The market price of our common stock has fluctuated significantly, and may fluctuate in the future. These fluctuations may be unrelated to our performance. General market or industry price declines or overall market volatility in the future could adversely affect the price of our common stock, and the current market price may not be indicative of future market prices.
If a change in control or change in management is delayed or prevented, the market price of our common stock could be negatively affected. Provisions in our corporate documents, as well as certain federal and state regulations,
and agreements with members of our senior management may make it difficult and expensive to pursue a tender offer, change in control or takeover attempt that our board of directors opposes. As a result, our shareholders may not have an opportunity to participate in such a transaction, and the trading price of our
common stock may not rise to the level of other institutions that are more vulnerable to hostile takeovers. Anti-takeover provisions contained in our charter also will make it more difficult for an outside shareholder to remove our current board of directors or management.
Holders of Pinnacle Financial’s bank indebtedness and junior subordinated debentures and other subordinated debt have rights that are senior to those of our common shareholders.
We have supported our continued growth through the issuance of trust preferred securities from special purpose trusts and accompanying junior subordinated debentures. We also have entered into a $25.0 million revolving line of credit and a subordinated loan agreement with a regional bank. At September 30, 2008, we had outstanding trust preferred securities and accompanying junior subordinated debentures totaling $82.5 million, borrowings of $18.0 million under our revolving line of credit, and $15.0 million under our subordinated loan agreement. Payments of the principal and interest on the trust preferred securities of these trusts are conditionally guaranteed by Pinnacle Financial. Further, the accompanying junior subordinated debentures we issued to the trusts are senior to our shares of common stock and shares of the Series A preferred stock. As a result, we must make payments on the junior subordinated debentures before any dividends can be paid on our common stock or our Series A preferred stock and, in the event of our bankruptcy, dissolution or liquidation, the holders of the junior subordinated debentures must be satisfied before any distributions can be made on our common stock or our Series A preferred stock. We have the right to defer distributions on our junior subordinated debentures (and the related trust preferred securities) for up to five years, during which time no dividends may be paid on our common stock or our Series A preferred stock. The rights of the lender that has extended the line of credit to us and who has loaned us the $15 million of subordinated debt are senior to those of holders of our common stock and our Series A preferred stock.
The amount of common stock owned by, and other compensation arrangements with, our officers and directors may make it more difficult to obtain shareholder approval of potential takeovers that they oppose. As of
June 30, 2004,December 31, 2008, directors and executive officers beneficially owned approximately
18.9%6.6% of our common stock. Employment agreements with our senior management also provide for significant payments under certain circumstances following a change in control. These compensation arrangements, together with the common stock, option and warrant ownership of our board and management, could make it
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difficult or expensive to obtain majority support for shareholder proposals or potential acquisition proposals of us that our directors and officers oppose.
Our business is dependent on technology, and an inability to invest in technological improvements may adversely affect our results of operations and financial condition. The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services. In addition to better serving customers, the effective use of technology increases efficiency and enables financial institutions to reduce costs. We have made significant investments in data processing, management information systems and internet banking accessibility. Our future success will depend in part upon our ability to create additional efficiencies in our operations through the use of technology, particularly in light of our past and projected growth strategy. Many of our competitors have substantially greater resources to invest in technological improvements. We cannot assure youmake assurances that our technological improvements will increase our operational efficiency or that we will be able to effectively implement
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new technology-driven products and services or be successful in marketing these products and services to our customers.
We may be unable to satisfy regulatory requirements relating to our internal control over financial reporting. Section 404 of the Sarbanes-Oxley Act of 2002 requires us to perform an evaluation of our internal control over financial reporting and have our auditor attest to such evaluation. Although we have prepared an internal plan of action for compliance, we have not completed the evaluation as of the date of this filing. Compliance with these requirements is expected to be expensive and time-consuming and may negatively impact our results of operations. Further, we may not meet the required deadlines. If we fail to timely complete this evaluation, or if our auditors cannot timely attest to our evaluation, we may be subject to regulatory scrutiny and a loss of public confidence in our internal control over financial reporting.
We are subject to various statutes and regulations that may limit our ability to take certain actions.
We operate in a highly regulated industry and are subject to examination, supervision, and comprehensive regulation by various regulatory agencies. Our compliance with these regulations is costly and restricts certain of our activities, including payment of dividends, mergers and acquisitions, investments, loans and interest rates charged, interest rates paid on deposits and locations of offices. We are also subject to capitalization guidelines established by our regulators, which require us to maintain adequate capital to support our
growth.growth and are subject to FDIC insurance assessments, which we expect will increase in 2009 as a result of the failure of several banks in 2008 that have depleted the insurance fund.
The laws and regulations applicable to the banking industry could change at any time, and we cannot predict the effects of these changes on our business and profitability. Because government regulation greatly affects the business and financial results of all commercial banks and bank holding companies, our cost of compliance could adversely affect our ability to operate profitably.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This prospectus contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-lookingThe words “expect”, “anticipate”, “intend”, “consider”, “plan”, “believe”, “seek”, “should”, “estimate”, and similar expressions are intended to identify such forward-looking statements, whichbut other statements may constitute forward-looking statements. These statements should be considered subject to various risks and uncertainties, and are made based onupon management’s belief as well as assumptions made by, and estimates and describe our future plans, strategies and expectations, are generally identifiable by the useinformation currently available to, management pursuant to “safe harbor” provisions of the words “anticipate,” “will,” “believe,” “estimate,” “expect,” “intend,” “seek,” or similar expressions. These forward-looking statements may address, among other things, our business plans, objectives or goal for future operations, the anticipated effectsPrivate Securities Litigation Reform Act of the offering of the securities hereunder, our forecasted revenues, earnings, assets or other measures of performance. These forward-looking statements are subject to risks, uncertainties and assumptions. Important factors that could cause1995. Pinnacle Financial’s actual results tomay differ materially from the results anticipated in forward-looking statements due to a variety of factors including, without limitation those described above under “Risk Factors,” and (i) unanticipated deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses, (ii) increased competition with other financial institutions, (iii) lack of sustained growth in the economy in the Nashville and Knoxville, Tennessee areas, (iv) rapid fluctuations or unanticipated changes in interest rates, (v) the inability of our bank subsidiary, Pinnacle National Bank, to satisfy regulatory requirements for its expansion plans, and (vi) changes in state or federal legislation or regulations applicable to financial service providers, including banks. Many of these risks factors are beyond our ability to control or predict, and you are cautioned not to put undue reliance on such forward-looking statements. Pinnacle Financial does not intend to update or reissue any forward-looking statements contained in this report as a result of new information or other circumstances that may become known to Pinnacle Financial.
DESCRIPTION OF SERIES A PREFERRED STOCK
The following is a brief description of the terms of the Series A preferred stock that may be resold by the selling shareholders. This summary does not purport to be complete in all respects. This description is subject to and qualified in its entirety by reference to our amended and restated charter, as amended, including the articles of amendment with respect to the Series A preferred stock, copies of which have been filed with the SEC and are also available upon request from us.
General
Under our amended and restated charter, as amended, we have authority to issue up to 10 million shares of preferred stock, no par value per share. Of that number of shares of preferred stock, 95,000 shares have been designated as Fixed Rate Cumulative Perpetual Preferred Stock, Series A, all of which shares of Series A preferred stock were issued to the initial selling shareholder in a transaction exempt from the registration requirements of the Securities Act. The issued and outstanding shares of Series A preferred stock are validly issued, fully paid and nonassessable.
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Dividends Payable On Shares of Series A Preferred Stock
Holders of shares of Series A preferred stock are entitled to receive if, as and when declared by our board of directors or a duly authorized committee of the board, out of assets legally available for payment, cumulative cash dividends at a rate per annum of 5% per share for the first five years following issuance, and 9% per annum thereafter. Each share of Series A preferred stock has a liquidation preference of $1,000 per share.
Dividends are payable quarterly in arrears on each February 15, May 15, August 15 and November 15, each a dividend payment date, starting with February 15, 2009. If any dividend payment date is not a business day, then the next business day will be the applicable dividend payment date, and no additional dividends will accrue as a result of the applicable postponement of the dividend payment date. Dividends payable during any dividend period are computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends payable with respect to the Series A preferred stock are payable to holders of record of shares of Series A preferred stock on the date that is 15 calendar days immediately preceding the applicable dividend payment date or such other record date as the board of directors or any duly authorized committee of the board determines, so long as such record date is not more than 60 nor less than 10 days prior to the applicable dividend payment date.
