AGREEMENT AND PLAN OF MERGER
by and between
PINNACLE FINANCIAL PARTNERS, INC.
and
CAVALRY BANCORP, INC.
Dated as of September 30, 2005
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TABLE OF CONTENTS
ARTICLE I.
THE MERGER...............................................1
1.1 The
Merger......................................1
1.2 Effective
Time..................................2
1.3 Effects of
the Merger...........................2
1.4 Conversion
of CAVB Common Stock ................2
1.5 PNFP
Capital Stock..............................3
1.6 Options
and Other Stock-Based Awards............3
1.7
Charter.........................................4
1.8
Bylaws..........................................4
1.9 Tax
Consequences................................4
1.10
Certain Post-Closing Matters....................4
1.11
Headquarters of Surviving Corporation...........5
ARTICLE II.
DELIVERY OF MERGER CONSIDERATION.........................5
2.1 Deposit of
Merger Consideration.................5
2.2 Delivery
of Merger Consideration................5
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PNFP...................7
3.1 Corporate
Organization..........................7
3.2
Capitalization..................................8
3.3 Authority;
No Violation........................10
3.4 Consents
and Approvals.........................10
3.5
Reports........................................11
3.6 Financial
Statements...........................12
3.7 Broker's
Fees..................................12
3.8 Absence of
Certain Changes or Events...........12
3.9 Legal
Proceedings..............................12
3.10
Taxes and Tax Returns..........................13
3.11
Employees......................................13
3.12
SEC Reports....................................15
3.13
Compliance with Applicable Law.................15
3.14
Certain Contracts..............................15
3.15
Agreements with Regulatory Agencies............16
3.16
Interest Rate Risk Management Instruments......17
3.17
Undisclosed Liabilities........................17
3.18
Insurance......................................17
3.19
Environmental Liability........................17
3.20
State Takeover Laws............................18
3.21
Reorganization.................................18
3.22
Information Supplied...........................18
3.23
Internal Controls..............................18
3.24
Opinion of PNFP Financial Advisor..............19
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF CAVB.................19
4.1 Corporate
Organization.........................19
4.2
Capitalization.................................20
4.3 Authority;
No Violation........................21
4.4 Consents
and Approvals.........................21
4.5
Reports........................................22
4.6 Financial
Statements...........................22
4.7 Broker's
Fees..................................23
4.8 Absence of
Certain Changes or Events...........23
4.9 Legal
Proceedings..............................23
4.10
Taxes and Tax Returns..........................23
4.11
Employees......................................24
4.12
SEC Reports....................................25
4.13
Compliance with Applicable Law.................26
4.14
Certain Contracts..............................26
4.15
Agreements with Regulatory Agencies............27
4.16
Interest Rate Risk Management Instruments......27
4.17
Undisclosed Liabilities........................28
4.18
Insurance......................................28
4.19
Environmental Liability........................28
4.20
State Takeover Laws............................28
4.21
Reorganization.................................28
4.22
Information Supplied...........................28
4.23
Internal Controls..............................29
4.24
Opinion of CAVB Financial Advisor..............29
ARTICLE V.
COVENANTS RELATING TO CONDUCT OF BUSINESS...............29
5.1 Conduct of
Businesses Prior to the Effective Time
.................................29
5.2 CAVB
Forbearances..............................30
5.3 PNFP
Forbearances..............................32
ARTICLE VI.
ADDITIONAL AGREEMENTS...................................33
6.1 Regulatory
Matters.............................33
6.2 Access to
Information..........................34
6.3
Shareholders' Approvals........................35
6.4 Legal
Conditions to Merger.....................36
6.5
Affiliates.....................................36
6.6 Stock
Quotation or Listing.....................36
6.7 Employee
Benefit Plans; Existing Agreements....36
6.8
Indemnification; Directors'and Officers'Insurance
...............................37
6.9 Additional
Agreements..........................38
6.10
Advice of Changes..............................38
6.11
Exemption from Liability Under Section 16(b). .39
6.12
Acquisition Proposals..........................39
6.13
Bank Merger....................................41
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ARTICLE VII.
CONDITIONS PRECEDENT....................................42
7.1 Conditions
to Each Party's Obligation To Effect
the Merger........................42
7.2 Conditions
to Obligations of CAVB..............43
7.3 Conditions
to Obligations of PNFP..............43
ARTICLE VIII.
TERMINATION AND AMENDMENT...............................44
8.1
Termination....................................44
8.2 Effect of
Termination..........................45
8.3
Termination Fee................................45
8.4
Amendment......................................47
8.5 Extension;
Waiver..............................47
ARTICLE IX.
GENERAL PROVISIONS......................................47
9.1
Closing........................................47
9.2
Standard.......................................47
9.3
Nonsurvival of Representations, Warranties and
Agreements.........................48
9.4
Expenses.......................................48
9.5
Notices........................................48
9.6
Interpretation.................................48
9.7
Counterparts...................................49
9.8 Entire
Agreement...............................49
9.9 Governing
Law..................................49
9.10
Publicity......................................49
9.11
Assignment; Third Party Beneficiaries..........49
EXHIBIT 6.5 CAVALRY BANCORP AFFILIATE
AGREEMENT....................Exh. 6.5 - 1
PNFP DISCLOSURE
SCHEDULE.......................................Confidential - 1
CAVB DISCLOSURE
SCHEDULE........................................Confidential -
3
AGREEMENT AND PLAN OF MERGER
AGREEMENT
AND PLAN OF MERGER, dated as of September 30, 2005 (this
"Agreement"), by and between CAVALRY BANCORP, INC, a Tennessee corporation
("CAVB"), and PINNACLE FINANCIAL PARTNERS, INC., a Tennessee corporation
("PNFP").
