As filed with the U.S. Securities and Exchange Commission on November 25, 2016
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SMARTFINANCIAL, INC.
(Exact nameName of registrantRegistrant as specifiedSpecified in its charter)
| Tennessee | ||
| 62-1173944 | ||
| (State or Incorporation or | (I.R.S. Employer Identification |
5401 Kingston Pike, Suite 600
Knoxville, Tennessee
(865) 437-5700
(Address, including zip code,Including Zip Code, and telephone number, including area code,Telephone Number, Including Area Code, of registrant’s principal executive offices)Registrant’s Principal Executive Offices)
William (Billy) Y. Carroll, Jr.
President and Chief Executive Officer
SmartFinancial, Inc.
5401 Kingston Pike, Suite 600
Knoxville, Tennessee 37919
Tel: (865) 437-5700
(Name, address, including zip code,Address, Including Zip Code, and telephone number, including area code,Telephone Number, Including Area Code, of agent for service)
The Commission is requested to send copies of all communications to:
Mark C. Kanaly, Esq.
Alston & Bird LLP
1201 W. SimsPeachtree Street
Atlanta, Georgia 30309-3424
Telephone: (404) 881-7975
Facsimile: (404) 253-8390
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this registration statement.If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box:
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box.
xIf this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
¨If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
¨If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box.
¨If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box.
¨Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitionsdefinition of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer | ¨ | Accelerated filer | x | |
Non-accelerated filer | ¨ | Smaller reporting company | x | |
| Emerging growth company | ¨ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
CALCULATION OF REGISTRATION FEE
| Title of Each Class of Securities to be Registered | Amount to be Registered (1)(2)(3) | Proposed Maximum Offering Price Per Unit (1) | Proposed Maximum Aggregate Offering Price(1)(2)(3) | Amount of Registration Fee (4) |
| Common Stock | ||||
| Preferred Stock | ||||
| Senior Debt Securities | ||||
| Subordinated Debt Securities | ||||
| Depositary Shares | ||||
| Purchase Contracts | ||||
| Units(5) | ||||
| Warrants | ||||
| Rights | ||||
| Total | $100,000,000 | $12,980.00 |
| Proposed Maximum | Proposed Maximum | |||||||||||||
| Title of Each Class of | Amount to be | Offering Price | Aggregate | Amount of | ||||||||||
| Securities to be Registered | Registered(1) | Per Share | Offering Price(1)(2) | Registration Fee(3) | ||||||||||
| Common stock (4) | -- | -- | -- | -- | ||||||||||
| Preferred stock (5) | -- | -- | -- | -- | ||||||||||
| Debt securities (6) | -- | -- | -- | -- | ||||||||||
| Depositary shares (7) | -- | -- | -- | -- | ||||||||||
| Warrants (8) | -- | -- | -- | -- | ||||||||||
| Units (9) | -- | -- | -- | -- | ||||||||||
| Total | $60,000,000 | n/a | $60,000,000 | $6,954 | ||||||||||
| (1) |
| (2) | The Registrant is hereby registering an indeterminate principal amount and number of each identified class of its securities up to a proposed maximum aggregate |
| (3) | The |
| (4) | Calculated pursuant to Rule 457(o) under the Securities Act. |
| Each unit will be issued |
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until thisthe registration statement shall become effective on such date as the Securities and Exchange Commission acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. Neither we nor the selling shareholdersWe may not sell any of these securities or accept your offer to buy any of them until the documentationregistration statement filed with the SEC relating to these securities has been declared “effective” by the SEC.Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities or our solicitation of yourand is not soliciting an offer to buy these securities in any state or other jurisdiction where the offer andor sale wouldis not be permitted or legal.
SUBJECT TO COMPLETION, DATED NOVEMBER 25, 2016
PROSPECTUS
SmartFinancial, Inc.
$60,000,000
Common Stock
Preferred Stock
Senior Debt Securities
SmartFinancial, Inc. may offer issue, and sell from time to time, together or separately,the securities listed above in one or more offerings any combination of (i) common stock, (ii) preferred stock, which we may issue in one or more series, (iii) debt securities, (iv) depositary shares, (v) warrants, and (vi) units, up to a maximum aggregate offering price of $60,000,000. Our debt securities may consist of debentures, notes, or other types of debt. The debt securities, preferred stock, and warrants may be convertible, exercisable, or exchangeable for common or preferred stock or other securities of ours. The preferred stock may be represented by depositary shares.
This prospectus provides a general description of the securities we may offer. Each time we sell securities, we will provide the specific terms of thesethe securities offered in supplementsa supplement to this prospectus. The prospectus supplementsor prospectus supplement may also may add, update or change information contained in this prospectus. You should read this prospectus and the applicable prospectus supplement carefully before you invest in any securities. This prospectus may not be used to sellconsummate a sale of securities unless accompanied by athe applicable prospectus supplement describing the method and terms of the offering. You should read this prospectus and the accompanying prospectus supplement together with the additional information described under the heading “Incorporation of Certain Documents by Reference” carefully before you invest.
Our common stock is listed on Thethe Nasdaq Capital Market (“
We may offer and sell these securities tothrough underwriting syndicates managed or throughco-managed by one or more underwriters, dealers, or agents, or directly to purchasers, on a continuous or a delayed basis.purchasers. The prospectus supplement for each offering of securities will describe in detail the plan of distribution for that offering. If our agents or any dealers or underwriters are involved in the sale of the securities, the applicable prospectus supplement will set forth the names
Investing in our securities involves risks. You should carefully consider the risk factors set out under the heading, “Risk Factors” inreferred to on page 5 of this prospectus and set forth in the documents incorporated or deemed incorporated by reference herein together with any information set forth in a “Risk Factors” section of any applicable prospectus supplement before making any decision to invest in our securities.
None of the Securities and Exchange Commission nor(the “SEC”), the Federal Deposit Insurance Corporation (the “FDIC”), the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) or any state securities commission or any other federal regulatory bodyagency has approved or disapproved of these securities or determined ifpassed upon the adequacy or accuracy of this prospectus is truthful or complete.prospectus. Any representation to the contrary is a criminal offense. The
These securities are not savings accounts or deposits or obligations of any bank and are not insured by the Federal DepositFDIC, the Bank Insurance CorporationFund, or any other governmental agency.government agency or instrumentality.
This prospectus is , 2016.dated June 26, 2020.
TABLE OF CONTENTS
This prospectus is a part of a registration statement that we filed with the Securities and Exchange Commission (the “
The registration statement containing this prospectus, including exhibits to the registration statement, provides additional information about us and “Incorporation of Certain Informationthe securities offered under this prospectus. The registration statement, including the exhibits and the documents incorporated herein by Reference.”
We may sell our securities to underwriters who will in turn sell the securities to the public on terms fixed at the time of sale. In addition, the securities may be sold by us directly or through dealers or agents that we may designatedesignated from time to time. If we, directly or through agents, solicit offers to purchase the securities, we reserve the sole right to accept and, together with ourany agents, to reject, in whole or in part, any of those offers.
Any prospectus supplement will contain the names of the underwriters, dealers agents, or selling shareholders,agents, if any, together with the terms of the offering, the compensation of those underwriters and the estimated net proceeds to be received by SmartFinancial.us. Any underwriters, dealers or agents participating in the offering may be deemed “underwriters” within the meaning of the Securities Act of 1933, as amended (the “
All references to “SMBK,” “we,” “our,” “us,” “SmartFinancial,” or the “Company” as used in this prospectus refer to SmartFinancial, Inc. and its consolidated subsidiaries, including SmartBank, which we sometimes refer to as “SmartBank,” or unless otherwise stated or the context otherwise requires.
Unless otherwise indicated, currency amounts in this prospectus and in any applicable prospectus supplement are stated in U.S. dollars.
We file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the public via the internet at the SEC’s website (www.sec.gov). You may also inspectread and copy any document that we file with the SEC at the SEC’s public reference facilityPublic Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330(800) SEC-0330 for further information about the Public Reference Room. Our filings with the SEC are also available to the public through the SEC’s Internet site at www.sec.gov. In addition, since some of our securities are listed on the public reference facility. In addition, we maintain a corporate website at www.smartbank.com. We make available through our websiteNasdaq Capital Market, you can read our SEC filings as soon as reasonably practical after we electronically file such material withat the SEC. ThisNasdaq Stock Market, Inc., Reports Section, 1735 K Street N.W., Washington, D.C. 20006. We also maintain an Internet site atwww.smartfinancialinc.com at which there is additional information about our business, however the contents of that site are not incorporated by reference to our website is for the convenienceinto, and are not otherwise a part of, investors as requiredthis prospectus.
Incorporation of Certain INFORMATION by the SEC and shall not be deemedReference
The SEC’s rules allow us to incorporate anyby reference information on the website into this registration statement, prospectus, and any prospectus supplement.
| · | Our Annual Report onForm 10-K for the year ended December 31, 2019, as amended, filed with the SEC on March 12, 2020; |
| · | Those portions of our Definitive Proxy Statement onSchedule 14A, filed with the SEC on April 17, 2020 that are incorporated by reference into our Annual Report onForm 10-K for the year ended December 31, 2019; |
| · | Our Current Reports on Form 8-K filed with the SEC onJanuary 22, 2020,January 23, 2020,March 2, 2020,March 11, 2020,April 3, 2020,April 24, 2020,April 28, 2020,April 29, 2020, andMay 29, 2020 (except for information furnished to the SEC that is not deemed to be “filed” for purposes of the Exchange Act); |
| · | The description of our common stock in our Registration Statement onForm S-4 filed with the SEC on December 6, 2019; |
| · | Any documents we file with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of the initial filing of this registration statement of which this prospectus is a part and prior to the effectiveness of such registration statement (except for information furnished to the SEC that is not deemed to be “filed” for purposes of the Exchange Act); and |
| · | Any documents we file with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act on or after the date of this prospectus and before the termination of the offering of the securities offered hereby (except for information furnished to the SEC that is not deemed to be “filed” for purposes of the Exchange Act). |
We will provide without charge to each person, including any beneficial owner, to whom this prospectus is delivered, upon his or her written or oral request, a copy of any or all documents referred to above which have been or may be incorporated by reference into this prospectus, excluding exhibits to those documents unless they are specifically incorporated by reference into those documents. You may request a copy of these filings, at no cost, by writing or telephoning us at:
Investor Relations
SMARTFINANCIAL, INC.
5401 Kingston Pike, Suite 600
Knoxville, Tennessee 37919
Tel: (865) 437-5700
You should rely only on the information contained or incorporated by reference in this prospectus and the applicable prospectus supplement. We have not authorized anyone else to provide you with additional or different information. We may only use this prospectus to sell securities if it is accompanied by a prospectus supplement. We are only offering these securities in jurisdictions where the offer is permitted. You should not assume that the information in this prospectus or the applicable prospectus supplement or any document incorporated by reference is accurate as of any date other than the dates of the applicable documents.
