section 2.2 is an amount equal to sixty percent (60%) of the average Base Salary for the sixty (60) full months immediately preceding Separation from Service subject to the following vesting schedule: |
If Separation from Service is prior to sixty (60) full months of employment, then Base Salary is the average Base Salary for the period served.
2.2.2 | Distribution of Benefit . The Bank shall distribute the benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following Normal Retirement Age. The annual benefit shall be distributed to the Executive for the greater of: (i) fifteen (15) years; or (ii) the Executives lifetime. |
2.3 | Disability Benefit . If the Executive experiences a Disability which results in a Separation from Service prior to Normal Retirement Age, the Bank shall distribute to the Executive the benefit described in this Section 2.3 in lieu of any other benefit under this Article. |
2.3.1 | Amount of Benefit. The annual benefit under this Section 2.3 is an amount equal to sixty percent (60%) of the average Base Salary for the sixty (60) full months immediately preceding Separation from Service subject to the following vesting schedule: |
Avenue Bank
Supplemental Executive Retirement Plan Agreement
If Separation from Service is prior to sixty (60) full months of employment, then Base Salary is the average Base Salary for the period served.
2.3.2 | Distribution of Benefit . The Bank shall distribute the benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following Normal Retirement Age. The annual benefit shall be distributed to the Executive for the greater of: (i) fifteen (15) years; or (ii) the Executives lifetime. |
2.4 | Change in Control Benefit . If a Change in Control occurs, followed within twenty (24) months by a Separation from Service, the Bank shall distribute to the Executive the benefit described in this Section 2.4 in lieu of any other benefit under this Article. |
2.4.1 | Amount of Benefit . The annual benefit under this Section 2.4 is an amount equal to sixty percent (60%) of the average Base Salary for the sixty (60) full months immediately preceding Separation from Service. If Separation from Service is prior to sixty (60) full months, then Base Salary is the average Base Salary for the period served. |
2.4.2 | Distribution of Benefit . The Bank shall distribute the benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following Separation from Service. The annual benefit shall be distributed to the Executive for the greater of: (i) fifteen (15) years; or (ii) the Executives lifetime. |
2.4.3 | Excess Parachute Payment Gross-up . If any benefit distributable under this Agreement would create an excise tax under the excess parachute rules of Code Section 280G, the Bank shall distribute to the Executive an additional amount (the Gross-up) equal to: the Executives excise penalty tax and any Medicare or Social Security taxes under this Agreement amount divided by the difference between (one minus the sum of (the penalty tax rate plus the Executives marginal income tax rate)). The Gross-up shall be paid in the same matter as in Section 2.4.2. |
2.5 |
Medicare/Social Security Gross-Up. The Bank shall annually pay to the Executive an amount equal to the Medicare and Social Security taxes attributable to the Executive under this Agreement. The Bank shall calculate the amount due to the Executive by multiplying, one and forty-five one hundredths percent (1.45%) times any amounts under |
Avenue Bank
Supplemental Executive Retirement Plan Agreement
this Agreement causing Medicare taxes and by multiplying six and twenty one hundred percent (6.20%) times any amounts under this Agreement causing Social Security taxes for amounts below the FICA Wage Limit. If the Executives Social Security wages exceed the FICA Wage Limit and this Agreement does not cause any additional Social Security tax to be paid by the Executive, Social Security taxes will not be grossed up under this Agreement. |
The Medicare/Social Security gross-up shall be paid within two and one-half (2 1 ⁄ 2 ) months following the end of each calendar year.