RECITALS:
WHEREAS,
the Boards of
Directors of PNFP and CAVB have approved, and deem
it advisable and in the best interests of their respective corporations and
shareholders to consummate the strategic business combination transaction
provided for herein in which CAVB will,
subject to the terms
and conditions set
forth herein, merge with and into PNFP (the "Merger"), so that PNFP is the
surviving corporation (hereinafter
sometimes referred to in such capacity as the
"Surviving Corporation") in the Merger;
WHEREAS, the
Boards of Directors of PNFP and CAVB have each determined that
the Merger and the other transactions
contemplated
hereby are consistent
with,
and in furtherance of, their respective
business strategies and goals;
WHEREAS,
the parties desire to
make certain
representations,
warranties,
covenants and agreements in connection with the Merger and also to
prescribe
certain conditions to the Merger; and
WHEREAS, for Federal
income tax
purposes, it is intended that the
Merger will qualify as a reorganization under the provisions of Section
368(a)
of the Internal Revenue Code of 1986, as amended
(the "Code"), and the
parties
intend, by executing this Agreement,
to adopt a plan of
reorganization
within
the meaning of Treasury Regulation Section
1.368-2(g).
NOW, THEREFORE,
in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally
bound
hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The
Merger.
(a) Subject to
the terms and
conditions of this
Agreement, in
accordance
with the Tennessee Business Corporation Act (the "TBCA"), at
the Effective Time
(as defined below), CAVB shall merge with and into PNFP. PNFP shall be the
Surviving Corporation in the Merger, and
shall continue its corporate existence
under the laws of the State of Tennessee.
Upon consummation of
the Merger, the
separate corporate existence of CAVB shall
terminate.
(b) The
parties may by mutual
agreement at any time change the method
of
effecting the combination of CAVB and PNFP including without limitation the
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provisions of this Article I, if and to the extent
they deem such change to be
desirable, including without limitation to
provide for a merger of CAVB with and
into a wholly-owned subsidiary of PNFP; provided,
however, that no such
change
shall (i) alter or change the amount of
Merger Consideration
(as defined below)
to be provided to holders of CAVB
Common Stock (as defined below) as provided
for in this Agreement, (ii) adversely affect the tax treatment of
holders of
CAVB Common Stock as a result of
receiving the Merger Consideration or (iii)
materially impede or delay consummation of
the transactions contemplated by this
Agreement.
1.2 Effective
Time. The Merger shall
become effective as
set forth in the
articles of merger that shall be filed with
the Secretary of State
of the State
of Tennessee (the "Tennessee Secretary") on the Closing Date. The term
"Effective Time" shall be the date and time
when the Merger becomes effective,
as set forth in the Articles of Merger.
1.3 Effects of the Merger.
At and after the
Effective Time, the Merger
shall have the effects set forth in Section
48-21-108 of the TBCA.
1.4 Conversion of CAVB Common Stock .
At the Effective Time,
by virtue of
the Merger and without any action on the
part of CAVB, PNFP or the holder of any
of the following securities:
(a) Subject to
Section 2.2(e), each share of the common stock, no par value
per share, of CAVB (the "CAVB Common
Stock") issued and outstanding immediately
prior to the Effective Time, except for shares of CAVB Common
Stock owned by
CAVB or PNFP (other than shares of CAVB Common Stock held in trust accounts,
managed accounts and the like, or otherwise
held in a fiduciary
capacity, that
are beneficially owned by third parties (any such shares held in a
fiduciary
capacity by CAVB or PNFP, as the case may
be, being referred to herein as "Trust
Account Shares")) or shares of CAVB Common Stock held on account of a debt
previously contracted ("DPC Shares"), shall be converted into the right to
receive 0.95 shares (the "Exchange Ratio")
of the common stock,
$1.00 par value
per share, of PNFP (the "PNFP Common
Stock") (the "Merger Consideration").
(b) All of the
shares of CAVB
Common Stock converted into the right to
receive the Merger Consideration pursuant to this Article I shall
no longer be
outstanding and shall automatically be cancelled and
shall cease to exist as of
the Effective Time, and each certificate
previously representing any such shares
of CAVB Common Stock (each, a
"Certificate") shall thereafter represent only the
right to receive (i) a certificate representing the number of whole shares of
PNFP Common Stock (defined below),
and (ii) cash in lieu
of fractional
shares,
into which the shares of CAVB Common Stock
represented by such
Certificate have
been converted pursuant to this Section 1.4 and
Section 2.2(e).
Certificates
previously representing shares of CAVB Common Stock shall be exchanged for
certificates representing whole shares of PNFP
Common Stock and cash in lieu of
fractional shares issued in consideration therefor upon the surrender of
such
Certificates in accordance with Section
2.2, without any interest thereon. If,
prior to the Effective Time, the
outstanding shares of PNFP Common Stock or CAVB
Common Stock shall have been increased,
decreased, changed into or exchanged for
a different number or kind of shares or securities as a result of a
reorganization, recapitalization,
reclassification, stock dividend, stock split,
reverse stock split, or other similar
change in
capitalization, an
appropriate
and proportionate adjustment shall be made to the Exchange Ratio per share
payable pursuant to this Agreement.
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(c) Notwithstanding anything in this Agreement to the contrary, at the
Effective Time, all shares of CAVB Capital
Stock (as defined
below) that are
owned by CAVB or PNFP (other than Trust
Account Shares and DPC
Shares) shall be
cancelled and shall cease to exist, and no Merger Consideration shall be
delivered in exchange therefor.
1.5 PNFP Capital
Stock. At and after the Effective Time, each share of PNFP
Capital Stock (as defined below) issued and
outstanding immediately prior to the
Closing Date shall remain issued and outstanding and shall not be affected by
the Merger.
1.6 Options and
Other Stock-Based Awards.