SPECIAL CAUTIONARY NOTICE
REGARDING FORWARD-LOOKING STATEMENTS
Certain statements made or incorporated by reference in this prospectus which are not statements of historical fact constitute forward-looking statements within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “
All statements other than statements of historical fact are forward-looking statements. You can identify these forward-looking statements through our use of words such as “believes,” “anticipates,” “expects,” “may,” “will,” “assumes,” “predicts,” “could,” “should,” “would,” “intends,” “targets,” “estimates,” “projects,” “plans,” “potential” and other similar words and expressions of the future or otherwise regarding the outlook for our future business and financial performance and/or the performance of the commercial banking industry and economy in general. Forward-looking statements are based on the current beliefs and expectations of our management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements. A number of factors could cause actual results to differ materially from those contemplated by the forward-looking statements in this registration statement, including, but not limited to: competitive pressures among financial institutions increasing significantly; economic conditions, either nationally or locally, in areas in which the Company conducts operations being less favorable than expected; and legislation or regulatory changes which adversely affect the ability of the consolidated Company to conduct business combinations or new operations.
Other potential risks and uncertainties that could cause our actual results to differ materially from those anticipated in any forward-looking statements include, but are not limited to, the following:
| ● | the effects of future economic, business and market conditions and disruptions in the credit and financial markets, domestic and foreign; | ||
| ● | changes in the local economies in our market areas which adversely affect our customers and their ability to transact profitable business with us, including the ability of our borrowers to repay their loans according to their terms or a change in the value of the related collateral; | ||
| ● | changes in the availability of funds resulting in increased costs or reduced liquidity, as well as the adequacy of our cash flow from operations and borrowings to meet our short-term liquidity needs; | ||
| ● | a deterioration or downgrade in the credit quality and credit agency ratings of the investment securities in our investment securities portfolio; | ||
| ● | impairment concerns and risks related to our investment securities portfolio of collateralized mortgage obligations, agency mortgage-backed securities, and obligations of states and political; | ||
| ● | the incurrence and possible impairment of goodwill associated with current or future acquisitions and possible adverse short-term effects on our results of operations; | ||
| ● | increased credit risk in our assets and increased operating risk caused by a material change in commercial, consumer and/or real estate loans as a percentage of our total loan portfolio; | ||
| ● | the concentration of our loan portfolio in loans collateralized by real estate; | ||
| ● | our level of construction and land development and commercial real estate loans; | ||
| ● | failure to prevent a breach to our Internet-based system and online commerce security; | ||
| ● | changes in the levels of loan prepayments and the resulting effects on the value of our loan portfolio; | ||
| ● | the failure of assumptions and estimates underlying the establishment of and provisions made to the allowance for loan losses; | ||
| ● | our ability to expand and grow our business and operations, including the establishment of additional branches and acquisition of additional branches and banks, and our ability to realize the cost savings and revenue enhancements we expect from such activities; | ||
| ● | government intervention in the U.S. financial system, including the effects of legislative, tax, accounting and regulatory actions and reforms, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Jumpstart Our Business Startups Act, the Consumer Financial Protection Bureau, the capital ratios of Basel III as adopted by the federal banking authorities and the Tax Cuts and Jobs Act of 2017; | ||
| ● | uncertainty related to the transition away from or methods of calculating the London Inter-bank Offered Rate; | ||
| ● | increased competition for deposits and loans adversely affecting rates and terms; | ||
| ● | the continued service of key management personnel; | ||
| ● | the potential payment of interest on demand deposit accounts to effectively compete for customers; | ||
| ● | potential environmental liability risk associated with properties that we assume upon foreclosure; | |
| ● | increased asset levels and changes in the composition of assets and the resulting impact on our capital levels and regulatory capital ratios; | |
| ● | risks of current or future mergers and acquisitions, including the related time and cost of implementing transactions and the potential failure to achieve expected gains, revenue growth or expense savings; | |
| ● | increases in regulatory capital requirements for banking organizations generally, which may adversely affect our ability to expand our business or could cause us to shrink our business; | |
| ● | acts of God or of war or other conflicts, acts of terrorism, pandemics or other catastrophic events that may affect general economic conditions; | |
| ● | impact of the current outbreak of the novel coronavirus (COVID-19); | |
| ● | changes in accounting policies, rules and practices and applications or determinations made thereunder; | |
| ● | fraudulent and negligent acts by loan applicants, mortgage brokers and our employees; | |
| ● | failure to maintain effective internal controls and procedures; | |
| ● | the risk that our deferred tax assets could be reduced if future taxable income is less than currently estimated, if corporate tax rates in the future are less than current rates, or if sales of our capital stock trigger limitations on the amount of net operating loss carryforwards that we may utilize for income tax purposes; and | |
| ● | our ability to attract and retain qualified employees. |
For a discussion of these and other risks that may cause actual results to differ from expectations, refer to “Part I – Item 1A. Risk Factors” and other information contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed on March 30, 2016;
The following is a brief summary highlights selected information about SmartFinancial and a general description of the securities we may offer. This summary is not complete andour business. It does not contain all of the information that may be important to you. For a more complete understandingBefore you decide to purchase any of us and the terms of theour securities, we will offer, you should read carefully this entire prospectus includingand the “Risk Factors” section, the applicableaccompanying prospectus supplement, for the securities and thealong with any other documentsinformation we refer to andin, or incorporate by reference. In particular, we incorporate important business and financial informationreference into, this prospectus by reference.
We May Offer
While we offer securities, will describe the amounts, prices,a wide range of commercial banking services, we focus on making loans secured primarily by commercial real estate and detailed termsother types of the securitiessecured and may describe risks associated with an investmentunsecured commercial loans to small and medium-sized businesses in the securities in addition to those described in the “Risk Factors” sectiona number of this prospectus. We will also include in the prospectus supplement, where applicable, information about material United States federal income tax considerations relating to the securities. Terms used in this prospectus will have the meanings described in this prospectus unless otherwise specified.
SMBK had, on a securities exchangeconsolidated basis, total assets of $2.87 billion, total loans of $2.14 billion, total deposits of $2.34 billion and any other specific termsshareholders’ equity of the series$336.2 million at March 31, 2020.
The principal executive offices of preferred stock.
Investing in our securities involves significant risks. You should read and carefully consider the risks and uncertainties and the risk factors set forthdescribed under “Risk Factors” in our most recent Annual Report on Form 10-K forand any subsequent Quarterly Reports on Form 10-Q which descriptions are incorporated by reference herein, as well as the year ended December 31, 2015, which isother information contained or incorporated by reference in this prospectus and in the documents and reports we file with the SEC after the date of this prospectus which are incorporated by reference into this prospectus, as well as any risks describedor in any applicable prospectus supplement hereto before you make an investmentmaking a decision regarding theto invest in our securities. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business operations.
We intend to use the net proceeds from any offering of securities by us for general corporate purposes, which may include acquisitions, capital expenditures, investments, and the repayment, redemption, or refinancing of all or a
We will not receive any of the proceeds from the saleresale of our securities by selling shareholders.
DESCRIPTION OF SECURITIES WE MAY OFFER
This prospectus contains summary descriptions of our common stock, preferred stock, senior and subordinated debt securities, depositary shares, purchase contracts, units, warrants and rights that we may offer from time to time. These summary descriptions are not meant to be complete descriptions of such securities. The particular terms of any security will be described in the related prospectus supplement and other offering material.
The material terms and provisions of the Company’s capital stock are summarized as set forth below. The following summary is not intended to be relied upon as an exhaustive list or a detailed description of the provisions discussed and is qualified in its entirety by the Tennessee Business Corporation Act (the “TBCA”) and by the Second Amended and Restated Charter (the “Charter”) and Second Amended and Restated Bylaws (as amended, the “Bylaws”) of the Company. Copies of our Charter and Bylaws are incorporated by reference in this prospectus. See “Where You Can Find More Information” and “Incorporation Of Certain Information By Reference.”
General
We are authorized to issue 42,000,000 shares of capital stock of which 40,000,000 are shares of common stock, par value $1.00 per share, and 2,000,000 are shares of preferred stock, par value $1.00 per share. As of November 22, 2016,June 25, 2020, there are 5,888,408were 15,216,932 shares of common stock outstanding (inclusive of 63,318 shares of restricted common stock having voting rights) and no shares of preferred stock issued and outstanding.
Common Stock
General.Each share of SMBK common stock has the same relative rights as, and is identical in all respects to, each other share of SMBK common stock. SMBK’s common stock is traded on the NASDAQ Capital Market under the symbol “SMBK.”
Voting Rights; Cumulative Voting.The outstanding shares of SMBK common stock are fully paid and nonassessable. Holders of SMBK common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the shareholders. Holders of SMBK common stock do not have preemptive rights and are not entitled to cumulative voting rights with respect to the election of directors. SMBK’s common stock is neither redeemable nor convertible into other securities, and there are no sinking fund provisions with respect to the common stock. Subject to the preferences applicable to any shares of SMBK preferred stock outstanding at the time, holders of recordcommon stock are entitled to, in the event of liquidation, share pro rata in all assets remaining after payment of liabilities.
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Board of Directors. The business of SMBK is controlled by a board of directors, which is elected by a non-cumulative vote of the common shareholders. SMBK’s bylaws provide that the power to increase or decrease the number of directors and to fill vacancies is vested in SMBK’s board of directors. The overall effect of this provision may be to prevent a person or entity from seeking to acquire control of SMBK through an increase in the number of directors on the board of directors and the election of designated nominees to fill newly created vacancies.
Dividends. Holders of SMBK common stock are entitled to receive dividends when, as and if declared by SMBK’s board of November 22, 2016. This numberdirectors out of funds legally available for dividends. In order to pay any dividends, SMBK generally must receive dividends from SmartBank. Under the Tennessee Banking Act, SmartBank is subject to restrictions on the payment of dividends to SMBK. Pursuant to these laws, SmartBank may only make a dividend from the surplus profits arising from the business of the bank, and may not declare dividends in any calendar year that exceeds the total of its retained net income of that year combined with its retained net income of the preceding two years without the prior approval of the commissioner of the Tennessee Department of Financial institutions (the “TDFI”). Moreover, Tennessee laws regulating SmartBank requires certain charges against and transfers from SmartBank’s undivided profit account before undivided profits can be made available for the payment of dividends. Furthermore, the TDFI also has the authority to prohibit the payment of dividends by SmartBank if it determines such payment to be an unsafe and unsound banking practice. SMBK’s ability to pay dividends to shareholders in the future will depend on its earnings and financial condition, liquidity and capital requirements, the general economic and regulatory climate, SMBK’s ability to service any equity or debt obligations senior to SMBK’s common stock and other factors deemed relevant by SMBK’s board of directors.