If we makedetermine not to pay any dividend or incorporate by reference in this prospectusa full dividend with respect to the Series A preferred stock, we are describedrequired to provide written notice to the holders of shares of Series A preferred stock prior to the applicable dividend payment date.
We are subject to various regulatory policies and requirements relating to the payment of dividends, including requirements to maintain adequate capital above regulatory minimums. The Board of Governors of the Federal Reserve System, or the Federal Reserve Board, is authorized to determine, under “Risk Factors.” These factors include, butcertain circumstances relating to the financial condition of a bank holding company, such as us, that the payment of dividends would be an unsafe or unsound practice and to prohibit payment thereof. In addition, we are not limited to:subject to Tennessee state laws relating to the payment of dividends.
Priority of Dividends
With respect to the payment of dividends and the amounts to be paid upon liquidation, the Series A preferred stock will rank:
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| | • | concentration of credit exposure; |
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| | • | senior to our common stock and all other equity securities designated as ranking junior to the strength of the Nashville MSA economy; |
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| • | our potential growth and the need for sufficient capital to support that growth; |
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| • | an insufficient allowance for loan losses as a result of inaccurate assumptions; |
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| • | changes in interest rates, yield curves and interest rate spread relationships; |
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| • | changes in the quality or composition of our loan or investment portfolios, including adverse developments in borrower industries or in the repayment ability of individual borrowers or issuers; |
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| • | increased competition or market concentration;Series A preferred stock; and |
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| | • | new state | at least equally with all other equity securities designated as ranking on a parity with the Series A preferred stock, with respect to the payment of dividends and distribution of assets upon any liquidation, dissolution or federal legislation, regulations, or the initiation or outcomewinding-up of litigation.Pinnacle Financial. |
So long as any shares of Series A preferred stock remain outstanding, unless all accrued and unpaid dividends for all prior dividend periods have been paid or are contemporaneously declared and paid in full, no dividend whatsoever shall be paid or declared on our common stock or other junior stock, other than a dividend payable solely in common stock. We and our subsidiaries also may not purchase, redeem or otherwise acquire for consideration any shares of our common stock or other junior stock unless we have paid in full all accrued dividends on the Series A preferred stock for all prior dividend periods, other than:
purchases, redemptions or other acquisitions of our common stock or other junior stock in connection with the administration of our employee benefit plans in the ordinary course of business (including purchases to offset the increase in diluted shares outstanding resulting from the grant, vesting or exercise of equity-based compensation and equitably adjusted for any stock split, stock dividend, reverse stock split, reclassification or similar transaction pursuant to a publicly announced repurchase plan);
purchases or other acquisitions by broker-dealer subsidiaries of Pinnacle Financial solely for the purpose of market-making, stabilization or customer facilitation transactions in junior stock or parity stock in the ordinary course of its business;
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| • | | purchases or other acquisitions by broker-dealer subsidiaries of Pinnacle Financial for resale pursuant to an offering by Pinnacle Financial of our stock that is underwritten by the related broker-dealer subsidiary; |
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| • | | any dividends or distributions of rights or junior stock in connection with any shareholders’ rights plan or any redemption or repurchase of rights pursuant to a shareholders’ rights plan; |
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| • | | acquisition of record ownership of junior stock or parity stock for the beneficial ownership of any other person who is not Pinnacle Financial or a subsidiary of Pinnacle Financial, including as trustee or custodian; and |
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| • | | the exchange or conversion of junior stock for or into other junior stock or of parity stock for or into other parity stock or junior stock but only to the extent that such acquisition is required pursuant to binding contractual agreements entered into before December 12, 2008 or any subsequent agreement for the accelerated exercise, settlement or exchange thereof for common stock. |
If we repurchase shares of Series A preferred stock from a holder other than the initial selling shareholder, we must offer to repurchase a ratable portion of the Series A preferred stock then held by the initial selling shareholder.
On any dividend payment date for which full dividends are not paid, or declared and funds set aside therefor, on the Series A preferred stock and any other parity stock, all dividends paid or declared for payment on that dividend payment date (or, with respect to parity stock with a different dividend payment date, on the applicable dividend date therefor falling within the dividend period and related to the dividend payment date for the Series A preferred stock), with respect to the Series A preferred stock and any other parity stock shall be declared ratably among the holders of any such shares who have the right to receive dividends, in proportion to the respective amounts of the undeclared and unpaid dividends relating to the dividend period.
Subject to the foregoing, such dividends (payable in cash, stock or otherwise) as may be determined by our board of directors (or a duly authorized committee of the board) may be declared and paid on our common stock and any other stock ranking equally with or junior to the Series A preferred stock from time to time out of any funds legally available for such payment, and the Series A preferred stock shall not be entitled to participate in any such dividend provided, however, that the consent of the Treasury will be required for us to pay dividends on shares of our common stock until the earlier of (i) December 12, 2011 and (ii) the date on which shares of the Series A preferred stock have been redeemed in whole or the Treasury no longer owns any shares of Series A preferred stock.
Redemption
The Series A preferred stock may not be redeemed prior to February 15, 2012 unless we have received aggregate gross proceeds from one or more qualified equity offerings (as described below) equal to $23,750,000, which equals 25% of these risksthe aggregate liquidation amount of the Series A preferred stock on the date of issuance. In such a case, we may redeem the Series A preferred stock, subject to the approval of Federal Reserve Board, in whole or uncertainties materialize,in part, upon notice as described below, up to a maximum amount equal to the aggregate net cash proceeds received by us from such qualified equity offerings. A “qualified equity offering” is a sale and issuance for cash by us, to persons other than Pinnacle Financial or its subsidiaries after December 12, 2008, of shares of perpetual preferred stock, common stock or a combination thereof, that in each case qualify as tier 1 capital of Pinnacle Financial at the time of issuance under the applicable risk-based capital guidelines of the Federal Reserve Board. Qualified equity offerings do not include issuances made in connection with acquisitions, issuances of trust preferred securities and issuances of common stock and/or perpetual preferred stock made pursuant to agreements or arrangements entered into, or pursuant to financing plans that were publicly announced, on or prior to October 13, 2008.
After February 15, 2012, we can redeem the Series A preferred stock at any time, subject to the approval of the Federal Reserve Board, in whole or in part, subject to notice as described below.
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In any redemption, the redemption price is an amount equal to the per share liquidation amount plus accrued and unpaid dividends to but excluding the date of redemption.
The Series A preferred stock will not be subject to any mandatory redemption, sinking fund or similar provisions. Holders of shares of Series A preferred stock have no right to require the redemption or repurchase of the Series A preferred stock.
If fewer than all of the outstanding shares of Series A preferred stock are to be redeemed, the shares to be redeemed will be selected eitherpro ratafrom the holders of record of shares of Series A preferred stock in proportion to the number of shares held by those holders or in such other manner as our board of directors or a committee thereof may determine to be fair and equitable.
We will mail notice of any redemption of Series A preferred stock by first class mail, postage prepaid, addressed to the holders of record of the shares of Series A preferred stock to be redeemed at their respective last addresses appearing on our books. This mailing will be at least 30 days and not more than 60 days before the date fixed for redemption. Any notice mailed or otherwise given as described in this paragraph will be conclusively presumed to have been duly given, whether or not the holder receives the notice, and failure duly to give the notice by mail or otherwise, or any defect in the notice or in the mailing or provision of the notice, to any holder of Series A preferred stock designated for redemption will not affect the redemption of any other Series A preferred stock. Each notice of redemption will set forth the applicable redemption date, the redemption price, the place where shares of Series A preferred stock are to be redeemed, and the number of shares of Series A preferred stock to be redeemed (and, if less than all shares of Series A preferred stock held by the applicable holder, the number of shares to be redeemed from the holder).
Shares of Series A preferred stock that are redeemed, repurchased or otherwise acquired by us will revert to authorized but unissued shares of our preferred stock.