(a) Effective as
of the Effective Time,
each then outstanding option to
purchase shares of CAVB Common Stock (each a "CAVB Stock Option") issued
pursuant to the equity-based compensation plans identified in Section 4.11
of
the CAVB Disclosure Schedule (the "CAVB Stock Plans")
to any current or former
employee or director of, or consultant to,
CAVB or any of its
Subsidiaries, as
defined below, shall be assumed by PNFP and shall
be converted
automatically
into an option to purchase a number of
shares of PNFP Common
Stock (rounded to
the nearest whole share) (an "Assumed Stock Option") at an exercise price
determined as provided below (and otherwise subject to the terms of the
CAVB
Stock Plans and the agreements evidencing
the options thereunder):
(i) The number
of shares of PNFP Common Stock to be subject to the
Assumed
Stock Option shall be equal to the product of the number of shares of CAVB
Common Stock subject to the CAVB Stock
Option and the Exchange Ratio, provided
that any fractional shares of PNFP Common Stock resulting from such
multiplication shall be rounded to the
nearest whole share; and
(ii) The
exercise price per share of PNFP Common
Stock under the
Assumed
Stock Option shall be equal to the exercise
price per share of CAVB Common Stock
under the CAVB Stock Option divided by the Exchange
Ratio, provided that such
exercise price shall be rounded to the
nearest whole cent.
In the case of any CAVB Stock Option to
which Section 421 of the Code applies by
reason of its qualification under Section 422 of the Code, the conversion
formula shall be adjusted, if necessary, to comply with Section
424(a) of the
Code. Except as otherwise provided herein, the Assumed Stock Options shall
be
subject to the same terms and conditions
(including expiration date, vesting and
exercise provisions) as were applicable to
the corresponding CAVB Stock Options
immediately prior to the Effective Time (but taking into account any changes
thereto, including the acceleration of
vesting thereof, provided for in the CAVB
Stock Plans or other CAVB Benefit Plan, as defined below, or in any award
agreement thereunder by reason of this Agreement or the transactions
contemplated hereby); provided, however,
that references to CAVB shall be deemed
to be references to PNFP.
(b) PNFP has
taken all corporate action necessary to reserve for issuance a
sufficient number of shares of PNFP Common Stock upon the exercise of the
Assumed Stock Options. On or as soon as practicable
following the Closing
Date
(and in no event more than five
business days after the Closing Date), PNFP
shall file a registration statement on an appropriate
form or a
post-effective
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amendment to a previously filed
registration statement
under the Securities Act
(defined below) with respect to the
issuance of the shares of PNFP Common Stock
subject to the Assumed Stock Options and shall use its reasonable efforts
consistent with customary industry standards to maintain the
effectiveness of
such registration statement or registration
statements (and maintain the current
status of the prospectus or prospectuses
contained therein) for
so long as such
equity awards remain outstanding.
1.7 Charter.
Subject to the terms
and conditions of this Agreement, at the
Effective Time, the Charter of PNFP, as
amended (the "PNFP Articles"), shall be
the Charter of the Surviving Corporation until thereafter
amended in accordance
with applicable law.
1.8 Bylaws.
Subject to the terms
and conditions of this Agreement, at the
Effective Time, the Bylaws of PNFP shall be the Bylaws of the Surviving
Corporation until thereafter amended in
accordance with applicable law.
1.9 Tax
Consequences.
It is intended
that the Merger shall
constitute a
"reorganization" within the meaning of Section 368(a) of the Code, that this
Agreement shall constitute a "plan of reorganization" for the purposes of
Sections 354 and 361 of the Code.
1.10 Certain
Post-Closing Matters.
(a) Board
Composition.
As of the Effective
Time, and continuing for a
period consistent with the 3 year
staggered terms of directors of PNFP to which
they will be added following the Effective Time, Ed C. Loughry, Jr. and two
other Current CAVB Directors, as defined below, shall be
appointed to and shall
serve on the Board of Directors of the
Surviving Corporation. For purposes of
this Section 1.10, the term "Current CAVB
Directors" shall mean those members of
the CAVB Board of Directors immediately prior to the public
announcement of the
transactions contemplated by this
Agreement.
(b) Procedure for Appointing Current CAVB Directors to Surviving
Corporation's Board of Directors. Within
thirty (30) days after the date of this
Agreement, the nominating and corporate
governance
committee of the Board
of
Directors of CAVB shall submit the names of Ed C.
Loughry, Jr. and two other
Current CAVB Directors to the nominating
and corporate
governance committee
of
PNFP for consideration of nomination to fill three vacancies on the Board of
Directors of the Surviving Corporation as of the Effective
Time. The nominating
and corporate governance committee of PNFP's Board of
Directors shall nominate
such persons to fill such vacancies. The Board of Directors of PNFP shall
promptly meet to consider the appointment
of such persons to fill such vacancies
and shall appoint such persons at such
meeting if such persons, other than Ed C.
Loughry, Jr., are reasonably acceptable candidates to serve on the Board of
Directors of the Surviving Corporation. In the event the nominating and
corporate governance committee or the Board of Directors of PNFP
objects to a
nominee, other than Ed C. Loughry, Jr., the
nominating and corporate governance
committee of CAVB's Board of Directors
shall propose additional nominees for
consideration until a reasonably acceptable
member is found.
(c) Officers of
Surviving Corporation.
The current officers
of PNFP shall
continue as the officers of the Surviving
Corporation.
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(d) Survival/Adoption of Commitments. The commitments set forth in
this
Section 1.10 shall survive the Effective Time as reflected in a formal
resolution of the Board of Directors of the Surviving Corporation to be
reflected in the minutes of the
Surviving Corporation following the Effective
Time of the Merger.
1.11
Headquarters of
Surviving Corporation.
From and after the
Effective
Time, the location of the headquarters and principal
executive offices of the
Surviving Corporation shall be that of the
headquarters and principal executive
offices of PNFP as of the date of this
Agreement.
ARTICLE II.
DELIVERY OF MERGER CONSIDERATION
2.1 Deposit of
Merger Consideration.
Prior to the
Effective Time, PNFP
shall deposit, or shall cause to be deposited, with a bank or trust company
reasonably acceptable to each of CAVB and
PNFP (the "Exchange Agent"), for the
benefit of the holders of Certificates, for exchange in accordance with this
Article II, certificates representing the shares of PNFP
Common Stock and cash
in lieu of any fractional shares (such cash and certificates
for shares of PNFP
Common Stock, together with any dividends
or distributions with respect thereto,
being hereinafter referred to as the "Exchange
Fund"), to be issued pursuant to
Section 1.4 and paid pursuant to Section
1.4 and Section 2.2(e)
in exchange for
outstanding shares of CAVB Common
Stock.
