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RegistrationNo. 333-146128
Tennessee | 6021 | 62-1812853 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
including area code, of agent for service)
Gary L. Scott, Chairman Mid-America Bancshares, Inc. 7651 Highway 70 South Nashville, Tennessee 37221 | Bob F. Thompson, Esq. Bass, Berry & Sims PLC 315 Deaderick Street, Suite 2700 Nashville, Tennessee 37238 | Daniel W. Small, Esq. One Burton Hills Boulevard, Suite 330 Nashville, Tennessee 37215 |
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The information in this joint proxy statement/prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary joint proxy statement/prospectus is not an offer to sell these securities, and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. |
M. Terry Turner | Gary L. Scott, Chairman | |
President and Chief Executive Officer | Chairman and Chief Executive Officer | |
Pinnacle Financial Partners, Inc. | Mid-America Bancshares, Inc. |
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To Be Held on November 27, 2007
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If you are a Pinnacle shareholder: | If you are a Mid-America shareholder: | |
Pinnacle Financial Partners, Inc. | Mid-America Bancshares, Inc. | |
211 Commerce Street, Suite 300 | 2019 Richard Jones Road | |
Nashville, TN 37201 | Nashville, Tennessee 37215 | |
Attention: Investor Relations | Attention: Investor Relations | |
(615)744-3700 | (615) 690-5800 | |
TO OBTAIN TIMELY DELIVERY OF PINNACLE FINANCIAL PARTNERS, INC. DOCUMENTS, YOU MUST MAKE YOUR REQUEST ON OR BEFORE NOVEMBER 9, 2007. | TO OBTAIN TIMELY DELIVERY OF MID-AMERICA BANCSHARES, INC. DOCUMENTS, YOU MUST MAKE YOUR REQUEST ON OR BEFORE NOVEMBER 9, 2007. |
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Ex-8.1 Opinion of Bass Berry & Sims PLC | ||||||||
Ex-23.1 Consent of Maggart & Associates, P.C. | ||||||||
Ex-23.2 Consent of KPMG LLP | ||||||||
Ex-99.1 Form of Pinnacle Financial Partners, Inc. Proxy Card | ||||||||
Ex-99.2 Form of Mid-America Bancshares, Inc. Proxy Card |
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Q: | What am I being asked to vote upon and how does my board recommend I vote? | |
A: | Shareholders of both Pinnacle andMid-America are being asked to (1) approve the merger agreement pursuant to which Pinnacle will acquireMid-America by merger, with Pinnacle being the surviving corporation, as well as, in the case of Pinnacle shareholders, to approve the issuance of Pinnacle common stock in connection with the merger and (2) to permit adjournment of their respective meetings to permit the solicitation of additional proxies in the event there are insufficient votes to constitute a quorum or to approve the matters presented at such special meetings. Additionally, Pinnacle shareholders are being asked to approve the amendment of Pinnacle’s 2004 Equity Incentive Plan to reserve an additional 500,000 shares of Pinnacle common stock for issuance under the plan. | |
Both the Pinnacle andMid-America boards of directors have determined unanimously that the proposed merger is advisable and in the best interests of the Pinnacle andMid-America shareholders, respectively, and each board recommends that its respective shareholders vote “For” approval of the merger agreement and “For” the adjournment proposals. In addition, members ofMid-America’s board of directors have entered into agreements with Pinnacle in which they agree to vote their shares ofMid-America common stock in favor of the merger agreement. | ||
Pinnacle’s board also recommends unanimously that its shareholders approve the issuance of Pinnacle common stock in connection with the merger and vote “For” the amendment to the 2004 Equity Incentive Plan. | ||
Neither Pinnacle’s board of directors norMid-America’s board of directors is aware of any other business to be considered at their respective special meetings. | ||
Q: | What vote is required to approve the merger of Pinnacle withMid-America or the adjournment of a special meeting? |
A: | The approval of the merger agreement and, in the case of the Pinnacle shareholders, the approval of the issuance of Pinnacle common stock in connection with the merger requires: (1) the affirmative vote of a majority of the shares of Pinnacle’s common stock outstanding on October 9, 2007, and (2) the affirmative vote of a majority of the shares ofMid-America’s common stock outstanding on October 9, 2007. |
If a quorum does not exist at the Pinnacle special meeting, adjournment requires the affirmative vote of a majority of the votes cast, in person or by proxy, at the special meeting. If a quorum exists at the Pinnacle special meeting but there are not enough affirmative votes to approve the merger agreement and issuance of Pinnacle common stock in connection with the merger, the special meeting may be adjourned if the votes cast, in person or by proxy, at the Pinnacle special meeting favoring the proposal to adjourn exceed the votes cast, in person or by proxy, opposing the proposal to adjourn. | ||
Similarly, if a quorum does not exist at theMid-America special meeting, adjournment requires the affirmative vote of a majority of the votes cast, in person or by proxy, at the special meeting. If a quorum exists at theMid-America special meeting but there are not enough affirmative votes to approve the merger agreement, the special meeting may be adjourned if the votes cast, in person or by proxy, at theMid-America special meeting favoring the proposal to adjourn exceed the votes cast, in person or by proxy, opposing the proposal to adjourn. | ||
Q: | Why is my vote important? | |
A: | Under the Tennessee Business Corporation Act, or TBCA, which governs both Pinnacle andMid-America, the merger agreement must be approved by the holders of a majority of the outstanding shares of both Pinnacle andMid-America common stock entitled to vote. In addition, Pinnacle’s charter requires that, since the merger was approved by at least a two-thirds vote of Pinnacle’s board of directors, it can be approved by a majority of Pinnacle’s outstanding common stock entitled to vote. Accordingly, if a Pinnacle orMid-America shareholder fails to vote, or if a Pinnacle orMid-America shareholder abstains, that will |
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make it more difficult for Pinnacle andMid-America to obtain the approval of the merger agreement.If you are a Pinnacle shareholder, your failure to vote will have the same effect as a vote against the approval of the merger agreement and the issuance of Pinnacle stock in connection with the merger. If you are aMid-America shareholder, your failure to vote will have the same effect as a vote against the approval of the merger agreement. | ||
The amendment to Pinnacle’s 2004 Equity Incentive Plan will be approved if the number of shares of Pinnacle common stock voted in favor of the proposal exceeds the number of shares of Pinnacle common stock voted against it. Therefore, abstaining from voting on the amendment to the 2004 Equity Incentive Plan will have no effect on whether the proposal is approved so long as a quorum is present. | ||
Q: | What do I need to do now? | |
A: | After you carefully read this joint proxy statement/prospectus, please respond as soon as possible by completing, signing and dating your proxy card and returning it in the enclosed postage-paid return envelope so that your shares will be represented and voted at your respective special meeting | |
The boards of directors of Pinnacle andMid-America each unanimously recommend that the shareholders of Pinnacle andMid-America, as the case may be, vote in favor of each of the proposals on which they will be voting at their respective special meeting. | ||
Q: | If my shares are held in “street name” by my broker, will my broker vote my shares for me? | |
A: | No. If you do not provide your broker with instructions on how to vote your “street name” shares, your broker will not be permitted to vote them, in the case ofMid-America shareholders, on the approval of the merger agreement, or, in the case of Pinnacle shareholders, on the approval of the merger agreement and the issuance of Pinnacle common stock in connection with the merger or the amendment to Pinnacle’s 2004 Equity Incentive Plan. You should, therefore, be sure to provide your broker with instructions on how to vote your shares. Please check the voting form used by your broker to see if it offers telephone or Internet submission of proxies. | |
Q: | What if I fail to instruct my broker? |
A: | If you fail to instruct your broker to vote your shares and the broker submits an unvoted proxy, the resulting broker “non-vote” will be counted toward a quorum at the respective special meeting, but it will otherwise have the consequence of a vote “Against” approval of the merger agreement, and, for Pinnacle shareholders, the issuance of Pinnacle common stock in connection with the merger. A failure to instruct your broker to vote your shares on the proposal to amend the 2004 Equity Incentive Plan will have no impact on that proposal so long as a quorum is present. |
Q: | Can I change my vote after I have delivered my proxy card? | |
A: | Yes. You may change your vote at any time before your proxy is voted at your meeting. You can do this in any of the three following ways: | |
• by sending a written notice to the corporate secretary of Pinnacle orMid-America, as appropriate, in time to be received before your special meeting stating that you would like to revoke your proxy; | ||
• by completing, signing and dating another proxy card bearing a later date and returning it by mail in time to be received before your special meeting, in which case your later-submitted proxy will be recorded and your earlier proxy revoked; or | ||
• if you are a holder of record, by attending the special meeting and voting in person. | ||
If your shares are held in an account at a broker or bank, you should contact your broker or bank to change your vote. |
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Q: | What vote is required to approve the amendment to Pinnacle’s 2004 Equity Incentive Plan? | |
A: | The amendment to Pinnacle’s 2004 Equity Incentive Plan to increase the number of shares available for issuance thereunder by 500,000 shares will be approved if the number of shares of Pinnacle common stock voted in favor of the amendment exceed the votes cast opposing the action. A properly executed proxy marked “ABSTAIN” with respect to this proposal will not be voted on the proposal, although it will be counted in determining whether there is a quorum. Therefore, abstaining from voting on the amendment to the Pinnacle’s 2004 Equity Incentive Plan will have no effect on whether the proposal is approved so long as a quorum is present. | |
Approval of the amendment to the 2004 Equity Incentive Plan is not dependent on approval of the merger, nor is approval of the merger dependent on approval of the amendment to the 2004 Equity Incentive Plan. | ||
Q: | Why are Pinnacle andMid-America proposing to merge? | |
A: | The boards of directors of both Pinnacle andMid-America believe that, among other things, the merger will provide the resulting company with expanded opportunities for profitable growth. In addition, the boards believe that by combining the resources of the two companies, the resulting company will have an improved ability to compete in the changing and competitive financial services industry. | |
Q: | What willMid-America shareholders receive as a result of the merger? | |
A: | As a shareholder ofMid-America, you will receive shares of Pinnacle common stock based on a formula in which each share ofMid-America common stock you own at the effective time of the merger will be converted into the right to receive 0.4655 shares of Pinnacle common stock and $1.50 in cash. Fractional shares will be converted into cash based on the average closing price of Pinnacle’s common stock for the five trading days preceding the effective date of the merger as reported by the Wall Street Journal. Based on the number ofMid-America shares outstanding as of August 15, 2007 plus 260,000 shares of restricted stock outstanding as of that date, Pinnacle expects to issue approximately 6.6 million shares of Pinnacle common stock to theMid-America shareholders. | |
Q: | How will the value of the considerationMid-America shareholders may receive be determined? |
A: | Because the merger is based upon a fixed exchange ratio, the valueMid-America shareholders receive will fluctuate based upon fluctuations in the market price of Pinnacle’s common stock. As of October 9, 2007, the most recent practical date prior to the date of this joint proxy statement/ prospectus, Pinnacle’s closing stock price was $30.62. Accordingly, based upon that price, each share ofMid-America would receive Pinnacle stock with a value of $14.25 ($30.62 times 0.4655) and $1.50 in cash. Any resulting fractional shares will be converted into cash. In the period between the announcement of the merger on August 15, 2007 and October 9, 2007, the closing price of Pinnacle’s common stock has ranged from $26.40 to $31.21 which would equate to a range of $12.29 to $14.53 in per share value toMid-America’s shareholders.You should obtain a current stock price quotation for Pinnacle common stock. You can get this quotation from a newspaper, on the Internet or by calling your broker. Shares ofMid-America are not listed or traded on a national exchange or over-the-counter. Based on information known toMid-America senior management, the only price paid for shares ofMid-America common stock during the week ended August 14, 2007 (the day prior to the signing of the merger agreement) was $12.25 per share on August 8, 2007. |
Q: | I am aMid-America shareholder. Should I send in my stock certificates now? | |
A: | No. After the merger is completed, Pinnacle will sendMid-America shareholders written instructions for exchanging their stock certificates for merger consideration.You should not send in your stock certificates until you receive these instructions. | |
Q: | I am a Pinnacle shareholder. Should I send in my common stock certificates? | |
A: | No. Outstanding shares of Pinnacle common stock will remain outstanding following the merger withMid-America, with no additional action required by Pinnacle shareholders. |
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Q: | Will shareholders have dissenters’ rights? |
A: | Yes. If you are aMid-America shareholder and you follow the procedures prescribed by Tennessee law, you may dissent from the merger and have the fair value of your stock paid to you in cash. If you follow those procedures, you won’t receive Pinnacle common stock. The fair value of yourMid-America common stock, determined in the manner prescribed by Tennessee law, will be paid to you in cash. That amount could be more or less than the merger consideration or the market value of Pinnacle common stock as of the closing date of the merger. For a more complete description of these dissenters’ rights, see page 55 andAppendix B to this joint proxy statement/prospectus where the full text of the Tennessee Dissenters’ Rights Statute is set out. |
Shareholders of Pinnacle are not entitled to dissenters’ or appraisal rights in connection with the merger. | ||
Q: | What are the federal income tax consequences toMid-America shareholders? | |
A: | For federal income tax purposes,Mid-America shareholders who exchange their shares for Pinnacle common stock will generally not recognize gain or loss on the exchange, but will be taxed on the cash portion of the merger consideration to the extent of any gain and any cash paid for fractional shares. |
Please see page 53 of this joint proxy statement/prospectus for a description of the material United States federal income tax consequences of the merger. |
Q: | I am aMid-America shareholder. May I sell the shares of Pinnacle common stock that I will receive in the merger? |
A: | Generally, yes. Shares of Pinnacle common stock that you receive in the merger will be freely transferable, unless you are an “affiliate” ofMid-America under applicable federal securities laws. Affiliates generally include directors, certain executive officers and holders of 10% or more ofMid-America’s common stock. Generally, all shares of Pinnacle common stock received by affiliates ofMid-America (including shares they beneficially own for others) may not be sold by them, except in compliance with the Securities Act of 1933, as amended. For more detail regarding this subject, see page 58. |
Q: | When do you expect the merger to be completed? | |
A: | We anticipate that the merger will be completed late in the fourth quarter of 2007 or early in the first quarter of 2008. In addition to shareholder approvals, we must also obtain certain regulatory approvals. Any delay in obtaining such approvals may delay the consummation of the merger. | |
Q: | If I’ve lost myMid-America stock certificate, can I receive consideration in the merger? |
A: | Yes. However, you will have to provide an affidavit attesting to the fact that you lost yourMid-America stock certificate. Additionally, you may have to give Pinnacle or the exchange agent a bond of 1.5% of the value of your shares to indemnify Pinnacle against a loss in the event someone finds or has your lost certificate and is able to transfer it. To avoid these measures, you should do everything you can to find your lost certificate before the time comes to send it in. |
Q: | Where will my shares be listed after the merger? | |
A: | Shares of Pinnacle’s common stock issued in the transaction will be listed on the Nasdaq Global Select Market and will trade under the symbol “PNFP.” | |
Q: | Who can help answer my questions? | |
A: | If you want additional copies of this document, or if you want to ask any questions about the merger, you should contact: |
Investor Relations | or | Investor Relations | ||
Pinnacle Financial Partners, Inc. | Mid-America Bancshares, Inc. | |||
211 Commerce Street, Suite 300 | 2019 Richard Jones Road | |||
Nashville, TN 37201 | Nashville, TN 37215 | |||
(615)744-3700 | (615) 690-5800 |
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• | Mid-America has change in control agreements with its four senior executive officers who are directors that provide for lump-sum payments and other benefits (including indemnification for tax liabilities) following a change in control. The merger will constitute a change in control under these agreements and the lump-sum payment will be made to the employees at the closing. On August 15, 2007, these agreements were amended to provide that if the merger is consummated in 2007, the executives will be paid their change in control payments as if the merger occurred on January 1, 2008. These payments and benefits are estimated to total approximately $5.7 million in the aggregate and will be paid byMid-America immediately prior to the closing of the merger. See “PROPOSAL #1 FOR SHAREHOLDERS OF PINNACLE FINANCIAL PARTNERS, INC. ANDMID-AMERICA BANCSHARES, INC.: THE PROPOSED MERGER — Interests of CertainMid-America Executive Officers and Directors in the Merger” on page 56 for more information about these payments. |
• | Jason K. West, PrimeTrust’s President and Chief Operating Officer, has entered into a new employment agreement with Pinnacle National Bank, which will become effective as of the closing of the merger and have a three-year term. This agreement provides for the payment of compensation and benefits to Mr. West and contains a covenant not to compete. While not parties to any written agreement with Pinnacle, it is expected that Gary Scott, David Major and Sam Short will work for the combined company for at least 12 months. | |
• | Pinnacle has agreed to indemnify and hold harmless each present and former director, officer and employee ofMid-America and its subsidiaries following completion of the merger. This indemnification |
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covers liability and expenses arising out of matters existing or occurring at or prior to the completion of the merger to the fullest extent such persons would have been indemnified as directors, officers or employees ofMid-America or any of its subsidiaries under existing indemnification agreementsand/or applicable law. This indemnification extends to liability arising out of the transactions contemplated by the merger agreement. Pinnacle also has agreed that it will maintain a policy of directors’ and officers’ liability insurance coverage for the benefit of all ofMid-America’s and its subsidiaries’ directors and officers as of immediately prior to the effective time of the merger for six years following completion of the merger. |
• | At the effective time of the merger, Pinnacle’s board of directors will be expanded by at least three members, and three members of the existingMid-America board of directors who are proposed byMid-America’s nominating and corporate governance committee and reasonably acceptable to Pinnacle’s nominating and corporate governance committee and board of directors will fill three of these vacancies. As members of the Pinnacle board of directors, the new directors who are not employees of Pinnacle can be expected to receive $1,100 for each board meeting attended and $900 for each committee meeting attended. In addition, these non-employee directors also may receive equity awards under Pinnacle’s 2004 Equity Incentive Plan similar to those awarded to Pinnacle’s non-employee directors in 2007. | |
• | Each of Gary Scott, David Major, Jason West and Sam Short has entered into a business protection agreement withMid-America. Under the terms of these agreements, each of Messrs. Scott, Major, West and Short has agreed that he will not actively participate or engage directly or indirectly in a competing business in the Nashville MSA and the counties contiguous to the Nashville MSA until the earlier of (1) voluntary retirement after reaching age 65; (2) a transaction in which an acquiror ofMid-America is subsequently acquired; (3) August 31, 2011; or (4) the date thatMid-America terminates the agreement. In exchange for this agreement not to compete, each executive is entitled to receive monthly payments equal to the greater of his current or future monthly base salary or $10,000 until the occurrence of one of these termination events. Mr. West’s business protection agreement will be superseded by his employment agreement with Pinnacle National Bank upon the effectiveness of the merger. | |
• | All of Mid-America’s outstanding options, stock appreciation rights and restricted shares will vest upon consumation of the merger, including those options, stock appreciation rights and restricted shares held by Mid-America’s directors and executive officers. These awards, which were granted in 2006, in connection with the completion of Mid-America’s share exchange, were scheduled to vest over ten years. Instead, as a result of the merger, these awards to directors and executive officers (with an aggregate value of approximately $3.6 million (based on the value of the consideration to be paid by Pinnacle on the date the merger was approved)) will vest at the effective time of the merger. |
• | stronger presence in the Nashville-Davidson-Murfreesboro MSA, one of the fastest growing MSAs in the United States, including areas within the MSA not presently served by Pinnacle, including Wilson, Dickson and Cheatham Counties; |
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• | potential cost synergies — the combined company will operate a common systems platform and threeMid-America and Pinnacle branches will be consolidated; |
• | increased size and scale — the combined company is expected to have pro forma assets of approximately $3.5 billion, resulting in increased lending capacity, and 30 offices (net of closures) in some of the fastest growing areas in the Nashville MSA; | |
• | enhanced franchise value — the increased size and scale of the combined company should increase its attractiveness to larger potential acquirors; |
• | accretive to earnings — applying the potential cost savings and other assumptions (described under “OPINIONS OF FINANCIAL ADVISORS — Opinion of Pinnacle’s Financial Advisor” beginning on page 60), the merger is anticipated to result in accretion to Pinnacle’s earnings per share beginning in 2008; and |
• | increased float — pro forma shares outstanding of the combined company would increase from approximately 15.5 million shares to 22.2 million shares. |
• | Pinnacle’s shares are readily marketable and have reflected a strong overall upward trend for most of Pinnacle’s time in operation; | |
• | Pinnacle is a locally headquartered bank holding company that appears to employ a veteran group of skilled bankers that will be attractive toMid-America’s customers, employees and other stakeholders; | |
• | At the present time relatively little market overlap exists between Pinnacle’s operations and those of Bank of the South and PrimeTrust Bank; | |
• | TheMid-America board believed that an affiliation with Pinnacle would make the combined entity both more competitive in the Middle Tennessee marketplace and a more attractive vehicle for entry into the market by a larger acquirer than either institution would on a standalone basis; | |
• | The cost-saving synergies that could be achieved in the merger, estimated at $7.4 million to $9 million, can be expected to increase the profitability of the combined institution; | |
• | IfMid-America were to remain independent, the company would have to consider the costs and benefits of raising new capital, listing its shares for public trading, and converting to a new data processing platform; | |
• | The costs of complying with increasing layers of bank regulation, and with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, were a concern to management and theMid-America board; | |
• | A merger would be expected to be a “tax free” re-organization for most non-dissenting shareholders except to the extent of the possible taxability of the $1.50 per share being paid in cash by Pinnacle for each share ofMid-America common stock; | |
• | TheMid-America board of directors was impressed with the management depth at Pinnacle and believed that access to the Pinnacle management team would benefitMid-America’s customers and |
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employees and would provide significant layers of additional capable management and appropriate management succession; and |