2.6 | Restriction on Commencement of Distributions . Notwithstanding any provision of this Agreement to the contrary, if the Executive is considered a Specified Employee, the provisions of this Section 2.6 shall govern all distributions hereunder. If benefit distributions which would otherwise be made to the Executive due to Separation from Service are limited because the Executive is a Specified Employee, then such distributions shall not be made during the first six (6) months following Separation from Service. Rather, any distribution which would otherwise be paid to the Executive during such period shall be accumulated and paid to the Executive in a lump sum on the first day of the seventh month following Separation from Service. All subsequent distributions shall be paid in the manner specified. |
2.7 | Distributions Upon Taxation of Amounts Deferred . If, pursuant to Code Section 409A, the Federal Insurance Contributions Act or other state, local or foreign tax, the Executive becomes subject to tax on the amounts deferred hereunder, then the Bank may make a limited distribution to the Executive in a manner that conforms to the requirements of Code section 409A. Any such distribution will decrease the Executives benefits distributable under this Article 2. |
2.8 | Change in Form or Timing of Distributions . For distribution of benefits under this Article 2, the Executive and the Bank may, subject to the terms of Section 8.1, amend this Agreement to delay the timing or change the form of distributions. Any such amendment: |
(a) | may not accelerate the time or schedule of any distribution, except as provided in Code Section 409A; |
(b) | must, for benefits distributable under Section 2.5, be made at least twelve (12) months prior to the first scheduled distribution; |
(c) | must, for benefits distributable under Sections 2.1, 2.2, 2.3, 2.4 and 2.5, delay the commencement of distributions for a minimum of five (5) years from the date the first distribution was originally scheduled to be made; and |
(d) | must take effect not less than twelve (12) months after the amendment is made. |
Avenue Bank
Supplemental Executive Retirement Plan Agreement
Article 3
Distribution at Death
3.1 | Death During Active Service . If the Executive dies prior to Separation from Service, the Bank shall distribute to the Beneficiary the benefit described in this Section 3.1. This benefit shall be distributed in lieu of any benefit under Article 2. |
3.1.1 | Amount of Benefit . The annual benefit under this Section 3.1 is an amount equal to sixty percent (60%) of the average Base Salary for the sixty (60) full months immediately preceding Separation from Service. If Separation from Service is prior to sixty (60) full months of employment, then Base Salary is the average Base Salary for the period served. |
3.1.2 | Distribution of Benefit . The Bank shall distribute the annual benefit to the Beneficiary in twelve (12) equal monthly installments for fifteen (15) years commencing within sixty (60) days following the Executives death. The Beneficiary shall be required to provide to the Bank the Executives death certificate. |
3.2 | Death During Distribution of a Benefit . If the Executive dies after any benefit distributions have commenced under this Agreement but before receiving all such distributions, the Bank shall distribute to the Beneficiary the remaining benefits at the same time and in the same amounts they would have been distributed to the Executive had the Executive survived; provided, however, for benefits payable under Article 2, if the Executive has received less than one hundred eighty (180) equal consecutive monthly installments, the Beneficiary shall continue to receive the same amounts at the same times until the sum of the installments to the Beneficiary and Executive total one hundred eighty (180). |
3.3 | Death Before Benefit Distributions Commence . If the Executive is entitled to benefit distributions under this Agreement but dies prior to the date that commencement of said benefit distributions are scheduled to be made under this Agreement, the Bank shall distribute to the Beneficiary the same benefits to which the Executive was entitled prior to death, except that the benefit distributions shall commence within sixty (60) days following the Executives death for a total of one hundred eighty (180) equal consecutive monthly installments. |
Article 4
Beneficiaries
4.1 | In General . The Executive shall have the right, at any time, to designate a Beneficiary to receive any benefit distributions under this Agreement upon the death of the Executive. The Beneficiary designated under this Agreement may be the same as or different from the beneficiary designated under any other plan of the Bank in which the Executive participates. |
4.2 |
Designation . The Executive shall designate a Beneficiary by completing and signing the Beneficiary Designation Form and delivering it to the Plan Administrator or its |
Avenue Bank
Supplemental Executive Retirement Plan Agreement
designated agent. If the Executive names someone other than the Executives spouse as a Beneficiary, the Plan Administrator may, in its sole discretion, determine that spousal consent is required to be provided in a form designated by the Plan Administrator, executed by the Executives spouse and returned to the Plan Administrator. The Executives beneficiary designation shall be deemed automatically revoked if the Beneficiary predeceases the Executive or if the Executive names a spouse as Beneficiary and the marriage is subsequently dissolved. The Executive shall have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form and the Plan Administrators rules and procedures. Upon the acceptance by the Plan Administrator of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be cancelled. The Plan Administrator shall be entitled to rely on the last Beneficiary Designation Form filed by the Executive and accepted by the Plan Administrator prior to the Executives death. |