Liquidation Rights
In the event that we voluntarily or involuntarily liquidate, dissolve or wind up our affairs, holders of Series A preferred stock will be entitled to receive an amount per share, referred to as the total liquidation amount, equal to the fixed liquidation preference of $1,000 per share, plus any accrued and unpaid dividends, whether or not declared, to the date of payment. Holders of the Series A preferred stock will be entitled to receive the total liquidation amount out of our assets that are available for distribution to shareholders, after payment or provision for payment of our debts and other liabilities but before any distribution of assets is made to holders of our common stock or any other shares ranking, as to that distribution, junior to the Series A preferred stock.
If our assets are not sufficient to pay the total liquidation amount in full to all holders of Series A preferred stock and all holders of any shares of outstanding parity stock, the amounts paid to the holders of Series A preferred stock and other shares of parity stock will be paidpro ratain accordance with the respective total liquidation amount for those holders. If the total liquidation amount per share of Series A preferred stock has been paid in full to all holders of Series A preferred stock and other shares of parity stock, the holders of our common stock or any other shares ranking, as to such distribution, junior to the Series A preferred stock will be entitled to receive all of our remaining assets according to their respective rights and preferences.
For purposes of the liquidation rights, neither the sale, conveyance, exchange or transfer of all or substantially all of our property and assets, nor the consolidation or merger by us with or into any other corporation or by another corporation with or into us, will constitute a liquidation, dissolution or winding-up of our affairs.
Voting Rights
Except as indicated below or otherwise required by law, the holders of Series A preferred stock will not have any voting rights.
Election of Two Directors upon Non-Payment of Dividends. If the dividends on the Series A preferred stock have not been paid for an aggregate of six quarterly dividend periods or more (whether or not consecutive), the authorized number of directors then constituting our board of directors will be increased by two. Holders of Series A preferred stock, together with the holders of any outstanding parity stock with like voting rights, referred to as
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voting parity stock, voting as a single class, will be entitled to elect the two additional members of our board of directors, referred to as the preferred stock directors, at the next annual meeting (or at a special meeting called for the purpose of electing the preferred stock directors prior to the next annual meeting) and at each subsequent annual meeting until all accrued and unpaid dividends for all past dividend periods have been paid in full. The election of any preferred stock director is subject to the qualification that the election would not cause us to violate the corporate governance requirement of the Nasdaq Stock Market (or any other exchange on which our securities may be listed) that listed companies must have a majority of independent directors.
Upon the termination of the right of the holders of Series A preferred stock and voting parity stock to vote for preferred stock directors, as described above, the preferred stock directors will immediately cease to be qualified as directors, their term of office shall terminate immediately and the number of authorized directors of Pinnacle Financial will be reduced by the number of preferred stock directors that the holders of Series A preferred stock and voting parity stock had been entitled to elect. The holders of a majority of shares of Series A preferred stock and voting parity stock, voting as a class, may remove any preferred stock director, with or without cause, and the holders of a majority of the shares Series A preferred stock and voting parity stock, voting as a class, may fill any vacancy created by the removal of a preferred stock director. If the office of a preferred stock director becomes vacant for any other reason, the remaining preferred stock director may choose a successor to fill such vacancy for the remainder of the unexpired term.
Other Voting Rights. So long as any shares of Series A preferred stock are outstanding, in addition to any other vote or consent of shareholders required by law or by our amended and restated charter, the vote or consent of the holders of at least 66 2/3% of the shares of Series A preferred stock at the time outstanding, voting separately as a single class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating:
| • | | any amendment or alteration of our amended and restated charter to authorize or create or increase the authorized amount of, or any issuance of, any shares of, or any securities convertible into or exchangeable or exercisable for shares of, any class or series of capital stock ranking senior to the Series A preferred stock with respect to payment of dividends and/or distribution of assets on any liquidation, dissolution or winding up of Pinnacle Financial; |
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| • | | any amendment, alteration or repeal of any provision of our amended and restated charter so as to adversely affect the rights, preferences, privileges or voting powers of the Series A preferred stock; or |
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| • | | any consummation of a binding share exchange or reclassification involving the Series A preferred stock or of a merger or consolidation of Pinnacle Financial with another entity, unless the shares of Series A preferred stock remain outstanding following any such transaction or, if Pinnacle Financial is not the surviving entity, are converted into or exchanged for preference securities of the surviving entity and such remaining outstanding shares of Series A preferred stock or preference securities have rights, references, privileges and voting powers that are not materially less favorable than the rights, preferences, privileges or voting powers of the Series A preferred stock, taken as a whole. |
To the extent of the voting rights of the Series A preferred stock, each holder of Series A preferred stock will have one vote for each share of Series A preferred stock held by such shareholder.
The foregoing voting provisions will not apply if, at or prior to the time when the vote or consent would otherwise be required, all outstanding shares of Series A preferred stock have been redeemed or called for redemption upon proper notice and sufficient funds have been set aside by us for the benefit of the holders of Series A preferred stock to effect the redemption.
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DESCRIPTION OF WARRANT
On December 12, 2008, we issued and sold to the Treasury a ten-year warrant to purchase up to 534,910 shares of our common stock, $1.00 par value, in addition to the 95,000 shares of Series A preferred stock. The warrant was immediately exercisable by the holder and will expire on December 12, 2018. The warrant may be exercised in whole or in part.
The exercise price of the warrant is $26.64 per share, and reflects the 20-day trailing average closing price of our common stock on the date the Treasury approved our application to sell the Series A preferred stock to the Treasury.
Exercise of Warrant
Without the consent of both us and the warrant holder, the warrant may only be exercised on a net basis, meaning the holder does not pay the exercise price to us but instead authorizes us to reduce the shares receivable on exercise of the warrant by the number of shares with a then current market value equal to the exercise price. To exercise the warrant, the holder must present and surrender the warrant and a notice of exercise to us.
Rights of Warrantholder
A holder of the warrant as such is not entitled to vote or exercise any of the rights as a stockholder of Pinnacle Financial until such time as such warrant has been duly exercised. The Treasury has agreed that it will not exercise voting power with respect to any shares of our underlying assumptions prove incorrect, our actual results, performancecommon stock issued to it upon exercise of the warrant.
Transferability of Warrant
The warrant and all rights thereunder are transferable, in whole or achievementsin part, by a holder upon surrender of the warrant, duly endorsed, to the office or agency of Pinnacle Financial. Thereafter, a new warrant registered in the name of the designated transferee or transferees will be made and delivered by Pinnacle Financial. Notwithstanding the foregoing, the Treasury may vary materiallyonly transfer or exercise an aggregate of 50% of the warrant prior to the earlier of (i) the date on which we have received aggregate gross proceeds of not less than $95,000,000 from future results, performanceone or achievements expressedmore qualified equity offerings (as described above) and (ii) December 31, 2009.
Adjustments to the Warrant
The number of shares of common stock for which the warrant may be exercised and the exercise price applicable to the warrant will be proportionately adjusted in the event Pinnacle Financial pays dividends or impliedmake distributions of shares of its common stock, or subdivides, combines or reclassifies outstanding shares of its common stock.
Until the earlier of December 12, 2011 and the date the initial selling securityholder no longer holds the warrant (and other than in certain permitted transactions described below, or in a stock split, subdivision, reclassification or combination as described above), if Pinnacle Financial issues any shares of common stock (or securities convertible or exchangeable for or exercisable into common stock) for no consideration or for less than 90% of the market price of the common stock on the last trading day prior to pricing such shares or convertible securities, then the number of shares of common stock into which the warrant is exercisable and the exercise price will be adjusted. Permitted transactions that will not trigger this adjustment include issuances:
| • | | as consideration for or to fund the acquisition of businesses and/or related assets; |
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| • | | in connection with employee benefit plans and compensation related arrangements in the ordinary course and consistent with past practice approved by Pinnacle Financial’s board of directors; |
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| • | | in connection with public or broadly marketed offerings and sales of common stock or convertible securities for cash conducted by Pinnacle Financial or its affiliates pursuant to registration under |
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the Securities Act or Rule 144A thereunder on a basis consistent with capital-raising transactions by these forward-looking statements. All forward-looking statements attributable to uscomparable financial institutions; and
in connection with the exercise of preemptive rights on terms existing as of December 12, 2008.