• | The board of directors considered the impact of the transaction on the return on investment ofMid-America’s shareholders and believed that the merger consideration of approximately $13.18 per share on the date the transaction was announced ($15.83 on the date of this joint proxy statement/prospectus), involving receipt byMid-America shareholders of a more liquid and potentially more attractive stock of the combined entity, constituted a reasonable or even excellent return to investors who bought shares directly from either Bank of the South or PrimeTrust Bank before theMid-America share exchange in September 2006. |
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• | a governmental authority that must grant a regulatory approval denies approval of the merger (although this termination right is not available to a party whose failure to comply with the merger agreement resulted in those actions by a governmental authority); | |
• | a governmental entity of competent jurisdiction issues a final nonappealable order enjoining or otherwise prohibiting the merger; | |
• | the merger is not completed on or before March 31, 2008 (although this termination right is not available to a party whose failure to comply with the merger agreement resulted in the failure to complete the merger by that date); | |
• | the other party’s board of directors adversely changes its recommendation that its shareholders vote “FOR” approval of the merger agreement (in the case ofMid-America) or the approval of the merger agreement and the issuance of Pinnacle common stock in connection with the merger (in the case of Pinnacle), or the other party breaches its obligation to hold its shareholders’ meeting to approve the transactions contemplated by the merger agreement; | |
• | the other party is in breach of its representations, warranties, covenants or agreements set forth in the merger agreement and the breach rises to a level that would excuse the terminating party’s obligation to complete the merger and is either incurable or is not cured within 30 days; | |
• | the shareholders ofMid-America do not approve the merger agreement at theMid-America shareholders’ meeting; or | |
• | the shareholders of Pinnacle do not approve the merger agreement and the issuance of Pinnacle common stock in connection with the merger at the Pinnacle shareholders’ meeting. |
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• | changes in the business, operations or prospects of Pinnacle,Mid-America or the combined company; | |
• | governmentaland/or litigation developmentsand/or regulatory considerations; | |
• | market assessments as to whether and when the merger will be consummated and the anticipated benefits of the merger; | |
• | governmental action affecting the banking and financial industry generally; | |
• | market assessments of the potential integration or other costs; and | |
• | general market and economic conditions. |
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• | the loss of key employees and customers; | |
• | the disruption of operations and business; | |
• | inability to maintain and increase competitive presence; | |
• | loan and deposit attrition, customer loss and revenue loss; | |
• | possible inconsistencies in standards, control procedures and policies; | |
• | unexpected problems with costs, operations, personnel, technology and credit; and/or | |
• | problems with the assimilation of new operations, sites or personnel, which could divert resources from regular banking operations. |
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• | difficulties in obtaining required shareholder and regulatory approvals for the merger and related transactions; | |
• | the level and timeliness of realization, if any, of expected cost savings from the merger; | |
• | difficulties related to the consummation of the merger and the integration of the businesses of Pinnacle andMid-America; | |
• | a materially adverse change in the financial condition of Pinnacle orMid-America; | |
• | greater than expected deposit attrition, customer loss, or revenue loss following the merger; | |
• | loan losses that exceed the level of allowance for loan losses of the combined company; | |
• | lower than expected revenue following the merger; | |
• | management of the combined company’s growth; | |
• | the risks inherent or associated with possible or completed acquisitions; | |
• | increases in competitive pressure in the banking industry; | |
• | changes in the interest rate environment that reduce margins; | |
• | changes in deposit flows, loan demand or real estate values; | |
• | changes in accounting principles, policies or guidelines; | |
• | legislative or regulatory changes; | |
• | general economic conditions, either nationally, in Tennessee or in the Nashville MSA, that are less favorable than expected resulting in, among other things, a deterioration of the quality of the combined company’s loan portfolio and the demand for its products and services; | |
• | dependence on key personnel; |
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• | changes in business conditions and inflation; and | |
• | changes in the securities markets. |
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As of and | ||||||||||||||||||||||||||||
for the Six | ||||||||||||||||||||||||||||
Months Ended June 30, | As of and for the Years Ended December 31, | |||||||||||||||||||||||||||
2007 | 2006 | 2006(1) | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||
(In thousands, except per share data, ratios and percentages) | ||||||||||||||||||||||||||||
Statement of Financial Condition Data: | ||||||||||||||||||||||||||||
Total assets | $ | 2,315,327 | $ | 1,985,625 | $ | 2,142,187 | $ | 1,016,772 | $ | 727,139 | $ | 498,421 | $ | 305,279 | ||||||||||||||
Loans, net of unearned income | 1,645,655 | 1,358,273 | 1,497,735 | 648,024 | 472,362 | 297,004 | 209,743 | |||||||||||||||||||||
Allowance for loan losses | (17,375 | ) | (14,686 | ) | (16,118 | ) | (7,858 | ) | (5,650 | ) | (3,719 | ) | (2,677 | ) | ||||||||||||||
Total securities | 339,781 | 305,643 | 346,494 | 279,089 | 208,170 | 139,944 | 73,980 | |||||||||||||||||||||
Goodwill and core deposit intangibles | 124,641 | 115,835 | 125,673 | — | — | — | — | |||||||||||||||||||||
Deposits and securities sold under agreements to repurchase | 1,937,979 | 1,664,265 | 1,763,427 | 875,985 | 602,655 | 405,619 | 249,067 | |||||||||||||||||||||
Advances from FHLB | 26,699 | 33,749 | 53,726 | 41,500 | 53,500 | 44,500 | 21,500 | |||||||||||||||||||||
Subordinated debt | 51,548 | 30,929 | 51,548 | 30,929 | 10,310 | 10,310 | — | |||||||||||||||||||||
Stockholders’ equity | 265,194 | 238,739 | 256,017 | 63,436 | 57,880 | 34,336 | 32,404 | |||||||||||||||||||||
Income Statement Data: | ||||||||||||||||||||||||||||
Interest income | 69,247 | 45,115 | 109,696 | 46,308 | 27,679 | 18,262 | 12,561 | |||||||||||||||||||||
Interest expense | 34,504 | 18,713 | 48,743 | 17,270 | 7,415 | 5,363 | 4,362 | |||||||||||||||||||||
Net interest income | 34,743 | 26,402 | 60,953 | 29,038 | 20,264 | 12,899 | 8,199 | |||||||||||||||||||||
Provision for loan losses | 1,688 | 2,094 | 3,732 | 2,152 | 2,948 | 1,157 | 938 | |||||||||||||||||||||
Net interest income after provision for loan losses | 33,056 | 24,308 | 57,221 | 26,886 | 17,316 | 11,742 | 7,261 | |||||||||||||||||||||
Noninterest income | 10,577 | 6,428 | 15,786 | 5,394 | 4,978 | 3,035 | 1,732 | |||||||||||||||||||||
Noninterest expense | 27,608 | 20,434 | 46,624 | 21,032 | 14,803 | 10,796 | 7,989 | |||||||||||||||||||||
Income before income taxes | 16,025 | 10,302 | 26,383 | 11,248 | 7,491 | 3,981 | 1,004 | |||||||||||||||||||||
Income tax expense | 4,997 | 3,368 | 8,456 | 3,193 | 2,172 | 1,426 | 356 | |||||||||||||||||||||
Net income | $ | 11,028 | $ | 6,934 | $ | 17,927 | $ | 8,055 | $ | 5,319 | $ | 2,555 | $ | 648 | ||||||||||||||
Per Share Data: | ||||||||||||||||||||||||||||
Earnings per share — basic | $ | 0.71 | $ | 0.56 | $ | 1.28 | $ | 0.96 | $ | 0.69 | $ | 0.35 | $ | 0.11 | ||||||||||||||
Weighted average shares outstanding — basic | 15,464,151 | 12,473,187 | 13,954,077 | 8,408,663 | 7,750,943 | 7,384,106 | 6,108,942 | |||||||||||||||||||||
Earnings per share — diluted | $ | 0.66 | $ | 0.51 | $ | 1.18 | $ | 0.85 | $ | 0.61 | $ | 0.32 | $ | 0.10 | ||||||||||||||
Weighted average shares outstanding — diluted: | 16,640,977 | 13,640,565 | 15,156,837 | 9,464,500 | 8,698,139 | 7,876,006 | 6,236,844 | |||||||||||||||||||||
Common shares outstanding at end of period | 15,545,581 | 15,370,916 | 15,446,074 | 8,426,551 | 8,389,232 | 7,384,106 | 7,384,106 | |||||||||||||||||||||
Performance Ratios and Other Data: | ||||||||||||||||||||||||||||
Return on average assets(2) | 1.02 | % | 0.92 | % | 1.01 | % | 0.93 | % | 0.89 | % | 0.66 | % | 0.29 | % | ||||||||||||||
Return on average stockholders’ equity(2) | 8.50 | % | 8.48 | % | 8.66 | % | 13.23 | % | 12.31 | % | 7.70 | % | 2.47 | % | ||||||||||||||
Net interest margin(3) | 3.61 | % | 3.97 | % | 3.90 | % | 3.60 | % | 3.62 | % | 3.53 | % | 3.81 | % | ||||||||||||||
Net interest spread(4) | 2.91 | % | 3.32 | % | 3.20 | % | 3.16 | % | 3.34 | % | 3.23 | % | 3.42 | % | ||||||||||||||
Noninterest income to average assets(2) | 0.97 | % | 0.85 | % | 0.89 | % | 0.62 | % | 0.83 | % | 0.78 | % | 0.76 | % | ||||||||||||||
Noninterest expense to average assets(2) | 2.54 | % | 2.72 | % | 2.61 | % | 2.42 | % | 2.48 | % | 2.78 | % | 3.50 | % | ||||||||||||||
Efficiency ratio(5) | 60.9 | % | 62.2 | % | 60.8 | % | 61.1 | % | 58.6 | % | 67.8 | % | 80.4 | % | ||||||||||||||
Average loan to average deposit ratio | 94.48 | % | 87.12 | % | 88.73 | % | 81.3 | % | 79.0 | % | 85.5 | % | 98.5 | % | ||||||||||||||
Average interest-earning assets to average interest-bearing liabilities | 119.75 | % | 125.30 | % | 122.10 | % | 120.0 | % | 120.0 | % | 118.9 | % | 119.6 | % | ||||||||||||||
Book value per share | $ | 17.06 | $ | 15.53 | $ | 16.57 | $ | 7.53 | $ | 6.90 | $ | 4.65 | $ | 4.39 | ||||||||||||||
Asset Quality Ratios: | ||||||||||||||||||||||||||||
Allowance for loan losses to non performing assets | 564.3 | % | 512.1 | % | 199.9 | % | 1,708.3 | % | 1,006.9 | % | 981.3 | % | 143.4 | % | ||||||||||||||
Allowance for loan losses to total loans | 1.04 | % | 1.08 | % | 1.08 | % | 1.21 | % | 1.20 | % | 1.25 | % | 1.28 | % | ||||||||||||||
Non performing assets to total assets | 0.13 | % | 0.14 | % | 0.37 | % | 0.05 | % | 0.08 | % | 0.08 | % | 0.61 | % | ||||||||||||||
Nonaccrual loans to total loans | 0.14 | % | 0.21 | % | 0.47 | % | 0.07 | % | 0.12 | % | 0.13 | % | 0.89 | % | ||||||||||||||
Net loan charge-offs (recoveries) to average loans(2) | 0.05 | % | 0.07 | % | 0.05 | % | 0.01 | % | 0.27 | % | 0.05 | % | 0.05 | % | ||||||||||||||
Capital Ratios: | ||||||||||||||||||||||||||||
Leverage(6) | 9.5 | % | 8.6 | % | 9.5 | % | 9.9 | % | 9.7 | % | 9.7 | % | 11.1 | % | ||||||||||||||
Tier 1 risk-based capital | 10.4 | % | 9.5 | % | 10.9 | % | 11.7 | % | 11.7 | % | 11.8 | % | 12.7 | % | ||||||||||||||
Total risk-based capital | 11.3 | % | 10.4 | % | 11.8 | % | 12.6 | % | 12.7 | % | 12.8 | % | 13.8 | % |
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(1) | Information for 2006 fiscal year includes the operations of Calvary Bancorp, Inc., which Pinnacle merged with on March 15, 2006 and reflects approximately 6.9 million shares of Pinnacle common stock issued in connection with that merger. | |
(2) | Ratios and data for the six months ended June 30, 2007 and June 30, 2006, are annualized. | |
(3) | Net interest margin is the result of net interest income on a tax equivalent basis for the period divided by average interest earning assets. | |
(4) | Net interest spread is the result of the difference between the interest yield earned on interest earning assets on a tax equivalent basis less the interest paid on interest bearing liabilities. | |
(5) | Efficiency ratio is the result of noninterest expense divided by the sum of net interest income and noninterest income. | |
(6) | Leverage ratio is defined as Tier 1 capital divided by average total assets for the fourth quarter of each year in the case of the full year data and for the second quarter in the case of the June 30 data. |
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As of and for the Six | ||||||||||||||||||||||||||||
Months Ended June 30, | As of and for the Years Ended December 31, | |||||||||||||||||||||||||||
2007 | 2006 | 2006(1) | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||
(In thousands, except per share data, ratios and percentages) | ||||||||||||||||||||||||||||
Consolidated Balance Sheets: | ||||||||||||||||||||||||||||
End of year: | ||||||||||||||||||||||||||||
Total assets | $ | 1,069,363 | $ | 472,814 | $ | 967,971 | $ | 419,302 | $ | 295,290 | $ | 203,227 | $ | 109,426 | ||||||||||||||
Loans, net | 764,690 | 328,586 | 686,690 | 301,878 | 226,486 | 154,102 | 76,023 | |||||||||||||||||||||
Securities available-for-sale | 176,101 | 92,406 | 168,395 | 64,035 | 44,134 | 35,125 | 25,073 | |||||||||||||||||||||
Securities held-to-maturity | 9,740 | — | 9,740 | — | — | — | — | |||||||||||||||||||||
Deposits | 904,665 | 410,402 | 823,755 | 359,037 | 262,567 | 178,921 | 97,378 | |||||||||||||||||||||
Series A Preferred Stock | — | — | — | — | 4,125 | — | — | |||||||||||||||||||||
Stockholders’ equity | 104,676 | 39,320 | 102,940 | 38,412 | 20,158 | 16,980 | 10,307 | |||||||||||||||||||||
Consolidated Statements of Earnings: | ||||||||||||||||||||||||||||
Interest income | 35,046 | 15,092 | 42,330 | 21,809 | 13,229 | 7,986 | 3,942 | |||||||||||||||||||||
Interest expense | 19,339 | 7,635 | 22,033 | 9,345 | 4,878 | 3,640 | 1,936 | |||||||||||||||||||||
Net interest income | 15,707 | 7,457 | 20,297 | 12,464 | 8,351 | 4,346 | 2,006 | |||||||||||||||||||||
Provision for loan losses | 600 | 164 | 1,273 | 1,121 | 962 | 1,138 | 928 | |||||||||||||||||||||
Net interest income after provision for loan losses | 15,107 | 7,293 | 19,024 | 11,343 | 7,389 | 3,208 | 1,078 | |||||||||||||||||||||
Non-interest income | 3,961 | 2,181 | 5,355 | 3,981 | 2,959 | 1,922 | 773 | |||||||||||||||||||||
Non-interest expense | 14,502 | 7,999 | 21,304 | 12,653 | 9,337 | 6,585 | 3,352 | |||||||||||||||||||||
Earnings (loss) before income taxes | 4,566 | 1,475 | 3,075 | 2,671 | 1,011 | (1,455 | ) | (1,501 | ) | |||||||||||||||||||
Income taxes | 1,509 | 338 | 771 | 65 | — | — | — | |||||||||||||||||||||
Earnings (loss) | $ | 3,057 | $ | 1,137 | $ | 2,304 | $ | 2,606 | $ | 1,011 | $ | (1,455 | ) | $ | (1,501 | ) | ||||||||||||
Per Share Data: | ||||||||||||||||||||||||||||
Basic earnings (loss) per common share | $ | 0.22 | $ | 0.17 | $ | 0.25 | $ | 0.43 | $ | 0.21 | $ | (0.37 | ) | $ | (0.68 | ) | ||||||||||||
Diluted earnings (loss) per common share | $ | 0.21 | $ | 0.17 | $ | 0.25 | $ | 0.43 | $ | 0.21 | $ | (0.37 | ) | $ | (0.68 | ) | ||||||||||||
Book value per common share, end of period | $ | 7.51 | $ | 5.79 | $ | 7.39 | $ | 5.67 | $ | 4.43 | $ | 4.15 | $ | 4.21 | ||||||||||||||
Ratios: | ||||||||||||||||||||||||||||
Return on average stockholders’ equity(2) | 6.06 | % | 5.82 | % | 4.28 | % | 8.39 | % | 5.70 | % | (8.51 | )% | (15.95 | )% | ||||||||||||||
Return on average assets(2) | 0.62 | % | 0.51 | % | 0.37 | % | 0.73 | % | 0.40 | % | (0.91 | )% | (1.97 | )% | ||||||||||||||
Average stockholders’ equity to average assets(2) | 9.96 | % | 8.32 | % | 8.75 | % | 8.73 | % | 7.10 | % | 10.74 | % | 12.35 | % | ||||||||||||||
Net interest margin(3) | 3.37 | % | 3.72 | % | 3.59 | % | 3.70 | % | 3.55 | % | 2.93 | % | 2.84 | % | ||||||||||||||
Net interest spread(4) | 3.04 | % | 3.00 | % | 3.03 | % | 3.24 | % | 3.26 | % | 2.57 | % | 2.30 | % | ||||||||||||||
Efficiency ratio(5) | 70.8 | % | 81.5 | % | 79.9 | % | 76.9 | % | 82.1 | % | 106.8 | % | 132.6 | % | ||||||||||||||
Leverage ratio(6) | 10.21 | % | 12.02 | % | 8.91 | % | 9.81 | % | 8.69 | % | 8.93 | % | 9.47 | % |
(1) | Information for 2006 includes the operations of Bank of the South for the period from September 1, 2006 to December 31, 2006. All periods prior to September 1, 2006 relate solely to PrimeTrust Bank and do not reflect the results of Bank of the South prior to that time. | |
(2) | Ratios for the six months ended June 30, 2007 and June 30, 2006 are annualized. | |
(3) | Net interest margin is the result of net interest income for the period divided by average interest earning assets. |
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(4) | Net interest spread is the result of the difference between the interest yield earned on interest earning assets less the interest paid on interest bearing liabilities. | |
(5) | Efficiency ratio is the result of noninterest expense divided by the sum of net interest income and noninterest income. | |
(6) | Leverage ratio is defined as Tier 1 capital divided by average total assets for the fourth quarter of each year in the case of the full year data and for the second quarter in the case of June 30 data. |
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Pinnacle | Pro Forma | |||||||||||||||||||
Financial | Mid-America | Acquisition | Pro Forma | |||||||||||||||||
Partners, Inc. | Bancshares, Inc. | Adjustments | Combined | |||||||||||||||||
(Dollars in thousands, except per share amount data) | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 106,002 | $ | 42,741 | A | $ | (9,905 | ) | $ | 149,048 | ||||||||||
B | (21,290 | ) | ||||||||||||||||||
G | 31,500 | |||||||||||||||||||
Investment securities: | ||||||||||||||||||||
Held to maturity | 27,068 | 9,740 | E | (212 | ) | 27,068 | ||||||||||||||
H | (9,528 | ) | ||||||||||||||||||
Available for sale | 312,713 | 176,101 | H | 9,528 | 498,342 | |||||||||||||||
Loans held for sale | 4,973 | 8,994 | 13,967 | |||||||||||||||||
Loans | 1,663,030 | 772,927 | D | (514 | ) | 2,431,912 | ||||||||||||||
E | (3,531 | ) | ||||||||||||||||||
Allowance for loan losses | (17,375 | ) | (8,237 | ) | D | 514 | (25,098 | ) | ||||||||||||
Loans, net | 1,645,655 | 764,690 | 2,406,814 | |||||||||||||||||
Goodwill | 114,288 | 19,147 | B | 131,356 | 243,201 | |||||||||||||||
B | (19,147 | ) | ||||||||||||||||||
C | 200 | |||||||||||||||||||
E | 3,432 | |||||||||||||||||||
F | (6,075 | ) | ||||||||||||||||||
Core deposit intangible | 10,353 | 4,142 | B | (4,142 | ) | 20,349 | ||||||||||||||
F | 9,996 | |||||||||||||||||||
Premises and equipment | 37,855 | 31,732 | A | (284 | ) | 68,102 | ||||||||||||||
E | (1,201 | ) | ||||||||||||||||||
Other assets | 56,420 | 12,076 | A | (242 | ) | 69,119 | ||||||||||||||
B | 1,625 | |||||||||||||||||||
E | 2,214 | |||||||||||||||||||
F | (3,921 | ) | ||||||||||||||||||
G | 1,085 | |||||||||||||||||||
H | (138 | ) | ||||||||||||||||||
Total assets | $ | 2,315,327 | $ | 1,069,363 | $ | 111,321 | $ | 3,496,011 | ||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||||
Deposits | $ | 1,797,536 | $ | 904,665 | E | $ | 1,719 | $ | 2,703,920 | |||||||||||
Advances from Federal Home Loan Bank | 46,699 | 32,325 | E | (1,017 | ) | 78,007 | ||||||||||||||
Securities sold under agreements to repurchase | 140,443 | 18,295 | 158,738 | |||||||||||||||||
Subordinated debentures and other borrowings | 51,548 | 3,500 | G | 32,585 | 87,633 | |||||||||||||||
Accrued expenses and other liabilities | 13,906 | 5,902 | A | (4,335 | ) | 19,478 | ||||||||||||||
A | 2,918 | |||||||||||||||||||
B | 825 | |||||||||||||||||||
C | 400 | |||||||||||||||||||
H | (138 | ) | ||||||||||||||||||
Total liabilities | $ | 2,050,132 | $ | 964,687 | $ | 32,958 | $ | 3,047,777 | ||||||||||||
Stockholders’ equity: | ||||||||||||||||||||
Preferred stock | — | — | ||||||||||||||||||
Common Stock | 15,546 | 13,933 | B | (13,933 | ) | 22,153 | ||||||||||||||
B | 6,607 | |||||||||||||||||||
Additional paid in capital | 212,923 | 87,919 | B | (87,919 | ) | 389,355 | ||||||||||||||
B | 176,632 | |||||||||||||||||||
C | (200 | ) | ||||||||||||||||||
Retained earnings | 42,137 | 5,023 | A | (9,014 | ) | 42,137 | ||||||||||||||
B | 3,991 | |||||||||||||||||||
Accumulated other comprehensive (loss) | (5,411 | ) | (2,199 | ) | B | 2,199 | (5,411 | ) | ||||||||||||
Total stockholders’ equity | 265,195 | 104,676 | 78,363 | 448,234 | ||||||||||||||||
Total liabilities and stockholders’ equity | $ | 2,315,327 | $ | 1,069,363 | $ | 111,321 | $ | 3,496,011 | ||||||||||||
�� |
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Table of Contents
(A) | To reflect the impact toMid-America’s consolidated statement of financial condition for the impact of merger related charges to be recognized byMid-America prior to consummation of the merger. It is estimated that $2.3 million of the cash payments made to certainMid-America employees will not be tax deductible. |
Retained earnings | $ | 9,014 | ||||||
Taxes payable | 4,335 | |||||||
Cash | $ | 9,905 | ||||||
Premises and equipment | 284 | |||||||
Other assets | 242 | |||||||
Accrued expenses | 2,918 |
(B) | To reflect the impact of the issuance of Pinnacle common stock for outstanding common stock ofMid- America at the 0.4655 exchange ratio. As the exchange ratio is fixed pursuant to the merger agreement, the value of the shares to be issued by Pinnacle toMid-America shareholders upon consummation of the merger are valued in accordance with EITF99-12, “Determination of the Measurement Date for the Market Price of Acquiror Securities Issued in a Purchase Business Combination.” Other components of the purchase price consideration are estimated costs directly attributable to the merger to be incurred by Pinnacle of $825,000 and the estimated fair value of options to acquire Pinnacle common stock to be issued to holders of options to acquireMid-America common stock and the estimated fair value of stock appreciation rights to acquire Pinnacle common stock to be issued to holders of similar rights to acquireMid-America common stock pursuant to the merger agreement. The fair value of the exchange options and stock appreciation rights was estimated using the Black-Scholes method. |
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Table of Contents
Number ofMid-America shares outstanding | 13,933,006 | |||||||
Number ofMid-America restricted shares that automatically vest on the merger date | 260,000 | |||||||
TotalMid-America shares exchanged | 14,193,006 | |||||||
Exchange ratio to Pinnacle shares | x 46.55 | % | ||||||
Number of Pinnacle shares to exchange | 6,606,844 | |||||||
Average price of Pinnacle shares used for merger | x$ | 26.26 | ||||||
Value of Pinnacle common stock exchanged forMid-America common stock | $ | 173,496 | ||||||
Total Mid-America shares exchanged | 14,193,006 | |||||||
Cash consideration price perMid-America common share | x $ | 1.50 | ||||||
Value of cash consideration forMid-America common stock | $ | 21,290 | ||||||
Total stock and cash consideration | $ | 194,786 | ||||||
Plus:Mid-America goodwill and core deposit intangible | 23,289 | |||||||
Less:Mid-America stockholders’ equity | (104,676 | ) | ||||||
Merger related expenses in (A) above | 9,014 | |||||||
Subtotal | $ | 122,413 | ||||||
Number ofMid-America options outstanding | 1,170,229 | |||||||
Exchange ratio to Pinnacle shares | x 46.55 | % | ||||||
Number of Pinnacle options to exchange | 544,742 | |||||||
Fair value of each Pinnacle option | x $ | 14.50 | ||||||
Total fair value of Pinnacle options | $ | 7,899 | ||||||
Number ofMid-America stock appreciation rights outstanding | 35,600 | |||||||
Exchange ratio to Pinnacle shares | x 46.55 | % | ||||||
Number of Pinnacle stock appreciation rights to exchange | 16,572 | |||||||
Fair value of each Pinnacle stock appreciation right | x $ | 13.20 | ||||||
Total fair value of Pinnacle stock appreciation rights | $ | 219 | ||||||
Investment banking fees incurred by Pinnacle | $ | 825 | ||||||
Goodwill before fair value adjustments | $ | 131,356 | ||||||
Goodwill | $ | 131,356 | ||||||
Other assets (deferred tax assets associated withMid-America core deposit intangible) | 1,625 | |||||||
Common stock ofMid-America | 13,933 | |||||||
Additional paid-in capital ofMid-America | 87,919 | |||||||
Retained earnings ofMid-America | $ | 3,991 | ||||||
Other comprehensive loss ofMid-America | 2,199 | |||||||
Goodwill ofMid-America | 19,147 | |||||||
Core deposit intangible ofMid-America | 4,142 | |||||||
Accrued liabilities (investment banking fees) | 825 | |||||||
Cash | 21,290 | |||||||
Common stock of Pinnacle | 6,607 | |||||||
Additional paid-in capital of Pinnacle | 176,632 |
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Table of Contents
(C) | To reflect the estimated costs associated with the joint proxy statement/prospectus which are to be shared equally between Pinnacle andMid-America. |
Paid in capital | $ | 200 | ||||||
Goodwill | 200 | |||||||
Accrued liabilities | $ | 400 |
(D) | To adjustMid-America’s loan portfolio and allowance for loan losses for those loans which Pinnacle does not expect to collect all contractually required payments on the loan, in accordance with AICPA Statement of Position03-3, “Accounting for Certain Loans or Debt Securities Acquired in a Transfer.” |
Allowance for loan losses | $ | 514 | ||||||
Loans | $ | 514 |
(E) | Purchase accounting entry to adjustMid-America net assets to their estimated fair value |
Goodwill | $ | 3,432 | ||||||
Other assets (deferred income taxes) | 2,214 | |||||||
Advances from Federal home Loan Bank | 1,017 | |||||||
Held-to-maturity investment securities | $ | 212 | ||||||
Loans | 3,531 | |||||||
Bank premises and equipment | 1,201 | |||||||
Deposits | 1,719 |
(F) | To reflect the estimated value of core deposit intangible asset associated with the core deposits ofMid-America. For purposes of the pro forma condensed consolidated financial statements, such intangible asset will be amortized using the sum-of-the-years digit method over a10-year life. |
Core deposit intangible | $ | 9,996 | ||||||
Other assets (deferred income taxes) | $ | 3,921 | ||||||
Goodwill | 6,075 |
(G) | To reflect the settlement of $3,500,000 in holding company indebtedness and the subsequent issuance of $35,000,000 in trust preferred securities issued by Pinnacle which would include an investment in an unconsolidated subsidiary of $1,085,000. |
Cash | $ | 31,500 | ||||||
Other assets (investment in unconsolidated subsidiaries) | 1,085 | |||||||
Subordinated indebtedness | $ | 32,585 |
(H) | To reflect certainMid-America balance sheet reclassifications to be consistent with Pinnacle’s presentation including the reclassification ofMid-America net deferred tax liabilities to net deferred tax assets and reclassification ofMid-America’s held-to-maturity investment securities as available-for-sale. |
Other liabilities (deferred tax liabilities) | $ | 138 | ||||||
Investment securities available-for-sale | 9,528 | |||||||
Other assets (deferred tax assets) | $ | 138 | ||||||
Investment securities held to maturity | 9,528 |
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Table of Contents
Pinnacle | Mid- | |||||||||||||||||||
Financial | America | Pro Forma | ||||||||||||||||||
Partners, | Bancshares, | Acquisition | Pro Forma | |||||||||||||||||