The principal source of funds from which SMBK pays cash dividends are the dividends received from its bank subsidiary, SmartBank. Consequently, dividends are dependent upon SmartBank’s earnings, capital needs, and regulatory policies, as well as statutory and regulatory limitations. Federal and state banking laws and regulations restrict the amount of dividends and loans a bank may make to its parent company. Approval by SMBK’s regulators is required if the total of all dividends declared in any calendar year exceeds the total of its net income for that year combined with its retained net income of the preceding two years.
Under certain conditions, dividends paid to SMBK by SmartBank are subject to approval by the TDFI. In addition, under the Federal Deposit Insurance Corporation Improvement Act, banks may not pay a dividend if, after paying the dividend, the bank would be undercapitalized.
Preemptive Rights; Liquidation; Redemption.SMBK common stock does not include shareholders withcarry any preemptive rights enabling a holder to subscribe for or receive shares of SMBK common stock. In the event of liquidation, holders of SMBK common stock are entitled to share in nominee name heldthe distribution of assets remaining after payment of debts and expenses and after required payments to holders of SMBK preferred stock, if any such shares are outstanding. There are no redemption or sinking fund provisions applicable to SMBK common stock.
Preferred Stock
Under the terms of our Charter, the Company has authorized the issuance of up to 2,000,000 shares of preferred stock, par value $1.00 per share, any part or all of which shares may be established and designated from time to time by the Depository Trust Company (“
In addition, as described below, the holdersunder “Description of commonDepositary Shares,” we may, instead of offering full shares of any series of preferred stock, are entitled to receive, pro rata, such dividends and other distributions as and when declaredoffer depositary shares evidenced by SmartFinancial’s boarddepositary receipts, each representing a fraction of directors outa share of the assets and funds legally available therefore. SmartFinancial paid no cash dividends on common stock in 2014 or 2015. SmartFinancial’s board of directors will continue to evaluate the payment of future dividends, if any, after capital needs required for expected growth of assets are reviewed.
Transfer Agent
The transfer agent and registrar for SmartFinancialour common stock is American Stock Transfer & Trust Company, LLC.
Anti-Takeover Provisions
General. Our charter and bylaws, as well as the Tennessee Business Corporation Act,TBCA, contain certain provisions designed to enhance the ability of our board of directors to deal with attempts to acquire control of us. These provisions may be deemed to have an anti-takeover effect and may discourage takeover attempts which have not been approved by the board of directors (including takeovers which certain shareholders may deem to be in their best interest). In particular,To the extent that such takeover attempts are discouraged, temporary fluctuations in the market price of common stock resulting from actual or rumored takeover attempts may be inhibited. These provisions also could discourage or make more difficult a merger, tender offer or proxy contest, even though such transaction may be favorable to the interests of shareholders, and could potentially adversely affect the market price of our common stock.
The following briefly summarizes protective provisions that are contained in our charter and bylaws and which are provided by the TBCA. This summary is necessarily general and is not intended to be a complete description of all the features and consequences of those provisions and is qualified in its entirety by reference to our charter and bylaws and the statutory provisions contained in the TBCA.
Authorized but Unissued Stock. The authorized but unissued shares of common stock and preferred stock will be available for future issuance without shareholder approval. These additional shares may be used for a variety of corporate purposes, including future private or public offerings to raise additional capital, corporate acquisitions, and employee benefit plans. The existence of authorized but unissued and unreserved shares of common stock and preferred stock may enable the board of directors to issue shares to persons friendly to current management, which could render more
Removal of Directors and Filling Vacancies. Our charter and bylaws provide that a summary of certain rights and provisions of the shares of preferred stock. This summary does not purport todirector may be complete and is qualified in its entirety by referenceremoved from office prior to the Second Amended and Restated Charter and Second Amended and Restated Bylawsexpiration of SmartFinancial and the Tennessee Business Corporation Act.
Advance Notice Requirements for Shareholder Proposals. Our bylaws establish advance notice procedures with regard to shareholder proposals. These procedures provide that the shareholder must submit certain information regarding the proposal, together with the proposal itself, to our corporate secretary in advance of the annual meeting. Shareholders submitting proposals for inclusion in our proxy statement must comply with the proxy rules under the Exchange Act. We may determinereject a shareholder proposal that is not made in accordance with such procedures.
Certain Nomination Requirements. Pursuant to our bylaws, we have established certain nomination requirements for an individual to be elected as a director at any annual or special meeting of the shareholders, including that the nominating party provide us within a specified time prior to the meeting (i) the name and address of the shareholder who intends to make the nomination and of the person or persons to be nominated; (ii) a representation that the shareholder is a holder of record of SMBK stock entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the exercisenotice; (iii) a description of itsall arrangements or understandings between the shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the shareholder; (iv) such other information regarding each nominee proposed by such shareholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the SEC, had the nominee been nominated, or intended to be nominated, by the board of directors; and (v) the consent of each nominee to serve as a director of the Company if so elected. These provisions could reduce the likelihood that a third party would nominate and elect individuals to serve on our board of directors.
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Business Combinations with Interested Shareholders. The Tennessee business judgment. SmartFinancial’s Second Amended and Restated Charter authorizescombinations statute provides that a 10% or greater shareholder of a resident domestic corporation cannot engage in a “business combination” (as defined in the statute) with such corporation for a period of two years following the date on which the 10% shareholder became such, unless the business combination or the acquisition of shares is approved by a majority of the disinterested members of such corporation’s board of directors before the 10% shareholder’s share acquisition date. This statute further provides that at no time (even after the two-year period subsequent to such share acquisition date) may the 10% shareholder engage in a business combination with the relevant corporation unless certain approvals of the board of directors or disinterested shareholders are obtained or unless the consideration given in the combination meets certain minimum standards set forth in the statute. The law is very broad in its scope and is designed to issue upinhibit unfriendly acquisitions but it does not apply to 2,000,000 sharescorporations whose charter contains a provision electing not to be covered by the law. Our charter does not contain such a provision. An amendment of preferred stock. our charter to that effect would, however, permit a business combination with an interested shareholder even though that status was obtained prior to the amendment.
Indemnification. The boardTBCA provides that a corporation may indemnify any of its directors and officers against liability incurred in connection with a proceeding if (i) the director or officer acted in good faith, (ii) in the case of conduct in his or her official capacity with the corporation, the director or officer reasonably believed such conduct was in the corporation’s best interest, (iii) in all other cases, the director or officer reasonably believed that his or her conduct was not opposed to the best interest of the corporation, and (iv) in connection with any criminal proceeding, the director or officer had no reasonable cause to believe that his or her conduct was unlawful. In actions brought by or in the right of the corporation, however, the TBCA provides that no indemnification may be made if the director or officer was adjudged to be liable to the corporation. In cases where the director or officer is wholly successful, on the merits or otherwise, in the defense of any proceeding instigated because of his or her status as an officer or director of a corporation, the TBCA mandates that the corporation indemnify the director or officer against reasonable expenses incurred in the proceeding. The TBCA also provides that in connection with any proceeding charging improper personal benefit to an officer or director, no indemnification may be made if such officer or director is adjudged liable on the basis that personal benefit was improperly received. Notwithstanding the foregoing, the TBCA provides that a court of competent jurisdiction, upon application, may order that an officer or director be indemnified for reasonable expenses if, in consideration of all relevant circumstances, the court determines that such individual is fairly and reasonably entitled to indemnification, notwithstanding the fact that (i) such officer or director was adjudged liable to the corporation in a proceeding by resolution, issueor in right of the corporation, (ii) such officer or director was adjudged liable on the basis that personal benefit was improperly received by him, or (iii) such officer or director breached his duty of care to the corporation.
The TBCA also empowers a seriescorporation to provide insurance for directors and officers against liability arising out of preferred stocktheir positions, even though the insurance coverage may be broader than the corporation’s power to indemnify. SMBK maintains directors’ and provideofficers’ liability insurance for the respective rightsbenefit of its directors and officers.
Our bylaws provide that the company will indemnify, to the fullest extent authorized by the TBCA and applicable federal law or regulations, any person who is made a party to or is involved in any proceeding by reason of the fact that he or she is or was a director or officer of SMBK, provided that the basis of such series atproceeding is alleged action in an official capacity as a director or officer.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling SMBK pursuant to the provisions discussed above, SMBK has been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
Certain rules of the FDIC limit the ability of certain depository institutions, their discretion without shareholder approval. We summarize below somesubsidiaries and their affiliated depository institution holding companies to indemnify affiliated parties, including institution directors. In general, subject to the ability to purchase directors and officers liability insurance and to advance professional expenses under certain circumstances, the rules prohibit such institutions from indemnifying a director for certain costs incurred with regard to an administrative or enforcement action commenced by any federal banking agency that results in a final order or settlement pursuant to which the director is assessed a civil money penalty, removed from office, prohibited from participating in the affairs of an insured depository institution or required to cease and desist from or take an affirmative action described in Section 8(b) of the Federal Deposit Insurance Act (12 U.S.C. § 1818(b)).
Anti-Takeover Statutes
In addition to certain of the provisions in our charter discussed above, the State of Tennessee has adopted statutes that can have an anti-takeover effect and may delay or prevent a tender offer or takeover attempt that a shareholder might consider in its best interest, including those attempts that might result in a premium over the market price for shares of our common stock.
Tennessee Control Share Acquisition Act. The Tennessee Control Share Acquisition Act generally provides that, except as stated below, “control shares” will applynot have any voting rights. Control shares are shares acquired by a person under certain circumstances which, when added to their shares owned, would give such person effective control over one-fifth or more, or a majority of all voting power (to the preferred stock that we may issue pursuantextent such acquired shares cause such a person to this prospectus unlessexceed one-fifth or one-third of all voting power) in the applicable prospectus supplement provides otherwise. This summary may not contain all information that is important to you. The complete termselection of the preferred stocka Tennessee corporation’s directors. However, voting rights will be contained inrestored to control shares by resolutions approved by the prospectus supplement applicable to the particular series of preferred stock that we issue. You should read the prospectus supplement, which will contain additional information and which may update or change some of the information below.
The ability ofTennessee Control Share Acquisition Act is not applicable to us because our charter does not contain a specific provision “opting in” to the act, as is required.
Tennessee Investor Protection Act. The Tennessee Investor Protection Act provides that unless a Tennessee corporation’s board of directors to issue preferred stock could discourage, delay or preventhas recommended a takeover offer to shareholders, no offeror beneficially owning 5% or other corporate action.