4.3 | Acknowledgment . No designation or change in designation of a Beneficiary shall be effective until received, accepted and acknowledged in writing by the Plan Administrator or its designated agent. |
4.4 | No Beneficiary Designation . If the Executive dies without a valid beneficiary designation, or if all designated Beneficiaries predecease the Executive, then the Executives spouse shall be the designated Beneficiary. If the Executive has no surviving spouse, any benefit shall be paid to the Executives estate. |
4.5 | Facility of Distribution . If the Plan Administrator determines in its discretion that a benefit is to be distributed to a minor, to a person declared incompetent or to a person incapable of handling the disposition of that persons property, the Plan Administrator may direct distribution of such benefit to the guardian, legal representative or person having the care or custody of such minor, incompetent person or incapable person. The Plan Administrator may require proof of incompetence, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Any distribution of a benefit shall be a distribution for the account of the Executive and the Beneficiary, as the case may be, and shall completely discharge any liability under this Agreement for such distribution amount. |
Article 5
General Limitations
5.1 | Termination for Cause . Notwithstanding any provision of this Agreement to the contrary, the Executive shall not be entitled to, and the Bank shall not distribute, any benefit under this Agreement if the Executives employment with the Bank is terminated by the Bank or an applicable regulator due to a Termination for Cause. |
5.2 | Suicide or Misstatement . No benefit shall be earned or distributed if the Executive commits suicide within two (2) years after the Effective Date, or if an insurance company which issued a life insurance policy covering the Executive and owned by the Bank denies coverage (i) for material misstatements of fact made by the Executive on an application for such life insurance, or (ii) for any other reason. |
Avenue Bank
Supplemental Executive Retirement Plan Agreement
5.3 | Removal . Notwithstanding any provision of this Agreement to the contrary, the Executive shall not be entitled to, and the Bank shall not distribute, any benefit under this Agreement if the Executive is subject to a final removal or prohibition order issued by an appropriate federal banking agency pursuant to Section 8(e) of the Federal Deposit Insurance Act. Notwithstanding anything herein to the contrary, any payments made to the Executive pursuant to this Agreement, or otherwise, shall be subject to and conditioned upon compliance with 12 U.S.C. 1828 and FDIC Regulation 12 CFR Part 359, Golden Parachute Indemnification Payments and any other regulations or guidance promulgated thereunder. |
5.4 | Forfeiture Provision . The Executive shall forfeit any non-distributed benefits under this Agreement if during the term of this Agreement and within thirty-six (36) months following a Separation from Service, the Executive, directly or indirectly, either as an individual or as a proprietor, stockholder, partner, officer, director, employee, agent, consultant or independent contractor of any individual, partnership, corporation or other entity (excluding an ownership interest of three percent (3%) or less in the stock of a publicly-traded company): |
(i) | becomes employed by, participates in, or becomes connected in any manner with the ownership, management, operation or control of any bank, savings and loan or other similar financial institution if the Executives responsibilities will include providing banking or other financial services within twenty-five (25) miles of any office maintained by the Bank as of the date of the termination of the Executives employment; |
(ii) | participates in any way in hiring or otherwise engaging, or assisting any other person or entity in hiring or otherwise engaging, on a regular or temporary, part-time or full-time basis, any individual who was employed by the Bank as of the date of termination of the Executives employment; |
(iii) | assists, advises, or serves in any capacity, representative or otherwise, any third party in any action against the Bank or transaction involving the Bank; |
(iv) | sells, offers to sell, provides banking or other financial services, assists any other person in selling or providing banking or other financial services, or solicits or otherwise competes for, either directly or indirectly, any orders, contract, or accounts for services of a kind or nature like or substantially similar to the financial services performed or financial products sold by the Bank (the preceding hereinafter referred to as Services), to or from any person or entity from whom the Executive or the Bank, to the knowledge of the Executive provided banking or other financial services, sold, offered to sell or solicited orders, contracts or accounts for Services during the three (3) year period immediately prior to the termination of the Executives employment; |
Avenue Bank
Supplemental Executive Retirement Plan Agreement