Inc. | Inc. | Adjustments | Combined | |||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||
Interest income | $ | 69,247 | $ | 35,046 | A | $ | 467 | $ | 104,760 | |||||||||||
Interest expense | 34,504 | 19,339 | A | (124 | ) | 55,145 | ||||||||||||||
A | 92 | |||||||||||||||||||
D | 1,334 | |||||||||||||||||||
34,743 | 15,707 | (835 | ) | 49,615 | ||||||||||||||||
Provision for loan losses | 1,688 | 600 | — | 2,288 | ||||||||||||||||
Net interest income after provision for loan losses | 33,055 | 15,107 | (835 | ) | 47,327 | |||||||||||||||
Noninterest income | 10,577 | 3,961 | — | 14,538 | ||||||||||||||||
Noninterest expense | 26,576 | 14,098 | A | 24 | 40,698 | |||||||||||||||
Amortization of intangible assets | 1,032 | 404 | B | 178 | 1,614 | |||||||||||||||
Income before income taxes | 16,024 | 4,566 | (1,037 | ) | 19,553 | |||||||||||||||
Income taxes | 4,997 | 1,509 | C | 117 | 6,100 | |||||||||||||||
E | (523 | ) | ||||||||||||||||||
Net income | $ | 11,027 | $ | 3,057 | $ | (631 | ) | $ | 13,453 | |||||||||||
Per share information: | ||||||||||||||||||||
Basic earnings per share | $ | 0.71 | $ | 0.22 | NM | $ | 0.61 | |||||||||||||
Fully diluted earnings per share | $ | 0.66 | $ | 0.21 | NM | $ | 0.57 | |||||||||||||
Weighted average shares (in thousands): | ||||||||||||||||||||
Basic | 15,464 | 13,930 | NM | 22,071 | ||||||||||||||||
Fully diluted | 16,641 | 14,639 | NM | 23,512 |
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December 31, 2006
Pinnacle | Mid- | |||||||||||||||||||
Financial | America | Pro Forma | ||||||||||||||||||
Partners, | Bancshares, | Acquisition | Pro Forma | |||||||||||||||||
Inc. | Inc. | Adjustments | Combined | |||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||
Interest income | $ | 109,696 | $ | 42,330 | A | $ | 1,608 | $ | 153,634 | |||||||||||
Interest expense | 48,743 | 22,033 | A | (1,298 | ) | 72,358 | ||||||||||||||
A | 211 | |||||||||||||||||||
D | 2,669 | |||||||||||||||||||
60,953 | 20,297 | 26 | 81,276 | |||||||||||||||||
Provision for loan losses | 3,732 | 1,273 | — | 5,005 | ||||||||||||||||
Net interest income after provision for loan losses | 57,221 | 19,024 | 26 | 76,271 | ||||||||||||||||
Noninterest income | 15,786 | 5,355 | — | 21,141 | ||||||||||||||||
Noninterest expense | 44,841 | 21,043 | A | 12 | 65,896 | |||||||||||||||
Amortization of intangible assets | 1,783 | 261 | B | 974 | 3,018 | |||||||||||||||
Income before income taxes | 26,383 | 3,075 | (960 | ) | 28,498 | |||||||||||||||
Income taxes | 8,456 | 771 | C | 671 | 8,851 | |||||||||||||||
E | (1,047 | ) | ||||||||||||||||||
Net income | $ | 17,927 | $ | 2,304 | $ | (584 | ) | $ | 19,647 | |||||||||||
Per share information: | ||||||||||||||||||||
Basic earnings per share | $ | 1.28 | $ | 0.25 | NM | $ | 0.96 | |||||||||||||
Fully diluted earnings per share | $ | 1.18 | $ | 0.25 | NM | $ | 0.89 | |||||||||||||
Weighted average shares (in thousands): | ||||||||||||||||||||
Basic | 13,954 | 9,169 | NM | 20,556 | ||||||||||||||||
Fully diluted | 15,157 | 9,294 | NM | 22,024 |
Six Months | ||||||||
Ended | Year Ended | |||||||
June 30, 2007 | December 31, 2006 | |||||||
(A) Amortization of fair value adjustments for the following items: Increase in interest income — Accretion of loan discount | $ | 467 | $ | 1,608 | ||||
Decrease in interest expense — Amortization of deposit premium | 124 | 1,298 | ||||||
Increase in interest expense — Accretion of Federal Home Loan Bank advances discount | (92 | ) | (211 | ) | ||||
Increase in noninterest expense — Depreciation related to premises and equipmentwrite-up | (24 | ) | (12 | ) | ||||
(B) Increase in amortization of intangible assets — Amortization of core deposit intangible over ten year life using the sum of the year’s digit method | (178 | ) | (974 | ) | ||||
(C) Increase in tax expense due to tax impact of A. and B. above | (117 | ) | (671 | ) | ||||
(D) Increase in interest expense due to issuance of $35 million in trust preferred securities at LIBOR plus 300 basis points less the impact of the payoff ofMid-America’s line of credit at prime minus 100 basis points. | (1,334 | ) | (2,669 | ) | ||||
(E) Decrease in tax expense due to tax impact of interest expense in D. above. | 523 | 1,047 |
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Mid-America | ||||||||||||||||
Pinnacle Financial | Mid-America | Combined Pro | Equivalent | |||||||||||||
Partners, Inc. | Bancshares, Inc. | Forma per Share | Pro Forma | |||||||||||||
Common Stock | Common Stock | Data | per Share Data(2) | |||||||||||||
Six months ended June 30, 2007 | ||||||||||||||||
Net income per share, basic | $ | 0.71 | $ | 0.22 | $ | 0.61 | $ | 0.28 | ||||||||
Net income per share, diluted | 0.66 | 0.21 | 0.57 | 0.27 | ||||||||||||
Dividends | — | — | — | — | ||||||||||||
Book value(3) | 17.06 | 7.51 | 19.46 | 9.06 | ||||||||||||
Year ended December 31, 2006 | ||||||||||||||||
Net income per share, basic | $ | 1.28 | $ | 0.25 | $ | 0.96 | $ | 0.45 | ||||||||
Net income per share, diluted | 1.18 | 0.25 | 0.89 | 0.41 | ||||||||||||
Dividends | — | — | — | — | ||||||||||||
Book value(4) | 16.59 | 7.39 | NM | NM |
(1) | Combined pro forma per share data and equivalent pro forma per share data does not reflect anticipated cost savings of $7.0 million in 2008 and $8.4 million in 2009. | |
(2) | Equivalent pro forma per share data represent the pro forma per share amounts attributed to one share ofMid-America common stock that has been exchanged for stock consideration. Equivalent pro forma per share amounts are calculated by multiplying the pro forma combined amounts by the exchange ratio of 0.4655. | |
(3) | The pro forma combined book value per share as of June 30, 2007 is calculated as the pro forma combined stockholders’ equity at June 30, 2007 divided by the sum of the number of shares of Pinnacle common stock outstanding at the period ended June 30, 2007 and the number of shares of Pinnacle common stock to be issued in conjunction with the acquisition ofMid-America. A detail of shares issued and price per share related to the acquisition ofMid-America is included in the section entitled “— Unaudited Pro Forma Condensed Combined Financial Information” above. | |
(4) | Book value as of December 31, 2006 is not meaningful (NM) as purchase accounting adjustments were calculated as of June 30, 2007. |
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Pinnacle | Mid-America | Equivalent Price per | ||||||||||
Date | Common Stock | Common Stock | Mid-America Share | |||||||||
August 14, 2007 | $ | 25.49 | $ | 12.25 | * | $ | 11.87 | |||||
October 9, 2007 | $ | 30.62 | $ | 11.65 | ** | $ | 14.25 |
* | ForMid-America, August 8, 2007 was the last day, to Mid-America’s knowledge that a trade was made prior to the announcement of the merger. |
** | ForMid-America, September 7, 2007 was the last day, to Mid-America’s knowledge, that a trade was made prior to October 9, 2007. |
High | Low | |||||||
2007: | ||||||||
First Quarter | $ | 33.85 | $ | 29.40 | ||||
Second Quarter | 31.48 | 28.27 | ||||||
Third Quarter | 31.31 | 21.62 | ||||||
Fourth Quarter (through October 9, 2007) | 30.93 | 28.71 | ||||||
2006: | ||||||||
First Quarter | $ | 28.84 | $ | 24.75 | ||||
Second Quarter | 30.92 | 27.09 | ||||||
Third Quarter | 37.41 | 28.93 | ||||||
Fourth Quarter | 36.17 | 31.23 | ||||||
2005: | ||||||||
First Quarter | $ | 24.05 | $ | 20.72 | ||||
Second Quarter | 25.14 | 20.50 | ||||||
Third Quarter | 26.65 | 22.67 | ||||||
Fourth Quarter | 25.96 | 21.70 |
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High | Low | |||||||
2007: | ||||||||
First Quarter | $ | 12.50 | $ | 11.00 | ||||
Second Quarter | 15.00 | 11.00 | ||||||
Third Quarter | 13.00 | 11.00 | ||||||
Fourth Quarter (through October 9, 2007) | — | — | ||||||
2006: | ||||||||
Third Quarter (From September 1, 2006) | $ | 8.76 | $ | 8.76 | ||||
Fourth Quarter | 14.00 | 11.00 |
Bank of the South | PrimeTrust Bank | |||||||||||||||
High Price | Low Price | High Price | Low Price | |||||||||||||
2006: | ||||||||||||||||
First Quarter | $ | 25.00 | $ | 24.00 | $ | — | $ | — | ||||||||
Second Quarter | 27.00 | 21.50 | — | — | ||||||||||||
Third Quarter (Through September 1, 2006) | — | — | — | — | ||||||||||||
Fourth Quarter | N/A | N/A | N/A | N/A | ||||||||||||
2005: | ||||||||||||||||
First Quarter | $ | 25.00 | $ | 21.50 | $ | 15.00 | $ | 15.00 | ||||||||
Second Quarter | 25.00 | 23.00 | 15.00 | 15.00 | ||||||||||||
Third Quarter | 27.00 | 23.00 | 15.00 | 15.00 | ||||||||||||
Fourth Quarter | 26.00 | 23.00 | 15.00 | 15.00 |
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• | approve the merger agreement, pursuant to whichMid-America will be merged with and into Pinnacle, and the issuance of Pinnacle common stock in connection with the merger; | |
• | approve the adjournment of the Pinnacle special meeting, if necessary, to permit Pinnacle to solicit additional proxies if there are insufficient votes at the special meeting to constitute a quorum or to approve the merger agreement and the issuance of Pinnacle common stock in connection with the merger; | |
• | approve an amendment to Pinnacle’s 2004 Equity Incentive Plan to increase the number of shares of Pinnacle common stock reserved for issuance thereunder by 500,000 shares; and | |
• | transact any other business that may properly come before the meeting. |
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• | submitting a written revocation prior to the meeting to Hugh M. Queener, Corporate Secretary, Pinnacle Financial Partners, Inc., 211 Commerce Street, Suite 300, Nashville, Tennessee 37201; | |
• | submitting another proxy by mail that is dated later than the original proxy; or | |
• | attending the special meeting and voting in person. |
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• | approve the merger agreement pursuant to whichMid-America will be merged with and into Pinnacle; | |
• | approve the adjournment of theMid-America special meeting, if necessary, to permitMid-America to solicit additional proxies if there are insufficient votes at the special meeting to constitute a quorum or to approve the merger agreement; and | |
• | transact any other business that may properly come before the meeting. |
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• | submitting a written revocation prior to the meeting to James S. Short, corporate secretary,Mid-America Bancshares, Inc., 2019 Richard Jones Road, Nashville, Tennessee 37215; | |
• | submitting another proxy by mail that is dated later than the original proxy; or | |
• | attending the special meeting and voting in person. |
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ANDMID-AMERICA BANCSHARES, INC.: THE PROPOSED MERGER
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• | Mid-America’s impact on Pinnacle’s asset size would be dramatic: the combined company would be around $3.2 billion rather than the $1.0 billion forMid-America and $2.2 billion for Pinnacle as of March 31, 2007; | |
• | BothMid-America and Pinnacle have had compatible and successful strategies for rapid growth; | |
• | Apparently complementary cultures at the two institutions based on forward-thinking, entrepreneurial strategies, that could be expected to be more attractive toMid-America’s customers and staff; | |
• | There exists substantial mutual respect between the management of Pinnacle and the management ofMid-America; | |
• | The companies have a complementary branch structure that will have little overlap over existing and planned branches; | |
• | By virtue of the decrease in price-to-earnings multiple related to Pinnacle’s shares, Pinnacle has a lesser downside risk than it had in December of 2006 and, in the opinion of Hovde, greater upside potential; and | |
• | If Pinnacle were to be ultimately acquired,Mid-America shareholders would have the ability to participate in any premium paid for Pinnacle. This would be in addition to the premium expected to be offered by Pinnacle forMid-America’s shares. |
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• | the merger consideration is fair to Pinnacle from a financial point of view; | |
• | the Merger would give Pinnacle a stronger presence in Nashville-Davidson-Murfreesboro MSA, one of the fastest growing MSAs in the United States, particularly in Wilson, Dickson and Cheatham Counties in the MSA; | |
• | the two institutions have potential cost synergies — Pinnacle will be utilizingMid-America’s current work force to help with Pinnacle’s growth,Mid-America’s two bank subsidiaries will migrate to a common processing platform with Pinnacle National Bank and threeMid-America locations will be consolidated into existing Pinnacle locations; | |
• | the merger will result in increased size and scale; the combined company is expected to have pro forma assets of approximately $3.5 billion, resulting in increased lending capacity, and 30 offices (net of closures) in some of the fastest growing areas in the Nashville MSA; | |
• | the merger is anticipated to enhance the franchise value of Pinnacle, both in the short-run and in the long-run and the increased size and scale of the combined company should increase its attractiveness to larger potential acquirors; | |
• | the merger is expected to enhance Pinnacle’s geographic market coverage by increasing its deposit market share in the Nashville MSA and expanding its branch system into three new counties in the Nashville MSA; |
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• | the merger is expected to be accretive to Pinnacle’s earnings beginning in 2008; | |
• | the merger increases the float in Pinnacle common stock by approximately 45%; | |
• | the merger brings to Pinnacle’s team a number of outstanding bankers; | |
• | the merger will generally be a tax-free transaction for Pinnacle and its new shareholders to the extent of the stock portion of the merger consideration; and | |
• | although the merger will result in Pinnacle’s tangible equity to tangible assets ratio being below 6%, its historical strategic target, Pinnacle and its bank subsidiary will remain well-capitalized institutions after the merger and the related issuance of trust preferred securities under all applicable regulatory capital requirements. |
• | First, Pinnacle’s shares are readily marketable and have reflected a strong overall upward trend for most of Pinnacle’s time in operation. Because the price-to-earnings ratio of Pinnacle’s common stock has |
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• | Second, Pinnacle is headquartered in the Nashville MSA and appears to employ a veteran group of skilled bankers that will be attractive toMid-America’s customers, employees and other stakeholders, and that will be well positioned to serve the communities that PrimeTrust Bank and Bank of the South serve. Based onMid-America’s research, following the 2005 merger between Pinnacle and Cavalry, then an independent community bank holding company headquartered in Rutherford County, Tennessee, the companies have apparently been successful in retaining customers and key personnel. | |
• | Third, at the present time relatively little market overlap exists between Pinnacle’s operations and those of Bank of the South and PrimeTrust Bank. However, in theMid-America board’s view, this would change as both ofMid-America’s banks (Bank of the South and PrimeTrust Bank) and Pinnacle National Bank increased their branching efforts in Wilson, Williamson, Rutherford and Davidson Counties. As a result of probable future branch-system overlap, the negative impact on a possible future merger and on the employees who might staff overlapping branches were believed to be significant. | |
• | Fourth, the board believed that an affiliation with Pinnacle would make the combined entity both more competitive in the Middle Tennessee marketplace and a more attractive vehicle for entry into the market by a larger acquirer than would either institution on a standalone basis. The combination eliminates a significant possibility for an out-of-state acquirer seeking a substantial presence in the Nashville area to offer to acquire one or the other of Pinnacle orMid-America, possibly at a lesser price than the combined entity may be expected to bring in an acquisition. Both Hovde and the board believed that this merger can have the result of allowing the shareholders ofMid-America, who become shareholders of Pinnacle, to receive another premium on their shares in the event of such an acquisition. |
• | Further, the cost-saving synergies that could be achieved in the merger, estimated by Mid-America at $7.4 million to $9 million, can be expected to increase the profitability of the combined institution. The combined company can expect to achieve cost savings that neither company could attain independently of the other. These cost savings should ultimately flow through to the shareholders as additional earnings per share. Among other significant savings,Mid-America subsidiary banks will not have to convert to a planned new data processing system on a standalone basis, which they were scheduled to do in mid 2008. Rather, they will convert to the data processing system used by Pinnacle. HadMid-America elected to remain independent for the present, but then later determined to be acquired, it is likely that the shareholders ofMid-America would have had to bear all or part of the costs of terminating the contract with the new data processing service provider potentially at a significant cost. |
• | In addition, ifMid-America were to remain independent, the company would have to consider the costs and benefits of raising new capital, listing its shares for public trading, and, as noted above, converting to a new data processing platform. The board believed that these costs would materially impactMid-America’s standalone profitability. | |
• | Further, the costs of complying with increasing layers of bank regulation, and with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 were a concern to management and theMid-America board. The merger offered the opportunity to spread the costs of compliance over a greater dollar volume of assets (reducing the cost of compliance allocable to each dollar of assets) and to eliminate an entire level of reporting (as a result of the merger, only Pinnacle as the combined entity will bear the costs of reporting, rather than two separate entities, Pinnacle andMid-America, as is true today). | |
• | Also, a merger would be expected to be a “tax free” re-organization for most nondissenting shareholders except to the extent of the possible taxability of the $1.50 per share being paid in cash for each share ofMid-America common stock. Moreover, the federal 15% income tax on long-term capital gains and dividends is set to expire in 2010, potentially resulting in higher taxes on dividends and capital gains unless Congress affirmatively acts to extend the current tax level. There can be no assurance that Congress will vote to extend the current tax level and, therefore, the combination with Pinnacle, given |
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the liquidity in Pinnacle’s shares, provides a mechanism forMid-America shareholders to elect to sell all or part of their shares before the expiration of the current tax level. Even ifMid-America listed its shares in 2008, as the board had considered, there could have been no assurance that a sufficient market would have developed to allow a significant number of shares to be sold to accommodateMid-America shareholders who chose to sell before the tax laws changed. TheMid-America board believes that the market for Pinnacle, having been established for several years, would be more likely to be able to handle the trading that may be required byMid-America shareholders. |
• | Next, the factors and considerations explained to the board of directors byMid-America’s financial advisor, Hovde, were extremely favorable to engaging in the merger transaction with Pinnacle at this time. Hovde strongly recommended this transaction as a unique and attractive opportunity forMid-America and its shareholders. In addition, Hovde issued its opinion to the board of directors that the transaction was, as of the date of the opinion, fair toMid-America and to the shareholders ofMid-America from a financial point of view. | |
• | In addition, the board of directors was impressed with the management depth at Pinnacle and believed that access to the Pinnacle management team would benefitMid-America customers and employees and would provide significant capable management and appropriate management succession. The strength of Pinnacle’s management team and its apparent commitment to and competitiveness in the Middle Tennessee market were attractive to theMid-America board. They believed that these factors would enhance the value of the shareholders’ investment inMid-America, as well as providing additional liquidity for its shares. |
• | Finally, the board of directors considered the impact of the timing of the transaction on the return on investment ofMid-America’s shareholders. The initial investors in PrimeTrust Bank and Bank of the South paid, on a split adjusted basis, $5.00 per share and $4.58 per share, respectively. Investors who bought PrimeTrust Bank and Bank of the South stock in the banks’ last capital offering paid, on a split adjusted basis, $7.50 per share and $9.86 per share, respectively.Mid-America’s board believed that the merger consideration of approximately $13.18 per share on the date the transaction was announced ($15.83 on the date of this joint proxy statement/prospectus), involving receipt byMid-America shareholders of a more liquid and potentially more attractive stock of the combined entity, constituted a reasonable or even excellent return to investors who bought shares directly from the two banks before theMid-America share exchange in September 2006. |
• | WhenMid-America was formed by a share exchange in September of 2006, the board believed, and so informed shareholders of PrimeTrust Bank and Bank of the South, that it was anticipated that the combined institution would take some time to achieve the synergies that were anticipated but that these synergies were expected to have a positive impact on long-term profitability. These synergies have not been fully achieved. It is possible that, by remaining independent, realization of these synergies could makeMid-America an even more attractive acquisition target, to the financial benefit of theMid-America shareholders. However, the synergies expected to be achieved in the proposed merger with Pinnacle exceed those thatMid-America expected to obtain in the combination of Bank of the South and PrimeTrust Bank. | |
• | Mid-America has achieved significant growth since September 2006. At the time of the share exchange, it had combined assets of $875 million. As of June 30, 2007,Mid-America has consolidated assets of $1.07 billion, representing a growth of nearly $195 million (22.25%). However, recent developments in the financial markets have made continued profitable growth more difficult, at least in the short term. |
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These factors include an inverted yield curve and a nearly industry-wide compressed net interest margin. |
• | At the time of the share exchange, theMid-America board, through its subsidiary banks, envisioned an ongoing branching plan that would further penetrate the Middle Tennessee market South of I-40, especially along the I-840 corridor. This branching plan was well conceived and might have further enhanced the value ofMid-America’s shares. Nonetheless, the combination with Pinnacle will result in a combined entity with 30 branches (after three anticipated branch closures), a number of branches that far exceeds the level thatMid-America’s subsidiary banks expected to open in the next five years. | |
• | WhenMid-America was formed, it offered change of control agreements to Messrs. Scott and West, to replace their agreements with PrimeTrust Bank, and to Messrs. Major and Short, who did not then have such agreements. It was expected that such contracts, which will become fully payable at the effective time of the merger, at a cost to the combined company of an estimated $5.7 million (approximately $4.4 million after tax), as will a contract due to Mr. Charles Lanier, an executive vice president of PrimeTrust Bank. Originally, it was intended that such contracts would not be payable for several years, at least. | |
• | When the share exchange was completed in September 2006,Mid-America granted restricted shares and non-qualified stock options to executive management and to members of the board of directors, as well as non-qualified stock options and stock appreciation rights to officers and employees. It was anticipated that most of these equity incentives would vest only after a number of years. The vesting schedule was ultimately set generally at 10% per year. Instead, as a result of the merger, these equity incentives granted to directors and executive officers (with an aggregate value of approximately $3.6 million (based upon the value of the consideration paid by Pinnacle on the date the merger was approved)) will vest at the effective time of the merger. | |
• | Another company might have offered more forMid-America’s shares than Pinnacle. However, Hovde provided theMid-America board with analyses that demonstrated that no other attractive acquirer could afford to pay as much as Pinnacle for theMid-America shares and have the transaction remain accretive to the acquirer’s earnings per share. In addition, theMid-America board believes thatMid-America should not enter into an auction process. Rather, it appeared to the board based on discussion with Hovde’s representatives that the Pinnacle transaction was unique and warranted the board’s decision to recommend to the shareholders that they approve a merger with Pinnacle even though, in the opinion of the board,Mid-America had a viable long-term strategic plan to continue to operate as an independent company and was not “for sale.” | |
• | Anticipated cost and revenue synergies expected for the combined company might not be obtained on a timely basis or they might not be obtained at all. Integrating the operations of the two companies and the subsidiary banks could be more costly and might not be as profitable as currently anticipated. | |
• | The merger could result in the loss of key employees and customers, disruptions and negative experiences by customers, deposit attrition and revenue loss, possible inconsistencies in standards, control procedures and policies, unexpected problems with costs, operations, personnel, technology and credit;and/or problems with the assimilation of new operations, sites or personnel, which could divert resources from regular banking operations. | |