If Pinnacle Financial declares any dividends or persons actingdistributions on our behalf are expressly qualifiedits common stock, other than dividends of its common stock or other dividends or distributions in their entirety byconnection with stock splits, subdivisions, reclassifications or combinations of its common stock, both the cautionary statements in this prospectus. We undertake no obligation to publicly update or revise any forward-looking statementsnumber of shares issuable upon exercise of the warrant and the exercise price of the warrant will be adjusted to reflect future eventssuch distribution.
If Pinnacle Financial effects a pro rata repurchase of its common stock both the number of shares issuable upon exercise of the warrant and the exercise price will be adjusted.
In the event of a merger, consolidation, statutory share exchange or
developments.USE OF PROCEEDS
We estimatesimilar transaction involving Pinnacle Financial and requiring shareholder approval, or a reclassification of Pinnacle Financial’s common stock, the warrantholder’s right to receive shares of Pinnacle Financial’s common stock upon exercise of the warrant shall be converted into the right to exercise the warrant for the transaction consideration that our net proceeds from our sale ofwould have been payable to the warrantholder with respect to the shares of common stock we are offeringfor which the warrant may be exercised, as if the warrant had been exercised prior to such merger, consolidation or similar transaction. For purposes of the provision described in the preceding sentence, if the holders of Pinnacle Financial common stock have the right to elect the amount or type of consideration to be received by them in the business combination, then the consideration that the warrantholder will be approximately $ , or approximately $ million ifentitled to receive upon exercise will be the underwriters’ over-allotment option is exercised in full, in each case after deducting estimated underwriting discountsamount and commissions and the estimated offering expenses payabletype of consideration received by us assuming a public offering price of $ per share.
We will invest approximatelymajority of the net proceeds in Pinnacle National, where these proceeds would be available for general corporate purposes, including Pinnacle National’s lending and investment activities associated with its anticipated growth. We will retain the remaining approximately $holders of the net proceeds for our general corporate purposes and working capital to position us for future growth opportunities. Pending these uses, the net proceeds will be invested by us in a variety of short-term assets, including federal funds, interest-bearing deposits in other banks and similar investments.
PRICE RANGE OF OUR COMMON STOCK
Our common stock has been traded on the Nasdaq Stock Market’s National Market System since August 14, 2002, under the symbol “PNFP.” From May 28, 2002, to August 13, 2002, our common stock was traded on the Nasdaq SmallCap Market and before that time it was traded on the Nasdaq over-the-counter bulletin board. The following table shows the high and low bid information for our common stock for the quarters since our common stock was originally listed on the Nasdaq over-the-counter bulletin board and thereafter on the Nasdaq SmallCap Market and the Nasdaq National Market System. Quotations for the period of time that the common stock was tradedwho affirmatively make an election.
DESCRIPTION OF PINNACLE FINANCIAL COMMON STOCK
General
The authorized capital stock of Pinnacle Financial consists of 90 million shares of common stock, par value $1.00 per share, and 10 million shares of preferred stock, no par value. As of December 31, 2008, 23,762,124 shares of Pinnacle Financial common stock were outstanding, and 95,000 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A were outstanding. The remaining shares of preferred stock, other than the shares currently issued as Series A preferred stock, may be issued in one or more series with those terms and at those times and for any consideration as the Pinnacle Financial board of directors determines. As of December 31, 2008, 2,754,254 shares of Pinnacle Financial common stock were reserved for issuance upon the exercise of outstanding stock options under various employee stock option plans, 345,000 shares were reserved for issuance upon exercise of warrants issued to Pinnacle Financial’s organizers and 534,910 shares were reserved for issuance upon exercise of the warrant issued to the Treasury in connection with its acquisition of the Series A preferred stock.
The following summary of the terms of the capital stock of Pinnacle Financial is not intended to be complete and is subject in all respects to the applicable provisions of the Tennessee Business Corporation Act, or TBCA, and is qualified by reference to the amended and restated charter and bylaws of Pinnacle Financial.
Common Stock
The outstanding shares of Pinnacle Financial common stock are fully paid and nonassessable. Holders of Pinnacle Financial 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 Pinnacle Financial common stock do not have pre-emptive rights and are not entitled to cumulative voting rights with respect to the election of directors. The Pinnacle Financial 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 Pinnacle Financial preferred stock outstanding at the time, including the Series A preferred stock, holders of Pinnacle Financial common stock are entitled to dividends when and as declared by the Pinnacle Financial board of directors from legally available funds and are entitled, in the event of liquidation, to share ratably in all assets remaining after payment of liabilities.
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Preferred Stock
Pinnacle Financial is authorized to issue up to 10 million shares of preferred stock. As of the date hereof, the 95,000 shares of Series A preferred stock are the only shares of preferred stock outstanding. The outstanding shares of Series A preferred stock have no maturity date and are fully paid and non-assessable. The holders of the shares of Series A preferred stock are entitled to the rights and preferences described above under “Description of Series A Preferred Stock”. The board of directors of Pinnacle Financial may, without further action by the shareholders of Pinnacle Financial, issue one or more series of Pinnacle Financial preferred stock and fix the rights and preferences of those shares, including the dividend rights, dividend rates, conversion rights, exchange rights, voting rights, terms of redemption, redemption price or prices, liquidation preferences, the number of shares constituting any series and the designation of such series.
Election of Directors by Shareholders
Pinnacle Financial’s amended and restated charter and bylaws provide that the Pinnacle Financial board of directors is to be divided into three classes as nearly equal in number as possible. Directors are elected by classes to three-year terms, so that approximately one-third of the directors of Pinnacle Financial are elected at each annual meeting of the shareholders. In addition, Pinnacle Financial’s bylaws provide that the power to increase or decrease the number of directors and to fill vacancies is vested in the Pinnacle Financial board of directors. The overall effect of these provisions may be to prevent a person or entity from seeking to acquire control of Pinnacle Financial through an increase in the number of directors on the
over-the-counter bulletinPinnacle Financial board
reflect inter-dealer prices, without retail markup, markdown, or commission,of directors and
may not represent11
actual transactions. The stock prices set forth below are adjustedthe election of designated nominees to reflect our two-for-one common stock split paid on May 10, 2004. To date, we have not paid anyfill newly created vacancies.
In the event that Pinnacle Financial fails to pay dividends on our common stock.
| | | | | | | | | | |
| | |
| | Bid Price Per Share |
| |
|
| | High | | Low |
| |
| |
|
| 2002: | | | | | | | | |
| | First quarter | | $ | 5.25 | | | $ | 4.38 | |
| | Second quarter | | | 5.95 | | | | 4.85 | |
| | Third quarter | | | 6.50 | | | | 5.45 | |
| | Fourth quarter | | | 6.65 | | | | 5.51 | |
| 2003: | | | | | | | | |
| | First quarter | | $ | 7.07 | | | $ | 6.38 | |
| | Second quarter | | | 8.50 | | | | 6.53 | |
| | Third quarter | | | 9.97 | | | | 8.00 | |
| | Fourth quarter | | | 12.95 | | | | 9.68 | |
| 2004: | | | | | | | | |
| | First quarter | | $ | 15.50 | | | $ | 11.65 | |
| | Second quarter | | | 18.67 | | | | 13.50 | |
| | Third quarter (through August 18, 2004) | | | 23.70 | | | | 17.70 | |
| | | |
| | | |
| |
On August 18, 2004, the last reported sale priceSeries A preferred stock for our common stock onan aggregate of six quarterly dividend periods or more (whether or not consecutive), the Nasdaq National Market System was $21.56 per share. The market price for our stock is highly volatile and fluctuates in response to a wide varietyauthorized number of factors. At August 18, 2004, we had approximately 59 shareholdersdirectors then constituting Pinnacle Financial’s board of record and an estimated 1,400 beneficial owners.
DIVIDEND POLICY
directors will be increased by two. Holders of ourthe Series A preferred stock, together with the holders of any outstanding parity stock with like voting rights, referred to as voting parity stock, voting as a single class, will be entitled to elect the two additional members of Pinnacle Financial’s board of directors, referred to as the preferred stock directors, at the next annual meeting (or at a special meeting called for the purpose of electing the preferred stock directors prior to the next annual meeting) and at each subsequent annual meeting until all accrued and unpaid dividends for all past dividend periods have been paid in full. See “Description of Series A Preferred Stock — Voting Rights”.