(v) | divulges, discloses, or communicates to others in any manner whatsoever, any confidential information of the Bank, to the knowledge of the Executive, including, but not limited to, the names and addresses of customers or prospective customers, of the Bank, as they may have existed from time to time, of work performed or services rendered for any customer, any method and/or procedures relating to projects or other work developed for the Bank, earnings or other information concerning the Bank. The restrictions contained in this subparagraph (v) apply to all information regarding the Bank, regardless of the source who provided or compiled such information. Notwithstanding anything to the contrary, all information referred to herein shall not be disclosed unless and until it becomes known to the general public from sources other than the Executive. |
5.5 | Change in Control . The forfeiture provision detailed in Section 5.4 hereof shall not be enforceable following a Change in Control. |
Article 6
Administration of Agreement
6.1 | Plan Administrator Duties . The Plan Administrator shall administer this Agreement according to its express terms and shall also have the discretion and authority to (i) make, amend, interpret and enforce all appropriate rules and regulations for the administration of this Agreement and (ii) decide or resolve any and all questions, including interpretations of this Agreement, as may arise in connection with this Agreement to the extent the exercise of such discretion and authority does not conflict with Code Section 409A. |
6.2 | Agents . In the administration of this Agreement, the Plan Administrator may employ agents and delegate to them such administrative duties as the Plan Administrator sees fit, including acting through a duly appointed representative, and may from time to time consult with counsel who may be counsel to the Bank. |
6.3 | Binding Effect of Decisions . Any decision or action of the Plan Administrator with respect to any question arising out of or in connection with the administration, interpretation or application of this Agreement and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in this Agreement. |
6.4 | Indemnity of Plan Administrator . The Bank shall indemnify and hold harmless the Plan Administrator against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Agreement, except in the case of willful misconduct by the Plan Administrator. |
6.5 | Bank Information . To enable the Plan Administrator to perform its functions, the Bank shall supply full and timely information to the Plan Administrator on all matters relating to the date and circumstances of the Executives death, Disability or Separation from Service, and such other pertinent information as the Plan Administrator may reasonably require. |
6.6 | Annual Statement . The Plan Administrator shall provide to the Executive, within one hundred twenty (120) days after the end of each Plan Year, a statement setting forth the benefits to be distributed under this Agreement. |
Avenue Bank
Supplemental Executive Retirement Plan Agreement
Article 7
Claims and Review Procedures
7.1 | Claims Procedure . An Executive or Beneficiary (claimant) who has not received benefits under this Agreement that he or she believes should be distributed shall make a claim for such benefits as follows: |
7.1.1 | Initiation Written Claim . The claimant initiates a claim by submitting to the Plan Administrator a written claim for the benefits. If such a claim relates to the contents of a notice or statement received by the claimant, the claim must be made within sixty (60) days after such notice or statement was received by the claimant. All other claims must be made within one hundred eighty (180) days of the date on which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by the claimant. |
7.1.2 | Timing of Plan Administrator Response . The Plan Administrator shall respond to such claimant within ninety (90) days after receiving the claim. If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional ninety (90) days by notifying the claimant in writing, prior to the end of the initial ninety (90) day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision. |
7.1.3 | Notice of Decision . If the Plan Administrator denies part or all of the claim, the Plan Administrator shall notify the claimant in writing of such denial. The Plan Administrator shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth: |
(a) | The specific reasons for the denial; |
(b) | A reference to the specific provisions of this Agreement on which the denial is based; |
(c) | A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed; |
(d) | An explanation of this Agreements review procedures and the time limits applicable to such procedures; and |
(e) | A statement of the claimants right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review. |
Avenue Bank
Supplemental Executive Retirement Plan Agreement
7.2 | Review Procedure . If the Plan Administrator denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Plan Administrator of the denial as follows: |
7.2.1 | Initiation Written Request . To initiate the review, the claimant, within sixty (60) days after receiving the Plan Administrators notice of denial, must file with the Plan Administrator a written request for review. |
7.2.2 | Additional Submissions Information Access . The claimant shall then have the opportunity to submit written comments, documents, records and other information relating to the claim. The Plan Administrator shall also provide the claimant, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimants claim for benefits. |