• | IfMid-America’s board of directors determined, in the exercise of the directors’ fiduciary duty, to cancel the merger,Mid-America could be expected to be required to pay a termination fee of $8 million to Pinnacle. In addition,Mid-America would have incurred significant financial costs in pursuing the Pinnacle merger. | |
• | Mid-America shareholders will own only about a third of the outstanding Pinnacle shares after the merger, thus having a lesser ability to influence the outcome of shareholder votes in the combined company. As a result, they will have a diminished ability to directly influence management decisions. | |
• | The market price of Pinnacle shares, while more liquid thanMid-America shares, will be more obviously subject to market fluctuations in the stock markets in general and those related to financial institutions and other financial companies in particular. This may make the stock price rise or fall in ways that are not predictable or correlated to Pinnacle’s financial performance. |
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• | The merger will trigger payments of $5.7 million in total to Gary Scott, Jason West, David Major and Sam Short at closing. The payment of these amounts will not have an impact on the consideration to be received byMid-America shareholders in the merger, although they will have an impact on Pinnacle’s future operations that, in the view of theMid-America board, is not material. | |
• | There may be different interests between some officers and directors in the merger and those of directors ornon-director shareholders. As noted above, outstanding stock options and restricted stock awards granted to directors and executive officers will be accelerated.Mid-America’s executive management team holds change of control agreements that will be triggered by completion of the merger. Mr. West has entered into an employment agreement with Pinnacle National Bank that will become effective upon the closing of the merger and threeMid-America directors are expected to be offered seats on the Pinnacle board of directors after the merger is completed. In addition, the officers and employees of PrimeTrust Bank and Bank of the South have been offered retention bonuses if they remain employed by Pinnacle after the effective time of the merger (or if they are discharged other than for cause) until the earlier of December 31, 2008 or their position is eliminated. Furthermore, the merger will result in accelerated vesting of stock options, restricted shares and stock appreciation rights granted toMid-America directors, executive officers and employees. | |
• | If the merger is not completed, there could be reputational damage toMid-America as well as to Pinnacle. However, the board is not aware of any circumstance that indicates that the transaction will not receive shareholder approval. | |
• | There will be significant expenses in pursuing this proposed transaction, including substantial fees to Hovde. | |
• | There can be no guarantees that Pinnacle’s financial or stock price performance will remain as attractive as they have been, in the opinion of theMid-America board or that of Hovde, in the past. |
• | a holder ofMid-America common stock will not recognize any gain or loss upon the exchange of that shareholder’s shares ofMid-America common stock for shares of Pinnacle common stock in the merger; however, a holder ofMid-America common stock will recognize gain on the receipt of any cash consideration in the merger equal to the lesser of (i) the amount by which the total merger consideration received by the holder ofMid-America common stock exceeds the holder’s basis in theMid-America common stock or (ii) the amount of the cash consideration received in the merger. This gain generally will be a capital gain and will be a long-term capital gain if the holding period for the shares ofMid-America common stock exchanged for cash is more than one year at the completion of the merger; | |
• | to the extent that a holder ofMid-America common stock receives cash instead of a fractional share of Pinnacle common stock, such holder will be required to recognize gain or loss, measured by the difference between the amount of cash received and the portion of the tax basis of that holder’s shares ofMid-America common stock allocable to that fractional share of Pinnacle common stock. This gain |
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or loss will be a capital gain or loss and will be a long-term capital gain or loss if the holding period for the share ofMid-America common stock exchanged for cash instead of the fractional share of Pinnacle common stock is more than one year at the completion of the merger; |
• | a holder ofMid-America common stock will have a tax basis in the Pinnacle common stock received in the merger equal to the tax basis of theMid-America common stock surrendered by that holder in the merger, less the amount of cash consideration received and increased by the amount of any gain recognized; and | |
• | the holding period for shares of Pinnacle common stock received in exchange for shares ofMid-America common stock in the merger will include the holding period for the shares ofMid-America common stock surrendered in the merger. |
• | a shareholder that is not a citizen or resident of the United States; | |
• | a financial institution or insurance company; | |
• | a mutual fund; | |
• | a tax-exempt organization; | |
• | a dealer or broker in securities or foreign currencies; | |
• | a trader in securities that elects to apply a mark-to-market method of accounting; | |
• | a shareholder that holds itsMid-America common stock as part of a hedge, appreciated financial position, straddle, conversion, or other risk reduction transaction; or | |
• | a shareholder that acquired itsMid-America common stock pursuant to the exercise of options or similar derivative securities or otherwise as compensation. |
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• | Mid-America, PrimeTrust and Bank of the South have entered into change of control agreements with each of Gary Scott, David Major, Jason West and Sam Short, pursuant to which each of these executives is entitled to receive a cash payment following a change of control, in an amount equal to (1) $1.00 less than three times the executive’s base amount of compensation as defined in Section 280G of the Code; and (2) an amount necessary to indemnify the executive for any excise tax payable by the executive as a result of this payment. On August 15, 2007,Mid-America, PrimeTrust, Bank of the South and these four executives entered into amendments to these agreements that provide that if the merger is consummated in 2007, the executives will be paid their change of control payment as if the merger was consummated January 1, 2008. This would allow each executive to include his 2007 compensation in his base amount calculation instead of 2001, which will increase the amount each executive is entitled to under these change of control agreements. Payments under these agreements are estimated (as of the date of the merger agreement) at approximately $5.7 million in the aggregate, or approximately $4.4 million, after tax, as a result of the fact that approximately $2.3 million of the payments are estimated to be nondeductible for tax purposes. |
• | PrimeTrust and Bank of the South will establish retention bonus pools totaling approximately $5 million in the aggregate that will be available for payment to the associates of each bank that are employed both at the closing of the merger and on December 31, 2008 or at such time as their position is eliminated, if earlier. | |
• | PrimeTrust and Bank of the South have each entered into agreements with certain of the bank’s associates in the past. Outstanding balances owed PrimeTrust and Bank of the South under these agreements totaling approximately $450,000 as of the date of this joint proxy statement/prospectus will be forgiven immediately prior to the closing of the merger. | |
• | Each of Gary Scott, David Major, Jason West and Sam Short has entered into a business protection agreement withMid-America. Under the terms of these agreements, each of Messrs. Scott, Major, West and Short has agreed that he will not actively participate or engage directly or indirectly in a competing business in the Nashville MSA and the counties contiguous to the Nashville MSA until the earlier of (1) voluntary retirement after reaching age 65; (2) a transaction in which an acquiror ofMid-America is subsequently acquired; (3) August 31, 2011; or (4) the date thatMid-America terminates the agreement. In exchange for this agreement not to compete, each executive is entitled to receive monthly payments equal to the greater of his current or future monthly base salary or $10,000 until the occurrence of one of these termination events. Mr. West’s business projection agreement will be superseded by his employment agreement with Pinnacle National Bank upon the effectiveness of the merger. |
• | the further registration under the Securities Act of the Pinnacle common stock to be transferred; | |
• | compliance with Rule 145 promulgated under the Securities Act, which permits limited sales under certain circumstances; or | |
• | the availability of another exemption from registration. |
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• | would result in a monopoly; | |
• | would be in furtherance of any combination or conspiracy to monopolize or attempt to monopolize the business of banking in any part of the United States; or | |
• | may have the effect in any part of the United States of substantially lessening competition, tending to create a monopoly or otherwise resulting in a restraint of trade, unless the FRB finds that the public interest created by the probable effect of the transaction in meeting the convenience and needs of the communities to be served clearly outweighs the anticompetitive effects of the proposed merger. |
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Transaction Price/Last Twelve Months’ Earnings per Share(1) | 34.4 | x | ||
Transaction Price/Book Value(2) | 195.5 | % | ||
Transaction Price/Tangible Book Value(2) | 252.3 | % | ||
Core Deposit Premium(2)(3) | 21.2 | % |
(1) | Due to the September, 2006 closing of the merger of equals creatingMid-America, last twelve months’ earnings per share is calculated based on year-to-date June 30, 2007 results annualized. | |
(2) | The calculation ofMid-America’s per share value includes the 260,000 restricted stock awards which immediately vest upon a change-of-control transaction. | |
(3) | Assumes time deposits > $100,000 are non-core deposits. As of June 30, 2007,Mid-America reported $322.4 million in non-core deposits. |
Appalachian Bancshares, Inc. | First South Bancorp, Inc. | |
BancTrust Financial Group, Inc. | FNB United Corp. | |
Bank of Granite Corporation | GB&T Bancshares, Inc. | |
BNC Bancorp | Omni Financial Services, Inc. | |
Capital Bank Corporation | PAB Bankshares, Inc. | |
CenterState Banks of Florida, Inc. | Peoples Bancorp of North Carolina, Inc. | |
Colony Bankcorp, Inc. | Savannah Bancorp, Inc. | |
Cooperative Bankshares, Inc. | Southern Community Financial Corporation | |
Crescent Banking Company | TIB Financial Corp. | |
Fidelity Southern Corporation | Yadkin Valley Financial Corporation | |
First Security Group, Inc. |
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Mid-America | ||||||||
Southeast Peer Group | ||||||||
Mid-America | Median | |||||||
Total Assets(In millions) | $ | 1,069.4 | $ | 1,170.0 | ||||
Tangible Equity/Tangible Assets | 7.77 | % | 7.60 | % | ||||
Return on Average Assets | 0.60 | % | 0.86 | % | ||||
Return on Average Equity | 5.82 | % | 9.48 | % | ||||
Efficiency Ratio | 73.73 | % | 61.33 | % | ||||
Price/Tangible Book Value | NA | 173.42 | % | |||||
Price/Last Twelve Months’ Earnings per Share | NA | 14.3 | x | |||||
Price/Estimated 2007 Earnings per Share | NA | 13.4 | x | |||||
Price/52-Week High | NA | 77.43 | % | |||||
Market Capitalization(in millions) | NA | $ | 140.4 |
Bancorp, Inc. | PrivateBancorp, Inc. | |
Cardinal Financial Corporation | Renasant Corporation | |
Cascade Bancorp | Seacoast Banking Corporation of Florida | |
City Bank | Sterling Bancshares, Inc. | |
Enterprise Financial Services Corp | Texas Capital Bancshares, Inc. | |
Fidelity Southern Corporation | Vineyard National Bancorp | |
Frontier Financial Corporation | Virginia Commerce Bancorp, Inc. | |
Integrity Bancshares, Inc.(1) | West Coast Bancorp | |
Preferred Bank | Western Alliance Bancorporation |
(1) | Financial data as of or for the twelve months ended March 31, 2007. |
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Company Designated | ||||||||
Peer Group | ||||||||
Pinnacle | Median | |||||||
Total Assets(in millions) | $ | 2,315.3 | $ | 2,290.6 | ||||
Tangible Equity/Tangible Assets | 6.42 | % | 7.24 | % | ||||
Return on Average Assets | 1.04 | % | 1.06 | % | ||||
Return on Average Equity | 8.62 | % | 12.97 | % | ||||
Price/Tangible Book Value | 307.26 | % | 223.44 | % | ||||
Price/Last Twelve Months’ Earnings per Share | 20.9 | x | 15.5 | x | ||||
Price/Estimated 2007 Earnings per Share | 19.8 | x | 15.1 | x | ||||
Price/52-Week High | 74.26 | % | 72.98 | % | ||||
Market Capitalization(in millions) | $ | 431.9 | $ | 385.4 |
Beginning Index Value | Ending Index Value | |||||||
August 10, 2006 | August 10, 2007 | |||||||
Pinnacle | 100.00 | % | 83.32 | % | ||||
NASDAQ Bank Index | 100.00 | 92.86 | ||||||
S&P 500 Index | 100.00 | 114.30 | ||||||
Company Designated Peer Group(1) | 100.00 | 80.14 |
(1) | Refers to the Company Designated Peer Group outlined in the “Comparable Group Analysis” section above. |
Beginning Index Value | Ending Index Value | |||||||
August 10, 2004 | August 10, 2007 | |||||||
Pinnacle | 100.00 | % | 122.19 | % | ||||
NASDAQ Bank Index | 100.00 | 107.37 | ||||||
S&P 500 Index | 100.00 | 138.78 | ||||||
Company Designated Peer Group(1) | 100.00 | 127.98 |
(1) | Refers to the Company Designated Peer Group outlined in the “Comparable Group Analysis” section above. |
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Median | Median | Median | ||||||||||||||
Nationwide | Southeast | Tennessee | ||||||||||||||
Pinnacle/Mid- | Group | Group | Group | |||||||||||||
America | Multiple | Multiple | Multiple | |||||||||||||
Transaction Price/Last Twelve Months’ Earnings per Share(1) | 34.4 | x | 21.5 | x | 23.5 | x | 23.8 | x | ||||||||
Transaction Price/Book Value(2) | 195.5 | % | 270.0 | % | 331.5 | % | 340.6 | % | ||||||||
Transaction Price/Tangible Book Value(2) | 252.3 | % | 295.3 | % | 358.4 | % | 344.7 | % | ||||||||
Core Deposit Premium(2)(3) | 21.2 | % | 26.0 | % | 36.2 | % | 27.0 | % |
(1) | Due to the September, 2006 closing of the merger of equals creatingMid-America, last twelve months’ earnings per share is calculated based on year-to-date June 30, 2007 results annualized. | |
(2) | The calculation ofMid-America’s per share value includes the 260,000 restricted stock awards which immediately vest upon a change-of-control transaction. | |
(3) | Assumes time deposits > $100,000 are non-core deposits. As of June 30, 2007,Mid-America reported $322.4 million in non-core deposits. |
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Discount Rate | 10.0x | 12.0x | 14.0x | 16.0x | 18.0x | 20.0x | ||||||||||||||||||
12.00% | $ | 6.45 | $ | 7.74 | $ | 9.03 | $ | 10.31 | $ | 11.60 | $ | 12.89 | ||||||||||||
13.00% | 6.19 | 7.43 | 8.67 | 9.91 | 11.15 | 12.39 | ||||||||||||||||||
14.00% | 5.95 | 7.14 | 8.33 | 9.52 | 10.72 | 11.91 | ||||||||||||||||||
15.00% | 5.72 | 6.87 | 8.01 | 9.16 | 10.30 | 11.45 | ||||||||||||||||||
16.00% | 5.50 | 6.61 | 7.71 | 8.81 | 9.91 | 11.01 |
Discount Rate | 125% | 145% | 165% | 185% | 205% | 225% | ||||||||||||||||||
12.00% | $ | 7.45 | $ | 8.65 | $ | 9.84 | $ | 11.03 | $ | 12.22 | $ | 13.42 | ||||||||||||
13.00% | 7.16 | 8.31 | 9.45 | 10.60 | 11.74 | 12.89 | ||||||||||||||||||
14.00% | 6.88 | 7.98 | 9.09 | 10.19 | 11.29 | 12.39 | ||||||||||||||||||
15.00% | 6.62 | 7.68 | 8.74 | 9.79 | 10.85 | 11.91 | ||||||||||||||||||
16.00% | 6.36 | 7.38 | 8.40 | 9.42 | 10.44 | 11.46 |
Budget Variance | 10.0x | 12.0x | 14.0x | 16.0x | 18.0x | 20.0x | ||||||||||||||||||
−25.0% | $ | 4.49 | $ | 5.39 | $ | 6.29 | $ | 7.19 | $ | 8.09 | $ | 8.98 | ||||||||||||
−20.0% | 4.79 | 5.75 | 6.71 | 7.67 | 8.62 | 9.58 | ||||||||||||||||||
−15.0% | 5.09 | 6.11 | 7.13 | 8.15 | 9.16 | 10.18 | ||||||||||||||||||
−10.0% | 5.39 | 6.47 | 7.55 | 8.62 | 9.70 | 10.78 | ||||||||||||||||||
−5.0% | 5.69 | 6.83 | 7.97 | 9.10 | 10.24 | 11.38 | ||||||||||||||||||
0.0% | 5.99 | 7.19 | 8.39 | 9.58 | 10.78 | 11.98 | ||||||||||||||||||
5.0% | 6.29 | 7.55 | 8.80 | 10.06 | 11.32 | 12.58 | ||||||||||||||||||
10.0% | 6.59 | 7.91 | 9.22 | 10.54 | 11.86 | 13.18 | ||||||||||||||||||
15.0% | 6.89 | 8.27 | 9.64 | 11.02 | 12.40 | 13.78 | ||||||||||||||||||
20.0% | 7.19 | 8.62 | 10.06 | 11.50 | 12.94 | 14.37 | ||||||||||||||||||
25.0% | 7.49 | 8.98 | 10.48 | 11.98 | 13.48 | 14.97 |
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Discount Rate | 10.0x | 12.0x | 14.0x | 16.0x | 18.0x | 20.0x | ||||||||||||||||||
11.00% | $ | 18.09 | $ | 21.71 | $ | 25.33 | $ | 28.94 | $ | 32.56 | $ | 36.18 | ||||||||||||
12.00% | 17.37 | 20.85 | 24.32 | 27.80 | 31.27 | 34.75 | ||||||||||||||||||
13.00% | 16.69 | 20.03 | 23.37 | 26.71 | 30.05 | 33.39 | ||||||||||||||||||
14.00% | 16.04 | 19.25 | 22.46 | 25.67 | 28.88 | 32.09 | ||||||||||||||||||
15.00% | 15.43 | 18.51 | 21.60 | 24.68 | 27.77 | 30.85 | ||||||||||||||||||
16.00% | 14.84 | 17.80 | 20.77 | 23.74 | 26.71 | 29.67 |
Discount Rate | 150% | 175% | 200% | 225% | 250% | 275% | 300% | |||||||||||||||||||||
11.00% | $ | 18.91 | $ | 22.07 | $ | 25.22 | $ | 28.37 | $ | 31.52 | $ | 34.67 | $ | 37.83 | ||||||||||||||
12.00% | 18.17 | 21.19 | 24.22 | 27.25 | 30.28 | 33.30 | 36.33 | |||||||||||||||||||||
13.00% | 17.45 | 20.36 | 23.27 | 26.18 | 29.09 | 32.00 | 34.91 | |||||||||||||||||||||
14.00% | 16.77 | 19.57 | 22.37 | 25.16 | 27.96 | 30.75 | 33.55 | |||||||||||||||||||||
15.00% | 16.13 | 18.82 | 21.50 | 24.19 | 26.88 | 29.57 | 32.26 | |||||||||||||||||||||
16.00% | 15.51 | 18.10 | 20.68 | 23.27 | 25.85 | 28.44 | 31.02 |
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Budget Variance | 10.0x | 12.0x | 14.0x | 16.0x | 18.0x | 20.0x | ||||||||||||||||||
−25.0% | $ | 12.44 | $ | 14.92 | $ | 17.41 | $ | 19.90 | $ | 22.39 | $ | 24.87 | ||||||||||||
−20.0% | 13.27 | 15.92 | 18.57 | 21.22 | 23.88 | 26.53 | ||||||||||||||||||
−15.0% | 14.09 | 16.91 | 19.73 | 22.55 | 25.37 | 28.19 | ||||||||||||||||||
−10.0% | 14.92 | 17.91 | 20.89 | 23.88 | 26.86 | 29.85 | ||||||||||||||||||
−5.0% | 15.75 | 18.90 | 22.05 | 25.20 | 28.36 | 31.51 | ||||||||||||||||||
0.0% | 16.58 | 19.90 | 23.21 | 26.53 | 29.85 | 33.16 | ||||||||||||||||||
5.0% | 17.41 | 20.89 | 24.38 | 27.86 | 31.34 | 34.82 | ||||||||||||||||||
10.0% | 18.24 | 21.89 | 25.54 | 29.18 | 32.83 | 36.48 | ||||||||||||||||||
15.0% | 19.07 | 22.88 | 26.70 | 30.51 | 34.32 | 34.18 | ||||||||||||||||||
20.0% | 19.90 | 23.88 | 27.86 | 31.84 | 35.82 | 39.80 | ||||||||||||||||||
25.0% | 20.73 | 24.87 | 29.02 | 33.16 | 37.31 | 41.45 |
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• | the merger agreement; | |
• | certain historical publicly available business and financial information concerningMid-America and Pinnacle; | |
• | certain internal financial statements and other financial and operating data concerningMid-America; | |
• | certain financial projections prepared by the managements ofMid-America and Pinnacle; | |
• | discussions with members of the senior managements ofMid-America and Pinnacle for the purpose of reviewing the future prospects ofMid-America and Pinnacle, including financial forecasts related to the respective businesses, earnings, assets, liabilities and the amount and timing of cost savings, which are referred to below as the “synergies,” expected to be achieved as a result of the merger; | |
• | historical market prices and trading volumes of Pinnacle common stock; | |
• | the terms of recent merger and acquisition transactions, to the extent publicly available, involving banks, thrifts and bank and thrift holding companies that Hovde considered relevant; | |
• | the pro forma ownership of the Pinnacle common stock by the shareholders ofMid-America relative to the pro forma contribution of theMid-America’s assets, liabilities, equity and earnings to the combined company; | |
• | the pro forma impact of the merger on the combined company’s earnings per share, consolidated capitalization and financial ratios; and | |
• | those other analyses and factors as Hovde deemed appropriate. |
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Buyer | Seller | |
United Community Finl Corp. (OH) | PVF Capital Corp. (OH) | |
Colonial BancGroup Inc. (AL) | Citrus & Chemical Bancorp. (FL) | |
Banco Popular Español SA | Total Bancshares Corp. (FL) | |
BancTrust Financial Group Inc. (AL) | Peoples BancTrust Co. (AL) | |
LSB Bancshares Inc. (NC) | FNB Financial Services Corp. (NC) | |
Marshall & Ilsley Corp. (WI) | Excel Bank Corporation (MN) | |
Renasant Corp. (MS) | Capital Bancorp Inc. (TN) | |
United Bankshares Inc. (WV) | Premier Community Bankshares (VA) | |
Greene County Bancshares Inc. (TN) | Civitas BankGroup (TN) | |
Royal Bank of Scotland Group | GreatBanc Inc. (IL) | |
Washington Federal Inc. (WA) | First Fed Banc of the SW Inc (NM) | |
Prosperity Bancshares Inc. (TX) | Texas United Bancshares Inc. (TX) | |
Cullen/Frost Bankers Inc. (TX) | Summit Bancshares Inc. (TX) | |
U.S. Bancorp (MN) | Vail Banks Inc. (CO) | |
Mercantile Bankshares Corp. (MD) | James Monroe Bancorp Inc. (VA) | |
National Bancshares Inc. (IA) | Metrocorp Inc. (IL) | |
National City Corp. (OH) | Forbes First Financial Corp. (MO) | |
FNB Corp. (NC) | Integrity Financial Corp (NC) | |
New York Community Bancorp (NY) | Long Island Financial Corp. (NY) | |
MAF Bancorp Inc. (IL) | EFC Bancorp Inc. (IL) | |
FLAG Financial Corp. (GA) | First Capital Bancorp, Inc. (GA) | |
Associated Banc-Corp (WI) | State Financial Services Corp. (WI) | |
Willow Grove Bncp Inc. (PA) | Chester Valley Bancorp Inc. (PA) |
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Buyer | Seller | |
First Banks, Inc. (MO) | Coast Financial Holdings Inc. (FL) | |
Colonial BancGroup Inc. (AL) | Citrus & Chemical Bancorp. (FL) | |
Banco Popular Español SA | Total Bancshares Corp. (FL) | |
BancTrust Financial Group Inc. (AL) | Peoples BancTrust Co. (AL) | |
LSB Bancshares Inc. (NC) | FNB Financial Services Corp. (NC) | |
Renasant Corp. (MS) | Capital Bancorp Inc. (TN) | |
United Bankshares Inc. (WV) | Premier Community Bankshares (VA) | |
Greene County Bancshares Inc. (TN) | Civitas BankGroup (TN) | |
IBERIABANK Corp. (LA) | Pocahontas Bancorp Inc. (AR) | |
Banc Corp. (AL) | Community Bancshares Inc. (AL) | |
Mercantile Bankshares Corp. (MD) | James Monroe Bancorp Inc. (VA) | |
FNB Corp. (NC) | Integrity Financial Corp (NC) | |
FLAG Financial Corp. (GA) | First Capital Bancorp, Inc. (GA) | |
Colonial BancGroup Inc. (AL) | FFLC Bancorp Inc. (FL) | |
Home Bancshares Inc. (AR) | TCBancorp Inc. (AR) | |
Popular Inc. (PR) | Kislak Financial Corp. (FL) | |
Peoples Holding Co. (MS) | Heritage Financial Hldg Corp (AL) | |
First Natl Bkshs of FL (FL) | Southern Community Bancorp (FL) | |
South Financial Group Inc. (SC) | Florida Banks Inc. (FL) | |
SouthTrust Corp. (AL) | FloridaFirst Bancorp Inc. (FL) | |
South Financial Group Inc. (SC) | CNB Florida Bancshares Inc. (FL) |
Buyer | Seller | |
Community First Inc. (TN) | First Natl Bk of Centerville (TN) | |
Greene County Bancshares Inc. (TN) | Civitas BankGroup (TN) | |
Pinnacle Financial Partners (TN) | Cavalry Bancorp Inc. (TN) | |
Greene County Bancshares Inc. (TN) | Independent Bankshares Corp. (TN) | |
First South Bancorp, Inc. (TN) | Murfreesboro Bancorp, Inc. (TN) | |
Fifth Third Bancorp (OH) | Franklin Financial Corp. (TN) | |
Synovus Financial Corp. (GA) | Community Financial Group Inc. (TN) |
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Ratio of | ||||||||||||||||
Tangible | ||||||||||||||||
12 Months | Book Value | |||||||||||||||
Tangible | Preceding | Premium to | ||||||||||||||
Total Assets | Book Value | Earnings | Core Deposits | |||||||||||||
(%) | (x) | (x) | (%) | |||||||||||||
Mid-America Bancshares, Inc. | 18.6 | 2.45 | 42.5 | 20.5 | ||||||||||||
Nationwide Merger Group average | 19.6 | 3.05 | 23.8 | 22.2 | ||||||||||||
Southeastern Merger Group average | 18.8 | 2.68 | 26.8 | 23.0 | ||||||||||||
Tennessee Merger Group average | 22.2 | 2.69 | 24.0 | 21.4 |
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Hypothetical Deal | ||||
Company | Value ($mm) | |||
Pinnacle Financial Partners, Inc. | $ | 187.2 | ||
Synovus Financial Corp. | $ | 164.7 | ||
United Community Banks, Inc. | $ | 162.9 | ||
Fifth Third Bancorp | $ | 161.7 | ||
BancorpSouth, Inc. | $ | 155.8 | ||
Green Bankshares, Inc. | $ | 149.4 | ||
Park National Corporation | $ | 148.3 | ||
Trustmark Corporation | $ | 148.2 | ||
Marshall & Ilsley Corporation | $ | 144.7 | ||
National City Corporation | $ | 140.2 | ||
Renasant Corporation | $ | 139.0 | ||
U.S. Bancorp | $ | 137.4 | ||
BB&T Corporation | $ | 136.5 | ||
KeyCorp | $ | 135.0 | ||
Regions Financial Corporation | $ | 127.1 | ||
Integra Bank Corporation | $ | 115.0 | ||
Wachovia Corporation | $ | 112.6 |
Mid-America | ||||
Contribution | ||||
to Pinnacle | ||||
Total assets | 31.6 | % | ||
Total net loans | 31.7 | % | ||
Total deposits | 33.5 | % | ||
Total equity | 28.3 | % | ||
Total tangible equity | 36.6 | % | ||
Net income — estimated fiscal year 2007 | 25.2 | % | ||
Net income — estimated fiscal year 2008 | 25.7 | % | ||
Net income — estimated fiscal year 2009 | 26.1 | % | ||
AverageMid-America Contribution Percentage | 29.8 | % | ||
ActualMid-America Pro Forma Ownership | 30.8 | % |
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GAAP Earnings per Share | ||||||||||||||||
2008 | 2009 | 2010 | 2011 | |||||||||||||
Mid-America Standalone | $ | 0.71 | $ | 0.86 | $ | 0.99 | $ | 1.17 | ||||||||
Pro Forma | 0.87 | 1.04 | 1.20 | 1.39 | ||||||||||||
% Accretion — Dilution | 22.4 | % | 21.0 | % | 21.7 | % | 19.1 | % |
Cash Earnings per Share | ||||||||||||||||
2008 | 2009 | 2010 | 2011 | |||||||||||||
Mid-America Standalone | $ | 0.71 | $ | 0.86 | $ | 0.99 | $ | 1.17 | ||||||||
Pro Forma | 0.82 | 0.96 | 1.12 | 1.31 | ||||||||||||
% Accretion — Dilution | 15.5 | % | 12.0 | % | 13.6 | % | 12.3 | % |
Book Value per Share | ||||||||||||||||
2008 | 2009 | 2010 | 2011 | |||||||||||||
Mid-America Standalone | $ | 8.25 | $ | 8.90 | $ | 9.65 | $ | 10.55 | ||||||||
Pro Forma | 9.32 | 10.36 | 11.56 | 12.96 | ||||||||||||
% Accretion — Dilution | 13.0 | % | 16.4 | % | 19.8 | % | 22.8 | % |
Tangible Book Value per Share | ||||||||||||||||
2008 | 2009 | 2010 | 2011 | |||||||||||||