Dividends on Common Stock
Holders of Pinnacle Financial’s common stock are entitled to receive dividends when, as and if declared by
ourPinnacle Financial’s board of directors out of funds legally available for dividends.
We havePinnacle Financial has never declared or paid any dividends on
ourits common stock. In order to pay any dividends,
wePinnacle Financial will need to receive dividends from Pinnacle National or have other sources of funds. As a national bank, Pinnacle National can only pay dividends to
usPinnacle Financial if it has retained earnings for the current fiscal year and the preceding two fiscal years, and if it has a positive retained earnings account. At
JuneSeptember 30,
2004,2008, Pinnacle National’s retained earnings
available for dividends were
$2,240,225.$66.9 million. In addition, its ability to pay dividends or otherwise transfer funds to
us will bePinnacle Financial is subject to various
regulatory restrictions.
Our
Pinnacle Financial’s ability to pay dividends to ourits shareholders in the future will depend on ourits earnings and financial condition, liquidity and capital requirements, the general economic and regulatory climate, ourits ability to service any equity or debt obligations senior to ourits common stock and other factors deemed relevant by ourPinnacle Financial’s board of directors. WePinnacle Financial currently intendintends to retain any future earnings to fund the development and growth of ourthe company’s business. Therefore, we doPinnacle Financial does not anticipate paying any cash dividends on ourits common stock in the foreseeable future.
16
12
Corporate Transactions
CAPITALIZATION
The following table sets forth our capitalization Pinnacle Financial’s amended and
certain capital ratios asrestated charter, with exceptions, requires that any merger or similar transaction involving Pinnacle Financial or any sale or other disposition of
June 30, 2004. Our capitalization is presented on an actual basisall or substantially all of Pinnacle Financial’s assets will require the affirmative vote of a majority of its directors then in office and
on an as adjusted basis to reflect the
saleaffirmative vote of
850,000the holders of at least two-thirds of the outstanding shares of
ourPinnacle Financial’s common
stock in this offering and our receipt of $ million in estimated net proceeds from this offering, assuming a public offering price of $ per share and after deducting the underwriting discount and estimated expenses of the offering.| | | | | | | | | | | |
| | |
| | June 30, 2004 |
| |
|
| | Actual | | As Adjusted |
| |
| |
|
| Stockholders’ equity: | | | | | | | | |
| | Preferred stock, no par value; 10,000,000 shares authorized: no shares issued and outstanding | | $ | — | | | | — | |
| | Common stock, par value $1.00; 20,000,000 shares authorized: 7,404,586 issued and outstanding at June 30, 2004 —As adjusted: 8,254,586 issued and outstanding | | | 7,404,586 | | | | 8,254,586 | |
| | Additional paid-in capital | | | 27,071,090 | | | | | |
| | Retained earnings | | | 2,050,342 | | | | 2,050,342 | |
| | Accumulated other comprehensive income (loss), net | | | (1,400,921 | ) | | | (1,400,921 | ) |
| | | |
| | | |
| |
| | | Total stockholders’ equity | | $ | 35,125,097 | | | | | |
| | | |
| | | |
| |
| Capital Ratios: | | | | | | | | |
| | Leverage(1) | | | 8.4 | % | | | | |
| | Risk-based capital(2): | | | | | | | | |
| | | Tier 1 | | | 10.2 | % | | | | |
| | | Total | | | 11.2 | % | | | | |
| |
(1) | Leverage ratio is defined as Tier 1 capital (pursuant to risk-based capital guidelines) as a percentage of adjusted average assets for the quarter ended June 30, 2004. As adjusted calculation assumes that proceeds from offering would have been received as the last transaction for the quarter ended June 30, 2004. |
|
(2) | The as adjusted calculations for the risk-based capital ratios assume that the proceeds from the offering are invested in assets which carry a 100% risk-weighting as of June 30, 2004. |
13
MANAGEMENT
Directors and Executive Officers
The following table sets forth certain information concerning our directors and executive officers as of August 5, 2004:
| | | | | | |
Name | | Age | | Position |
| |
| |
|
M. Terry Turner(1) | | | 49 | | | President and Chief Executive Officer and Director |
Robert A. McCabe, Jr.(1) | | | 53 | | | Chairman of the Board |
Hugh M. Queener | | | 48 | | | EVP and Chief Administrative Officer |
James E. White | | | 51 | | | EVP and Senior Lending Officer |
Charles B. McMahan | | | 57 | | | EVP and Senior Credit Officer |
Joanne B. Jackson | | | 47 | | | EVP and Client Services Group Manager |
Harold R. Carpenter | | | 45 | | | EVP and Chief Financial Officer |
Sue G. Atkinson(3) | | | 63 | | | Director |
Gregory L. Burns(1)(4) | | | 49 | | | Director |
Colleen Conway-Welch(3) | | | 60 | | | Director |
Clay T. Jackson(2)(3) | | | 50 | | | Director |
John E. Maupin, Jr.(3)(4) | | | 57 | | | Director |
Robert E. McNeilly, Jr.(1)(2)(3) | | | 72 | | | Director |
Dale W. Polley(1)(2) | | | 55 | | | Director |
Linda E. Rebrovick(2) | | | 48 | | | Director |
James L. Shaub, II(2)(4) | | | 46 | | | Director |
Reese L. Smith, III(4) | | | 56 | | | Director |
| |
(1) | Member of the Executive Committee of the Board of Directors. |
|
(2) | Member of the Audit Committee of the Board of Directors. |
|
(3) | Member of the Community Affairs Committee of the Board of Directors. |
|
(4) | Member of the Human Resources, Nominating and Compensation Committee of the Board of Directors |
M. Terry Turneris our president and chief executive officer. Mr. Turner joined Park National Bank, Knoxville, Tennessee in 1979 where he held various management positions, including senior vice president of the bank’s commercial division. In 1985, Mr. Turner joined First American National Bank, Nashville, Tennessee, as a result of its acquisition of Park National Bank. Mr. Turner served from January 1994 until November 1998 as president of the retail bank of First American National Bank. From November 1998 until October 1999, he served as president of the Investment Services Group of First American Corporation. Mr. Turner’s banking career at First American in Nashville covered 14 years, and entailed executive level responsibilities for almost all aspects of its banking and investment operations.
Robert A. McCabe, Jr. began his banking career with the former Park National Bank of Knoxville, Tennessee, as an officer trainee in 1976. From 1976 to 1984, Mr. McCabe held various positions with Park National Bank in Knoxville, including senior vice president, until the acquisition of Park National by First American National Bank in 1985. Mr. McCabe joined First American as an executive vice president of the retail bank of First American National Bank of Nashville, a position he held until 1987 when First American promoted him to president and chief operating officer of the First American National Bank of Knoxville. In 1989, Mr. McCabe was given added responsibility by being named president and chief operating officer for First American’s east Tennessee region. Mr. McCabe continued in that position until 1991, when First American selected him as president of First American’s Corporate Banking division, and
14
shortly thereafter, as president of its General Banking division. In 1994, First American appointed Mr. McCabe as a vice chairman of First American Corporation. In March 1999, Mr. McCabe was appointed by First American to manage all banking and non-banking operations, a position he held until First American’s merger with AmSouth in October 1999. Mr. McCabe serves as a director of National Health Investors of Murfreesboro, Tennessee.
Hugh M. Queenerwas employed by AmSouth from 1999 to 2000, serving as an executive vice president in the consumer banking group in Nashville. Prior to the merger with AmSouth, Mr. Queener was employed by First American National Bank from 1987 to 1999, serving most recently as executive vice president in charge of retail lending from 1987 to 1999.
James E. Whitewas employed by AmSouth from 1999 to 2000, serving as executive vice president — group sales manager for the private banking group in Nashville. Prior to the merger with AmSouth, Mr. White was employed by First American National Bank from 1991 to 1999, serving in a variety of roles in the commercial and private banking areas, including private banking group manager in 1998 and 1999 and president of the middle region of Tennessee in 1997 and 1998.