2.2 Delivery of
Merger Consideration.
(a) As soon as
practicable, but in no
event later than five business days,
after the Effective Time, the Exchange
Agent shall mail to each holder of record
of one or more Certificates a letter of transmittal in customary form as
reasonably agreed by the parties (which shall specify that
delivery shall be
effected, and risk of loss and title to the
Certificates shall
pass, only upon
delivery of the Certificates to the Exchange
Agent) and instructions for use in
effecting the surrender of the Certificates in exchange for certificates
representing the shares of PNFP Common Stock
and any cash in lieu of fractional
shares into which the shares of CAVB Common Stock represented by such
Certificate or Certificates shall have been converted pursuant to this
Agreement. Upon proper surrender to the Exchange Agent of a Certificate or
Certificates for exchange and cancellation, together with such properly
completed and duly executed letter of transmittal as the Exchange Agent may
reasonable require, the holder of such Certificate or Certificates shall be
entitled to receive in exchange therefor, as applicable, (i) a certificate
representing that number of whole shares of PNFP Common Stock to which such
holder of CAVB Common Stock shall have become entitled pursuant to the
provisions of Article I and (ii) a check
representing the
amount of any cash in
lieu of fractional shares which such holder has the
right to receive in respect
of the Certificate or Certificates surrendered pursuant to the provisions of
this Article II, and the Certificate or Certificates so surrendered shall
forthwith be cancelled. No interest will be paid or accrued on any
cash or on
any unpaid dividends and distributions
payable to holders of Certificates.
(b) No
dividends or other distributions declared with respect to PNFP
Common Stock shall be paid to the holder of
any unsurrendered
Certificate until
the holder thereof shall surrender such Certificate in accordance with this
Article II. After the surrender of a
Certificate in accordance with this Article
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II, the record holder thereof shall be
entitled to receive any such dividends or
other distributions, without any interest thereon,
which theretofore had become
payable with respect to shares of PNFP Common Stock represented by such
Certificate.
(c) If any
certificate
representing
shares of PNFP Common
Stock is to be
issued in a name other than that in which the Certificate or Certificates
surrendered in exchange therefor is or are registered,
it shall be a
condition
of the issuance thereof that the Certificate or Certificates so surrendered
shall be properly endorsed (or accompanied by an appropriate instrument of
transfer) and otherwise in proper form for transfer, and that the person
requesting such exchange shall pay to the
Exchange Agent in advance any transfer
or other taxes required by reason of the
issuance of a certificate representing
shares of PNFP Common Stock in any name
other than that of the registered holder
of the Certificate or Certificates surrendered, or required for any other
reason, or shall establish to the
satisfaction of the
Exchange Agent that such
tax has been paid or is not payable.
(d) After the
Effective Time, there shall be no transfers on the stock
transfer books of CAVB of the shares of
CAVB Common Stock that
were issued and
outstanding immediately prior to the Effective
Time. If, after the Effective
Time, certificates representing such shares are presented for
transfer to the
Exchange Agent, they shall be cancelled and exchanged for certificates
representing shares of PNFP Common Stock and cash for fractional shares as
provided in this Article II.
(e) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing
fractional shares of
PNFP Common Stock shall
be issued upon the surrender for exchange of Certificates, no dividend or
distribution with respect to PNFP Common Stock shall be payable on or with
respect to any fractional share, and such fractional share
interests shall not
entitle the owner thereof to vote or to any other
rights of a
shareholder
of
PNFP. In lieu of the issuance of any such
fractional
share, PNFP shall pay to
each former shareholder of CAVB who otherwise
would be entitled to receive such
fractional share an amount in cash determined
by multiplying (i) the average of
the closing-sale prices of PNFP Common Stock on the
securities market or
stock
exchange in which the PNFP Common Stock
principally
trades, as reported by
The
Wall Street Journal for the five trading
days immediately
preceding the date of
the Effective Time by (ii) the fraction of a share (rounded to the nearest
thousandth when expressed in decimal form) of PNFP Common Stock to
which such
holder would otherwise be entitled to
receive pursuant to Section 1.4.
(f) Any portion of the Exchange Fund that remains unclaimed by the
shareholders of CAVB as of the first
anniversary of the
Effective Time shall be
paid to PNFP. Any former shareholders of
CAVB who have not theretofore complied
with this Article II shall thereafter look only to PNFP for payment of the
shares of PNFP Common Stock and cash in lieu of any
fractional
shares and any
unpaid dividends and distributions on the PNFP Common Stock
deliverable
in
respect of each share of CAVB Common Stock
such shareholder holds
as determined
pursuant to this Agreement, in each case, without any interest thereon.
Notwithstanding the foregoing, none of CAVB, PNFP, the Exchange Agent or
any
other person shall be liable to any former
holder of shares of CAVB Common Stock
for any amount delivered in good faith to a public official pursuant to
applicable abandoned property, escheat or
similar laws.