Mid-America Standalone | $ | 6.59 | $ | 7.25 | $ | 8.00 | $ | 8.90 | ||||||||
Pro Forma | 6.67 | 7.71 | 8.91 | 10.30 | ||||||||||||
% Accretion — Dilution | 1.1 | % | 6.4 | % | 11.4 | % | 15.8 | % |
Dividends per Share | ||||||||||||||||
2008 | 2009 | 2010 | 2011 | |||||||||||||
Mid-America Standalone | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||
Pro Forma | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||
% Accretion — Dilution | NA | NA | NA | NA |
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Company Name | Assets ($mm) | |||
Wintrust Financial Corporation (IL) | 9,348 | |||
East West Bancorp, Inc. (CA) | 10,829 | |||
CVB Financial Corp. (CA) | 6,137 | |||
Boston Private Financial Holdings, Inc. (MA) | 5,939 | |||
PrivateBancorp, Inc. (IL) | 4,486 | |||
CoBiz Financial Inc. (CO) | 2,280 | |||
Mercantile Bank Corporation (MI) | 2,104 |
Avg | ||||||||||||||||||||||||||||||||||||||||||||
Wkly | ||||||||||||||||||||||||||||||||||||||||||||
YTD | 3 Mo. | Vol/ | ||||||||||||||||||||||||||||||||||||||||||
Price/ | Price/ | Price/ | Price/ | Price/ | Mkt | Price | Price | Shares | Inside | Instit’l | ||||||||||||||||||||||||||||||||||
Book | TBV | LTM | 07 EPS | 08 EPS | Value | Change | Change | Out | Ownrshp | Ownrshp | ||||||||||||||||||||||||||||||||||
(%) | (%) | EPS(x) | (x) | (x) | ($mm) | (%) | (%) | (%) | (%) | (%) | ||||||||||||||||||||||||||||||||||
Pinnacle | 151.6 | 286.2 | 19.5 | 18.5 | 15.2 | 402.2 | (16.27 | ) | (5.03 | ) | 1.77 | 14.05 | 33.59 | |||||||||||||||||||||||||||||||
Comparable Company Average | 175.3 | 265.7 | 16.0 | 15.1 | 13.2 | 888.3 | (18.10 | ) | (11.53 | ) | 3.97 | 11.73 | 60.55 |
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• | the number of shares of Pinnacle common stock subject to the new Pinnacle stock option or stock appreciation right will be equal to the product of the number of shares ofMid-America common stock subject to theMid-America stock option or stock appreciation right and 0.4655, rounded to the nearest whole share; and | |
• | the exercise price per share of Pinnacle common stock subject to the new Pinnacle stock option or stock appreciation right will be equal to the exercise price per share ofMid-America common stock under theMid-America stock option or stock appreciation right less $1.50 divided by 0.4655, rounded to the nearest cent. |
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• | approval of the merger agreement byMid-America’s shareholders; | |
• | approval of the merger agreement and the issuance of Pinnacle common stock in connection with the merger by Pinnacle’s shareholders; | |
• | approval by The Nasdaq Stock Market of listing of the shares of Pinnacle common stock to be issued in the merger, subject to official notice of issuance; | |
• | receipt of all required regulatory approvals and expiration of all related statutory waiting periods; | |
• | effectiveness of the registration statement, of which this joint proxy statement/prospectus constitutes a part, for the Pinnacle shares to be issued in the merger; | |
• | absence of any order, injunction or decree of a court or agency of competent jurisdiction which prohibits completion of the merger; | |
• | the receipt by each party of an opinion of counsel, dated the closing date of the merger, substantially to the effect that the merger will be treated as a reorganization under Section 368(a) of the Code and that no tax gain or loss will be recognized by Pinnacle,Mid-America orMid-America shareholders (except for any income tax consequences toMid-America shareholders arising in connection with receipt of the cash portion of the merger consideration and cash payments for fractional shares); | |
• | absence of any statute, rule, regulation, order, injunction or decree which prohibits, materially restricts or makes illegal completion of the merger; | |
• | accuracy of the other party’s representations and warranties contained in the merger agreement, except, in the case of most of the representations and warranties, where the failure to be accurate would not be reasonably likely to have a material adverse effect on the party making the representations and warranties (see “— Representations and Warranties” immediately below), and the performance by the other party of its obligations contained in the merger agreement in all material respects; and | |
• | each ofMid-America’s executive officers and directors shall have executed agreements in which they agree to vote their shares ofMid-America common stock in favor of the merger. |
• | corporate existence, good standing and qualification to conduct business; | |
• | capital structure; | |
• | due authorization, execution, delivery and enforceability of the merger agreement; |
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• | absence of any violation of agreements or law or regulation as a result of the merger; | |
• | governmental and third party consents necessary to complete the merger; | |
• | SEC, banking and other regulatory filings; | |
• | financial statements; | |
• | fees payable to financial advisors in connection with the merger; | |
• | absence of material adverse changes; | |
• | legal proceedings and regulatory actions; | |
• | tax matters; | |
• | employee matters; | |
• | compliance with laws; | |
• | contracts; | |
• | agreements with regulatory agencies; | |
• | interest rate risk management instruments; | |
• | undisclosed liabilities; | |
• | insurance coverage; | |
• | environmental matters; | |
• | state takeover laws; | |
• | tax treatment as a reorganization; | |
• | accuracy of information to be included in SEC filings and proxy statements; | |
• | disclosure of internal controls and procedures; and | |
• | receipt of fairness opinions. |
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• | conduct its business in the ordinary course; | |
• | preserve its business organization, employees, and business relationships; | |
• | retain the services of its key officers and key employees; and | |
• | take no action to adversely affect or delay obtaining regulatory approval of the merger, performing the covenants under the merger agreement, or consummating the merger. |
• | (1) adjust, split, combine or reclassify any shares of the party’s capital stock; (2) make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire, any shares of the party’s capital stock or any securities or obligations convertible into or exchangeable for any shares of its capital stock, except (A) dividends paid by or to any of the subsidiaries of the parties, (B) the acceptance of shares of the party’s common stock as payment of the exercise price of stock options or for withholding taxes incurred in connection with the exercise of stock options or the vesting or lapsing of forfeiture restrictions on restricted shares of common stock, each in accordance with past practice and the terms of the applicable award agreements) and (C) the acceptance of shares of common stock upon forfeiture of any restricted shares pursuant to any award of restricted shares under an equity-based incentive plan; (3) grant any stock appreciation rights or grant any individual, corporation or other entity any right to acquire any shares of the party’s capital stock; or (4) issue any additional shares of capital stock except pursuant to the exercise of stock options outstanding as of the date of the merger agreement or issued thereafter if permitted; | |
• | knowingly take any action, or knowingly fail to take any action, which action or failure to act is reasonably likely to prevent the merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code; | |
• | take any action or fail to take any action that is intended or may reasonably be expected to result in any of the party’s representations and warranties being or becoming untrue in any material respect, or in any conditions to the merger not being satisfied; | |
• | take any action that would materially impede or delay the ability of the parties to obtain any necessary approvals of any regulatory agency or governmental entity required for the transactions contemplated by the merger agreement; or | |
• | agree to take, make any commitment to take, or adopt any resolutions of its board of directors in support of, any of the actions prohibited by the preceding bullet points. |
• | other than in the ordinary course of business consistent with past practice: (1) incur any indebtedness for borrowed money, or (2) assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other individual, corporation or other entity; | |
• | increase the wages, salaries, compensation, pension, or other fringe benefits or perquisites payable to any officer, employee, or director ofMid-America; | |
• | pay any pension or retirement allowance not required by any existing plan or agreement or by applicable law; | |
• | pay any bonus; |
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• | become a party to, amend or commit itself to, any pension, retirement, profit-sharing or welfare benefit plan or agreement or employment agreement with or for the benefit of any employee, other than as required by applicable law or an existing agreement; | |
• | except as required under any existing plan, grant, or agreement, accelerate the vesting of, or the lapsing of restrictions with respect to, anyMid-America stock options or restricted shares ofMid-America common stock; | |
• | enter into any material new line of business or make any material change in its lending, investment, underwriting, risk and asset liability management or other banking and operating policies, except as required by applicable law, regulation or policies imposed by any governmental entity; | |
• | make capital expenditures other than in the ordinary course of business consistent with past practice or as disclosed to Pinnacle pursuant to the merger agreement; | |
• | amend its charter or bylaws, or otherwise take any action to exempt any person or entity (other than Pinnacle) or any action taken by any such person or entity from any takeover statute or similarly restrictive provisions of its organizational documents, or terminate, amend or waive any provisions of any confidentiality or standstill agreements in place with any third parties; | |
• | other than in prior consultation with Pinnacle, restructure or materially change its investment securities portfolio or its gap position, through purchases, sales or otherwise, or the manner in which the portfolio is classified or reported; or | |
• | sell, transfer, mortgage, encumber or otherwise dispose of any of its properties or assets that are material toMid-America and its subsidiaries, taken as a whole, to any individual, corporation or other entity other than a subsidiary (or cancel, release or assign any indebtedness that is material toMid-America and its subsidiaries, taken as a whole, to any person or any claims held by any person that are material toMid-America and its subsidiaries, taken as a whole, in each case other than in the ordinary course of business consistent with past practice or pursuant to contracts in force at the date of the merger agreement or as otherwise consented to between the parties; | |
• | terminate any of the business protection agreements entered into with each of Gary Scott, Jason West, Sam Short and David Majors; | |
• | implement or adopt any change in its tax accounting or financial accounting principles, practices or methods, other than as required by applicable law or regulation, generally accepted accounting principles or regulatory guidelines; and | |
• | settle any material claim, action or proceeding, except in the ordinary course of business consistent with past practice. |
• | acquire or agree to acquire any business or any corporation, partnership, association or other business organization or division, or acquire any assets which would be material to the party, other than an acquisition if it would not reasonably be expected to have a material adverse effect on Pinnacle or materially delay completion of the merger, or in connection with foreclosures, settlements in lieu of foreclosures or troubled loan or debt restructurings in the ordinary course of business consistent with prudent banking practices; or | |
• | amend its charter, except to authorize additional common shares, or bylaws. |
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• | the board of directors ofMid-America receives the acquisition proposal prior toMid-America’s shareholders meeting; | |
• | the board of directors ofMid-America, after consultation with its outside legal counsel, reasonably determines in good faith that the failure to engage in those discussions or provide information would cause it to violate its fiduciary duties under applicable law; | |
• | the board of directors ofMid-America concludes in good faith that the acquisition proposal constitutes or is reasonably likely to result in a superior proposal (as described below); | |
• | Mid-America enters into a confidentiality agreement with the person making the inquiry or proposal having customary non-disclosure, confidentiality, standstill and non-solicitation provisions that are reasonably satisfactory to Pinnacle; and | |
• | Mid-America notifies Pinnacle promptly, and in any event within 24 hours ofMid-America’s receipt of any acquisition proposal or any request for nonpublic information relating toMid-America by any third party considering making, or that has made, an acquisition proposal, of the identity of the third party, the material terms and conditions of any inquiries, proposals or offers, and updates on the status of the terms of any proposals, offers, discussions or negotiations on a current basis. |
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• | by mutual consent of Pinnacle andMid-America; | |
• | by either Pinnacle orMid-America, if any request or application for a required regulatory approval is denied by the governmental entity which must grant such approval and such denial has become final and non-appealable, or a governmental entity has issued an order decree, or ruling to permanently prohibit the merger and such prohibition has become final and non-appealable, except that no party may so terminate the merger agreement if the denial is a result of the failure of such party to the merger agreement; | |
• | by either Pinnacle orMid-America, if any governmental entity of competent jurisdiction has issued a final non-appealable order enjoining or otherwise prohibiting the merger; | |
• | by either Pinnacle orMid-America, if the merger is not completed on or before March 31, 2008, unless the failure of the closing to occur by this date is due to the failure of the party seeking to terminate the merger agreement to comply with the merger agreement; | |
• | by either Pinnacle orMid-America, if any approval of the shareholders of Pinnacle orMid-America required for completion of the merger has not been obtained upon a vote taken at a duly held meeting of shareholders or at any adjournment or postponement thereof; | |
• | by either Pinnacle orMid-America, if (1) the terminating party is not then in material breach of any representation, warranty, covenant or other agreement contained in the merger agreement and (2) there has been a breach of any of the covenants, agreements, representations or warranties of the other party in the merger agreement, which breach is not cured within 30 days following written notice to the party committing the breach, or which breach, by its nature, cannot be cured prior to the closing date of the merger, and which breach, individually or together with all other breaches, would, if occurring or continuing on the closing date, result in the failure of the condition relating to the performance of obligations or breaches of representations or warranties described under “— Conditions to the Completion of the Merger” above; | |
• | by either Pinnacle orMid-America, if (1) the board of directors of the other does not publicly recommend that its shareholders either approve the merger agreement, (2) after recommending that its shareholders approve the merger agreement, the board of directors has withdrawn, modified or amended its recommendation in any manner adverse to the other party, or (3) the other party materially breaches its obligations under the merger by reason of a failure to call a meeting of its shareholders or a failure to prepare and mail to its shareholders this document; |
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• | by Pinnacle, if the board of directors ofMid-America authorizes, recommends, proposes or publicly announces its intention to authorize, recommend or propose an acquisition proposal with any person other than Pinnacle; or |
• | byMid-America if Pinnacle’s average closing stock price over aten-day period prior to and ending on the eighth day before the closing is less than $18.00 and the quotient resulting from dividing Pinnacle’s average closing stock price for that same ten-day period by the average closing price for Pinnacle’s common stock for theten-day period prior to and ending on August 15, 2007 ($25.095) is less than the difference between (1) the quotient resulting from dividing the Nasdaq Bank Index on the eighth day prior to the closing of the merger by the Nasdaq Bank Index on August 15, 2007 (2,874.37) and (2) 0.25. |
• | any termination will be without prejudice to the rights of any party arising out of the willful breach by the other party of any provision of the merger agreement; and | |
• | designated provisions of the merger agreement, including the payment of fees and expenses, the confidential treatment of information and, if applicable, the termination fee described below, will survive the termination. |
• | If Pinnacle terminates the merger agreement becauseMid-America’s board of directors (1) did not recommend thatMid-America’s shareholders approve the merger, (2) after making such a recommendation, withdraws, modifies or amends its recommendation in a manner adverse to Pinnacle, or (3) fails to call a shareholder meeting to approve the merger, thenMid-America must pay the termination fee on the business day following the termination. | |
• | if Pinnacle terminates the merger agreement becauseMid-America’s board of directors has authorized, recommended, proposed or publicly announced its intention to authorize, recommend or propose any acquisition proposal with any person other than Pinnacle, thenMid-America must pay the termination fee on the business day following the termination. | |
• | If (1) the merger agreement is terminated by either party because the required shareholder vote ofMid-America was not obtained atMid-America’s shareholders meeting and (2) a bona fide acquisition transaction with respect toMid-America was publicly announced or otherwise communicated to the board of directors ofMid-America before its shareholders meeting, which we refer to as a public proposal, that has not been withdrawn, and within six months after termination of the merger agreement,Mid-America enters into any definitive agreement with respect to, or consummates, any acquisition transaction, the termination fee will become payable to Pinnacle on the date the definitive agreement is executed or the transaction is consummated. | |
• | If (1) the merger agreement is terminated by either party because the merger has not been completed by March 31, 2008, or by Pinnacle because of a material breach byMid-America of a representation, warranty, covenant or agreement that causes a condition to the merger to not be satisfied, (2) a public proposal with respect to an acquisition transaction involvingMid-America was made and not withdrawn before the merger agreement was terminated and (3) after the announcement of the public proposal,Mid-America intentionally breached any of its representations, warranties, covenants or agreements and the breach materially contributed to the failure of the merger to become effective and within six months after the termination of the merger agreement,Mid-America enters into any definitive agreement with respect to, or consummates, any acquisition transaction, the termination fee will become payable to Pinnacle on the date the definitive agreement is executed or the transaction is consummated. |
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• | the direct or indirect acquisition, purchase or assumption of all or a substantial portion of the assets or deposits ofMid-America; | |
• | the acquisition by any person of direct or indirect beneficial ownership of 20% or more of the outstanding shares of voting stock ofMid-America; or | |
• | a merger, consolidation, business combination, liquidation, dissolution or similar transaction involvingMid-America, other than a merger, business combination or similar transaction ofMid-America if the shareholders ofMid-America immediately before the transaction own at least 60% of the voting stock of the entity surviving the transaction (or the parent of the surviving entity) immediately following the transaction. |
• | extend the time for the performance of any of the obligations or other acts of the other party under the merger agreement; | |
• | waive any inaccuracies in the other party’s representations and warranties contained in the merger agreement; and | |
• | waive the other party’s compliance with any of its agreements contained in the merger agreement, or waive compliance with any conditions to its obligations to complete the merger. |
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• | a breach of the director’s duty of loyalty to Pinnacle 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. |
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Rights of Pinnacle Shareholders and the Rights ofMid-America Shareholders
Pinnacle Shareholder Rights | Mid-America Shareholder Rights | |||
Description of Common Stock: | Pinnacle is authorized to issue 90,000,000 shares of common stock, par value $1.00 per share. | Mid-America is authorized to issue 75,000,000 shares of common stock, par value $1.00 (unless otherwise specified by the board of directors). | ||
Description of Preferred Stock: | Pinnacle’s charter authorizes the board of directors to issue 10,000,000 shares of preferred stock with no par value. | Mid-America’s charter authorizes the board of directors to issue 25,000,000 shares of preferred stock, par value $1.00 (unless otherwise specified by the board of directors). | ||
Special Meeting of Shareholders: | Under the TBCA, the board of directors, any person authorized by the charter or bylaws, or (unless the charter provides otherwise) the holders of at least 10% of the votes entitled to be cast may call a special meeting of shareholders. | Under the TBCA, the board of directors, any person authorized by the charter or bylaws, or (unless the charter provides otherwise) the holders of at least 10% of the votes entitled to be cast may call a special meeting of shareholders. |
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Pinnacle Shareholder Rights | Mid-America Shareholder Rights | |||
Pinnacle’s bylaws allow for special meetings of the shareholders to be called at any time by its board of directors, its president, or by the holders of at least 25% of votes entitled to be cast at any special meeting, upon the delivery of a written request to its secretary. The request must describe the purpose(s) for the meeting. Special meetings shall be held at those times, places and dates as shall be specified in the notice of the meeting. | Special meetings of Mid-America’s shareholders may be called by the chairman of the board of directors, the president, the chief executive officer or any two executive vice presidents or by the affirmative vote of not less than 75% of the board of directors acting with or without a meeting. Special meetings of shareholders may also be called by the holders of at least 75% of all votes entitled to be cast on any issue proposed to be considered at any specially-called meeting upon request in writing to the secretary of Mid-America, at least 90 days before the date of the meeting. | |||
Shareholder Rights Plan: | Pinnacle does not have a shareholder rights plan as a part of its charter, bylaws, or by separate agreement. | Same as Pinnacle. | ||
Election and Size of Board of Directors: | The board of directors must not consist of less than five (5) nor more than twenty-five (25) members. The number may be fixed or changed from time to time, by the affirmative vote of two-thirds of the issued and outstanding shares of the corporation entitled to vote in an election of directors, or by the affirmative vote of two-thirds of all directors then in office. | The number of directors of the Mid-America must not be fewer than three (3) nor more than thirty (30). No action may be taken to decrease or increase the number of directors unless a majority of the directors then in office concurs in that action. | ||
The board of directors is divided into three (3) classes, Class I, Class II and Class III, which are nearly equal in number as possible. Each Class of director serves a three (3) year term. No person over the age of seventy (70) is eligible for election. | The board of directors of Mid-America is divided into three classes as nearly equal in number as possible. The classes are designated Class I, Class II and Class III with each director elected for a term of three (3) years. | |||
Presently, Pinnacle’s board of directors consists of 13 members. After the merger, Pinnacle’s board of directors will have at least 16 members. | Presently, Mid-America’s board of directors consists of 14 members. | |||
Vacancies on the Board of Directors: | The TBCA provides that vacancies on the board of directors may be filled by the shareholders or directors, unless the charter provides otherwise. | The TBCA provides that vacancies on the board of directors may be filled by the shareholders or directors, unless the charter provides otherwise. |
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Pinnacle Shareholder Rights | Mid-America Shareholder Rights | |||
Pinnacle’s bylaws provide that the directors, even though less than a quorum, may fill any vacancy on the board of directors, including a vacancy created by an increase in the number of directors. Any appointment by the directors shall continue until the expiration of the term of the director whose place has become vacant, or, in the case of an increase in the number of director, until the next meeting of the shareholders. | Mid-America’s bylaws provide that vacancies in the board of directors, however caused, and newly created directorships are filled by the affirmative vote of the majority of the total number of directors then in office, though less than a quorum, or by a sole remaining directors. Any director elected to fill a vacancy resulting from an increase in the number of directors shall hold office for a term that shall coincide with the remaining term of the class of directors to which he or she is elected. | |||