The offeror must provide that any equity securities of an offeree company deposited or tendered pursuant to a takeover offer may be withdrawn by an offeree at any time within seven days from the date the offer has become effective following filing with the Commissioner and the offeree company and public announcement of the SBLF Preferred Stock of our rationaleterms or after 60 days from the date the offer has become effective. If the takeover offer is for not declaring dividends.
The Tennessee Investor Protection Act does not apply to us, as it does not apply to bank holding companies subject to regulation by a federal agency and does not apply to any offer involving a vote by holders of equity securities of the offeree company.
TBCA. The Tennessee Business Combination Act generally prohibits a “business combination” by a company or as otherwise requiredany of our subsidiaries with an “interested shareholder” within five years after the shareholder becomes an interested shareholder. The company or any of its subsidiaries can, however, enter into a business combination within that period if, before the interested shareholder became such, the company’s board of directors approved the business combination or the transaction in which the interested shareholder became an interested shareholder. After that five-year moratorium, the business combination with the interested shareholder can be consummated only if it satisfies certain fair price criteria or is approved by law.
For purposes of these provisions of the Tennessee Business Combination Act, a “business combination” includes mergers, share exchanges, sales and leases of assets, issuances of securities, and similar transactions. An “interested shareholder” is generally any person or entity that beneficially owns 10% or more of the voting power of any outstanding class or series of our stock.
Tennessee Greenmail Act. The Tennessee Greenmail Act applies to a Tennessee corporation that has a class of voting stock registered or traded on a national securities exchange or registered with the SEC pursuant to Section 12(g) of the Exchange Act. Under the Tennessee Greenmail Act, a company may not declared and paid in full dividendspurchase any of its shares at a price above the market value of such shares from any person who holds more than 3% of the class of securities to be purchased if such person has held such shares for an aggregate of five quarters, whether or not consecutive,less than two years, unless the holderspurchase has been approved by the affirmative vote of a majority of the outstanding shares of SBLF Preferred Stock,each class of voting stock issued by the company or the company makes an offer, or at least equal value per share, to all shareholders of such class.
Bank Holding Company Act. The Bank Holding Company Act requires any “bank holding company,” as a single class, may appoint a representative to serve as an observer on the board. Such right would continue until we had made full dividend payments for four consecutive quarters thereafter. If we have not declared and paid in full dividends for an aggregate of six quarters, and the aggregate liquidation preference of the outstanding shares of SBLF Preferred Stock is greater than $25,000,000, the authorized number of directors on our board of directors shall automatically increase by two and the holders of the SBLF Preferred Stock, voting as a single class, shall have the right to elect two directors to fill such newly created directorships. Such directors would be elected at each of our annual meetings held until we had made full dividend payments for four consecutive quarters. If extinguished by four consecutive timely dividend payments, the rights to appoint board observers and elect directors shall revestdefined in the holders of the SBLF Preferred Stock upon each subsequent missed quarterly dividend payment.
DESCRIPTION OF SENIOR AND SUBORDINATED DEBT SECURITIES
We may offer from time to time debt securities in the form of (a) consent of Treasury if Treasury holds any shares of SBLF Preferred Stock or (b) the holders of a majority of the outstanding shares of SBLF Preferred Stock, voting as a single class, is required for effecting or validating (i) any amendment or alteration of our Articles of Incorporation to authorize, create or issue any shares (or any security convertible into any shares) of any equity security rankingeither senior to the SBLF Preferred Stock with respect to the payment of dividends or distribution of assets in the event of a liquidation, dissolution or winding up; (ii) any change to our Articles of Incorporation that would adversely affect the rights, privileges or voting powers of the SBLF Preferred Stock; (iii) any consummation of a binding share exchange or reclassification involving the SBLF Preferred Stock, subject to certain enumerated exceptions; and (iv) any sale of all or substantially all of our assets if the SBLF Preferred Stock will not be contemporaneously redeemed.
The notes will befollowing summary of the general terms and provisions of the indenture is not complete (the text below refers to both indentures as the form of “indenture”). Forms of indentures for senior indebtedness and subordinated indebtedness are included or incorporated by reference as exhibits to the registration statement of which this prospectus isforms a part. The indentures are substantially identical except as described below under “Subordinated Debt Securities” in this section. You should read the indentures for provisions of the notes. You should also read the prospectus supplement, which will contain additional information and whichthat may update or change some of the information below.
When we offer to sell a particular series of debt securities, wethe prospectus supplement will describe the specific terms of the securities in a supplement to this prospectus. The prospectus supplementseries, and it will also indicateaddress whether the general terms and provisions described in this prospectusbelow apply to athe particular series of debt securities.
General
Unless otherwise provided in a supplemental indenture, our board of directors will consist of either our senior debt (“senior debt securities”), our senior subordinated debt (“senior subordinated debt securities”), our subordinated debt (“subordinated debt securities”) or our junior subordinated debt (“junior subordinated debt securities” and, together withset the senior subordinated debt securities and the subordinated debt securities, the “subordinated securities”). Debt securities, whether senior, senior subordinated, subordinated or junior subordinated, may be issued as convertible debt securities or exchangeable debt securities.
| · | the title of the debt securities; |
| · | the price(s), expressed as a percentage of the principal amount, at which we will sell the debt securities; | |
| · | whether the debt securities will be senior or subordinated, and, if subordinated, any such provisions that are different from those described below under “Subordinated Debt Securities;” | |
| · | any limit on the aggregate principal amount of the debt securities; | |
| · | the date(s) when principal payments are due on the debt securities; | |
| · | the interest rate(s) on the debt securities, which may be fixed or variable, per annum or otherwise, and the method used to determine the rate(s), the dates on which interest will begin to accrue and be payable, and any regular record date for the interest payable on any interest payment date; | |
| · | the place(s) where principal of, premium and interest on the debt securities will be payable; | |
| · | provisions governing redemption of the debt securities, including any redemption or purchase requirements pursuant to any sinking fund or analogous provisions or at the option of a holder of debt securities, and the redemption price and other detailed terms and provisions of such repurchase obligations; | |
| · | the denominations in which the debt securities will be issued, if other than minimum denominations of $1,000 and any integral multiple of $1,000 in excess thereof; |
| · | whether the debt securities will be issued in the form of certificated debt securities or global debt securities; |
| · | the portion of the principal of the debt securities payable upon declaration of acceleration of the maturity date, if other than the entire principal amount; |
| · | any additional or modified events of default from those described in this prospectus or in the indenture and any change in the acceleration provisions described in this prospectus or in the indenture; | |
| · | any additional or modified covenants from those described in this prospectus or in the indenture with respect to the debt securities; |
| · | any depositaries, interest rate calculation agents, exchange rate calculation agents or other agents with respect to the debt securities; and | |
| · | any other specific terms of such debt securities. |
In addition, to or change in the “Events of Default” described in this prospectus or in the indenture with respect to the debt securities and any change in the acceleration provisions described in this prospectus or in the indenture with respect to the debt securities;
The applicable prospectus supplement will provide an overview of the U.S. federal income tax considerations and other special considerations applicable to any debt securities we offer for sale.
Transfer and Exchange
As described in the applicable prospectus supplement, each debt security will be represented by either a certificate issued in definitive registered form (we will refer to any debt security represented by a certificated security as a “certificated debt security”) or one or more global securities registered in the name of a depositary, or its nominee (we will refer to any debt security represented by a global debt security as a “book-entry debt security”), in the aggregate principal amount of the series of debt securities. Except as described below under the heading “Global Debt Securities and Book-Entry System,” book-entry debt securities will not be certificated.
Certificated Debt Securities
You can transfer certificated debt securities (and the right to receive the principal of, premium and interest thereon) only by surrendering the certificate representing those certificated debt securities. Either we or the trustee will reissue the existing certificate, or issue a new certificate, to the new holder.
You may transfer or exchange certificated debt securities at any office we maintain for this prospectuspurpose in accordance with the terms of the indenture. There is being deliveredno service charge, but we may require payment of a sum sufficient to cover any taxes or other governmental charges payable in connection with a series of subordinatedtransfer or exchange.
Global Debt Securities and Book-Entry System
Each global debt security representing book-entry debt securities the accompanying prospectus supplementwill be deposited with, or on behalf of, The Depository Trust Company (which we refer to below as “DTC” or the information incorporated by reference“depositary”), as the depositary, and registered in this prospectus will set forth the approximate amount of senior indebtedness outstanding asits (or its nominee’s) name. DTC is a limited-purpose trust company and a “banking organization” organized under New York law, a member of the endFederal Reserve System, a “clearing corporation” within in the meaning of the most recent fiscal quarter.
Ownership of beneficial interests in book-entry debt securities will be limited to “participants” or Exchange Rights
So long as DTC (or its nominee) is the registered owner of a global debt security, DTC or its nominee, as the case may be, convertible into or exchangeable for our other securities or property. The terms and conditions of conversion or exchange will be set forth inconsidered the supplemental indenture, board resolutionsole owner or officers’ certificate related to that seriesholder of the book-entry debt securities represented by such global debt security for all purposes under the indenture. This means that, except as described below, beneficial owners of book-entry debt securities will not be entitled to have securities registered in their names or to receive physical delivery of a certificate in definitive form nor will such beneficial owners be considered the owners or holders of those securities under the indenture. Accordingly, to exercise any rights of a holder under the indenture each person beneficially owning book-entry debt securities must rely on DTC’s procedures for the related global debt security and, will be described inif such person is not a participant, on the relevant prospectus supplement. The terms will include, among others, the following:
Notwithstanding the above, under existing industry practice, the depositary may authorize persons on whose behalf it holds a global debt security to convertexercise certain of a holder’s rights. For purposes of obtaining any consents or exchange the debt securities;
All payments of Columbia, and expressly assumes the due and punctual payment of the principal of, and premium if any, and interest on, book-entry debt securities will be paid to DTC (or its nominee) as the registered holder of the related global debt security, and any redemption notices will be sent directly to DTC. Neither we, the trustee nor any other agent of ours or agent of the trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in a global debt security or for maintaining, supervising or reviewing any records relating to beneficial ownership interests. We expect DTC, upon receipt of any payment of principal of, premium or interest on a global debt security, to immediately credit participants’ accounts with payments ratably according to the respective amounts of book-entry debt securities held by each participant. We also expect that payments by participants to owners of beneficial interests in book-entry debt securities held through those participants will be governed by standing customer instructions and customary practices, similar to those for securities held in “street name.”