Charles B. McMahanwas employed by AmSouth Bancorporation from 1999 to 2002 as Senior Vice President — State Senior Credit Officer for Tennessee and Louisiana based in Nashville, Tennessee. Prior to the merger with AmSouth, Mr. McMahan was employed in a variety of roles from 1974 to 1999 at First American National Bank in the commercial and consumer lending areas and, ultimately, was promoted to Executive Vice President — Credit Administration. Mr. McMahan is also a certified public accountant.
Joanne B. Jacksonwas employed by AmSouth from 1999 to 2000 as the business banking team leader in Nashville, Tennessee. Prior to the merger with AmSouth, Ms. Jackson was employed as a senior vice president at First American National Bank from 1994 to 1999, serving in a variety of roles focusing on the small business market.
Harold R. Carpenterwas employed by AmSouth from 1999 to 2000 as a senior vice president in the finance group in Nashville, Tennessee. Prior to the merger with AmSouth, Mr. Carpenter was employed by First American National Bank as senior vice president from 1994 to 1999, serving most recently as the financial manager for the Tennessee, Mississippi and Louisiana areas. Mr. Carpenter was employed by the national accounting firm, KPMG, from 1982 to 1994.
Sue G. Atkinsonhas been chairman of Atkinson Public Relations of Nashville, Tennessee since 1986.
Gregory L. Burnsserves as chairman of the board and chief executive officer for O’Charley’s Inc. Mr. Burns joined O’Charley’s in 1983 as controller, and later held the positions of executive vice president, chief financial officer and president.
Colleen Conway-Welchis the dean and chief executive officer of the Vanderbilt University School of Nursing in Nashville, Tennessee, a position she has held since 1984. Ms. Conway-Welch’s professional activities include or have included serving as a member of thestock. However, if Pinnacle Financial’s board of directors for Ardent Health Systems, Caremark and RehabCare Group.
Clay T. Jacksonis Senior Vice President, Regional Agency Manager, Tennessee for BB&T — Cooper, Love & Jackson. Mr. Jackson washas approved the president and a principalparticular transaction by the affirmative vote of Cooper, Love & Jackson, Inc. prior to the September 2003 merger with BB&T and had served in this capacity since 1989.
John E. Maupin, Jr. is president and chief executive officer of Meharry Medical College, a position he has held since 1994. Dr. Maupin came to Meharry from the Morehouse School of Medicine in Atlanta, Georgia, where he served as executive vice president from 1989 to 1994. He currently serves on the Board of Directors of LifePoint Hospitals, Inc. and VALIC Companies I and II of American International Group Inc.
Robert E. McNeilly, Jris a retired banker, and is currently a board membertwo-thirds of the Ragland Corporation, a privately-owned, real estate holding company. From 1993 to 1996, Mr. McNeilly served as
15
presidententire board, then the applicable provisions of First American Trust Company, Nashville, Tennessee law would govern and from 1986 to 1993, as the chairman of First American National Bank.
Dale W. Polleyretired as a vice chairman and membershareholder approval of the board of directors of First American Corporation and First American National Bank in 2000. Intransaction would require only the nine years preceding these positions, Mr. Polley served in various executive management positions at First American, which included serving as its president from 1997 to 1999. Before joining First American in 1991, Mr. Polley was group executive vice president and treasurer for C&S/ Sovran Corporation, and held various positions within Sovran before its merger with C&S. Mr. Polley joined Sovran from Commerce Union Bank of Nashville where he was its executive vice president and chief financial officer. Mr. Polley serves on the board of directors of O’Charley’s Inc.
Linda E. Rebrovickcurrently serves as executive vice president and chief marketing officer of BearingPoint. Ms. Rebrovick was previously executive vice president of HealthCare Consulting, KPMG Consulting and national managing partner, KPMG LLP’s HealthCare Consulting Practice. She has 22 years of experience in consulting, including work for IBM as the business unit executive for its Tennessee Consulting & Systems Integration Services.
James L. Shaub, IIis president and chief executive officer of Southeast Waffles, LLC, a multi-state Waffle House franchise based in Nashville.
Reese L. Smith, IIIis president of Haury & Smith Contractors, Inc., a real estate development and home building firm. From 1996 to 1999, Mr. Smith served as a board member of First Union National Bank of Nashville, and was a founder and director of Brentwood National Bank from its inception in 1991 to 1996.
16
UNDERWRITING
Subject to the terms and conditions in the underwriting agreement dated , 2004, the underwriters named below, for whom Raymond James & Associates, Inc. is acting as representative, have severally agreed to purchase from us the respective number of shares of our common stock set forth opposite their names below:
| | | | | |
Underwriter | | Number of Shares |
| |
|
Raymond James & Associates, Inc. | | | | |
| | |
| |
| Total | | | 850,000 | |
| | |
| |
The underwriting agreement provides that the obligationsaffirmative vote of the several underwriters to purchase and accept deliveryholders of a majority of the common stock offered by this prospectus are subject to approval by their counsel of legal matters and to other conditions set forth in the underwriting agreement. The underwriters are obligated to purchase and accept delivery of all of theoutstanding shares of common stock offered by this prospectus, if any are purchased, other than those covered by the over-allotment option described below.
The underwriters proposeentitled to offer the common stock directly to the public at the public offering price indicatedvote on the cover pagetransaction. Any amendment of this prospectus and to various dealersprovision adopted by less than two-thirds of the entire board of directors would require the affirmative vote of the holders of at that price less a concession not to exceed $ per share,least two-thirds of which $ may be reallowed to other dealers. After this offering, the public offering price, concession and reallowance to dealers may be reduced by the underwriters. No reduction will change the amount of proceeds to be received by us as indicated on the cover page of this prospectus. Theoutstanding shares of common stock are offered bystock; otherwise, the underwriters as stated in this prospectus, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in part.
We have granted toamendment would only require the underwriters an option, exercisable within 30 days afteraffirmative vote of at least a majority of the date of this prospectus, to purchase from time to time up to an aggregate of 127,500 additionaloutstanding shares of common stockstock.
Pinnacle Financial’s charter describes the factors that its board of directors must consider in evaluating whether an acquisition proposal made by another party is in Pinnacle Financial’s shareholders’ best interests. The term “acquisition proposal” refers to cover over-allotments, if any at the public offering price less the underwriting discount. If the underwriters exercise their over-allotment option to purchase anyoffer of the additional 127,500 shares, each underwriter, subject to certain conditions, will become obligated to purchase its pro rata portion of these additional shares based on the underwriter’s percentage purchase commitment in this offering as indicated in the table above. If purchased, these additional shares will be sold by the underwriters on the same terms as those on which the shares offered by this prospectus are being sold. The underwriters may exercise the over-allotment option only to cover over-allotments made in connection with the sale of the shares of common stock offered in this offering.another party to:
At our request, the underwriters have reserved up to 40,000 shares of our common stock offered by this prospectus for sale to our directors and officers at the public offering price set forth on the cover page of this prospectus. These persons must commit to purchase from an underwriter or selected dealer at the same time as the general public. The number of shares available for sale to the general public will be reduced to the extent these persons purchase the reserved shares. Any reserved shares purchased by our directors or executive officers will be subject to the lock-up agreements described on the following page. We are not making loans to these officers or directors to purchase such shares.
The following table summarizes the underwriting compensation to be paid to the underwriters by us. These amounts assume both no exercise and full exercise of the underwriters’ over-allotment option to purchase additional shares. We estimate that the total expenses payable by us in connection with this offering, other than the underwriting discount referred to below, will be approximately $ .
| | • | | | | | | | | | | | |
| | | | Total Without | | Total With |
| | Per Share | | Over-Allotment | | Over-Allotment |
| |
| |
| |
|
Price to public | | $ | | | | $ | | | | $ | | |
Underwriting discounts | | | | | | | | | | | | |
Proceeds to us, before expenses | | | | | | | | | | | | |
17
We have agreed to indemnify the underwriters against various liabilities, including liabilities under the Securities Act of 1933, or to contribute to payments the underwriters may be required to make because of any of those liabilities.