7.2.3 | Considerations on Review . In considering the review, the Plan Administrator shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. |
7.2.4 | Timing of Plan Administrator Response . The Plan Administrator shall respond in writing to such claimant within sixty (60) days after receiving the request for review. If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional sixty (60) days by notifying the claimant in writing, prior to the end of the initial sixty (60) day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision. |
7.2.5 | Notice of Decision . The Plan Administrator shall notify the claimant in writing of its decision on review. The Plan Administrator shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth: |
(a) | The specific reasons for the denial; |
(b) | A reference to the specific provisions of this Agreement on which the denial is based; |
(c) | A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimants claim for benefits; and |
(d) | A statement of the claimants right to bring a civil action under ERISA Section 502(a). |
Avenue Bank
Supplemental Executive Retirement Plan Agreement
Article 8
Amendments and Termination
8.1 | Amendments . This Agreement may be amended only by a written agreement signed by the Bank and the Executive. However, the Bank may unilaterally amend this Agreement to conform with written directives to the Bank from its auditors or banking regulators or to comply with legislative changes or tax law, including without limitation Code Section 409A. |
8.2 | Plan Termination Generally . This Agreement may be terminated only by a written agreement signed by the Bank and the Executive. The benefit shall be the vested benefit as specified in Article 2 or Article 3 as applicable as of the date this Agreement is terminated. Except as provided in Section 8.3, the termination of this Agreement shall not cause a distribution of benefits under this Agreement. Rather, upon such termination benefit distributions will be made at the earliest distribution event permitted under Article 2 or Article 3. |
8.3 | Plan Terminations Under Code Section 409A . Notwithstanding anything to the contrary in Section 8.2, if the Bank terminates this Agreement in the following circumstances: |
(a) | Within thirty (30) days before or twelve (12) months after a Change in Control, provided that all distributions are made no later than twelve (12) months following such termination of this Agreement and further provided that all the Banks arrangements which are substantially similar to this Agreement are terminated so the Executive and all participants in the similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of such termination; |
(b) | Upon the Banks dissolution or with the approval of a bankruptcy court provided that the amounts deferred under this Agreement are included in the Executives gross income in the latest of (i) the calendar year in which this Agreement terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the distribution is administratively practical; or |
(c) | Upon the Banks termination of this and all other arrangements that would be aggregated with this Agreement pursuant to Treasury Regulations Section 1.409A-1(c) if the Executive participated in such arrangements (Similar Arrangements), provided that (i) the termination and liquidation does not occur proximate to a downturn in the financial health of the Bank, (ii) all termination distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such termination, and (iii) the Bank does not adopt any new arrangement that would be a Similar Arrangement for a minimum of three (3) years following the date the Bank takes all necessary action to irrevocably terminate and liquidate the Agreement; |
Avenue Bank
Supplemental Executive Retirement Plan Agreement
the Bank may distribute the amount the Executive is vested in under this Agreement, determined as of the date of the termination of this Agreement, to the Executive in a lump sum subject to the above terms.
Article 9
Miscellaneous
9.1 | Binding Effect . This Agreement shall bind the Executive and the Bank and their beneficiaries, survivors, executors, administrators and transferees. |
9.2 | No Guarantee of Employment . This Agreement is not a contract for employment. It does not give the Executive the right to remain as an employee of the Bank nor interfere with the Banks right to discharge the Executive. It does not require the Executive to remain an employee nor interfere with the Executives right to terminate employment at any time. |
9.3 | Non-Transferability . Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner. |
9.4 | Tax Withholding and Reporting . The Bank shall withhold any taxes that are required to be withheld, including but not limited to taxes owed under Code Section 409A from the benefits provided under this Agreement. The Executive acknowledges that the Banks sole liability regarding taxes is to forward any amounts withheld to the appropriate taxing authorities. The Bank shall satisfy all applicable reporting requirements, including those under Code Section 409A. |
9.5 | Applicable Law and Forum . This Agreement and all rights hereunder shall be governed by the laws of the State of Tennessee, except to the extent preempted by the laws of the United States of America. Any legal action arising out of or related to this Agreement shall be brought in a court of competent jurisdiction located in Davidson County, Tennessee. |