Removal of Directors: | The TBCA provides that shareholders may remove directors with or without cause unless the charter provides that directors may be removed only for cause. However, if a director is elected by a particular voting group, that director may only be removed by the requisite vote of that voting group. | The TBCA provides that shareholders may remove directors with or without cause unless the charter provides that directors may be removed only for cause. However, if a director is elected by a particular voting group, that director may only be removed by the requisite vote of that voting group. | ||
Pinnacle’s charter or bylaws provide that a director may be removed with cause by a majority of the shares entitled to vote or upon the affirmative vote of two-thirds (2/3) of all directors then in office or without cause by a vote of two-thirds (2/3) of the shares entitled to vote. | Mid-America’s charter provides that any one or more directors may be removed for cause, at any time, by the affirmative vote of at least 75% of the entire board of directors or by the affirmative vote of at least 75% of all issued and outstanding shares of Mid-America. | |||
Indemnification: | The Pinnacle charter and bylaws provide that Pinnacle shall have the power to indemnify any director or officer of the corporation to the fullest extent permitted by the TBCA, as amended. Pinnacle may also indemnify and advance expenses to any employee or agent of Pinnacle who is not a director or officer to the same extent as to a director or officer if the board of directors determines that to do so is in the best interests of Pinnacle. | Same as Pinnacle. |
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Pinnacle Shareholder Rights | Mid-America Shareholder Rights | |||
Personal Liability of Directors: | Pinnacle’s charter provides that, to the fullest extent permitted by the TBCA, a director of Pinnacle shall not be liable to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director. | Same as Pinnacle. | ||
The TBCA provides that a corporation may not indemnify a director for liability 1) for any breach of the director’s duty of loyalty to the corporation or its shareholders; 2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; or 3) under Sec. 48-18-304 of the TBCA (with respect to the unlawful payment of dividends), as the same exists or hereafter may be amended. | ||||
Under Pinnacle’s charter, any modification to this provision requires an affirmative vote of either two-thirds (2/3) of the directors in office or two-thirds (2/3) of the shares entitled to vote. All modifications to this provision are prospective. | Under Mid-America’s charter, any modification to this provision requires the affirmative vote of the holders of 75% or more of the shares entitled to vote; provided, however, that if at least 75% of the members of the entire board of directors adopt a resolution affirmatively recommending the proposed amendment and directing that it be submitted to the shareholders, then the amendment shall be adopted if approved by a majority of the shares entitled to vote. | |||
Dissenters’ Rights: | The TBCA provides that a shareholder of a corporation is generally entitled to receive payment of the fair value of his or her stock if the shareholder dissents from transactions including a proposed merger, share exchange or a sale of substantially all of the assets of the corporation. However, dissenters’ rights generally are not available to holders of shares, such as shares of Pinnacle common stock, which are registered on a national securities exchange or quoted on a national market security system. | Under the TBCA, Mid-America’s shareholders have dissenters’ rights which entitle them to dissent from, and obtain payment of the fair value of the shareholders’ shares in the event of, certain extraordinary corporate transactions. Mid-America’s shareholders have the right to dissent from this merger. |
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Pinnacle Shareholder Rights | Mid-America Shareholder Rights | |||
Votes on Extraordinary Corporate Transactions: | Under the TBCA, a sale or other disposition of all or substantially all of the corporation’s assets, a merger of the corporation with and into another corporation, or a share exchange involving one or more classes or series of the corporation’s shares or a dissolution of the corporation must be approved by the board of directors (except in certain limited circumstances) plus, with certain exceptions, the affirmative vote of the holders of a majority of all shares of stock entitled to vote thereon. | Under the TBCA, a sale or other disposition of all or substantially all of the corporation’s assets, a merger of the corporation with and into another corporation, or a share exchange involving one or more classes or series of the corporation’s shares or a dissolution of the corporation must be approved by the board of directors (except in certain limited circumstances) plus, with certain exceptions, the affirmative vote of the holders of a majority of all shares of stock entitled to vote thereon. | ||
Pinnacle’s charter requires that all extraordinary corporate transactions must be approved by two 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. | Mid-America’s charter provides that all extraordinary corporate transactions must be approved by the affirmative vote of the holders of 75% or more of the shares entitled to vote; provided, however, that if at least 75% of the members of the entire board of directors adopt a resolution affirmatively recommending the proposed transaction and directing that it be submitted to the shareholders for their approval, then such transactions shall be adopted if approved by a majority of the shares entitled to vote. Because Mid-America’s board of directors unanimously approved the merger with Pinnacle, the affirmative vote of the shares entitled to vote will be necessary to approve the merger. |
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Pinnacle Shareholder Rights | Mid-America Shareholder Rights | |||
Consideration of Other Constituencies: | The TBCA provides that no corporation (nor its officers or directors) registered or traded on a national securities exchange or registered with the SEC shall be held liable for either having failed to approve the acquisition of shares by an interested shareholder on or before such interested shareholder’s share acquisition date, or for opposing any proposed merger, exchange, tender offer or significant disposition of the assets of the corporation or any of its subsidiaries because of a good faith belief that such merger, exchange, tender offer or significant disposition of assets would adversely affect the corporation’s employees, customers, suppliers, the communities in which such corporation or its subsidiaries operate or are located or any other relevant factor if such factors are permitted to be considered by the board of directors under the charter for such corporation in connection with a merger, exchange, tender offer or significant disposition of assets. Pinnacle’s charter permits such factors to be considered. | Same as Pinnacle. | ||
Amendment of Charter: | The TBCA provides that certain relatively technical amendments to a corporation’s charter may be adopted by the directors without shareholder action. Generally, the TBCA provides that a corporation’s charter may be amended by a majority of votes entitled to be cast on an amendment, subject to any condition the board of directors may place on its submission of the amendment to the shareholders. | The TBCA provides that certain relatively technical amendments to a corporation’s charter may be adopted by the directors without shareholder action. Generally, the TBCA provides that a corporation’s charter may be amended by a majority of votes entitled to be cast on an amendment, subject to any condition the board of directors may place on its submission of the amendment to the shareholders. |
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Pinnacle Shareholder Rights | Mid-America Shareholder Rights | |||
Pinnacle’s charter contains no other specific provisions. | In addition to the requirements of the TBCA, the provisions set forth in Articles VII, VIII, IX, X, XI, XII, XIII, XIV, and XV of Mid-America’s charter may only be modified by an affirmative vote the affirmative vote of the holders of 75% or more of the shares entitled to vote; provided, however, that if at least 75% of the members of the entire board of directors adopt a resolution affirmatively recommending the amendment and directing that it be submitted to the shareholders for their approval, then the amendment shall be adopted if approved by a majority of the shares entitled to vote. | |||
Amendment of Bylaws: | Under the TBCA, shareholder action is generally not necessary to amend the bylaws, unless the charter provides otherwise or the shareholders in amending or repealing a particular bylaw provide expressly that the board of directors may not amend or repeal that bylaw. The shareholders may amend or repeal Pinnacle’s bylaws even though the bylaws may also be amended or repealed by its board of directors. | Under the TBCA, shareholder action is generally not necessary to amend the bylaws, unless the charter provides otherwise or the shareholders in amending or repealing a particular bylaw provide expressly that the board of directors may not amend or repeal that bylaw. The shareholders may amend or repeal Mid-America’s bylaws even though the bylaws may also be amended or repealed by its board of directors. | ||
Pinnacle’s bylaws may be altered or amended and new bylaws may be adopted by the shareholders at any annual or special meeting of the shareholders or by the board of directors at any regular or special meeting of the board of directors. If this action is to be taken at a meeting of the shareholders, notice of the general nature of the proposed change in the bylaws must be given in the notice of meeting. The shareholders may provide by resolution that any bylaw provision modified by them may not be modified by the board. | Mid-America’s bylaws may be amended or repealed or additional bylaws may be adopted by the board of directors by a vote of a majority of the entire board of directors; provided, however, that any amendment or repeal of any part of Article 1, 2, 5, 6, 7, or 9 of the bylaws effected by the board of directors shall require the affirmative vote of at least 75% of the full board of directors following 20 days prior written notice, or, if presented to shareholders shall require the affirmative vote of at least 75% of all of the shares entitled to vote thereon, exclusive of any interested shareholder following at least 45 days prior written notice to all shareholders of the specific proposal. |
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Pinnacle Shareholder Rights | Mid-America Shareholder Rights | |||
Except as otherwise provided in the charter, action by the shareholders with respect to bylaws shall be taken by an affirmative vote of a majority of all shares entitled to elect directors, and action by the board of directors with respect to bylaws shall be taken by an affirmative vote of a majority of all directors then holding office. | ||||
Control Share Acquisitions: | The Tennessee Control Share Acquisition Act generally provides that, except as stated below, ‘‘control shares” will not have any voting rights. Control shares are shares acquired by a person under certain circumstances which, when added to other shares owned, would give such person effective control over one-fifth or more, or a majority of all voting power (to the extent such acquired shares cause such person to exceed one-fifth or one-third of all voting power) in the election of a Tennessee corporation’s directors. However, voting rights will be restored to control shares by resolution approved by the affirmative vote of the holders of a majority of the corporation’s voting stock, other than shares held by the owner of the control shares. If voting rights are granted to control shares which give the holder a majority of all voting power in the election of the corporation’s directors, then the corporation’s other shareholders may require the corporation to redeem their shares at fair value. The Tennessee Control Share Acquisition Act is not applicable to Pinnacle because the Pinnacle charter does not contain a specific provision “opting in” to the Control Share Acquisition Act. | The Tennessee Control Share Acquisition Act generally provides that, except as stated below, ‘‘control shares” will not have any voting rights. Control shares are shares acquired by a person under certain circumstances which, when added to other shares owned, would give such person effective control over one-fifth or more, or a majority of all voting power (to the extent such acquired shares cause such person to exceed one-fifth or one-third of all voting power) in the election of a Tennessee corporation’s directors. However, voting rights will be restored to control shares by resolution approved by the affirmative vote of the holders of a majority of the corporation’s voting stock, other than shares held by the owner of the control shares. If voting rights are granted to control shares which give the holder a majority of all voting power in the election of the corporation’s directors, then the corporation’s other shareholders may require the corporation to redeem their shares at fair value. The Tennessee Control Share Acquisition Act is applicable to Mid-America because Mid-America’s charter specifically “opts in” to the Control Share Acquisition Act. |
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Pinnacle Shareholder Rights | Mid-America Shareholder Rights | |||
Investor Protection Act: | The Tennessee Investor Protection Act (“TIPA”) provides that unless a Tennessee corporation’s board of directors has recommended a takeover offer to shareholders, no offeror beneficially owning 5% or more of any class of equity securities of the offeree company, any of which was purchased within the preceding year, may make a takeover offer for any class of equity security of the offeree company if after completion the offeror would be a beneficial owner of more than 10% of any class of outstanding equity securities of the company unless the offeror, before making such purchase: (i) makes a public announcement of his or her intention with respect to changing or influencing the management or control of the offeree company; (ii) makes a full, fair and effective disclosure of such intention to the person from whom he or she intends to acquire such securities; and (iii) 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. | Same as Pinnacle. |
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Pinnacle Shareholder Rights | Mid-America Shareholder Rights | |||
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, 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. |
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Pinnacle Shareholder Rights | Mid-America Shareholder Rights | |||
Business Combinations Involving Interested Shareholders: | The Tennessee Business Combination Act generally prohibits a “business combination” by Pinnacle or a subsidiary with an “interested shareholder” within five years after the shareholder becomes an interested shareholder. Pinnacle or a subsidiary can, however, enter into a business combination within that period if, before the interested shareholder became such, Pinnacle’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. | The Tennessee Business Combination Act generally prohibits a “business combination” by Mid-America or a subsidiary with an “interested shareholder” within five years after the shareholder becomes an interested shareholder. Mid-America or a subsidiary can, however, enter into a business combination within that period if, before the interested shareholder became such, Mid-America’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 person or entity that beneficially owns 10% or more of the voting power of any outstanding class or series of Pinnacle stock. | 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 person or entity that beneficially owns 10% or more of the voting power of any outstanding class or series of Mid-America stock. |
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Pinnacle Shareholder Rights | Mid-America Shareholder Rights | |||
Pinnacle’s charter does not have special requirements for transactions with interested parties; however, all business combinations, as defined above, must be approved by two 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. | Mid-America’s charter also provides that for purposes of calling a special meeting of shareholders, shares held by any interested shareholder shall be disregarded for purposes of determining whether the requisite percentage to call the meeting has been reached. Additionally, all business combinations, as defined above, must be approved by the affirmative vote of the holders of 75% or more of the shares entitled to vote; provided, however, that if at least 75% of the members of the entire board of directors adopt a resolution affirmatively recommending the proposed transaction and directing that it be submitted to the shareholders for their approval, then such amendment shall be adopted if approved by a majority of the shares entitled to vote. Because Mid-America’s board of directors unanimously approved the merger with Pinnacle, the affirmative vote of a majority of the shares entitled to vote will be necessary to approve the merger. | |||
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, Pinnacle may not purchase 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 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 or Pinnacle makes an offer, of at least equal value per share, to all shareholders of such class. | Same as Pinnacle. |
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• Mutual Funds | • Fixed Annuities | |
• Variable Annuities | • Stocks | |
• Money Market Instruments | • Financial Planning | |
• Treasury Securities | • Asset Management Accounts | |
• Bonds | • Listed Options |
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• | directors and executive officers, | |
• | executive compensation, | |
• | principal shareholders, | |
• | certain relationships and related transactions, and | |
• | other related matters concerning Pinnacle |
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Mutual funds | Fixed annuities | |
Stocks | Variable annuities | |
Money market instruments | Financial planning | |
Treasury securities | Asset management accounts | |
Bonds | Listed options |
• | directors and executive officers, | |
• | executive compensation, | |
• | principal shareholders, | |
• | certain relationships and related transactions, and | |
• | other related matters concerningMid-America |
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MID-AMERICA BANCSHARES, INC.: ADJOURNMENT OF SPECIAL MEETINGS
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December 31, 2000 | 19.8 | % | ||
December 31, 2001 | 17.1 | % | ||
December 31, 2002 | 11.8 | % | ||
December 31, 2003 | 11.8 | % | ||
December 31, 2004 | 16.7 | % | ||
December 31, 2005 | 16.3 | % | ||
December 31, 2006 | 12.5 | % | ||
After giving effect to Pinnacle’s merger with Mid-America and approved of the amendment to increase the shares reserved under the 2004 Equity Incentive Plan | 12.8 | %* |
(*) | Includes impact of additional allocation of 500,000 shares as contemplated by this proposal and consummation of Pinnacle’s merger withMid-America and the related assumption by Pinnacle ofMid-America’s, Bank of the South’s and PrimeTrust Bank’s various stock option plans and the issuance of approximately 6.6 million Pinnacle shares in connection with the merger. |
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December 31, 2000 | 9.8 | % | ||
December 31, 2001 | 2.3 | % | ||
December 31, 2002 | 3.5 | % | ||
December 31, 2003 | 2.5 | % | ||
December 31, 2004 | 2.3 | % | ||
December 31, 2005 | 2.5 | % | ||
December 31, 2006 | 2.4 | % |
• | The Equity Incentive Plan prohibits the Committee from amending the terms of previously granted options to reduce the exercise price or canceling a previously granted option and substituting another option with a lower exercise price. Pinnacle has never repriced any of its options. | |
• | The Equity Incentive Plan provides that any options granted under the Equity Incentive Plan, other than Substitute Awards (as defined herein), may not be granted at less than the fair market value of the common stock on the date of grant. | |
• | The Equity Incentive Plan limits to 50,000 the maximum number of shares with respect to which all performance awards may be granted to a Covered Officer (as defined in the Equity Incentive Plan) in each year of the performance period and to five times the Covered Officer’s annual salary the maximum |
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amount of any award to such an employee that may be settled in cash in each year of the performance period. |
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• | earnings or book value per share; | |
• | net income; | |
• | return on equity, assets, capital, capital employed or investments; | |
• | earnings before interest, taxes, depreciationand/or amortization; | |
• | operating income or profit; | |
• | operating efficiencies; | |
• | the ratio of criticized/classified loans to capital; | |
• | allowance for loan losses; | |
• | the ratio of non-performing loans to total loans; | |
• | the ratio of past due loans greater than 90 days and non-accruals to total loans; | |
• | the ratio of net charge-offs to average loans; | |
• | after tax operating income; | |
• | cash flows; | |
• | total revenues or revenues per employee; | |
• | stock price or total shareholder return; | |
• | growth in deposits; | |
• | dividends; | |
• | strategic business objectives, consisting of one or more objectives based on meeting specified cost targets, business expansion goals and goals relating to acquisitions or divestitures; or | |
• | any combination thereof. |
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Number of | ||||||||||||
Securities | ||||||||||||
Remaining Available | ||||||||||||
Number of | for Future Issuance | |||||||||||
Securities to be | Under Equity | |||||||||||
Issued Upon | Weighted Average | Compensation Plans | ||||||||||
Exercise of | Exercise Price of | (Excluding | ||||||||||
Outstanding | Outstanding | Securities | ||||||||||
Options, Warrants | Options, Warrants | Reflected in First | ||||||||||
Plan Category | and Rights | and Rights | Column) | |||||||||
Equity compensation plans approved by shareholders: | ||||||||||||
2000 Stock Incentive Plan | 909,225 | $ | 7.51 | — | ||||||||
2004 Equity Incentive Plan | 634,185 | $ | 23.06 | 609,922 | ||||||||
Cavalry Bancorp Stock Option Plan | 115,049 | $ | 10.79 | — | ||||||||
Equity compensation plans not approved by shareholders | N/A | N/A | N/A | |||||||||
Total | 1,658,459 | $ | 12.93 | 609,922 | ||||||||
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• | Base Salary | |
• | Annual Cash Incentive Plan | |
• | Long-term Equity Compensation Incentive Plans. |
• | Job scope and responsibilities; | |
• | Corporate, business unit, and individual performance; | |
• | Competitive salaries for similar positions at peer institutions; and | |
• | Other factors. |
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• | Named executive officers and other Leadership Team members received stock option awards during 2006. All stock options awarded to the named executive officers and other Leadership Team members in 2006 vest over a five-year period and have value only to the extent that Pinnacle’s common stock price increases over the grant price during the ten-year exercise period. This compensation element is totally at-risk in the event that the stock price does not increase over the grant price over the ten-year period. The more shareholder value increases, the greater the compensation to the executives. Stock options are typically granted at the Committee’s meeting in January when the overall annual compensation for the named executive officers is determined and shortly after the public announcement of Pinnacle’s fourth quarter and annual financial results. In setting 2006 compensation, the Committee deferred granting options and establishing annual incentive awards for the named executive officers until after the Cavalry transaction was completed. Therefore, the option grants and annual incentive awards were established at the Committee’s March 14, 2006 meeting. Options are granted to new hires at the Committee meeting following employment. | |
• | The Committee also grants shares of restricted stock to the named executive officers and other Leadership Team members, the forfeiture restrictions of which are tied to the achievement of certain soundness and profitability thresholds as prescribed by Pinnacle’s three-year performance plan as approved by Pinnacle’s board of directors. For 2006, the awards were granted on August 15, 2006 with the vesting criteria for each of the three years of the performance period established on that date. For 2007, the Committee approved the awards on January 17, 2007 establishing on that date the vesting criteria for the first year of the award and providing that the vesting criteria for the second and third years of the performance period will be set at the Committee’s meeting following the full board’s strategic planning meeting, which is typically held in June of each year. The restrictions associated with the restricted shares awarded to the named executive officers and other Leadership Team members in 2006 and 2007 lapse in 33% increments upon the achievement of the performance targets for each fiscal year in the three year performance period or for the entire three-year period in the event the one year targets are not met but the targets established for the three-year period are met on a cumulative basis. Therefore, the incentive is only earned if senior management effectively manages Pinnacle to achieve sustained longer-term performance within certain earnings and soundness thresholds. The performance targets associated with the 2006 award were achieved and the restrictions associated with the 2006 traunche of the 2006 award have been released. Additionally, the 2006 performance targets associated with the 2004 and 2005 awards were also achieved and the restrictions associated with 2006 traunche of the 2004 and 2005 awards have also been released. |