We will issue certificated debt securities in exchange for each global debt security if the depositary at any on alltime cannot or will not continue as depositary or ceases to be a clearing agency registered under the Exchange Act, and we fail to appoint a successor depositary registered as a clearing agency under the Exchange Act within 90 days. In addition, we may at any time and in our sole discretion decide not to have the book-entry debt securities represented by global debt securities; in that event, we will issue certificated debt securities in exchange for the global debt securities of that series. If an event of default with respect to the book-entry debt securities represented by those global debt securities has occurred and is continuing, holders may exchange global debt securities for certificated debt securities.
We have obtained the foregoing information concerning DTC and its book-entry system from sources we believe to be reliable, but we take no responsibility for the accuracy of this information.
No Protection in the Event of a Change of Control
Unless we state otherwise in the applicable prospectus supplement, the debt securities and the due performance of every covenantwill not contain any provisions affording holders of the indenturedebt securities protection, such as prior consent or acceleration rights, in the event we agree to be performeda change in control or observed by us, by supplemental indenture satisfactory to the trustee, executed and delivered to the trustee by such corporation;
Covenants
The applicable prospectus supplement will describe any restrictive covenants applicable to any debt securities we offer for sale.
Consolidation, Merger and such supplemental indenture comply with the indenture provisions relating to merger, consolidation and saleSale of assets.
We may not consolidate or mergermerge with, or into any other personsell or any sale, conveyance, lease or other transfer of all or substantially all of our or our subsidiaries’properties and assets to, any person, the successor person shall succeed, and be substituted for, us under the indenture and each series of outstanding debt securities, andwhich we shall be relieved of all obligations under the indenture and each series of outstanding debt securitiesrefer to the extent we were the predecessor person.
| · | immediately after giving effect to the transaction, no event of default, and no event which after the giving of notice or lapse of time or both, would become an event of default, shall have occurred and be continuing under the indenture; and |
| · | certain other conditions are met. |
Events of Default
For any series of debt securities, in addition to any event of default described in the prospectus supplement applicable to that series, an event of default will include the following events:
| · | default in the payment when |
| default in |
| default |
| default in the performance or breach of any other covenant or warranty in the indenture |
| certain events of bankruptcy, insolvency or reorganization |
The applicable prospectus supplement will explain whether or not an event of Defaultdefault with respect to a particularone series of debt securities (except as to certain events of bankruptcy, insolvency or reorganization) necessarily constitutes an Event of Defaultwill constitute a cross-default with respect to any other series of debt securities. The occurrencesecurities (except that certain events of certain Events of Defaultbankruptcy, insolvency or an acceleration under the indenture mayreorganization will always constitute cross-defaults).
If an event of default under certain of our other indebtedness that we may have outstanding from time to time. Unless
Each indenture will provide that the trustee will be under no obligation to exercise any rights or powers under such indenture at the request of acceleration,any holder of outstanding debt securities unless the trustee is indemnified to its satisfaction against any loss, liability or expense. Subject to certain rights of the trustee, the holders of a majority in aggregate principal amount of outstanding debt securities of any series may rescind this accelerated payment requirement if all existing Events of Default, except for nonpayment of the principal on the debt securities of that series that has become due solely as a result of the accelerated payment requirement, have been cured or waived and if the rescission of acceleration would not conflict with any judgment or decree. The holders of a majority in aggregate principal amount of the outstanding debt securities of any series also have the right to waive past defaults, except a default in paying principal or interest on any outstanding debt security, or in respect of a covenant or a provision that cannot be modified or amended without the consent of all holders of the debt securities of that series.
No holder of any debt security may institute any proceeding, judicial or otherwise, with respect to the default was already curedindenture or waived. Unless there isfor the appointment of a receiver or trustee, or for any remedy under the indenture, unless:
| · | that holder has previously given to the trustee written notice of a continuing event of default with respect to debt securities of that series; and |
| · | the holders of at least a majority in principal amount of the outstanding debt securities of that series have requested the trustee in writing (and offered indemnity or security satisfactory to the trustee) to institute the proceeding (and have not subsequently given contrary instructions), and the trustee has failed to institute the proceeding within 60 days. |
Notwithstanding the foregoing, the holder of any debt security will have an absolute and unconditional right to receive payment of the principal of, premium and any interest on that debt security on or after the due dates expressed in paying principal, interest or any premium when due,that debt security and to institute suit for the enforcement of payment.
Under the indenture we must furnish the trustee can withhold giving noticea statement as to compliance with the holders if it determines in good faith that the withholding of notice is in the interest of the holders. In the case of a default specified in clause (4) above describing Events of Default, no notice of default to the holders of the debt securities of that series will be given until 60 days after the occurrence of the event of default.
Modification and Waiver
We may amend or supplement the indenture may be amended or modified without the consent of any holdera series of debt securities in order to:
| · | reduce the amount of debt securities whose holders must consent to an amendment, supplement or waiver; |
| · | reduce the rate of, or extend the time for payment of, interest (including default interest) on any debt security; |
| · | reduce the principal or change the stated maturity of any debt security or reduce the amount of, or postpone the date fixed for, the payment of any sinking fund or analogous obligation; |
| · | reduce the principal amount of discount securities payable upon acceleration of maturity; |
| · | waive a default or event of default in the payment of the principal of or interest, if any, on any debt security (except a rescission of acceleration by the holders of at least a majority in aggregate principal amount of the then outstanding debt securities of that series and a waiver of the payment default that resulted from such acceleration); |
| · | make the principal of or interest, if any, on any debt security payable in any currency other than that stated in the debt security; |
| · | make any change to certain provisions of the indenture relating to, among other things, holders’ rights to receive payment of the principal of, premium and interest on those debt securities and to institute suit for the enforcement of any such payment and to waivers or amendments; or |
| · | waive a redemption payment with respect to any debt security. |
Except for certain specified provisions, the holders of at least a majority in principal amount of the outstanding debt securities of any series may on behalf of all holders waive our compliance with provisions of the indenture. In certain circumstances, the indenture can be amended without the consent of the holders. The holders of a majority in principal amount of the outstanding debt securities of any series may on behalf of all holders waive any past default under the indenture with respect to that series and its consequences, except a payment default or a default of a covenant or provision which cannot be modified or amended without the consent of the holder of each outstanding debt security affected:
Defeasance of Debt Securities and Certain Covenants in each case, we have irrevocably deposited or caused to be depositedCertain Circumstances
Legal Defeasance
We may deposit with the trustee, sufficient funds to pay and dischargein trust, cash or U.S. government securities in an amount that, which through the entire indebtedness on the seriespayment of debt securities; and
Defeasance of default or default with respect toCertain Covenants
Under the outstandingindenture (and unless otherwise provided by the terms of the applicable series of debt securities of that series has occurred and is continuing at the time of such deposit after giving effect tosecurities), upon making the deposit or,and delivering the legal opinion described in “Legal Defeasance” above, we will not need to comply with the covenants described under the heading “Consolidation, Merger and Sale of Assets” and certain other covenants set forth in the case of legal defeasance, no default relating to bankruptcy or insolvency has occurred and is continuing atindenture, as well as any time on or before the 91st day after the date of such deposit, it being understoodadditional covenants that this condition is not deemed satisfied until after the 91st day;
Covenant Defeasance and Registrar
If we exercise our option to effect covenant defeasance with respect to any series of debt securities withoutand the debt securities of that series are declared due and payable because of the occurrence of any event of default, the amounts on deposit with the trustee will be sufficient to pay amounts due on the debt securities of that series at the time of their stated maturity but may not be sufficient to pay amounts due on the debt securities of that series at the time of the acceleration resulting from the event of default. We will remain liable for those payments.
The Trustee
The indentures limit the right of the trustee, should it become a creditor of us, to obtain payment of claims or secure its claims. The trustee is permitted to engage in certain other transactions. However, if the trustee acquires any conflicting interest, and there is a default under the debt securities of any series for which it is trustee, the trustee must eliminate the conflict or resign.
Subordinated Debt Securities
The indenture will govern the extent to which payment on any subordinated debt securities will be subordinated to the prior notice,payment in full of all of our senior indebtedness. The subordinated debt securities also are effectively subordinated to all debt and we orother liabilities, including trade payables and lease obligations, if any, of our subsidiaries may act as paying agentsubsidiaries.
Upon any distribution of our assets upon any dissolution, winding up, liquidation or registrar.
We may not make any payment on the subordinated debt securities, represented by these global securities. The depositary maintains a computerized system that will reflect each investor’s beneficial ownership ofincluding upon redemption (whether at the securities through an account maintained by the investor with its broker/dealer, bank, trust companyholder’s or other representative, as we explain more fully below.
| · | a default in the payment of the principal, premium, if any, interest, rent or other obligations in respect of any senior indebtedness occurs and is continuing beyond any applicable grace period (called a “payment default”); or |
| · | a default (other than a payment default) with respect to designated senior indebtedness occurs and is continuing that permits holders of designated senior indebtedness to accelerate its maturity, and the trustee receives a notice of such default (called a “payment blockage notice”) from us or any other person permitted to give such notice under the indenture (called a “non-payment default”). |
We may issueresume payments and distributions on the registeredsubordinated debt securities, in the formcase of onea payment default, upon the date on which such default is cured or more fully registered global securities that will be deposited with a depositarywaived or its custodian identifiedceases to exist; and, in the applicable prospectus supplement and registered incase of a non-payment default, the name of that depositary or its nominee. In those cases, one or more registered global securities will be issued in a denomination or aggregate denominations equal to the portionearlier of the aggregate principaldate on which such nonpayment default is cured or face amountwaived and 179 days after the date on which the payment blockage notice is received, if the maturity of the securities todesignated senior indebtedness has not been accelerated, unless the indenture otherwise prohibits such payment or distribution at the time of such payment or distribution.
No new payment blockage notice may be represented by registered global securities. Unlessgiven unless and until it is exchanged in whole for securities in definitive registered form, a registered global security may not be transferred except as a whole by and among365 days have elapsed since the depositary for the registered global security, the nomineesinitial effectiveness of the depositary or any successors of the depositary or those nominees.
If the trustee or any holder of the notes receives any payment or distribution of our assets in contravention of the foregoing subordination provisions, then such payment or distribution will be held in trust for the benefit of holders of senior indebtedness or their representatives to the extent necessary to make payment in full in cash or payment satisfactory to the holders of senior indebtedness of all unpaid senior indebtedness.
In the event of our bankruptcy, dissolution or reorganization, holders of senior indebtedness may receive more, ratably, and holders of the subordinated debt securities may receive less, ratably, than our other agentcreditors (including our trade creditors). This subordination will not prevent the occurrence of ours orany event of default under the indenture.
The indenture does not prohibit us from incurring debt, including senior indebtedness. We may from time to time incur additional debt, including senior indebtedness.