9.6 | Unfunded Arrangement . The Executive and the Beneficiary are general unsecured creditors of the Bank for the distribution of benefits under this Agreement. The benefits represent the mere promise by the Bank to distribute such benefits. The rights to benefits are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment by creditors. Any insurance on the Executives life or other informal funding asset is a general asset of the Bank to which the Executive and Beneficiary have no preferred or secured claim. |
9.7 | Reorganization . The Bank shall not merge or consolidate into or with another bank, or reorganize, or sell substantially all of its assets to another bank, firm or person unless such succeeding or continuing bank, firm or person agrees to assume and discharge the obligations of the Bank under this Agreement. Upon the occurrence of such an event, the term Bank as used in this Agreement shall be deemed to refer to the successor or survivor entity. |
Avenue Bank
Supplemental Executive Retirement Plan Agreement
9.8 | Entire Agreement . This Agreement constitutes the entire agreement between the Bank and the Executive as to the subject matter hereof. No rights are granted to the Executive by virtue of this Agreement other than those specifically set forth herein. |
9.9 | Interpretation . Wherever the fulfillment of the intent and purpose of this Agreement requires and the context will permit, the use of the masculine gender includes the feminine and use of the singular includes the plural. This Agreement shall be interpreted without the benefit of any rule of interpretation or construction under which a contract is or may be construed against the drafter. |
9.10 | Alternative Action . In the event it shall become impossible for the Bank or the Plan Administrator to perform any act required by this Agreement due to regulatory or other constraints, the Bank or Plan Administrator may perform such alternative act as most nearly carries out the intent and purpose of this Agreement and is in the best interests of the Bank, provided that such alternative act does not violate Code Section 409A. |
9.11 | Headings . Article and section headings are for convenient reference only and shall not control or affect the meaning or construction of any provision herein. |
9.12 | Validity . If any provision of this Agreement shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Agreement shall be construed and enforced as if such illegal or invalid provision had never been included herein. The parties agree that a court of competent jurisdiction shall have the power to revise or reform this Agreement, if necessary, to make this Agreement enforceable to the maximum extent permitted by law. |
9.13 | Notice . Any notice or filing required or permitted to be given to the Bank or Plan Administrator under this Agreement shall be sufficient if in writing and hand-delivered or sent by registered or certified mail to the address below: |
Avenue Bank |
111 Tenth Avenue South, Suite 400 |
Nashville TN 37203 |
Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.
Any notice or filing required or permitted to be given to the Executive under this Agreement shall be sufficient if in writing and hand-delivered or sent by registered or certified mail to the last known address of the Executive.
9.14 |
Deduction Limitation on Benefit Payments . If the Bank reasonably anticipates that the Banks deduction with respect to any distribution under this Agreement would be limited or eliminated by application of Code Section 162(m), then to the extent deemed |
Avenue Bank
Supplemental Executive Retirement Plan Agreement
necessary by the Bank to ensure that the entire amount of any distribution from this Agreement is deductible, the Bank may delay payment of any amount that would otherwise be distributed under this Agreement. The delayed amounts shall be distributed to the Executive (or the Beneficiary in the event of the Executives death) at the earliest date the Bank reasonably anticipates that the deduction of the payment of the amount will not be limited or eliminated by application of Code Section 162(m). |
9.15 | Compliance with Section 409A . This Agreement shall be interpreted and administered consistent with Code Section 409A. |
IN WITNESS WHEREOF, the Executive and a duly authorized representative of the Bank have signed this Agreement.
EXECUTIVE | AVENUE BANK | |||||
/s/ Ronald Samuels |
By: |
/s/ Kent Cleaver |
||||
Ronald Samuels | Title: | Chief Operating Officer |
Avenue Bank
Supplemental Executive Retirement Plan Agreement
Beneficiary Designation Form
{ } | New Designation |
{ } | Change in Designation |
I, Ronald Samuels, designate the following as Beneficiary under this Agreement:
Primary: |
||||
% | ||||
% | ||||
Contingent: |
||||
% | ||||
% |
Notes:
| PRINT CLEARLY or TYPE the name(s) of the Beneficiary(ies). |
| To name a trust as a Beneficiary, provide the name of the trustee(s) and the exact name and date of the trust agreement. |
| To name your estate as a Beneficiary, write Estate of [your name] . |
| Be aware that none of the contingent Beneficiaries will receive anything unless ALL of the primary beneficiaries predecease you. |
I understand that I may change these Beneficiary designations by delivering a new written designation to the Plan Administrator, which shall be effective only upon receipt and acknowledgment by the Plan Administrator prior to my death. I further understand that the designations will be automatically revoked if the Beneficiary(ies) predeceases me, or, if I have named my spouse as a Beneficiary and I become divorced or legally separated from such spouse.
Name: |
|
|||||||
Signature: |
|
Date: |
|
Received by the Plan Administrator this day of , 200
By: |
|
|
Title: |
|