Subject to specified exceptions, each of our directors and our executive officers has agreed, for a period of 90 days after the date of this prospectus, without the prior written consent of Raymond James & Associates, Inc., not tomake a tender offer or exchange offer sell, contract to sell, pledge, grant any option to purchase or otherwise dispose of any shares of our common stock or securities convertible into or exercisable or exchangeable for any shares of our common stock. This agreement also precludes any hedging collar or other transaction designed or reasonably expected to result in a disposition of our common stock or securities convertible into or exercisable or exchangeable for our common stock.
In addition, we have agreed that, for 90 days after the date of this prospectus, we will not, directly or indirectly, without the prior written consent of Raymond James & Associates, Inc., issue, sell, contract to sell, or otherwise dispose of or transfer, any of our common stock or securities convertible into, exercisable for or exchangeable for our common stock, or enter into any swap or other agreement that transfers, in whole or in part, the economic consequences of ownership of our common stock or securities convertible into, exercisable for or exchangeable for our common stock, except for our sale of common stock in this offering and the issuance of options or shares of common stock under our existing employee benefit plans, pursuant to previously issued warrants or in connection with acquisitions approved by the Company’s board of directors.
Until the offering is completed, rules of the Securities and Exchange Commission may limit the ability of the underwriters and certain selling group members to bid for and purchase shares of our common stock. As an exception to these rules, the underwriters may engage in certain transactions that stabilize the price of our common stock. These transactions may include short sales, stabilizing transactions, purchases to cover positions created by short sales and passive market making. Short sales involve the sale by the underwriters of a greater number of shares of our common stock than they are required to purchase in the offering. Stabilizing transactions consist of certain bids or purchases made for the purpose of preventing or retarding a decline in the market price of our common stock while the offering is in progress. In passive market making, the underwriter, in its capacity as market maker in the common stock, may, subject to limitations, make bids for or purchases of our common stock until the time, if any, at which a stabilizing bid is made.
The underwriters also may impose a penalty bid. This occurs when a particular underwriter repays to the other underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.
These activities by the underwriters may stabilize, maintain or otherwise affect the market price of our common stock. As a result, the price of our common stock may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued by the underwriters without notice at any time. These transactions may be effected on the Nasdaq National Market or otherwise.
Our common stock is listed on the Nasdaq National Market under the symbol “PNFP.”
Certain representatives of the underwriters or their affiliates may in the future perform investment banking and other financial services, including without limitation outsourced retail investment services, for us, our affiliates and our customers for which they may receive advisory or transaction-based fees and commissions, as applicable, plus out-of-pocket expenses, of the nature and in amounts customary in the industry for such services. For example, we offer retail brokerage and investment services to our customers through a contract with Raymond James Financial Services, Inc., and Raymond James & Associates, Inc. is currently a market maker in our common stock on the Nasdaq National Market.
18
WHERE CAN YOU FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any materials we file with the SEC at the SEC’s public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information on its public reference rooms. The SEC also maintains an Internet website at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Our SEC filings are also available on our website at http://www.mypinnacle.com and at the office of the Nasdaq National Market.
This prospectus, which is part of the registration statement, omits some of the information included in the registration statement as permitted by the rules and regulations of the SEC. As a result, statements made in this prospectus as to the contents of any contract or other document are not necessarily complete. You should read the full text of any contract or document filed as an exhibit to the registration statement for a more complete understanding of the contract or document or matter involved.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to “incorporate by reference” the information we file with it, which means that we can disclose important information to you by referring you to those documents that we have previously filed with the SEC or documents that we will file with the SEC in the future. The information incorporated by reference is considered to be part of this prospectus, and later information that we file with the SEC will automatically update and supersede this information. This prospectus incorporates by reference the documents set forth below that we have previously filed with the SEC. These documents contain important information about our company and its finances:
| |
| (1) The Registrant’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2003;Pinnacle Financial’s common stock or any other equity security of Pinnacle Financial; |
| |
| | (2) The Registrant’s Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2004 and June 30, 2004;• | | merge or combine Pinnacle Financial with another corporation; or |
| |
| | (3) The Registrant’s Current Reports• | | purchase or otherwise acquire all or substantially all of the properties and assets owned by Pinnacle Financial. |
The board of directors, in evaluating an acquisition proposal, is required to consider all relevant factors, including:
| • | | the expected social and economic effects of the transaction on Form 8-K filed January 21, 2004, February 2, 2004, April 20, 2004Pinnacle Financial’s employees, clients and July 21, 2004;other constituents, such as its suppliers of goods and services; |
|
| • | | the payment being offered by the other corporation in relation to (1) Pinnacle Financial’s current value at the time of the proposal as determined in a freely negotiated transaction and (2) the board of directors’ estimate of Pinnacle Financial’s future value as an independent company at the time of the proposal; and |
| |
| | (4) The description of • | | the Registrant’s Common Stock, par value $1.00 per share contained inexpected social and economic effects on the Registrant’s Registration Statement on Form 8-A filed with the Commission and dated August 3, 2000, including all amendments and reports filed for purposes of updating such description; andcommunities within which Pinnacle Financial operates. |
Pinnacle Financial has included this provision in its amended and restated charter because serving its community is one of the reasons for organizing Pinnacle National. As a result, the board of directors believes its obligation in evaluating an acquisition proposal extends beyond evaluating merely the payment being offered in relation to the market or book value of the common stock at the time of the proposal.
While the value of what is being offered to shareholders in exchange for their stock is the main factor when weighing the benefits of an acquisition proposal, the board believes it is appropriate also to consider all other relevant factors. For example, the board will evaluate what is being offered in relation to the current value of Pinnacle Financial at the time of the proposal as determined in a freely negotiated transaction and in relation to the board’s estimate of the future value of Pinnacle Financial as an independent concern at the time of the proposal. A takeover bid often places the target corporation virtually in the position of making a forced sale, sometimes when the market price of its stock may be depressed. The board believes that frequently the payment offered in such a situation, even though it may exceed the value at which shares are then trading, is less than that which could be obtained in a freely negotiated transaction. In a freely negotiated transaction, management would have the opportunity to seek a suitable partner at a time of its choosing and to negotiate for the most favorable price and terms that would reflect not only Pinnacle Financial’s current value, but also its future value.
17
before making such purchase: (1) makes a public announcement of his or her intention with respect to changing or influencing the management or control of the offeree company; (2) makes a full, fair and effective disclosure of such intention to the person from whom he or she intends to acquire such securities; and (3) files with the Tennessee Commissioner of Commerce and Insurance (the “Commissioner”) and the offeree company a statement signifying such intentions and containing such additional information as may be prescribed by the Commissioner.
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 terms or after 60 days from the date the offer has become effective. If the takeover offer is for less than all the outstanding equity securities of any class, such an offer must also provide for acceptance of securities pro rata if the number of securities tendered is greater than the number the offeror has offered to accept and pay for. If such an offeror varies the terms of the takeover offer before its expiration date by increasing the consideration offered to offerees, the offeror must pay the increased consideration for all equity securities accepted, whether accepted before or after the variation in the terms of the offer.
The TIPA does not apply to Pinnacle Financial, 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.
The Tennessee Business Combination Act generally prohibits a “business combination” by Pinnacle Financial or a subsidiary with an “interested shareholder” within five years after the shareholder becomes an interested shareholder. Pinnacle Financial or a subsidiary can, however, enter into this prospectusa business combination within that period if, before the interested shareholder became such, Pinnacle Financial’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 two-thirds (2/3) of the other shareholders.
For purposes 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 filings madeperson or entity that beneficially owns 10% or more of the voting power of any outstanding class or series of Pinnacle Financial stock.
Pinnacle Financial’s charter does not have special requirements for transactions with interested parties; however, all business combinations, as defined above, must be approved by ustwo thirds (2/3) of the directors and a majority of the shares entitled to vote or a majority of the directors and two thirds (2/3) of the shares entitled to vote.
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 under Sections 13(a), 13(c), 14 or 15(d)pursuant to Section 12(g) of the Exchange Act. Under the Tennessee Greenmail Act, afterPinnacle Financial may not purchase any of its shares at a price above the date hereofmarket 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 less than two years, unless the purchase has been approved by the affirmative vote of a majority of the outstanding shares of each class of voting stock issued by Pinnacle Financial or Pinnacle Financial makes an offer, or at least equal value per share, to all shareholders of such class.