We are obligated to pay compensation to the trustee, will have any responsibilityreimburse the trustee for reasonable expenses and to indemnify the trustee against certain losses, liabilities or liability for any aspect of the recordsexpenses it incurs in connection with its duties relating to the subordinated debt securities. The trustee’s claims for these payments made on account of beneficial ownership interests in the registered global security or for maintaining, supervising or reviewing any records relatingwill generally be senior to those beneficial ownership interests.
Certain Definitions
“Indebtedness” means:
(1) all indebtedness, obligations and other liabilities (contingent or otherwise) for borrowed money (including our obligations in definitive form inrespect of overdrafts, foreign exchange forcontracts, currency exchange agreements, interest rate protection agreements, and any loans or advances from banks, whether or not evidenced by notes or similar instruments) or evidenced by bonds, debentures, notes or similar instruments (whether or not the recourse of the lender is to the whole of the assets of such person or to only a registered global security will be registeredportion thereof) (other than any account payable or other accrued current liability or obligation incurred in the nameordinary course of business in connection with the obtaining of materials or names that the depositary gives to the trusteeservices);
(2) all reimbursement obligations and other liabilities (contingent or other relevant agent of ours or theirs. It is expected that the depositary’s instructions will be based upon directions received by the depositary from participantsotherwise) with respect to ownershipletters of beneficial interestscredit, bank guarantees or bankers’ acceptances;
(3) all obligations and liabilities (contingent or otherwise) in respect of leases required, in conformity with generally accepted accounting principles, to be accounted for as capitalized lease obligations on our balance sheet;
(4) all obligations and other liabilities (contingent or otherwise) under any lease or related document (including a purchase agreement) in connection with the lease of real property which contractually obligates us to purchase or cause a third party to purchase the leased property and thereby guarantee a minimum residual value of the leased property to the lessor and the obligations of such person under such lease or related document to purchase or to cause a third party to purchase such leased property;
(5) all obligations (contingent or otherwise) with respect to an interest rate or other swap, cap or collar agreement or other similar instrument or agreement or foreign currency hedge, exchange, purchase or similar instrument or agreement;
(6) all direct or indirect guaranties or similar agreements in respect of, and obligations or liabilities (contingent or otherwise), to purchase or otherwise acquire or otherwise assure a creditor against loss in respect of indebtedness, obligations or liabilities of others of the type described in (1) through (5) above;
(7) any indebtedness or other obligations described in (1) through (6) above secured by any mortgage, pledge, lien or other encumbrance existing on property which we own or hold, regardless of whether the indebtedness or other obligation secured thereby shall be assumed by us; and
(8) any and all refinancings, replacements, deferrals, renewals, extensions and refundings of, or amendments, modifications or supplements to, any indebtedness, obligation or liability of the kind described in clauses (1) through (7) above.
“Senior indebtedness” means the principal, premium, if any, interest, including any interest accruing after bankruptcy, additional amounts, if any, and rent or termination payment on or other amounts due on our current or future indebtedness, whether created, incurred, assumed, guaranteed or in effect guaranteed by us, including any deferrals, renewals, extensions, refundings, amendments, modifications or supplements to the above. Senior indebtedness does not include:
| · | indebtedness that expressly provides that it shall not be senior in right of payment to subordinated debt securities or expressly provides that it is on the same basis or junior to subordinated debt securities; and |
| · | our indebtedness to any of our majority-owned subsidiaries. |
Governing Law
Unless otherwise set forth in the registered global security that had been held by the depositary.
The following briefly summarizes the general provisions that will apply to depositary shares unless the applicable prospectus supplement provides otherwise. This summary may not contain all information that is important to you. The complete terms of the depositary shares will be contained in the depositary agreement and depositary receipt applicable to any depositary shares. These documents have been or will be included or incorporated by reference as exhibits to the registration statement of which this prospectus is a part. You should read the depositary agreement and the depositary receipt. You should also read the prospectus supplement applicable to a particular issuance of depositary shares, which will contain additional information and which may update or change some of the information below.
Description of Depositary Shares
We may offer depositary shares evidenced by receipts for such depositary shares, which we sometimes refer to as “depositary receipts.” Each depositary receipt represents a fraction of a share of the particular series of preferred stock.stock issued and deposited with a depositary. The fraction of a share of preferred stock which each depositary share represents will be set forth in the applicable prospectus supplementsupplement.
We will indicate that fraction. Thedeposit the shares of any series of preferred stock represented by depositary shares willaccording to the provisions of a deposit agreement to be deposited under a depositary agreemententered into between us and a bank or trust company, that meets certain requirements and is selected by us, which we refer towill select as our preferred stock depositary, and which may be the “bank depositary.”same institution that serves as an indenture trustee. The depositary must have its principal office in the United States and have combined capital and surplus of at least $50,000,000. We will name the depositary in the applicable prospectus supplement. Each owner of a depositary share will be entitled to all the rights and preferences of the underlying preferred stock in proportion to the applicable fraction of a share of preferred stock represented by the depositary share. These rights may include dividend, voting, redemption, conversion and liquidation rights. The depositary shares will be evidenced by depositary receipts issued pursuant to the depositary agreement. Depositary receipts will be distributed to those persons purchasing the fractional shares of preferred stock in accordance with the terms of the offering.
Withdrawal of Preferred Stock
A holder of depositary receipts at the principal office of the bank depositary, subject to the terms of the depositary agreement, the owner of
Dividends and Other Distributions
Holders of depositary shares of any series will receive their pro rata share of cash dividends or other cash distributions received by the depositary on the preferred stock of that series held by it. Each holder will receive these distributions in proportion to the number of depositary shares owned by the holder. The depositary will distribute only whole United States dollars and cents. The depositary will add any fractional cents not distributed to the next sum received for distribution to record holders of depositary shares. In the event of a non-cash distribution, the depositary will distribute property to the record holders of depositary shares, unless the depositary determines that it is not feasible to make such a distribution. If this occurs, the depositary, with our approval, may sell the property and distribute the net proceeds from the sale to the holders.
Redemption of Depositary Shares
If a series of preferred stock thus withdrawn may not thereafter deposit thoserepresented by depositary shares underis subject to redemption, then we will give the necessary proceeds to the depositary. The depositary will then redeem the depositary agreement or receiveshares using the funds they received from us for the preferred stock. The depositary receipts evidencingwill notify the record holders of the depositary shares therefor.
Upon and after the redemption of shares of the underlying series of preferred stock, the depositary shares called for redemption will no longer be considered outstanding. Therefore, all rights of holders of the depositary shares will then cease, except that the holders will still be entitled to receive any cash payable upon the redemption and any money or other property to which the holder was entitled at the time of redemption.
Voting Rights
Upon receipt of notice of any meeting at which the holders of preferred stock of the related series are entitled to vote, the depositary will notify holders of depositary receipts all reportsshares of the upcoming vote and communications from usarrange to deliver our voting materials to the holders. The record date for determining holders of depositary shares that are deliveredentitled to vote will be the same as the record date for the related series of preferred stock. The materials the holders will receive will (1) describe the matters to be voted on and (2) explain how the holders, on a certain date, may instruct the depositary to vote the shares of preferred stock underlying the depositary shares. For instructions to be valid, the depositary must receive them on or before the date specified. The depositary will attempt, as far as practical, to vote the shares as instructed by the holder. We will cooperate with the depositary to enable it to vote as instructed by holders of depositary shares. If any holder does not instruct the depositary how to vote the holder’s shares, the depositary will abstain from voting those shares.
Conversion or Exchange
The depositary will convert or exchange all depositary shares on the same day that the preferred stock underlying the depositary shares is converted or exchanged. In order for the depositary to do so, we will deposit with the depositary any other preferred stock, common stock or other securities into which the preferred stock is to be converted or for which it will be exchanged.
The exchange or conversion rate per depositary share will be equal to the bankexchange or conversion rate per share of preferred stock, multiplied by the fraction of a share of preferred stock represented by one depositary share. All amounts per depositary share payable by us for dividends that have accrued on the preferred stock to the exchange or conversion date that have not yet been paid shall be paid in appropriate amounts on the depositary shares.
The depositary shares, as such, cannot be converted or exchanged into other preferred stock, common stock, securities of another issuer or any other of our securities or property. Nevertheless, if so specified in the applicable prospectus supplement, a holder of depositary shares may be able to surrender the depositary receipts to the depositary with written instructions asking the depositary to instruct us to convert or exchange the preferred stock represented by the depositary shares into other shares of preferred stock or common stock or to exchange the preferred stock for securities of another issuer. If the depositary shares carry this right, upon the payment of applicable fees and taxes, if any, we will cause the conversion or exchange of the preferred stock using the same procedures as we use for the delivery of preferred stock. If a holder is only surrendering part of the depositary shares represented by a depositary receipt for conversion, new depositary receipts will be issued for any depositary shares that we are requirednot surrendered.
Amendment and Termination of the Deposit Agreement
We may agree with the depositary to furnishamend the deposit agreement and the form of depositary receipt without consent of the holder at any time. However, if the amendment adds or increases fees or charges payable by holders of the depositary shares or prejudices an important right of holders, it will only become effective with the approval of holders of at least a majority of the affected depositary shares then outstanding. If an amendment becomes effective, holders are deemed to agree to the amendment and to be bound by the amended deposit agreement if they continue to hold their depositary receipts.
The deposit agreement will automatically terminate if:
| · | all outstanding depositary shares have been redeemed and all amounts payable upon redemption have been paid; |
| · | each share of preferred stock held by the depositary has been converted into or exchanged for common stock, other preferred stock or other securities; or |
| · | a final distribution in respect of the preferred stock held by the depositary has been made to the holders of depositary receipts in connection with our liquidation, dissolution or winding-up. |
We may also terminate the deposit agreement at any time. Upon such event, the depositary will give notice of termination to the holders not less than 30 days before the termination date. Once depositary receipts are surrendered to the depositary, it will send to each holder the number of whole and fractional shares of the series of preferred stock underlying that holder’s depositary receipts, provided that, at our election we may pay cash in lieu of fractional shares of preferred stock that may be issuable.
Charges of Depositary and Expenses
We will pay all transfer and other taxes and governmental charges in connection with the establishment of the depositary arrangements. We will pay all charges and fees of the depositary for the initial deposit of the preferred stock, the depositary’s services and redemption of the preferred stock.