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(g) In the event
any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed
and, if reasonably required by PNFP,
the posting by such person of a bond
in such amount as PNFP
may determine
is
reasonably necessary as indemnity against any
claim that may be made against it
with respect to such Certificate,
the Exchange Agent
will issue in exchange for
such lost, stolen or destroyed Certificate the shares of PNFP
Common Stock, and
any cash in lieu of fractional shares
deliverable in respect thereof pursuant to
this Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PNFP
Except as
disclosed in (a) the PNFP Reports (defined below) filed prior to
the date hereof or (b) the disclosure
schedule (the "PNFP Disclosure Schedule")
delivered by PNFP to CAVB prior to the execution of this Agreement (which
schedule sets forth, among other things, items the disclosure of which is
necessary or appropriate either in response
to an express disclosure requirement
contained in a provision hereof or as an exception to one or more
representations or warranties contained in
this Article III or to one or more of
PNFP's covenants contained in Article V, provided, however, that,
notwithstanding anything in this Agreement to the
contrary, (i) no such item is
required to be set forth in such schedule
as an exception to a representation or
warranty if its absence would not result in the related representation or
warranty being deemed untrue or incorrect under the standard established by
Section 9.2, and (ii) the mere inclusion of an item in such schedule as an
exception to a representation or warranty shall not be deemed an
admission that
such item represents a material exception or material fact, event or
circumstance or that such item has had or would
be reasonably likely
to have a
Material Adverse Effect (as defined below)
on PNFP), PNFP hereby
represents and
warrants to CAVB as follows:
3.1 Corporate
Organization.
(a) PNFP is a
corporation
duly organized, validly existing and in good
standing under the laws of the State of
Tennessee. PNFP has
the corporate power
and authority to own or lease all of its
properties
and assets and to
carry on
its business as it is now being conducted,
and is duly licensed
or qualified to
do business in each jurisdiction in which the nature
of the business
conducted
by it or the character or location of the
properties and assets
owned or leased
by it makes such licensing or qualification
necessary, except
where the failure
to be so licensed or qualified would not, either individually or in the
aggregate, have a Material Adverse Effect on PNFP. As used in
this Agreement,
the term "Material Adverse Effect" means, with respect to CAVB, PNFP or the
Surviving Corporation, as the case may be, a material
adverse effect on (i) the
business, operations, results of operations
or financial condition of such party
and its Subsidiaries taken as a whole or which might
have a financial cost
to
PNFP after the Merger of at least $500,000
taking into account, for example with
respect to Regulatory Agreements, the aggregate costs to PNFP of compliance,
personnel costs, appeals, fines, legal, accounting, or consulting fees, or
restrictions on future expansion, or (ii) the ability of such party
to timely
consummate the transactions contemplated hereby; provided, however, that with
respect to clause (i), the following shall not be deemed to have a
Material
Adverse Effect: any change or event caused by or
resulting from (A) changes in
prevailing interest rates, currency
exchange rates or other economic or monetary
conditions in the United States or elsewhere, (B) changes in United States
or
foreign securities markets, including changes in price levels or trading
7
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volumes, (C) changes or events,
after the date hereof,
affecting the
financial
services industry generally and not specifically relating to PNFP or CAVB or
their respective Subsidiaries, as the case may be, (D) changes,
after the date
hereof, in generally accepted accounting principles or regulatory
accounting
requirements applicable to banks or savings associations and their holding
companies generally, (E) changes, after the date hereof,
in laws, rules or
regulations of general applicability or interpretations thereof by any
Governmental Entity (as defined below), (F)
actions or omissions of PNFP or CAVB
taken with the prior written consent of the
other or required hereunder, (G) the
execution and delivery of this Agreement or
the consummation of the transactions
contemplated hereby or the announcement
thereof, or (H) any outbreak of major
hostilities in which the United States is involved or any act of terrorism
within the United States or directed
against its facilities or citizens wherever
located; and provided, further, that in no event shall a change in
the trading
prices of a party's capital stock, by itself, be considered material or
constitute a Material Adverse Effect.
(b) PNFP is a
bank holding
company registered under the Bank Holding
Company Act of 1956, as amended (the "BHC
Act"). True and complete copies of the
PNFP Articles and Bylaws of PNFP, as in
effect as of the date of this Agreement,
have previously been made available by PNFP
to CAVB.
(c) Each PNFP
Subsidiary (i) is duly
organized and validly
existing under
the laws of its jurisdiction of organization, (ii) is duly qualified to do
business and in good standing in all jurisdictions (whether federal, state,
local or foreign) where its ownership or leasing of property
or the conduct of
its business requires it to be so qualified and in which the failure to be
so
qualified would have a Material Adverse Effect on PNFP and (iii) has all
requisite corporate or other power and
authority to own or lease its properties
and assets and to carry on its business as
now conducted,
except to the
extent
that the failure to have such power or
authority will not result in a Material
Adverse Effect on PNFP. As used in this
Agreement, the word
"Subsidiary"
when
used with respect to any party means any bank, savings bank, corporation,
partnership, limited liability company, or other organization, whether
incorporated or unincorporated, which is consolidated with such party for
financial reporting purposes under
GAAP.
3.2
Capitalization.
8
<PAGE>
(a) The authorized capital stock of PNFP consists of forty million
(40,000,000) shares of PNFP Common Stock,
of which, as of September 30, 2005,
8,424,217 shares were issued and outstanding, and ten million (10,000,000)
shares of preferred stock, no par value per
share (together with the PNFP Common
Stock, the "PNFP Capital Stock"),
of which, as of
September 30, 2005, no shares
were issued and outstanding. As of the date hereof,
no shares of PNFP
Capital
Stock were reserved for issuance except for 2,133,489 shares of PNFP Common
Stock reserved for issuance upon the
exercise of options to purchase shares of
PNFP Common Stock (each a "PNFP Stock
Option") pursuant to the equity-based
compensation plans of PNFP (the "PNFP Stock
Plans") as
identified
in Section
3.2(a) of the PNFP Disclosure Schedule. All
of the issued and outstanding shares
of PNFP Capital Stock have been duly
authorized and validly issued and are fully
paid, nonassessable and free of
preemptive rights,
with no personal
liability
attaching to the ownership thereof.
(b) No bonds,
debentures,
notes or other
indebtedness having the right to
vote on any matters on which shareholders may vote ("Voting Debt") of PNFP
are
issued or outstanding. Since June 30, 2005, PNFP has not issued any shares
of
PNFP Capital Stock or any securities
convertible
into or exercisable for any
shares of PNFP Capital Stock, other than as
would be permitted by Section 5.3(a)
hereof.