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Soundness | ||
Criticized/classified assets to capital Nonperforming loans to total loans Net charged-off loans to average loans Total risk based capital ratio Tangible equity ratio | Allowance for loan losses to total loans Past due loans > 30 days Tier 1 leverage ratio Net noncore funding dependency | |
Profitability | ||
Return on average assets Fully-diluted earnings per share Total noninterest income to total revenues | Return on average equity Efficiency ratio Net interest margin | |
Growth | ||
Growth in earnings per share year over year | Growth in deposits year over year | |
Market Effectiveness | ||
Deposit market share Internal operational quality index | Associate retention rates |
• | Meet or exceed ongoing profitability goals; | |
• | Recruit and retain a work force which embraces the culture of a high growth, values-oriented enterprise; | |
• | Market a financial firm that emphasizes distinctive service and expert advice to clients; | |
• | Plan and execute the necessary capital raising efforts to support the extraordinary growth; | |
• | Manage and measure the risk characteristics of the firm (including soundness, operational, and reputation risks) such that risks and returns remain in balance; | |
• | Conduct business that is consistent with the standards of the various regulatory bodies; and | |
• | Provide for a corporate governance process that is considered “best practice” among publicly held entities. |
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• | 40% to 50% should be in the form of base salary and | |
• | 50% to 60% should be “at-risk,” or tied to the achievement of short-and long-term performance targets. | |
• | Approximately one third of the “at-risk” compensation should be in the form of a targeted cash incentive award dependent on the firm meeting annual performance and soundness targets. | |
• | Approximately two thirds of the “at-risk” compensation should be longer-term in nature and directly linked to shareholder value creation. This compensation could be in the form of stock options, restricted stock, stock appreciation rights, etc. For longer-term compensation, the Committee believed that it should have latitude to grant awards that are both subject to time vesting and awards that vested pursuant to the achievement of multi-year performance targets. As a result, restricted share awards vest based on achievement of multi-year performance targets for2006-2008 while option awards vest 20% per year over a five-year term without regard to performance. |
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Change in | ||||||||||||||||||||||||||||||||||||
Pension | ||||||||||||||||||||||||||||||||||||
Value and | ||||||||||||||||||||||||||||||||||||
Nonqualified | ||||||||||||||||||||||||||||||||||||
Non-Equity | Deferred | |||||||||||||||||||||||||||||||||||
Stock | Incentive Plan | Compensation | All Other | |||||||||||||||||||||||||||||||||
Name and Principal | Salary | Bonus | Awards | Option | Compensation | Earnings | Compensation | Total | ||||||||||||||||||||||||||||
Position | Year | ($) | ($) | ($)(1) | Awards ($)(2) | ($)(3) | ($) | ($)(4) | ($) | |||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||
M. Terry Turner | 2006 | $ | 410,000 | — | $ | 38,534 | $ | 114,966 | $ | 246,000 | — | $ | 35,302 | $ | 844,802 | |||||||||||||||||||||
President and Chief Executive Officer | ||||||||||||||||||||||||||||||||||||
Robert A. McCabe, Jr. | 2006 | $ | 389,500 | — | $ | 36,234 | $ | 107,775 | $ | 233,700 | — | $ | 35,618 | $ | 802,827 | |||||||||||||||||||||
Chairman of the Board | ||||||||||||||||||||||||||||||||||||
Hugh M. Queener | 2006 | $ | 234,000 | — | $ | 26,084 | $ | 74,421 | $ | 112,320 | — | $ | 26,081 | $ | 472,906 | |||||||||||||||||||||
Chief Administrative Officer | ||||||||||||||||||||||||||||||||||||
Harold R. Carpenter | 2006 | $ | 175,000 | — | $ | 17,233 | $ | 33,347 | $ | 84,000 | — | $ | 8,670 | $ | 318,250 | |||||||||||||||||||||
Chief Financial Officer | ||||||||||||||||||||||||||||||||||||
Charles B. McMahan | 2006 | $ | 175,000 | — | $ | 12,155 | $ | 28,738 | $ | 63,000 | — | $ | 7,994 | $ | 286,886 | |||||||||||||||||||||
Chief Credit Officer |
(1) | Stock Awards— Since 2004, Pinnacle has awarded restricted shares to certain executive officers, including the named executive officers. The restrictions on these shares lapse in 33% annual increments upon the achievement of certain soundness and performance thresholds for the current fiscal year and the next two fiscal years. Based on achievement of the soundness and performance thresholds for the fiscal year ended December 31, 2006, the restrictions for the 2006 Award did lapse as did similar restrictions on restricted share awards for the 2004 and 2005 awards. All awards were issued pursuant to the terms of the Equity Incentive Plan. The amount in column (e) reflects the dollar amount recognized for financial statement purposes for the fiscal year ended December 31, 2006, in accordance with SFAS 123(R) of awards pursuant to the Equity Incentive Plan and thus includes amounts from awards granted in and prior to 2006. Assumptions used in the calculations of these amounts are included in footnote 14 to Pinnacle’s audited financial statements for the fiscal year ended December 31, 2006 included in Pinnacle’s Annual Report ofForm 10-K filed with the SEC on February 28, 2007. There were no forfeited restricted share awards in 2006. | |
(2) | Option Awards— All options are granted at an exercise price that equals the closing price of Pinnacle’s common stock on the date of grant. All awards expire ten years from date of issuance and vest in 20% increments on the anniversary date of the grant. The awards prior to 2006 were issued as incentive stock options while the 2006 awards are classified as nonstatutory stock options. All awards were issued pursuant to the terms of the 2000 Plan or the Equity Incentive Plan. The amount in column (f) reflects the dollar amount recognized for financial statement purposes for the fiscal year ended December 31, 2006, in accordance with SFAS 123(R) of awards pursuant to the 2000 Plan and the Equity Incentive Plan and thus includes amounts from awards granted in and prior to 2006. Assumptions used in the calculations of these amounts are included in footnote 14 to Pinnacle’s audited consolidated financial statements for the fiscal year ended December 31, 2006 included in Pinnacle’s Annual Report onForm 10-K filed with the SEC on February 28, 2007 and in footnotes 1 and 12 to Pinnacle’s audited consolidated financial statements for the fiscal year ended December 31, 2003 included in Pinnacle’s Annual Report onForm 10-K filed on February 20, 2004. There were no forfeited stock option grants for the named executive officers in 2006, however, 14,836 previously granted stock option awards were forfeited by employees of Pinnacle during 2006. |
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(3) | Non-Equity Incentive Plan Compensation — Reflects compensation attributable to Pinnacle’s 2006 Annual Cash Incentive Plan in which all non-commissioned based associates participate. Actual and target payouts are expressed as a percentage of base salary. Payout of incentive compensation occurs upon achievement of certain soundness and performance thresholds as determined by the Committee. Subject to the plan’s provisions, payout for 2006 was at 120% of target for all associates as well as each named executive officer. |
Turner | McCabe | Queener | Carpenter | McMahan | ||||||||||||||||
2006% Target | 50 | % | 50 | % | 40 | % | 40 | % | 30 | % | ||||||||||
2006% Payment | 60 | % | 60 | % | 48 | % | 48 | % | 36 | % | ||||||||||
2006 Payment | $ | 246,000 | $ | 233,700 | $ | 112,320 | $ | 84,000 | $ | 63,000 |
(4) | Other Compensation— Pinnacle provides the named executive officers with other forms of compensation. The following is a listing of various types of other compensation that Pinnacle has not used in the past but may consider in the future to award its executives. We believe that including a listing of forms of compensation that we currently do not use is beneficial to investors as they compare our compensation elements to those of other organizations. |
Turner | McCabe | Queener | Carpenter | McMahan | ||||||||||||||||
Stock appreciation rights granted | None | None | None | None | None | |||||||||||||||
Stock performance units granted | None | None | None | None | None | |||||||||||||||
Supplemental retirement plans | NA | NA | NA | NA | NA | |||||||||||||||
Pension plan | NA | NA | NA | NA | NA | |||||||||||||||
Deferred compensation | NA | NA | NA | NA | NA | |||||||||||||||
Board fees | No | No | NA | NA | NA |
Turner | McCabe | Queener | Carpenter | McMahan | ||||||||||||||||
401k match | $ | 16,927 | $ | 16,109 | $ | 9,888 | $ | 7,000 | $ | 7,000 | ||||||||||
Long term disability policy | $ | 5,175 | $ | 6,309 | $ | 2,993 | $ | 1,670 | $ | 994 |
Turner | McCabe | Queener | Carpenter | McMahan | ||||||||||||||||
Company provided vehicles | NA | NA | NA | NA | NA | |||||||||||||||
Automobile allowance | $ | 13,200/year | $ | 13,200/year | $ | 13,200/year | No | No | ||||||||||||
Parking allowances | No | No | No | No | No | |||||||||||||||
Personal tax return fees paid | $ | 750 | $ | 2,400 | $ | — | No | No | ||||||||||||
Health club membership | No | No | No | No | No | |||||||||||||||
Country club membership | No | No | No | No | No | |||||||||||||||
Corporate aircraft | NA | NA | NA | NA | NA |
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Estimated Future Payouts Under | Estimated Future Payouts Under | |||||||||||||||||||||||||||||||||||||||||||
Non-Equity Incentive Plan | Equity Incentive Plan | |||||||||||||||||||||||||||||||||||||||||||
Awards (1) | Awards (2) | All Other | ||||||||||||||||||||||||||||||||||||||||||
All Other | Stock | |||||||||||||||||||||||||||||||||||||||||||
Stock | Awards: | Exercise | Grant | |||||||||||||||||||||||||||||||||||||||||
Awards: | Number of | or Base | Date Fair | |||||||||||||||||||||||||||||||||||||||||
Number of | Securities | Price of | Value of | |||||||||||||||||||||||||||||||||||||||||
Shares of | Underlying | Option | Stock and | |||||||||||||||||||||||||||||||||||||||||
Grant | Stock or | Options | Awards | Option | ||||||||||||||||||||||||||||||||||||||||
Name and Principal Position | Date | Threshold | Target | Maximum | Threshold | Target | Maximum | Units (#) | (#) | ($/share) | Awards | |||||||||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) | |||||||||||||||||||||||||||||||||
M. Terry Turner | 3/17/2006 | — | — | — | — | — | — | — | 23,866 | $ | 27 | $ | 230,784 | |||||||||||||||||||||||||||||||
President and Chief | 8/15/2006 | — | — | — | 1,068 | 3,204 | 3,204 | — | — | — | $ | 112,000 | ||||||||||||||||||||||||||||||||
Executive Officer | N/A | $ | 0.00 | $ | 532,000 | $ | 1,064,000 | — | — | — | — | — | — | N/A | ||||||||||||||||||||||||||||||
Robert A. McCabe, Jr. | 3/17/2006 | — | — | — | — | — | — | — | 22,673 | $ | 27 | $ | 219,248 | |||||||||||||||||||||||||||||||
Chairman of the Board | 8/15/2006 | — | — | — | 982 | 2,946 | 2,946 | — | — | — | $ | 103,000 | ||||||||||||||||||||||||||||||||
N/A | $ | 0.00 | $ | 505,400 | $ | 1,010,800 | — | — | — | — | — | — | N/A | |||||||||||||||||||||||||||||||
Hugh M. Queener | 3/17/2006 | — | — | — | — | — | — | — | 11,933 | $ | 27 | $ | 115,392 | |||||||||||||||||||||||||||||||
Chief Administrative | 8/15/2006 | — | — | — | 620 | 1,859 | 1,859 | — | — | — | $ | 65,000 | ||||||||||||||||||||||||||||||||
Officer | N/A | $ | 0.00 | $ | 238,000 | $ | 476,000 | — | — | — | — | — | — | N/A | ||||||||||||||||||||||||||||||
Harold R. Carpenter | 3/17/2006 | — | — | — | — | — | — | — | 9,189 | $ | 27 | $ | 88,858 | |||||||||||||||||||||||||||||||
Chief Financial | 8/15/2006 | — | — | — | 429 | 1,287 | 1,287 | — | — | — | $ | 45,000 | ||||||||||||||||||||||||||||||||
Officer | N/A | $ | 0.00 | $ | 192,500 | $ | 385,000 | — | — | — | — | — | — | N/A | ||||||||||||||||||||||||||||||
Charles B. McMahan | 3/17/2006 | — | — | — | — | — | — | — | 8,353 | $ | 27 | $ | 80,774 | |||||||||||||||||||||||||||||||
Chief Credit Officer | 8/15/2006 | — | — | — | 381 | 1,144 | 1,144 | — | — | — | $ | 40,000 | ||||||||||||||||||||||||||||||||
N/A | $ | 0.00 | $ | 130,200 | $ | 260,400 | — | — | — | — | — | — | N/A |
(1) | The amounts shown in column (c) reflect the minimum payment level under Pinnacle’s 2007 Annual Cash Incentive Plan which is 0% of the target amount shown in column (d). The amount shown in column (e) is 200% of such target amount. These amounts are based on the individual’s current salary and position. | |
(2) | Reflects an award of restricted shares under the Equity Incentive Plan. The amounts shown in column (g) reflect the restricted share award targeted number of shares that can be earned over a three-year vesting period. This is also the maximum number of shares that can be earned by the named executive officer over the three-year period thus it is the same number in column (h). All awards in column (g) and (h) could be forfeited should Pinnacle not meet the performance and soundness targets for these awards. The restrictions on these shares lapse in 33% annual increments upon the achievement of certain soundness and performance thresholds for the fiscal years ending December 31, 2006, 2007 and 2008. The named executive officer is entitled to vote these shares and receive any dividends payable with respect thereto, if any, prior to the lapsing of the forfeiture restrictions thereon. Based on achievement of the soundness and performance thresholds for the fiscal year ended December 31, 2006, the restrictions for the 2006 Award did lapse as did similar restrictions on restricted share awards from 2004 and 2005 awards. As a result, the threshold amounts above in column (f) reflect the vesting of the 2006 traunche. The following is the number of shares each named executive officer was awarded in 2006. |
Turner | McCabe | Queener | Carpenter | McMahan | ||||||||||||||||
No. of awards | 3,204 | 2,946 | 1,859 | 1,287 | 1,144 | |||||||||||||||
Grant date fair value of each award | $ | 34.96 | $ | 34.96 | $ | 34.96 | $ | 34.96 | $ | 34.96 | ||||||||||
Aggregate value of award | $ | 112,000 | $ | 103,000 | $ | 65,000 | $ | 45,000 | $ | 40,000 |
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(3) | The amounts shown in column (j) reflect the number of stock options granted pursuant to the Equity Incentive Plan during 2006. All options are granted at an exercise price that equals the closing price of Pinnacle’s common stock at the date of grant. All of the reflected awards expire ten years from date of issuance and vest in 20% increments on the anniversary date of the grant. The awards prior to 2006 were issued as incentive stock options while the 2006 awards are classified as nonstatutory stock options. All awards were issued pursuant to the terms of the 2000 Plan or the Equity Incentive Plan. The amount in column (l) reflects the dollar amount to be recognized for financial statement purposes in accordance with SFAS 123(R) over the vesting period. Assumptions used in the calculations of these amounts are included in footnote 14 to Pinnacle’s audited financial statements for the fiscal year ended December 31, 2006 included in Pinnacle’s Annual Report ofForm 10-K filed with the SEC on February 28, 2007. The following are the number of options to acquire common stock granted to each named executive officer during 2006: |
Turner | McCabe | Queener | Carpenter | McMahan | ||||||||||||||||
Grant date | Mar. 15, 2006 | Mar. 15, 2006 | Mar. 15, 2006 | Mar. 15, 2006 | Mar. 15, 2006 | |||||||||||||||
No. of option awards | 23,866 | 22,673 | 11,933 | 9,189 | 8,353 | |||||||||||||||
Exercise price | $ | 27.11 | $ | 27.11 | $ | 27.11 | $ | 27.11 | $ | 27.11 | ||||||||||
Grant date fair value of each option award | $ | 9.67 | $ | 9.67 | $ | 9.67 | $ | 9.67 | $ | 9.67 | ||||||||||
Aggregate value of award | $ | 230,784 | $ | 219,248 | $ | 115,392 | $ | 88,858 | $ | 80,774 |
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Stock Awards(2) | ||||||||||||||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||||||||
Option Awards(1) | Incentive | |||||||||||||||||||||||||||||||||||
Equity | Equity | Plan Awards: | ||||||||||||||||||||||||||||||||||
Incentive | Incentive | Market or | ||||||||||||||||||||||||||||||||||
Plan | Plan | Payout | ||||||||||||||||||||||||||||||||||
Awards: | Market | Awards: | Value of | |||||||||||||||||||||||||||||||||
Number of | Number of | Number of | Number of | Value of | Number of | Unearned | ||||||||||||||||||||||||||||||
Securities | Securities | Securities | Shares or Units | Shares | Unearned | Shares, Units or | ||||||||||||||||||||||||||||||
Underlying | Underlying | Underlying | of Stock | or Units | Shares, Units or | Other Rights | ||||||||||||||||||||||||||||||
Unexercised | Unexercised | Unexercised | Option | That | of Stock That | Other Rights | That | |||||||||||||||||||||||||||||
Options (#) | Options (#) | Unearned | Exercise | Option | Have Not | Have Not | That Have Not | Have Not | ||||||||||||||||||||||||||||
Name | Exercisable | Unexercisable | Options (#) | Price ($) | Expiration Date | Vested (#) | Vested ($) | Vested (#) | Vested (3) (#) | |||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | |||||||||||||||||||||||||||
M. Terry Turner | — | 23,866 | — | $ | 27.11 | 3/17/2016 | — | — | 3,332 | $ | 110,557 | |||||||||||||||||||||||||
4,422 | 17,689 | — | $ | 23.88 | 1/19/2015 | — | — | — | — | |||||||||||||||||||||||||||
6,056 | 9,084 | — | $ | 14.78 | 4/26/2014 | — | — | — | — | |||||||||||||||||||||||||||
15,000 | 10,000 | — | $ | 6.65 | 2/26/2013 | — | — | — | — | |||||||||||||||||||||||||||
36,000 | 9,000 | — | $ | 4.96 | 2/1/2012 | — | — | — | — | |||||||||||||||||||||||||||
15,000 | — | — | $ | 3.82 | 3/1/2011 | — | — | — | — | |||||||||||||||||||||||||||
90,000 | — | — | $ | 5.00 | 12/19/2010 | — | — | — | — | |||||||||||||||||||||||||||
Robert A. McCabe, Jr. | — | 22,673 | — | $ | 27.11 | 3/17/2016 | — | — | 3,100 | $ | 102,851 | |||||||||||||||||||||||||
3,943 | 15,772 | — | $ | 23.88 | 1/19/2015 | — | — | — | — | |||||||||||||||||||||||||||
5,400 | 8,100 | — | $ | 14.78 | 4/26/2014 | — | — | — | — | |||||||||||||||||||||||||||
13,200 | 8,800 | — | $ | 6.65 | 2/26/2013 | — | — | — | — | |||||||||||||||||||||||||||
36,000 | 9,000 | — | $ | 4.96 | 2/1/2012 | — | — | — | — | |||||||||||||||||||||||||||
15,000 | — | — | $ | 3.82 | 3/1/2011 | — | — | — | — | |||||||||||||||||||||||||||
76,700 | — | — | $ | 5.00 | 12/19/2010 | — | — | — | — | |||||||||||||||||||||||||||
Hugh M. Queener | — | 11,933 | — | $ | 27.11 | 3/17/2016 | — | — | 2,025 | $ | 67,189 | |||||||||||||||||||||||||
3,461 | 13,845 | — | $ | 23.88 | 1/19/2015 | — | — | — | — | |||||||||||||||||||||||||||
4,740 | 7,110 | — | $ | 14.78 | 4/26/2014 | — | — | — | — | |||||||||||||||||||||||||||
11,400 | 7,600 | — | $ | 6.65 | 2/26/2013 | — | — | — | — | |||||||||||||||||||||||||||
21,600 | 5,400 | — | $ | 4.96 | 2/1/2012 | — | — | — | — | |||||||||||||||||||||||||||
9,000 | — | — | $ | 3.82 | 3/1/2011 | — | — | — | — | |||||||||||||||||||||||||||
60,000 | — | — | $ | 5.00 | 12/19/2010 | — | — | — | — | |||||||||||||||||||||||||||
Harold R. Carpenter | — | 9,189 | — | $ | 27.11 | 3/17/2016 | — | — | 1,3 90 | $ | 46,130 | |||||||||||||||||||||||||
1,080 | 4,320 | — | $ | 23.88 | 1/19/2015 | — | — | — | — | |||||||||||||||||||||||||||
2,200 | 3,300 | — | $ | 14.78 | 1/12/2014 | — | — | — | — | |||||||||||||||||||||||||||
9,600 | 2,400 | — | $ | 4.96 | 2/1/2012 | — | — | — | — | |||||||||||||||||||||||||||
6,000 | — | — | $ | 3.82 | 3/1/2011 | — | — | — | — | |||||||||||||||||||||||||||
4,000 | — | — | $ | 5.00 | 12/19/2010 | — | — | 1,096 | — | |||||||||||||||||||||||||||
Charles B, McMahan | — | 8,353 | — | $ | 27.11 | 3/17/2016 | — | — | — | $ | 36,381 | |||||||||||||||||||||||||
1,600 | 6,400 | — | $ | 23.88 | 1/19/2015 | — | — | — | — | |||||||||||||||||||||||||||
2,460 | 3,690 | — | $ | 14.78 | 1/12/2014 | — | — | — | — | |||||||||||||||||||||||||||
4,000 | 1,000 | — | $ | 6.46 | 12/31/2012 | — | — | — | — | |||||||||||||||||||||||||||
(1) | All option awards vest in 20% increments annually over the10-year option term. | |
(2) | Unearned restricted share awards as of December 31, 2006 are for those shares which have vesting criteria tied to 2007 and 2008 performance and soundness targets. The 2006 restricted share award is 66.7% unearned at December 31, 2006 as 33.3% of the award has restrictions that tied to 2007 performance and soundness targets and 33.3% that are tied to 2008 targets. The 2005 restricted share award is 33.3% unearned because 33.3% of the award is associated with 2007 performance and soundness targets. |
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(3) | Market value is determined by multiplying the closing market price of Pinnacle’s common stock on December 29, 2006 by the number of shares. |
Option Awards | Stock Awards | |||||||||||||||
Number of | Number of | |||||||||||||||
Shares | Value | Shares | Value | |||||||||||||
Acquired on | Realized on | Acquired on | Realized on | |||||||||||||
Name | Exercise (#) | Exercise ($) | Vesting (#) | Vesting ($) | ||||||||||||
(a) | (b) | (c) | (d) | (e) | ||||||||||||
M. Terry Turner | — | — | 2,484 | $ | 82,433 | |||||||||||
Robert A. McCabe, Jr. | 13,300 | $ | 385,834 | 2,314 | $ | 76,789 | ||||||||||
Hugh M. Queener | — | — | 1,580 | $ | 52,412 | |||||||||||
Harold R. Carpenter | — | — | 1,063 | $ | 35,268 | |||||||||||
Charles B. McMahan | — | — | 828 | $ | 27,464 |
Payment Obligation Terminating Event | In relation to Base Salary | |
Mr. Turner becomes permanently disabled | Maximum of six months | |
Pinnacle terminates Mr. Turner’s employment without cause, as defined in the agreement | End of agreement’s term, but not more than three years | |
Mr. Turner terminates his employment for cause, as defined | Maximum of twelve months | |
Mr. Turner terminates his employment within twelve months after a change of control, as defined | Three times base salary and target bonus, plus benefits |
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(a) | A “change of control” generally means the acquisition by a person or group of 40% or more of the voting securities of Pinnacle or Pinnacle National Bank; a change in the majority of the board over a twelve-month period (unless the new directors were approved by a two-thirds majority of prior directors); a merger, consolidation or reorganization in which Pinnacle’s shareholders before the merger own 50% or less of the voting power after the merger; or the sale, transfer or assignment of all or substantially all of the assets of Pinnacle and its subsidiaries to any third party. |
(b) | Termination for “cause” generally means that immediately following the change of control, the executive no longer reports to the same supervisor he reported to prior to the change of control, a change in supervisory authority such that the associates that reported to the executive prior to the change of control no longer report to the executive, a material modification in the executive’s job title or scope of responsibility, a change in office location of more than 25 miles from the executive’s current office location or a material change in salary, bonus opportunity or other benefit. |
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Pinnacle | ||||||||||||||||||||||||
Terminates | ||||||||||||||||||||||||
Employee | ||||||||||||||||||||||||
for Cause | ||||||||||||||||||||||||
or Employee | Employee | |||||||||||||||||||||||
Terminates | Terminates | |||||||||||||||||||||||
Pinnacle | Employment | for Cause | ||||||||||||||||||||||
Terminates | Employee | Without | Within | |||||||||||||||||||||
Employment | Terminates | Cause or | Twelve Months | |||||||||||||||||||||
Employee | Employee | Without | Employment | Employee | of a Change | |||||||||||||||||||
Disability(4) | Death(4) | Cause | for Cause | Retires | of Control | |||||||||||||||||||
M. Terry Turner | ||||||||||||||||||||||||
2006 base salary | $ | 410,000 | $ | — | $ | 410,000 | $ | 410,000 | $ | — | $ | 410,000 | ||||||||||||
2006 cash incentive payment | $ | 205,000 | $ | — | $ | 205,000 | $ | 205,000 | $ | — | $ | 205,000 | ||||||||||||
Total | $ | 615,000 | $ | — | $ | 615,000 | $ | 615,000 | $ | — | $ | 615,000 | ||||||||||||
Multiplier (in terms of years) | x.5 | x 0 | x 3 | x 1 | x 0 | x 3 | ||||||||||||||||||
Aggregate cash payment | $ | 307,500 | $ | — | $ | 1,845,000 | $ | 615,000 | $ | — | $ | 1,845,000 | ||||||||||||
Health insurance — $800 per month | $ | — | $ | — | $ | 9,600 | $ | 2,400 | $ | — | $ | 28,800 | ||||||||||||
Tax assistance | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 7,500 | ||||||||||||
Intrinsic value of unvested stock options that immediately vest(1) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,116,170 | ||||||||||||
Value of unearned restricted shares that immediately vest | $ | 110,557 | $ | 110,557 | $ | — | $ | — | $ | — | $ | 110,557 | ||||||||||||
Payment for excise tax and gross up(2) | $ | — | $ | — | $ | 674,707 | $ | — | $ | — | $ | 823,564 | ||||||||||||
$ | 418,057 | $ | 110,557 | $ | 2,529,307 | $ | 617,400 | $ | — | $ | 3,931,591 | |||||||||||||
Robert A. McCabe, Jr. | ||||||||||||||||||||||||
2006 base salary | $ | 389,500 | $ | — | $ | 389,500 | $ | 389,500 | $ | — | $ | 389,500 | ||||||||||||
2006 cash incentive payment | $ | 194,750 | $ | — | $ | 194,750 | $ | 194,750 | $ | — | $ | 194,750 | ||||||||||||
Total | $ | 584,250 | $ | — | $ | 584,250 | $ | 584,250 | $ | $ | 584,250 | |||||||||||||
Multiplier (in terms of years) | x.5 | x 0 | x 3 | x 1 | x 0 | x 3 | ||||||||||||||||||
Aggregate cash payment | $ | 292,125 | $ | — | $ | 1,752,750 | $ | 584,250 | $ | — | $ | 1,752,750 | ||||||||||||
Health insurance — $800 per month | $ | — | $ | — | $ | 9,600 | $ | 2,400 | $ | — | $ | 28,800 | ||||||||||||
Tax assistance | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 7,500 | ||||||||||||
Intrinsic value of unvested stock options that immediately vest(1) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,032,609 | ||||||||||||
Value of unearned restricted shares that immediately vest | $ | 102,851 | $ | 102,851 | $ | — | $ | — | $ | — | $ | 102,851 | ||||||||||||
Payment for excise tax and gross up(2) | $ | — | $ | — | $ | 635,760 | $ | — | $ | — | $ | 772,897 | ||||||||||||
$ | 394,976 | $ | 102,851 | $ | 2,398,110 | $ | 586,650 | $ | — | $ | 3,697,407 | |||||||||||||
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Pinnacle | ||||||||||||||||||||||||
Terminates | ||||||||||||||||||||||||
Employee | ||||||||||||||||||||||||
for Cause | ||||||||||||||||||||||||