Limitations on Our Obligations and Liability to Holders of Depositary Receipts
The deposit agreement may limit our obligations underand the depositary agreement. The obligations of the bank depositarydepositary. It may also limit our liability and us underthe liability of the depositary as follows:
| · | we and the depositary will only be obligated to take the actions specifically set forth in the deposit agreement in good faith; |
| · | we and the depositary will not be liable if either is prevented or delayed by law or circumstances beyond our or its control from performing our or its obligations under the deposit agreement; |
| · | we and the depositary will not be liable if either exercises discretion permitted under the deposit agreement; |
| · | we and the depositary will have no obligation to become involved in any legal or other proceeding related to the depositary receipts or the deposit agreement on behalf of the holders of depositary receipts or any other party, unless we and the depositary are provided with satisfactory indemnity; and |
| · | we and the depositary will be permitted to rely upon any written advice of counsel or accountants and on any documents we believe in good faith to be genuine and to have been signed or presented by the proper party. |
In the deposit agreement, will be limitedwe may agree to performance in good faith of our duties thereunder, and we will not be obligated to prosecute or defend any legal proceeding in respect of anyindemnify the depositary shares or preferred stock unless satisfactory indemnity is furnished. We may rely upon written advice of counsel or accountants, or upon information provided by persons presenting preferred stock for deposit, holders of depositary receipts or other persons believed to be competent and on documents believed to be genuine.
Resignation and Removal of Bank Depositary
The bank depositary may resign at any time by delivering tonotifying us notice of its election to do so, andso. In addition, we may remove the depositary at any time remove the bank depositary. Any suchtime. Such resignation or removal will take effect upon the appointment ofwhen we appoint a successor bank depositary and its acceptance of suchit accepts the appointment. TheWe must appoint the successor bank depositary must be appointed within 60 days after delivery of the notice of resignation or removal and the new depositary must be a bank or trust company meetinghaving its principal office in the requirementsUnited States and having a combined capital and surplus of at least $50,000,000.
DESCRIPTION OF PURCHASE CONTRACTS
We also may issue purchase contracts, including contracts obligating holders to purchase from us, and obligating us to sell to holders, a fixed or varying number of debt or equity securities at a future date or dates. The consideration for such securities may be fixed at the time that the purchase contracts are issued or may be determined by reference to a specific formula set forth in the purchase contracts. Any purchase contract may include anti-dilution provisions to adjust the number of shares issuable pursuant to such purchase contract upon the occurrence of certain events.
The purchase contracts may be issued separately or as a part of units consisting of a purchase contract and other securities. These contracts, and the holders’ obligations to purchase our securities under the purchase contracts, may be secured by cash, certificates of deposit, U.S. government securities that may mature prior to, or simultaneously with, the maturity of the depositary agreement.
We summarize below somealso may offer two or more of the provisions that will apply tosecurities described in this prospectus in the warrants that we may issueform of a “unit,” including pursuant to this prospectus unlessa unit agreement. The unit may be transferable only as a whole, or the securities comprising a unit may, as described in the applicable prospectus supplement, provides otherwise. This summarybe separated and transferred by the holder separately. There may or may not containbe an active market for units or the underlying securities, and not all information that is important to you. The complete terms of the warrants willsecurities comprising a unit may be contained in the applicable warrant certificate and warrant agreement. These documents have beenlisted or will be includedtraded on a securities exchange or incorporated by reference as exhibits to the registration statement of which this prospectus is a part. You should read the warrant certificate and the warrant agreement. You should also read the prospectus supplement, which will contain additional information and which may update or change some of the information below.
We may issue together with other securitieswarrants in one or separately, warrantsmore series to purchase debt securities, common stock, preferred stock, senior debt securities, subordinated debt securities, other securities or otherany combination of these securities. Warrants may be issued independently or together with any underlying securities and may be attached to or separate from the underlying securities. We may issue theeach series of warrants under a separate warrant agreementsagreement to be entered into between us and a bank or trust company, as warrant agent, all as set forth inagent. If applicable, the applicable prospectus supplement. The warrant agent would act solely as our agent in connection with the warrants of thesuch series being offered and would not assume any obligation or relationship of agency or trust for or with anyon behalf of holders or beneficial owners of warrants.
The applicable prospectus supplement will describe the terms of any warrants, including the following, terms, where applicable, of warrants in respect of which this prospectus is being delivered:
| · | the title of the warrants; |
| · | the total number of warrants to be issued; |
| · | the consideration for which we will issue the warrants, including the applicable currency or currencies; |
| · | anti-dilution provisions to adjust the number of shares of our common stock or other securities to be delivered upon exercise of the warrants; |
| · | the designation |
| · | the price at which and the currency or currencies in which investors may purchase the underlying securities purchasable upon exercise of the warrants; |
| · | the dates on which the right to exercise the warrants |
| · | the procedures and conditions relating to the exercise of |
| · | whether the warrants will be in registered or bearer form; |
| · | information with respect to book-entry registration and transfer procedures, if any; |
| · | the minimum or maximum amount of warrants which may be exercised at any one time; |
| · | the designation and terms of the |
| · | |||
| · | |||
| · | the identity of any warrant agent; and |
| · | any other terms of the warrants, including terms, procedures and limitations relating to the exchange, transfer and exercise of the |
Warrant certificates may be exchanged for new warrant certificates of different denominations, and warrants may be exercised at the warrant agent’s corporate trust office or any other office indicated in the applicable prospectus supplement. Prior to the exercise of their warrants, holders of warrants exercisable for debt securities will not have any of the rights of holders of the debt securities purchasable upon such exercise and will not be entitled to payments of principal (or premium, if any) or interest, if any, on the debt securities purchasable upon such exercise. Prior to the exercise of their warrants, holders of warrants exercisable for shares of common stock, preferred stock or depositary shares will not have any rights of holders of the common stock, preferred stock or depositary shares purchasable upon such exercise, including the rightany rights to vote such shares or to receive any distributions or dividends if any, or payments upon our liquidation, dissolution or winding-up or to exercise voting rights, if any.
Exercise of Warrants
A warrant will entitle the holder thereof to purchase thefor cash an amount of such principal amounts of debt securities or such number of shares of common stock or preferred stock or other securities at thean exercise price asthat will in each case be set forthstated in, or that will be determinable as set forthdescribed in, the applicable prospectus supplement. Warrants may be exercised at any time upprior to the close of business on the expiration date and in accordance with the procedures set forth in the applicable prospectus supplement. AfterUpon and after the close of business on the expiration date, unexercised warrants will become void. Warrants may be exercised as set forth in the applicable prospectus supplement relating to the warrants offered thereby. Upon receipt of paymentvoid and the warrant certificate properly completed and duly executed at the corporate trust office of the warrant agenthave no further force, effect or any other office indicated in the applicable prospectus supplement, we will, as soon as practicable, forward the purchased securities. If less than all of the warrants represented by the warrant certificate are exercised, a new warrant certificate will be issued for the remaining warrants.
Enforceability of RightsRights; Governing Law
The holders of Holders of Warrants
The following briefly summarizes the general provisions of rights to purchase additional shares of our common stock or any series of preferred stock, which we may issue. The specific terms of any rights, including the period during which the exercise pricerights may be exercised, the manner of exercising such rights, and the transferability of rights, will be disclosed in the applicable prospectus supplement.
General
We may distribute rights, which may or may not be transferable, to the holders of our common stock or any series of our preferred stock as of a record date set by our board of directors, at no cost to such holders. Each holder will be given the right to purchase a specified number of securities covered by, a common stock warrant or preferred stock warrant may be adjusted proportionately if we subdivide or combinewhole shares of our common stock or preferred stock for every share of our common stock or share of a series of preferred stock that the holder thereof owned on such record date, as applicable.
Exercise Price
Our board of directors will determine the exercise price or prices for the rights based upon a number of factors, including, without limitation, our business prospects; our capital requirements; the price or prices at which an underwriter or standby purchasers may be willing to purchase shares that remain unsold in the rights offering; and general conditions in the securities markets, especially for securities of financial institutions.
The subscription price may or may not reflect the actual or long-term fair value of the common stock or preferred stock offered in the rights offering. We provide no assurances as to the market values or liquidity of any rights issued, or as to whether or not the market prices of the common stock or preferred stock subject to the rights will be more or less than the rights’ exercise price during the term of the rights or after the rights expire.
Exercising Rights; Fees and Expenses
The manner of exercising rights will be set forth in the applicable prospectus supplement. Any subscription agent or escrow agent will be set forth in the applicable prospectus supplement. We will pay all fees charged by any subscription agent and escrow agent in connection with anythe distribution and exercise of rights. Rights holders will be responsible for paying all other provisions;commissions, fees, taxes or
Expiration of Rights
The applicable prospectus supplement will set forth the expiration date and the warrant agent may deem necessary or desirable and whichtime (“Expiration Date”) for exercising rights. If holders of rights do not adversely affectexercise their rights prior to such time, their rights will expire and will no longer be exercisable and will have no value.
We will extend the interestsExpiration Date as required by applicable law and may, in our sole discretion, extend the Expiration Date. If we elect to extend the Expiration Date, we will issue a press release announcing such extension prior to the scheduled Expiration Date.
Withdrawal and Termination
We may withdraw the rights offering at any time prior to the Expiration Date for any reason. We may terminate the rights offering, in whole or in part, at any time before completion of the warrant holders.
Rights of Subscribers
Holders of rights will have no rights as shareholders with respect to the shares of common stock or preferred stock for which the rights may be exercised until they have exercised their rights by payment in full of the exercise price and in the manner provided in the applicable prospectus supplement, and such shares of common stock or preferred stock, as applicable, have been issued to such persons. Holders of rights will have no right to revoke their subscriptions or receive their monies back after they have completed and delivered the materials required to exercise their rights and have paid the exercise price to the subscription agent. All exercises of rights will be final and cannot be revoked by the holder of rights.
Regulatory Limitations
We will not be required to issue any person or group of persons shares of our common stock or preferred stock pursuant to the rights offering if, in our sole opinion, such person would be required to give prior notice to or obtain prior approval from, any state or federal governmental authority to own or control such shares if, at the time the rights offering is scheduled to expire, such person has not obtained such clearance or approval in form and substance reasonably satisfactory to us.
Standby Agreements
We may enter into one or more separate agreements with one or more standby underwriters or other persons to purchase, for their own account or on our behalf, any shares of our common stock or preferred stock not subscribed for in the rights offering. The terms of any such agreements will be described in the applicable prospectus supplement.