(c) Except
for (i) this
Agreement,
(ii) the rights
under the PNFP
Stock
Plans which represented, as of June 30, 2005, the right to acquire up to an
aggregate of 1,630,093 shares of PNFP
Common Stock, and (iii) agreements entered
into and securities and other instruments issued after the date of this
Agreement as permitted by Section 5.3(a),
there are no options,
subscriptions,
warrants, calls, rights, commitments or agreements of any character to
which
PNFP or any its Subsidiaries is a party or by
which it or any its
Subsidiaries
is bound obligating PNFP or any its
Subsidiaries to issue,
deliver or sell,
or
cause to be issued, delivered or sold, additional shares of PNFP Capital
Stock
or any Voting Debt or stock appreciation
rights of PNFP any its
Subsidiaries or
obligating PNFP or any its Subsidiaries, extend or enter into any such
option,
subscription, warrant, call, right, commitment or agreement. There are no
outstanding contractual obligations of PNFP or any its Subsidiaries (A) to
repurchase, redeem or otherwise acquire any shares of capital
stock of PNFP or
any its Subsidiaries or (B) pursuant to
which PNFP or any of its Subsidiaries is
or could be required to register shares of PNFP Capital Stock or other
securities under the Securities Act of
1933, as amended (the "Securities Act"),
except any such contractual obligations entered into after the date hereof
as
permitted by Section 5.3(a).
(d) PNFP owns,
directly or
indirectly, all of the
issued and
outstanding
shares of capital stock or other equity ownership interests of each of its
Subsidiaries, free and clear of any liens,
pledges, charges,
encumbrances and
security interests whatsoever ("Liens"), and all of such shares or equity
ownership interests are duly authorized and validly issued and
are fully paid,
nonassessable (subject to 12 U.S.C. ss. 55) and
free of preemptive rights, with
no personal liability attaching to the ownership
thereof. No Subsidiary of PNFP
has or is bound by any outstanding subscription, option, warrant, call,
commitment or agreement of any character
calling for the purchase or issuance of
any shares of capital stock or any other
equity security of
such Subsidiary or
any securities representing the right to purchase or otherwise receive any
shares of capital stock or any other equity
security of such Subsidiary. Section
3.2(d) of the PNFP Disclosure Schedule sets forth a list of the material
9
<PAGE>
investments of PNFP in Non-Subsidiary
Affiliates. As used in this Agreement, the
term "Non-Subsidiary Affiliate" when used with respect to any
party means any
corporation, partnership, limited liability company, joint venture or other
entity other than such party's
Subsidiaries.
3.3 Authority;
No Violation.
(a) PNFP has
full corporate power and authority to execute and deliver this
Agreement and, subject in the case of the consummation of the Merger to the
adoption of this Agreement by the requisite
vote of the holders of
PNFP Common
Stock, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the
consummation of the transactions contemplated
hereby have been duly and validly
approved by the Board
of Directors
of PNFP.
The Board of Directors of PNFP determined that the Merger is advisable
and in
the best interest of PNFP and its shareholders and has directed that this
Agreement and the transactions contemplated hereby be submitted to PNFP's
shareholders for adoption at a meeting of
such shareholders and,
except for the
adoption of this Agreement by the
affirmative vote of
the holders of a majority
of the outstanding shares of PNFP Common Stock, no
other corporate
proceedings
on the part of PNFP are necessary to approve this
Agreement and to consummate
the transactions contemplated hereby. This Agreement has been
duly and validly
executed and delivered by PNFP and
(assuming due
authorization,
execution and
delivery by CAVB) constitutes valid and
binding obligations of PNFP, enforceable
against PNFP in accordance with its terms (except as may be limited by
bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting the
rights of creditors generally and the
availability of equitable remedies).
(b) Neither the
execution and delivery by PNFP of this
Agreement nor the
consummation by PNFP of the transactions
contemplated hereby,
nor compliance by
PNFP with any of the terms or provisions
hereof, will (i)
violate any provision
of the PNFP Articles or Bylaws of PNFP or (ii)
assuming that the consents and
approvals referred to in Section 3.4 are
duly obtained, (x) violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction
applicable to PNFP, any of its Subsidiaries
or Non-Subsidiary
Affiliates or any
of their respective properties or assets or (y)
violate, conflict
with, result
in a breach of any provision of or the loss
of any benefit under,
constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance
required by, or
result in the creation of any Lien upon any of the
respective
properties
or
assets of PNFP, any of its Subsidiaries or
its Non-Subsidiary
Affiliates under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which PNFP, any of its Subsidiaries or its Non-Subsidiary
Affiliates is a party, or by which they or
any of their respective properties or
assets may be bound or affected, except (in the case of clause (ii)
above) for
such violations, conflicts, breaches or defaults which, either
individually or
in the aggregate, will not have a Material
Adverse Effect on PNFP.
3.4 Consents and
Approvals. Except for
(i) the filing of applications and
notices, as applicable, with the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") under the BHC Act and the
Federal Reserve
Act, as amended, and approval of such
applications and notices, (ii) the filing
of any required applications or notices
with any other federal, state or foreign
10
<PAGE>
agencies or regulatory authorities and
approval of such applications and notices
(the "Other Regulatory Approvals"), (iii) the filing with the
Securities and
Exchange Commission (the "SEC") of a Joint Proxy Statement/Prospectus in
definitive form relating to the meeting of
CAVB's and PNFP's
shareholders to be
held in connection with this Agreement and
the transactions
contemplated hereby
(the "Joint Proxy Statement"), and of the registration statement on Form S-4
(the "Form S-4") in which the Joint
Proxy Statement will be included as a
prospectus, and declaration of
effectiveness of the Form S-4, (iv) the filing of
the Articles of Merger with the Tennessee
Secretary pursuant to the TBCA, (v)
any notice or filings under the
Hart-Scott-Rodino
Antitrust Improvements Act of
1976, as amended (the "HSR Act"), (vi) any
consents, authorizations, approvals,
filings or exemptions in connection with compliance with the applicable
provisions of federal and state
securities
laws relating to the
regulation of
broker-dealers, investment advisers or
transfer agents, and the rules of NASDAQ,
or which are required under insurance,
mortgage banking and
other similar laws,
(vii) such filings and approvals as are required to be made or
obtained under
the securities or "Blue Sky" laws of various states in connection with the
issuance of the shares of PNFP Common
Stock pursuant to this Agreement and
(viii) the approval of this Agreement by
the requisite vote of the shareholders
of PNFP and CAVB, no consents or approvals
of or filings or
registrations with
any court, administrative agency or
commission or other governmental authority
or instrumentality (each a "Governmental Entity") are necessary in
connection
with (A) the execution and delivery by PNFP of this Agreement and (B) the
consummation by PNFP of the Merger and the other transactions contemplated
hereby. Except for any consents, authorizations, or approvals of any other
material contracts to which PNFP is a party
and which are listed in Section 3.4
of the PNFP Disclosure Schedule,
no consents,
authorizations,
or approvals of
any other person are necessary in
connection with (A) the execution and delivery
by PNFP of this Agreement and (B) the
consummation by PNFP of the Merger and the
other transactions contemplated hereby.