or Employee | Employee | |||||||||||||||||||||||
Terminates | Terminates | |||||||||||||||||||||||
Pinnacle | Employment | for Cause | ||||||||||||||||||||||
Terminates | Employee | Without | Within | |||||||||||||||||||||
Employment | Terminates | Cause or | Twelve Months | |||||||||||||||||||||
Employee | Employee | Without | Employment | Employee | of a Change | |||||||||||||||||||
Disability(4) | Death(4) | Cause | for Cause | Retires | of Control | |||||||||||||||||||
Hugh M. Queener | ||||||||||||||||||||||||
2006 base salary | $ | 234,000 | $ | — | $ | 234,000 | $ | 234,000 | $ | — | $ | 234,000 | ||||||||||||
2006 cash incentive payment | $ | 93,600 | $ | — | $ | 93,600 | $ | 93,600 | $ | — | $ | 93,600 | ||||||||||||
Total | $ | 327,600 | $ | — | $ | 327,600 | $ | 327,600 | $ | — | $ | 327,600 | ||||||||||||
Multiplier (in terms of years) | x.5 | x 0 | x 3 | x 1 | x 0 | x 3 | ||||||||||||||||||
Aggregate cash payment | $ | 163,800 | $ | — | $ | 982,800 | $ | 327,600 | $ | — | $ | 982,800 | ||||||||||||
Health insurance — $800 per month | $ | — | $ | — | $ | 9,600 | $ | 2,400 | $ | — | $ | 28,800 | ||||||||||||
Tax assistance | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 7,500 | ||||||||||||
Intrinsic value of unvested stock options that immediately vest(1) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 758,479 | ||||||||||||
Value of unearned restricted shares that immediately vest | $ | 67,189 | $ | 67,189 | $ | — | $ | — | $ | — | $ | 67,189 | ||||||||||||
Payment for excise tax and gross up(2) | $ | — | $ | — | $ | 336,086 | $ | — | $ | — | $ | 431,394 | ||||||||||||
$ | 230,989 | $ | 67,189 | $ | 1,328,486 | $ | 330,000 | $ | — | $ | 2,276,162 | |||||||||||||
Harold R. Carpenter | ||||||||||||||||||||||||
2006 base salary | $ | 175,000 | $ | — | $ | 175,000 | $ | 175,000 | $ | — | $ | 175,000 | ||||||||||||
2006 cash incentive payment | $ | 70,000 | $ | — | $ | 70,000 | $ | 70,000 | $ | — | $ | 70,000 | ||||||||||||
Total | $ | 245,000 | $ | — | $ | 245,000 | $ | 245,000 | $ | — | $ | 245,00 | ||||||||||||
Multiplier (in terms of years) | x.5 | x 0 | x 3 | x 1 | x 0 | x 3 | ||||||||||||||||||
Aggregate cash payment | $ | 112,500 | $ | — | $ | 735,000 | $ | 245,000 | $ | — | $ | 735,000 | ||||||||||||
Health insurance — $800 per month | $ | — | $ | — | $ | 9,600 | $ | 2,400 | $ | — | $ | 28,800 | ||||||||||||
Tax assistance | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 7,500 | ||||||||||||
Intrinsic value of unvested stock options that immediately vest(1) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 272,074 | ||||||||||||
Value of unearned restricted shares that immediately vest | $ | 46,130 | $ | 46,130 | $ | — | $ | — | $ | — | $ | 46,130 | ||||||||||||
Payment for excise tax and gross up(2) | $ | — | $ | — | $ | 258,877 | $ | — | $ | — | $ | 307,914 | ||||||||||||
$ | 168,630 | $ | 46,130 | $ | 1,003,477 | $ | 247,400 | $ | — | $ | 1,397,417 | |||||||||||||
Charles B. McMahon(3) | ||||||||||||||||||||||||
2006 base salary | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
2006 cash incentive payment | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Total | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Multiplier (in terms of years) | x.5 | x 0 | x 3 | x 1 | x 0 | x 3 | ||||||||||||||||||
Aggregate cash payment | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Health insurance — $800 per month | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Tax assistance | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Intrinsic value of unvested stock options that immediately vest(1) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 255,178 | ||||||||||||
Value of unearned restricted shares that immediately vest | $ | 36,381 | $ | 36,381 | $ | — | $ | — | $ | — | $ | 36,381 | ||||||||||||
Payment for excise tax and gross up(2) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
$ | 36,381 | $ | 36,381 | $ | — | $ | — | $ | — | $ | 291,559 | |||||||||||||
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(1) | Vesting of stock option awards pursuant to a change of control may only occur upon the consent of the Committee. | |
(2) | In determining the anticipated payment due the executive for excise tax and gross up pursuant to a termination by Pinnacle of the employee without cause or a termination within twelve months following a change of control by the employee for cause, Pinnacle has included in the calculation the anticipated value of the immediate vesting of previously unvested restricted share awards and stock option grants in addition to the cash payments and healthcare benefits noted above. As a result, Pinnacle has computed the 20% excise tax obligation owed by Messrs. Turner, McCabe, Queener and Carpenter in the event Pinnacle terminates their employment without cause to be $304,000, $286,000, $151,000 and $116,000, respectively and in the event of a change of control to be $371,000, $347,000, $194,000 and $139,000, respectively. As a result, Pinnacle has assumed a personal income tax rate of 45% for each executive and has included the additional gross up amount in the table above. Pinnacle has not anticipated such excise tax or gross up payments for other terminating events as payments for such matters would be extended over a period of time such that the executive’s compensation would likely not be subject to section 280(g) of the Code. | |
(3) | Mr. McMahan does not have an employment agreement with Pinnacle. | |
(4) | The above amounts do not include benefits owed the named executive officers or their estates pursuant to Pinnacle’s broad based group disability insurance policies or group life insurance policy. These benefits would be paid pursuant to these group polices which are provided to all employees of Pinnacle. Additionally, and also not included in the above amounts, the named executive officers and certain other Leadership Team members also participate in a supplemental group disability policy which provides incremental coverage (i.e., “gap coverage”) for these individuals over the broad-based group disability coverage maximums. |
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• | Annual Report onForm 10-K for the fiscal year ended December 31, 2006; | |
• | Quarterly Reports onForm 10-Q for the quarters ended March 31, 2007 and June 30, 2007; |
• | Current Reports onForm 8-K filed on January 8, 2007, January 19, 2007, January 25, 2007, February 5, 2007, April 9, 2007, April 17, 2007, July 18, 2007, August 15, 2007 and September 21, 2007; and |
• | The description of Pinnacle’s common stock contained in its Registration Statement onForm 8-A/12G, filed with the SEC on August 3, 2000 (FileNo. 000-31225) |
• | Annual Report onForm 10-K for the fiscal year ended December 31, 2006; | |
• | Quarterly Reports onForm 10-Q for the quarters ended March 31, 2007 and June 30, 2007; | |
• | Current Reports onForm 8-K filed on February 12, 2007, February 21, 2007, April 24, 2007, June 20, 2007, July 26, 2007 and August 15, 2007; and |
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Table of Contents
Page | ||||||||
ARTICLE I. THE MERGER | A-1 | |||||||
1.1 | The Merger | A-1 | ||||||
1.2 | Effective Time | A-1 | ||||||
1.3 | Effects of the Merger | A-1 | ||||||
1.4 | Conversion of Target Common Stock | A-2 | ||||||
1.5 | Acquiror Capital Stock | A-3 | ||||||
1.6 | Options and Other Stock-Based Awards | A-3 | ||||||
1.7 | Charter | A-3 | ||||||
1.8 | Bylaws | A-4 | ||||||
1.9 | Tax Consequences | A-4 | ||||||
1.10 | Certain Post-Closing Matters | A-4 | ||||||
1.11 | Headquarters of Surviving Corporation | A-4 | ||||||
ARTICLE II. DELIVERY OF MERGER CONSIDERATION | A-4 | |||||||
2.1 | Deposit of Merger Consideration | A-4 | ||||||
2.2 | Delivery of Merger Consideration | A-4 | ||||||
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF ACQUIROR | A-6 | |||||||
3.1 | Corporate Organization | A-6 | ||||||
3.2 | Capitalization | A-7 | ||||||
3.3 | Authority; No Violation | A-8 | ||||||
3.4 | Consents and Approvals | A-8 | ||||||
3.5 | Reports | A-9 | ||||||
3.6 | Financial Statements | A-9 | ||||||
3.7 | Broker’s Fees | A-10 | ||||||
3.8 | Absence of Certain Changes or Events | A-10 | ||||||
3.9 | Legal Proceedings | A-10 | ||||||
3.10 | Taxes and Tax Returns | A-10 | ||||||
3.11 | Employees | A-11 | ||||||
3.12 | SEC Reports | A-12 | ||||||
3.13 | Compliance with Applicable Law | A-12 | ||||||
3.14 | Certain Contracts | A-13 | ||||||
3.15 | Agreements with Regulatory Agencies | A-13 | ||||||
3.16 | Interest Rate Risk Management Instruments | A-13 | ||||||
3.17 | Undisclosed Liabilities | A-14 | ||||||
3.18 | Insurance | A-14 | ||||||
3.19 | Environmental Liability | A-14 | ||||||
3.20 | State Takeover Laws | A-14 | ||||||
3.21 | Reorganization | A-14 | ||||||
3.22 | Information Supplied | A-14 | ||||||
3.23 | Internal Controls | A-15 | ||||||
3.24 | Opinion of Acquiror Financial Advisor | A-15 |
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ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF Target | A-15 | |||||||
4.1 | Corporate Organization | A-15 | ||||||
4.2 | Capitalization | A-16 | ||||||
4.3 | Authority; No Violation | A-17 | ||||||
4.4 | Consents and Approvals | A-17 | ||||||
4.5 | Reports | A-18 | ||||||
4.6 | Financial Statements | A-18 | ||||||
4.7 | Broker’s Fees | A-18 | ||||||
4.8 | Absence of Certain Changes or Events | A-18 | ||||||
4.9 | Legal Proceedings | A-18 | ||||||
4.10 | Taxes and Tax Returns | A-19 | ||||||
4.11 | Employees | A-19 | ||||||
4.12 | SEC Reports | A-21 | ||||||
4.13 | Compliance with Applicable Law | A-21 | ||||||
4.14 | Certain Contracts | A-21 | ||||||
4.15 | Agreements with Regulatory Agencies | A-22 | ||||||
4.16 | Interest Rate Risk Management Instruments | A-22 | ||||||
4.17 | Undisclosed Liabilities | A-22 | ||||||
4.18 | Insurance | A-22 | ||||||
4.19 | Environmental Liability | A-23 | ||||||
4.20 | State Takeover Laws | A-23 | ||||||
4.21 | Reorganization | A-23 | ||||||
4.22 | Information Supplied | A-23 | ||||||
4.23 | Internal Controls | A-23 | ||||||
4.24 | Opinion of Target Financial Advisor | A-24 | ||||||
ARTICLE V. COVENANTS RELATING TO CONDUCT OF BUSINESS | A-24 | |||||||
5.1 | Conduct of Businesses Prior to the Effective Time | A-24 | ||||||
5.2 | Target Forbearances | A-24 | ||||||
5.3 | Acquiror Forbearances | A-26 | ||||||
ARTICLE VI. ADDITIONAL AGREEMENTS | A-27 | |||||||
6.1 | Regulatory Matters | A-27 | ||||||
6.2 | Access to Information | A-28 | ||||||
6.3 | Shareholders’ Approvals | A-28 | ||||||
6.4 | Legal Conditions to Merger | A-29 | ||||||
6.5 | Affiliates | A-29 | ||||||
6.6 | Stock Quotation or Listing | A-29 | ||||||
6.7 | Employee Benefit Plans; Existing Agreements | A-29 | ||||||
6.8 | Indemnification; Directors’ and Officers’ Insurance | A-30 | ||||||
6.9 | Additional Agreements | A-30 | ||||||
6.10 | Advice of Changes | A-31 | ||||||
6.11 | Exemption from Liability Under Section 16(b) | A-31 | ||||||
6.12 | Acquisition Proposals | A-31 | ||||||
6.13 | Bank Merger | A-33 |
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ARTICLE VII. CONDITIONS PRECEDENT | A-33 | |||||||
7.1 | Conditions to Each Party’s Obligation To Effect the Merger | A-33 | ||||||
7.2 | Conditions to Obligations of Target | A-34 | ||||||
7.3 | Conditions to Obligations of Acquiror | A-34 | ||||||
ARTICLE VIII. TERMINATION AND AMENDMENT | A-34 | |||||||
8.1 | Termination | A-34 | ||||||
8.2 | Effect of Termination | A-36 | ||||||
8.3 | Termination Fee | A-36 | ||||||
8.4 | Amendment | A-37 | ||||||
8.5 | Extension; Waiver | A-37 | ||||||
ARTICLE IX. GENERAL PROVISIONS | A-37 | |||||||
9.1 | Closing | A-37 | ||||||
9.2 | Standard | A-37 | ||||||
9.3 | Nonsurvival of Representations, Warranties and Agreements | A-38 | ||||||
9.4 | Expenses | A-38 | ||||||
9.5 | Notices | A-38 | ||||||
9.6 | Interpretation | A-38 | ||||||
9.7 | Counterparts | A-38 | ||||||
9.8 | Entire Agreement | A-38 | ||||||
9.9 | Governing Law | A-38 | ||||||
9.10 | Publicity | A-39 | ||||||
9.11 | Assignment; Third Party Beneficiaries | A-39 | ||||||
9.12 | Specific Performance | A-39 |
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(a) | if to Target, to: | with a copy to: | ||
Mid-America Bancshares, Inc. 7651 Highway 70 South Nashville, TN 37221 Attn: Gary L. Scott Facsimile: (615) 292-0337 | Daniel W. Small One Burton Hills Boulevard Suite 330 Nashville, TN 37215 Facsimile:(615) 252-6001 | |||
(b) | if to Acquiror, to: | with a copy to: | ||
Pinnacle Financial Partners, Inc. 211 Commerce Street, Suite 300 Nashville, TN 37201 Attn: M. Terry Turner Facsimile: (615) 744-3770 | Bob F. Thompson Bass, Berry & Sims PLC 315 Deaderick Street, Suite 2700 Nashville, TN 37238 Facsimile: (615) 742-6262 |
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ACQUIROR.: | ||
Attest: | Pinnacle Financial Partners, Inc. | |
/s/ Hugh M. Queener | By: /s/ M. Terry Turner | |
Secretary, Hugh M. Queener | Name: M. Terry Turner | |
Title: President and Chief Executive Officer | ||
TARGET: | ||
Attest: | Mid-America Bancshares, Inc. | |
/s/ James S. Short | By: /s/ Gary L. Scott | |
Secretary, James S. Short | Name: Gary L. Scott | |
Title: Chairman and Chief Executive Officer |
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DISSENTERS’ RIGHTS
Part 1 — Right to Dissent and Obtain Payment for Shares | ||
48-23-101. | Chapter definitions. | |
48-23-102. | Right to dissent. | |
48-23-103. | Dissent by nominees and beneficial owners. | |
Part 2 — Procedure for Exercise of Dissenters’ Rights | ||
48-23-201. | Notice of dissenters’ rights. | |
48-23-202. | Notice of intent to demand payment. | |
48-23-203. | Dissenters’ notice. | |
48-23-204. | Duty to demand payment. | |
48-23-205. | Share restrictions. | |
48-23-206. | Payment. | |
48-23-207. | Failure to take action. | |
48-23-208. | After-acquired shares. | |
48-23-209. | Procedure if shareholder dissatisfied with payment or offer. | |
Part 3 — Judicial Appraisal of Shares | ||
48-23-301. | Court action. | |
48-23-302. | Court costs and counsel fees. |
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(ii) | reviewed certain historical publicly available business and financial information concerning Target and Acquiror; |
(iii) | reviewed certain internal financial statements and other financial and operating data concerning Target; |
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(v) | held discussions with members of the senior managements of Target and Acquiror for the purpose of reviewing the future prospects of Target and Acquiror, including financial forecasts related to the respective businesses, earnings, assets, liabilities and the amount and timing of cost savings (the “Synergies”) expected to be achieved as a result of the Merger; |
(vi) | reviewed historical market prices and trading volumes of Acquiror Common Stock; |
(vii) | reviewed the terms of recent merger and acquisition transactions, to the extent publicly available, involving banks, thrifts and bank and thrift holding companies that we considered relevant; |
(viii) | evaluated the pro forma ownership of the Acquiror Common Stock by the shareholders of Target relative to the pro forma contribution of the Target’s assets, liabilities, equity and earnings to the combined company; |
(ix) | analyzed the pro forma impact of the Merger on the combined company’s earnings per share, consolidated capitalization and financial ratios; and |
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2004 EQUITY INCENTIVE PLAN
By: |
Name: |
Title: |
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Item 20. | Indemnification of Directors and Officers. |
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• | a breach of the director’s duty of loyalty to the Registrant 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. |
Item 21. | Exhibits and Financial Statement Schedules |
Item 22. | Undertakings. |
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By: | /s/ M. Terry Turner |
Signature | Title | Date | ||||
* | Chairman of the Board | October 11, 2007 | ||||
/s/ M. Terry Turner | President, Chief Executive Officer and Director (Principal Executive Officer) | October 11, 2007 | ||||
* | Chief Financial Officer (Principal Financial and Accounting Officer) | October 11, 2007 | ||||
* | Director | October 11, 2007 | ||||
* | Director | October 11, 2007 | ||||
* | Director | October 11, 2007 | ||||
* | Director | October 11, 2007 | ||||
* | Director | October 11, 2007 | ||||
* | Director | October 11, 2007 | ||||
* | Director | October 11, 2007 | ||||
* | Director | October 11, 2007 |
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Signature | Title | Date | ||||
* | Director | October 11, 2007 | ||||
* | Director | October 11, 2007 | ||||
* | Director | October 11, 2007 | ||||
*By: | /s/ M. Terry Turner Attorney-in-Fact |
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Exhibit | ||||
No. | Description | |||
2 | .1 | Agreement and Plan of Merger dated as of August 15, 2007 between Pinnacle Financial Partners, Inc. andMid-America Bancshares, Inc. (incorporated herein by reference to Appendix A to the joint proxy statement/prospectus that is Part I of this registration statement) (schedules and exhibits to which been omitted pursuant to Items 601(b)(2) of Regulations S-K) | ||
3 | .1 | Charter of Pinnacle Financial Partners, Inc. as amended (restated for SEC electronic filing purposes only) (incorporated herein by reference to Exhibit 3.1 in the Registrant’s Quarterly Report onForm 10-Q for the quarter ended March 31, 2005) (FileNo. 000-31225) | ||
3 | .2 | Bylaws of Pinnacle Financial Partners, Inc. as amended (restated for SEC electronic filing purposes only) (incorporated herein by reference to Exhibit 3.2 in the Registrant’s Annual Report onForm 10-KSB for the fiscal year ended December 31, 2002) (FileNo. 000-31225) | ||
4 | .1 | Specimen Common Stock Certificate (incorporated herein by reference to exhibit 4.1 in the Registrant’s Registration Statement onForm SB-2, as amended (FileNo. 333-38018)) | ||
4 | .2 | See Exhibits 3.1 and 3.2 for provisions of the Charter and Bylaws defining rights of holders of the Registrant’s Common Stock | ||
5 | .1 | Opinion of Bass, Berry & Sims PLC regarding the validity of the securities being registered* | ||
8 | .1 | Form of opinion of Bass, Berry & Sims PLC to be delivered at closing regarding material federal income tax consequences relating to the merger | ||
10 | .1 | Lease Agreement by and between TMP, Inc. (former name of Pinnacle Financial Partners, Inc.) and Commercial Street Associates dated March 16, 2000 (main office) (incorporated herein by reference to the Registrant’s Registration Statement onForm SB-2, as amended (FileNo. 333-38018)). | ||
10 | .2 | Form of Pinnacle Financial Partners, Inc.’s Organizers’ Warrant Agreement (incorporated herein by reference to the Registrant’s Registration Statement onForm SB-2, as amended (FileNo. 333-38018)) | ||
10 | .3 | Employment Agreement dated as of August 1, 2000 by and between Pinnacle National Bank, Pinnacle Financial Partners, Inc. and Robert A. McCabe, Jr. (incorporated herein by reference to the Registrant’s Registration Statement onForm SB-2, as amended (FileNo. 333-38018))** | ||
10 | .4 | Employment Agreement dated as of April 1, 2000 by and between Pinnacle National Bank, Pinnacle Financial Partners, Inc. and Hugh M. Queener (incorporated herein by reference to the Registrant’s Registration Statement onForm SB-2, as amended (FileNo. 333-38018))** | ||
10 | .5 | Letter Agreement dated March 14, 2000 and accepted March 16, 2000 by and between Pinnacle Financial Corporation (now known as Pinnacle Financial Partners, Inc.) and Atkinson Public Relations (incorporated herein by reference to the Registrant’s Registration Statement onForm SB-2, as amended (FileNo. 333-38018)) | ||
10 | .6 | Employment Agreement dated March 1, 2000 by and between Pinnacle National Bank, Pinnacle Financial Partners, Inc. and M. Terry Turner (incorporated herein by reference to the Registrant’s Registration Statement onForm SB-2, as amended (FileNo. 333-38018))** | ||
10 | .7 | Pinnacle Financial Partners, Inc. 2000 Stock Incentive Plan (incorporated herein by reference to the Registrant’s Registration Statement onForm SB-2, as amended (FileNo. 333-38018))** | ||
10 | .8 | Form of Pinnacle Financial Partners, Inc.’s Stock Option Award (incorporated herein by reference to the Registrant’s Registration Statement onForm SB-2, as amended (FileNo. 333-38018))** | ||
10 | .9 | Agreement for Assignment of Lease by and between Franklin National Bank and TMP, Inc., now known as Pinnacle Financial Partners, Inc., effective July 17, 2000 (incorporated herein by reference to the Registrant’s Registration Statement onForm SB-2, as amended (FileNo. 333-38018)) | ||
10 | .10 | Form of Assignment of Lease and Consent of Landlord by Franklin National Bank, Pinnacle Financial Partners, Inc., formerly TMP, Inc., and Stearns Investments, Jack J. Stearns and Edna Stearns, General Partners (incorporated herein by reference to the Registrant’s Registration Statement onForm SB-2, as amended (FileNo. 333-38018)) | ||
10 | .11 | Green Hills Office Lease (incorporated herein by reference to the Registrant’sForm 10-KSB for the fiscal year ended December 31, 2000 as filed with the SEC on March 29, 2001) |
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Exhibit | ||||
No. | Description | |||
10 | .12 | Form of Restricted Stock Award Agreement (incorporated herein by reference to the Registrant’sForm 10-Q for the quarter ended September 30, 2004)** | ||
10 | .13 | Form of Incentive Stock Option Agreement (incorporated herein by reference to the Registrant’sForm 10-Q for the quarter ended September 30, 2004)** | ||
10 | .14 | Lease Agreement for West End Lease (incorporated herein by reference to the Registrant’sForm 10-K for the fiscal year ended December 31, 2004 as filed with the SEC on February 28, 2005) | ||
10 | .15 | Lease Amendments for Commerce Street location (incorporated herein by reference to the Registrant’sForm 10-K for the fiscal year ended December 31, 2004 as filed with the SEC on February 28, 2005) | ||
10 | .16 | Pinnacle Financial Partners, Inc. 2004 Equity Incentive Plan (incorporated herein by reference to the Registrant’s Current Report onForm 8-K filed on April 19, 2005)** | ||
10 | .17 | 2005 Annual Cash Incentive Plan (incorporated herein by reference to the Registrant’sForm 10-Q for the quarter ended March 31, 2005)** | ||
10 | .18 | Fourth Amendment to Commerce Street Lease (incorporated herein by reference to the Registrant’sForm 10-Q for the quarter ended March 31, 2005) | ||
10 | .19 | Employment Agreement by and between Pinnacle National Bank and Ed C. Loughry, Jr. (incorporated herein by reference to the Registrant’s Registration Statement onForm S-4, as amended (FileNo. 333-129076))** | ||
10 | .20 | Employment Agreement by and between Pinnacle National Bank and William S. Jones (incorporated herein by reference to the Registrant’s Registration Statement onForm S-4, as amended(File No. 333-129076))** | ||
10 | .21 | Consulting Agreement by and between Pinnacle National Bank and Ronnie F. Knight (incorporated herein by reference to the Registrant’s Registration Statement onForm S-4, as amended (FileNo. 333-129076))** | ||
10 | .22 | 2006 Director Compensation Summary (incorporated herein by reference to the Registrant’s Current Report onForm 8-K filed on January 23, 2006)** | ||
10 | .23 | Form of Restricted Stock Agreement for non-employee directors (incorporated herein by reference to the Registrant’s Current Report onForm 8-K filed on January 23, 2006)** | ||
10 | .24 | Form of Non-Qualified Stock Option Agreement (incorporated herein by reference to the Registrant’sForm 10-K for the fiscal year ended December 31, 2005 as filed with the SEC on February 24, 2006)** | ||
10 | .25 | 2006 Annual Cash Incentive Plan (incorporated herein by reference to the Registrant’s Current Report onForm 8-K filed on March 20, 2006)** | ||
10 | .26 | Employment Agreement dated as of March 14, 2006 by and among Pinnacle Financial Partners, Inc., Pinnacle National Bank and Harold R. Carpenter (incorporated herein by reference to the Registrant’s Current Report onForm 8-K filed on March 20, 2006)** | ||
10 | .27 | Calvary Bancorp, Inc. 1999 Stock Option Plan (incorporated herein by reference to the Registrant’sForm 10-Q for the quarter ended on September 30, 2006)** | ||
10 | .28 | Amendment No. 1 to Calvary Bancorp, Inc. 1999 Stock Option Plan (incorporated herein by reference to the Registrant’sForm 10-Q for the quarter ended on September 30, 2006)** | ||
10 | .29 | Form of Non-Qualified Stock Option Agreement (incorporated herein by reference to the Registrant’sForm 10-Q for the quarter ended on September 30, 2006)** | ||
10 | .30 | Amendment No. 1 to Pinnacle Financial Partners, Inc. 2000 Stock Incentive Plan (incorporated herein by reference to the Registrant’sForm 10-Q for the quarter ended on September 30, 2006)** | ||
10 | .31 | Amendment No. 3 to Pinnacle Financial Partners, Inc. 2004 Equity Incentive Plan (incorporated herein by reference to the Registrant’sForm 10-Q for the quarter ended on September 30, 2006)** | ||
10 | .32 | 2007 Named Executive Officer Summary (incorporated herein by reference to the Registrant’sForm 10-K for the fiscal year ended December 31, 2006 as filed with the SEC on February 28, 2007)** |
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Exhibit | ||||
No. | Description | |||
10 | .33 | Form of Restricted Stock Award Agreement (incorporated herein by reference to the Registrant’sForm 10-K for the fiscal year ended December 31, 2006 as filed with the SEC on February 28, 2007)** | ||
21 | .1 | Subsidiaries of the Registrant (incorporated by reference to Exhibit 21 in the Registrant’s Annual Report onForm 10-K filed for the fiscal year ended December 31, 2006) | ||
23 | .1 | Consent of Maggart & Associates, P.C. (forMid-America Bancshares, Inc.) | ||
23 | .2 | Consent of KPMG LLP (for Pinnacle Financial Partners, Inc.) | ||
23 | .3 | Consent of Bass, Berry & Sims PLC (included in the opinions filed as Exhibits 5.1 and 8.1 to this Registration Statement) | ||
24 | .1 | Power of Attorney* | ||
99 | .1 | Form of Pinnacle Financial Partners, Inc. Proxy Card | ||
99 | .2 | Form ofMid-America Bancshares, Inc. Proxy Card | ||
99 | .3 | Opinion of Sandler O’Neill & Partners, L.P. (attached as Appendix C to the joint proxy statement/ prospectus which is part of this registration statement) | ||
99 | .4 | Consent of Sandler O’Neill & Partners, L.P.* | ||
99 | .5 | Opinion of Hovde Financial, Inc. (attached as Appendix D to the joint proxy statement/ prospectus which is part of this registration statement) | ||
99 | .6 | Consent of Hovde Financial, Inc.* |
* | Previously filed. |
** | Management compensatory plan or arrangement |
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