Indemnification
The TBCA provides that a corporation may indemnify any of its directors and
priorofficers against liability incurred in connection with a proceeding if: (a) such person acted in good faith; (b) in the case of conduct in an official capacity with the corporation, he reasonably believed such conduct was in the corporation’s best interests; (c) in all other cases, he reasonably believed that his conduct was at least not opposed to the
filingbest interests of
a post-effective amendmentthe corporation; and (d) in connection with any criminal proceeding, such person had no reasonable cause to
this Registration Statement which indicatesbelieve his conduct was unlawful. In actions brought by or in the right of the corporation, however, the TBCA provides that
all securities offered hereby have been soldno indemnification may be made if the director or
which deregisters all securities then remaining unsold. Any statements contained in a document incorporated or deemedofficer was adjudged to be
incorporated by reference herein shall be deemed to be modified or replaced for purposes hereofliable to the
extentcorporation. The TBCA also provides that
a statement contained herein (or in
connection with any
other subsequently filed document which alsoproceeding charging improper personal benefit to an officer or director, no indemnification may be made if such officer or director is
incorporated or deemed to be incorporated by reference herein) modifies or replaces such statement. Any statement so modified or replaced shall not be deemed, except as so modified or replaced, to constitute a part hereof. Notwithstanding the foregoing, information furnished under Items 9 and 12 of any Current Report on Form 8-K, including the related exhibits, is not incorporated by reference in this prospectus or the accompanying registration statement.
We will provide to each person, including any beneficial owner, to whom this prospectus is delivered a copy of any or all of the information that we have incorporated by reference into this prospectus but not delivered with this prospectus. To receive a free copy of any of the documents incorporated by reference in this prospectus, other than exhibits, unless they are specifically incorporated by reference in those
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documents, call or write to Harold R. Carpenter, Pinnacle Financial Partners, Inc., The Commerce Center, 211 Commerce Street, Suite 300, Nashville, Tennessee 37201, (615) 744-3700. The information relating to us contained in this prospectus does not purport to be comprehensive and should be read together with the information contained in the documents incorporated or deemed to be incorporated by reference in this prospectus. See also “Where You Can Find More Information.”
LEGAL MATTERS
Certain legal matters with respect to the shares of common stock offered hereby will be passed upon for us by Bass, Berry & Sims PLC, Nashville, Tennessee. Certain legal matters with respect to the common stock offered by this prospectus will be passed upon for Raymond James by Powell, Goldstein, Frazer & Murphy LLP, Atlanta, Georgia.
EXPERTS
The consolidated financial statements of Pinnacle Financial Partners, Inc. as of December 31, 2003 and December 31, 2002, and for each of the fiscal years in the three-year period ended December 31, 2003 have been incorporated by reference in this prospectus and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.
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TABLE OF CONTENTS
| | | | |
| | Page |
| |
|
Prospectus Summary | | | 1 | |
Risk Factors | | | 7 | |
Special Note Regarding Forward-Looking Statements | | | 10 | |
Use of Proceeds | | | 11 | |
Price Range of Our Common Stock | | | 11 | |
Dividend Policy | | | 12 | |
Capitalization | | | 13 | |
Management | | | 14 | |
Underwriting | | | 17 | |
Where Can You Find More Information | | | 19 | |
Documents Incorporated by Reference | | | 19 | |
Legal Matters | | | 20 | |
Experts | | | 20 | |
You should rely onlyadjudged liable on the information contained or incorporated by reference in this prospectus. We have not, and the underwriters have not, authorized any other person to provide you with different information. We are not, and the underwriters are not, making an offer to sell our common stock in any jurisdiction where the offer or sale is not permitted. You should assumebasis that the information contained in this prospectus is accurate only as of the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or any sale of the common stock. Our business, financial condition, results of operations and prospects may have changed since the date of this prospectus. Unless otherwise indicated, all information in this prospectus assumes that the underwriters will not exercise their option to purchase additional common stock to cover over-allotments.such personal benefit was
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850,000 Shares
Common Stock
PROSPECTUS
RAYMOND JAMES
, 2004
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
improperly received. 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 a director or officer of a corporation, the TBCA mandates that the corporation indemnify the director or officer against reasonable expenses incurred in the proceeding. The TBCA provides that a court of competent jurisdiction, unless the corporation’s charter provides otherwise, 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 (a) such officer or director was adjudged liable to the corporation in a proceeding by or in the right of the corporation; (b) such officer or director was adjudged liable on the basis that personal benefit was improperly received by him; or (c) such officer or director breached his duty of care to the corporation.
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Item 14. | Other Expenses of Issuance and Distribution. |
The expensesPinnacle Financial’s charter provides that it will indemnify its directors and officers to be paidthe maximum extent permitted by the Registrant in connection with the distribution of the securities being registered are as set forth in the following table:
| | | | | |
| Securities and Exchange Commission fee | | $ | 2,333 | |
| Printing expenses* | | $ | 35,000 | |
| Legal fees and expenses* | | $ | 50,000 | |
| Accounting fees and expenses* | | $ | 67,500 | |
| Miscellaneous* | | $ | 50,000 | |
| | | |
| |
| Total* | | $ | 204,833 | |
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Item 15. | Indemnification of Directors and Officers. |
The Registrant’sTBCA. Pinnacle Financial’s bylaws provide that its directors and officers willshall be indemnified against expenses that they actually and reasonably incur if they are successful on the merits of a claim or proceeding. In addition, the bylaws provide that the RegistrantPinnacle Financial will advance to its directors and officers reasonable expenses of any claim or proceeding so long as the director or officer furnishes the RegistrantPinnacle Financial with (1) a written affirmation of his or her good faith belief that he or she has met the applicable standard of conduct and (2) a written statement that he or she will repay any advances if it is ultimately determined that he or she is not entitled to indemnification.
When a case or dispute is settled or otherwise not ultimately determined on its merits, the indemnification provisions provide that
the RegistrantPinnacle Financial will indemnify its directors and officers when they meet the applicable standard of conduct. The applicable standard of conduct is met if the
directordirectors or officer acted in a manner he or she in good faith believed to be in or not opposed to
the Registrant’sPinnacle Financial’s best interests and, in the case of a criminal action or proceeding, if the insider had no reasonable cause to believe his or her conduct was unlawful.
The Registrant’sPinnacle Financial’s board of directors, shareholders or independent legal counsel determines whether the director or officer has met the applicable standard of conduct in each specific case.
The Registrant’s
Pinnacle Financial’s amended and restated charter and bylaws also provide that the indemnification rights contained
in the bylawstherein do not exclude other indemnification rights to which a director or officer may be entitled under any bylaw, resolution or agreement, either specifically or in general terms approved by the affirmative vote of the holders of a majority of the shares entitled to vote.
The RegistrantPinnacle Financial can also provide for greater indemnification than is provided for in the bylaws if
the RegistrantPinnacle Financial chooses to do so, subject to approval by its shareholders and the limitations provided in
the Registrant’sits amended and restated charter as discussed in the subsequent paragraph.
The Registrant’s
Pinnacle Financial’s amended and restated charter eliminates, with exceptions, the potential personal liability of a director for monetary damages to
the RegistrantPinnacle Financial and its shareholders for breach of a duty as a director. There is, however, no elimination of liability for:
| | |
| | • | | a breach of the director’s duty of loyalty to the RegistrantPinnacle Financial or its shareholders; |
| |
| | • | | an act or omission not in good faith or which involves intentional misconduct or a knowing violation of law;��or |
| |
| | • | | any payment of a dividend or approval of a stock repurchase that is illegal under the Tennessee Business Corporation Act.TBCA. |
II-1
The Registrant’s
Pinnacle Financial’s amended and restated charter does not eliminate or limit
the Registrant’sPinnacle Financial’s right or the right of its shareholders to seek injunctive or other equitable relief not involving monetary damages.
The indemnification provisions of the bylaws specifically provide that the RegistrantPinnacle Financial may purchase and maintain insurance on behalf of any director or officer against any liability asserted against and incurred by him or her in his or her capacity as a director, officer, employee or agent whether or not the RegistrantPinnacle Financial would have had the power to indemnify against such liability.
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