3.5 Reports. PNFP and each of its Subsidiaries have timely filed all
reports, registrations and statements,
together with any
amendments required to
be made with respect thereto, that they were required to file
since January 1,
2000 with (i) the Federal Reserve Board, (ii) the Federal Deposit Insurance
Corporation, (iii) any state regulatory
authority (each a
"State
Regulator"),
(iv) the Office of the Comptroller of the Currency (the "OCC"), (v) the SEC,
(vi) any State Regulator (collectively "Regulatory Agencies"), and all other
reports and statements required to be filed by them since January 1, 2000,
including, without limitation, any report or statement required to be filed
pursuant to the laws, rules or regulations of the United
States, any state,
or
any Regulatory Agency, and have paid all
fees and assessments due and payable in
connection therewith, except where the
failure to file such report, registration
or statement or to pay such fees and
assessments, either
individually or in the
aggregate, will not have a Material
Adverse Effect on
PNFP. Except for
normal
examinations conducted by a Regulatory Agency in the ordinary course of the
business of PNFP and its Subsidiaries, no Regulatory Agency has initiated any
proceeding or, to the knowledge of PNFP, investigation into the business or
operations of PNFP or any of its Subsidiaries since January 1, 2000, except
where such proceedings or investigation
will not, either
individually or in the
aggregate, have a Material Adverse Effect on PNFP. There is no unresolved
violation, criticism, or exception by any
Regulatory Agency with respect to any
report or statement relating to any examinations of PNFP or any of its
Subsidiaries which, in the reasonable judgment of PNFP, will, either
individually or in the aggregate, have a
Material Adverse Effect on PNFP.
11
<PAGE>
3.6 Financial
Statements.
PNFP has previously
made available to CAVB true
and correct copies of (i) the consolidated balance sheets of PNFP and its
Subsidiaries as of December 31, 2002, 2003
and 2004 and the related consolidated
statements of income and changes in
shareholders' equity
and cash flows for the
fiscal years ended December 31, 2002 through 2004, inclusive as reported in
PNFP's Annual Report on Form 10-K for the fiscal
year ended December
31, 2004,
filed with the SEC under the Exchange Act
and accompanied by the audit report of
KPMG LLP, independent public accountants with respect to PNFP, and (ii) the
unaudited consolidated balance sheet of
PNFP and its Subsidiaries as of June 30,
2004 and 2005, and the related consolidated statements of income, changes in
shareholders' equity and cash flows for the
three-month
period then ended,
as
reported in PNFP's Quarterly Report on Form 10-Q for
the quarterly period ended
June 30, 2005. The financial statements referred to in this Section 3.6
(including the related notes, where applicable) fairly present in all material
respects the consolidated results of operations, changes in shareholders'
equity, cash flows and financial
position of PNFP and
its Subsidiaries for the
respective fiscal periods or as of the respective dates therein set forth,
subject to normal year-end audit adjustments in the case of unaudited
statements; each of such statements (including the related notes, where
applicable) complies in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto; and each of such
statements (including the related notes, where
applicable) has been prepared in all material respects in accordance with
accounting principles generally accepted in the United States ("GAAP")
consistently applied during the periods involved, except, in each case, as
indicated in such statements or in the notes
thereto. The books and
records of
PNFP and its Subsidiaries have been, and are being,
maintained in all
material
respects in accordance with GAAP and any
other applicable
legal and
accounting
requirements and reflect only actual
transactions.
3.7 Broker's
Fees. Except for Raymond James &
Associates, Inc.,
neither
PNFP nor any PNFP Subsidiary nor any of
their respective
officers or
directors
has employed any broker or finder or
incurred any
liability for any broker's
fees, commissions or finder's fees in connection with the Merger or related
transactions contemplated by this
Agreement.
3.8 Absence of
Certain Changes or Events.
(a) Since June
30, 2005, no event or
events have occurred
that have had,
either individually or in the aggregate, a
Material Adverse Effect on PNFP.
(b) Since June 30,
2005, through and
including the date of this Agreement,
PNFP and its Subsidiaries have carried on their respective businesses in all
material respects in the ordinary
course.
3.9 Legal
Proceedings.
(a) Except as
disclosed in Section 3.9(a) of the PNFP Disclosure Schedule,
neither PNFP nor any of its Subsidiaries is a party to any, and there are no
pending or, to the best of PNFP's
knowledge, threatened,
legal, administrative,
arbitral or other proceedings, claims, actions or governmental or regulatory
investigations of any nature against PNFP or any of its Subsidiaries or
challenging the validity or propriety of
the transactions
contemplated by
this
Agreement as to which, in any such case,
there is a reasonable probability of an
12
<PAGE>
adverse determination and which, if adversely
determined,
will be reasonably
likely to, either individually or in the aggregate, have a Material Adverse
Effect on PNFP.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction (other than those that apply to
similarly situated bank holding
companies or banks) imposed upon PNFP, any
of its Subsidiaries or
the assets of
PNFP or any of its Subsidiaries that has
had, or will have, either individually
or in the aggregate, a Material Adverse
Effect on PNFP.