We may sell the securities describedcovered in this prospectus in any combination. of three ways (or in any combination):
| · | through underwriters or dealers; |
| · | directly to a limited number of purchasers or to a single purchaser; or |
| · | through agents. |
Each unittime that we use this prospectus to sell securities, we will be issued so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder ofprovide a unit will have the rights and obligations of a holder of each included security. The unit agreement under which a unit is issued may provide that the securities included in the unit may not be heldprospectus or transferred separately, at any time or at any time before a specified date. The applicable prospectus supplement may describe:
| · | the name or names of any underwriters, dealers or agents and the amounts of any securities underwritten or purchased by each of them; and |
| · | the public offering price of the common stock and the proceeds to us and any discounts, commissions or concessions allowed or reallowed or paid to dealers. |
Any public offering price and any discounts or concessions allowed or reallowed or paid to dealers; and
If underwriters are used in the sale of some or all ofany securities, the securities coveredwill be acquired by this prospectus, the underwriters will acquire the securities for their own account. The underwritersaccount and may resell the securities, either directlybe resold from time to the public or to securities dealers, at various timestime in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The obligations ofsecurities may be either offered to the public through underwriting syndicates represented by managing underwriters, or directly by underwriters. Generally, the underwriters’ obligations to purchase the securities will be subject to certain conditions. Unless indicated otherwise in a prospectus supplement, theconditions precedent. The underwriters will be obligated to purchase all the securities of the series offered if any of the securities are purchased.
We may sell the securities through agents from time to time. The prospectus or prospectus supplement will name any agent involved in the offer or sale of the securities and any concessions allowed or reallowedcommissions we pay to dealers may be changed intermittently.
We may authorize agents, underwriters, dealers or dealersagents to solicit offers by certain specified institutionspurchasers to purchase the securities from us at athe public offering price set forth in the prospectus or prospectus supplement pursuant to delayed delivery contracts providing for payment and delivery on a futurespecified date specified in the prospectus supplement. Thesefuture. The contracts will be subject only to those conditions set forth in the applicableprospectus or prospectus supplement, and the prospectus or prospectus supplement will set forth theany commissions payablewe pay for solicitation of these contracts.
Agents and underwriters may receive compensation in the form of discounts, concessions or commissions from us and/or the purchasers of securities for whom such broker-dealers, agents or underwriters may act as agents or to whom they sell as principal, or both (this compensation to a particular broker-dealer might be in excess of customary commissions).
We will identify any underwritersmay enter into derivative transactions with third parties, or agents, and describe their compensation, in a prospectus supplement. Any institutional investors or others that purchase offeredsell securities directly, and then resell the securities, may be deemed to be underwriters, and any discounts or commissions receivednot covered by them from us and any profit on the resale of the securities by them may be deemed to be underwriting discounts and commissions under the Securities Act.
Each series of securities will identifybe a new issue of securities and will have no established trading market other than the selling shareholders,common stock which is listed on the Nasdaq Capital Market. Any underwriters to whom securities are sold for public offering and sale may make a market in the securities, to be offered by the selling shareholders, the terms of the offering and the terms of the securities. Selling shareholders may be deemed to bebut such underwriters in connection with the securities they resell and any profits on the sales may be deemed to be underwriting discounts and commissions under the Securities Act. The selling shareholders will receive all the proceeds from the sale of securities. We will not receivebe obligated to do so and may discontinue any proceeds from sales by selling shareholders.
Unless otherwise indicated in the applicable prospectus supplement, the validity of the securities offered hereunderhereby will be passed upon for us by Butler SnowAlston & Bird LLP, Nashville, Tennessee.Atlanta, Georgia. If the validity of the securities offered hereby in connection with offerings made pursuant to this prospectus areis being passed upon by counsel forof the underwriters, dealers agents, or selling shareholders,agents, if any, such counsel will be named in the prospectus supplement relating to such offering.
The consolidated financial statements of SmartFinancial, Inc. and its subsidiary as of December 31, 20152019 and 20142018, and for each of the two years in the period ended December 31, 2019, and the effectiveness of internal control over financial reporting as of December 31, 2019, included in the Company’s Annual Report onForm 10-K for the year ended December 31, 2019, incorporated by reference herein, have been incorporated by reference herein and in the registration statement in reliance upon the reportsreport of Mauldin & Jenkins, LLC,Dixon Hughes Goodman LLP, an independent registered public accounting firm, included in the Company’s Annual Report onForm 10-K for the year ended December 31, 2019, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.
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PART II
Item 14.
Other Expenses of Issuance and DistributionThe following areis an itemized statement of the estimated fees and expenses incurred in connection with the issuance and distribution of the notes and the common shares issuable upon conversion thereof. We will bear all of these expenses, including those expenses of the selling shareholders (other than any underwriting discounts or commissions).
| Securities and Exchange Commission Registration Fee | $ | 6,954 | |
| Legal Fees and Expenses | * | ||
| Accounting Fees and Expenses | * | ||
| Printing Expenses | * | ||
| Blue Sky Fees | * | ||
| Transfer Agent Fees and Expenses | * | ||
| Miscellaneous | * | ||
| Total | $ | 6,954 | |
| Securities and Exchange Commission registration fee | $ | 12,980 | ||
| Listing fees and expenses | * | |||
| FINRA filing fee | * | |||
| Printing and engraving expenses | * | |||
| Trustee, registrar and transfer agent, and depositary fees and expenses | * | |||
| Attorneys’ fees and expenses | * | |||
| Accounting fees and expenses | * | |||
| Miscellaneous expenses | * | |||
| Total | $ | * | ||
* Estimated expenses are not presently known.
Item 15.
Indemnification of Directors and OfficersThe Tennessee Business Corporation Act (“
The Company’s second amended and restated charter contains a provision stating that directors shall not be personally liable for monetary damage to the corporation or its shareholders for breach of fiduciary duty as a director, except to the extent required by the Tennessee Business Corporation ActTBCA in effect from time to time.
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Under the Company’s second amended and restated bylaws, each person who was or is made a party to, or is threatened to be made a party to or is otherwise involved in, any proceeding, by reason of the fact that he or she is or was a director or officer of the Company or is or was serving at the request of the Company as a director, officer, or employee of another corporation or of a partnership, joint venture, trust, or other enterprise, including service with respect to employee benefit plans, provided that the basis of such proceeding is alleged action in an official capacity as a director, officer, or employee within the scope of such indemnitee’ sindemnitee’s duties and authority, shall be indemnified and held harmless by the Company to the fullest extent authorized by the Tennessee Business Corporation Act,TBCA, as the same now exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Company to provide broader indemnification rights than such law permitted the Company prior to such amendment), and applicable federal laws and regulations (including without limitation applicable Federal Deposit Insurance CorporationFDIC regulations regarding indemnification payments by a depository institution holding company, as the same may be amended from time to time), against all expense, liability, and loss (including without limitation attorneys’ fees, judgments, fines, excise taxes, penalties, and amounts paid into settlement) reasonably incurred or suffered by such indemnitee in connection therewith, and such indemnification shall continue as to an indemnitee who has ceased to be a director, officer, or employee and shall inure to the benefit of the indemnitee’ s heirs, executors, and administrators.
Notwithstanding the foregoing, the Company shall indemnify an indemnitee with respect to a proceeding initiated or instituted by the indemnitee only if such proceeding (or part thereof) was authorized by the board of directors.
The right to indemnification conferred by the Company is a contract right and shall include the right to be paid by the Company the expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that any such advancement of expenses for expenses incurred by an indemnitee in his or her capacity as a director, officer, or employee (and not in any other capacity in which service was or is rendered by such indemnitee, including without limitation service to any employee benefit plan) shall be made only upon delivery to the Company of an undertaking by and on behalf of such indemnitee to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right of appeal that such indemnitee is not entitled to be indemnified for such expenses.
Moreover, the foregoing right of indemnification shall not be exclusive of other rights to which such person, his heirs, executors, administrators, successors or assigns may be entitled under any law, bylaw, agreement, vote of shareholders or otherwise.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers, and controlling persons of the Company pursuant to its bylaws, or otherwise, the Company has been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
The Company carries standard directors’ and officers’ liability insurance covering its directors and officers.
Item 16.
ExhibitsSee the Exhibit Index filed herewith and appearing immediately after the signature page(s) toattached hereto, which is incorporated into this registration statement is incorporated by reference herein.
Item 17.
UndertakingsThe undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, of the securities registered hereby, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
| (ii) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; |
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| (iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
provided, however,
| (2) | That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fide offering thereof. |
| (3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
| (4) | That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: |
| (i) | Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and |
| (ii) | Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initialbona fide offering thereof.Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date. |
| (5) | That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
| (i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
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| (ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
| (iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
| (iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
| (6) | That, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934, as amended) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fide offering thereof. |
| (7) | To file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of the Act. |
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of eachthe registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SECSecurities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by athe registrant of expenses incurred or paid by a director, officer or controlling person of athe registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, thatthe registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
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EXHIBIT INDEX
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* To be filed by amendment or as an exhibit to a document to be incorporated by reference herein.
** To be filed separately pursuant to Section 305(b)(2) of the Trust Indenture Act of 1939, if applicable.
*** Filed herewith.
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Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the cityCity of Knoxville, State of Tennessee, on November 25, 2016.
| SMARTFINANCIAL, INC. | |||||
| By: | /s/ William Y. Carroll, Jr. | ||||
| Name: William Y. Carroll, | |||||
| Title: President and Chief Executive Officer | |||||
POWER OF ATTORNEY
KNOW ALL PERSONSMEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints William Y. Carroll, Jr. and C. Bryan Johnson, and each of them, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this registration statementany and all amendments (including all pre-effective and post-effective amendments) to this Registration Statement and to sign any registration statement (and any post-effective amendments thereto and all registration statements filedthereto) effective upon filing pursuant to Rule 462(b) which incorporate this registration statement by reference),under the Securities Act of 1933, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the SEC,Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewithand about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming that said attorney-in-fact, and agent or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act as amended,of 1933, this registration statement has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Title | Date | |||
| /s/ Wesley M. Welborn | Chairman of the Board | June 26, 2020 | ||
| Wesley M. Welborn | ||||
| /s/ William Y. Carroll, Jr. | President, Chief Executive Officer and | |||
| William Y. Carroll, Jr. | ||||
| /s/ | Executive Vice President and Chief | |||
| /s/ Victor L. Barrett | Director | |||
| Victor L. Barrett | ||||
| /s/ Monique P. Berke | Director | |||
| Monique P. Berke | ||||
| /s/ William Y. Carroll, Sr. | Vice Chairman and Director | |||
| William Y. Carroll, Sr. | ||||
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| /s/ Ted C. Miller | Director | |||
| Ted C. Miller | ||||
| /s/ David A. Ogle | Director | |||
| David A. Ogle | ||||
| /s/ | Director | |||
| /s/ | Director | |||
| /s/ Keith E. Whaley | Director | |||
Keith E. Whaley | ||||
| /s/ Geoffrey A. Wolpert | Director |
| June 26, 2020 | ||
| Geoffrey A. Wolpert | ||
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