3.10 Taxes and
Tax Returns.
(a) Each of PNFP
and its Subsidiaries
has duly filed all
federal, state,
foreign and local information returns and
Tax returns required to be filed by it
on or prior to the date of this
Agreement (all such returns being accurate
and
complete in all material respects) and has duly paid or
made provision for
the
payment of all Taxes that have been incurred or are due or claimed to be
due
from it by federal, state, foreign or local taxing
authorities other than
(i)
Taxes or other governmental charges that are not yet
delinquent
or are being
contested in good faith or have not been finally determined and have been
adequately reserved against under GAAP, or
(ii) information returns, Tax returns
or Taxes as to which the failure to file, pay or make provision for is not
reasonably likely to have, either
individually or in the
aggregate, a
Material
Adverse Effect on PNFP. The federal income Tax returns of PNFP and its
Subsidiaries to the knowledge of PNFP have not
been examined by the IRS. There
are no material disputes pending,
or to the knowledge of
PNFP, claims asserted,
for Taxes or assessments upon PNFP or any of its
Subsidiaries
for which PNFP
does not have reserves that are adequate
under GAAP. Neither PNFP nor any of its
Subsidiaries is a party to or is bound by any Tax sharing, allocation or
indemnification agreement or arrangement (other than such an agreement or
arrangement exclusively between or among
PNFP and its Subsidiaries). Within the
past five years, neither PNFP nor any of its Subsidiaries has been a
"distributing corporation" or a "controlled corporation" in a distribution
intended to qualify under Section 355(a) of
the Code.
(b) As used in
this Agreement,
the term "Tax" or "Taxes" means (i) all
federal, state, local, and foreign income,
excise, gross receipts, gross income,
ad valorem, profits, gains, property, capital, sales, transfer, use,
payroll,
employment, severance, withholding, duties, intangibles, franchise, backup
withholding, and other taxes, charges, levies
or like assessments together with
all penalties and additions to tax and interest
thereon and (ii) any
liability
for Taxes described in clause (i) under
Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local or
foreign law).
3.11
Employees.
(a) Section
3.11(a) of the PNFP
Disclosure Schedule
sets forth a true and
complete list of each material benefit or compensation plan, arrangement or
agreement, and any material bonus,
incentive, deferred
compensation,
vacation,
stock purchase, stock option, severance,
employment, change of control or fringe
benefit plan, program or agreement that is
maintained, or
contributed to,
for
the benefit of current or former directors or employees of PNFP and its
Subsidiaries or with respect to which PNFP
or its Subsidiaries
may, directly or
indirectly, have any liability to such
directors or employees, as of the date of
this Agreement (the "PNFP Benefit
Plans").
13
<PAGE>
(b) PNFP has
heretofore made
available to CAVB true and complete copies of
each of the PNFP Benefit Plans and certain
related documents, including, but not
limited to, (i) the actuarial report for such PNFP Benefit Plan
(if applicable)
for each of the last two years,
and (ii) the most
recent determination
letter
from the IRS (if applicable) for such PNFP
Benefit Plan..
(c) Except as
would not reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Effect on PNFP, (i) each of the
PNFP
Benefit Plans has been operated and administered in all material respects in
compliance with the Employee Retirement Income Security Act of
1974, as amended
("ERISA") and the Code, (ii) each of the PNFP Benefit Plans intended to be
"qualified" within the meaning of Section
401(a) of the Code and has received a
favorable determination from the IRS that such PNFP Benefit Plan is so
qualified, and to the knowledge of PNFP,
there are no existing circumstances or
any events that have occurred that will
adversely affect the qualified status of
any such PNFP Benefit Plan, (iii) with respect to each PNFP
Benefit Plan which
is subject to Title IV of ERISA,
the present
value of accrued
benefits under
such PNFP Benefit Plan, based upon the actuarial
assumptions
used for funding
purposes in the most recent actuarial report prepared by such PNFP Benefit
Plan's actuary with respect to such PNFP
Benefit Plan, did not, as of its latest
valuation date, exceed the then current
value of the assets of such PNFP Benefit
Plan allocable to such accrued benefits, (iv) no PNFP Benefit Plan
provides
benefits, including, without limitation, death or
medical benefits (whether or
not insured), with respect to current or former
employees or directors
of PNFP
or its Subsidiaries beyond their retirement or other termination of service,
other than (A) coverage mandated by applicable law, (B) death benefits or
retirement benefits under any "employee
pension plan" (as such
term is defined
in Section 3(2) of ERISA), (C) deferred compensation benefits accrued as
liabilities on the books of PNFP or its
Subsidiaries
or (D) benefits the
full
cost of which is borne by the current or
former employee
or director (or his
beneficiary), (v) no material liability under Title IV of ERISA has been
incurred by PNFP, its Subsidiaries or any trade or business, whether or not
incorporated, all of which together with PNFP, would be deemed a "single
employer" under Section 4001 of ERISA (a
"PNFP ERISA
Affiliate") that has
not
been satisfied in full, and no condition
exists that presents a material risk to
PNFP, its Subsidiaries or any PNFP ERISA Affiliate of incurring a material
liability thereunder, (vi) no PNFP Benefit Plan is a "multiemployer pension
plan" (as such term is defined in Section 3(37) of ERISA), (vii) all
contributions payable by PNFP or its
Subsidiaries as of the Effective Time with
respect to each PNFP Benefit Plan in
respect of current or prior plan years have
been paid or accrued in accordance with GAAP, (viii) none of PNFP, its
Subsidiaries or any other person, including any fiduciary, has engaged in a
transaction in connection with which PNFP,
its Subsidiaries or
any PNFP Benefit
Plan will be subject to either a material
civil penalty assessed pursuant to
Section 409 or 502(i) of ERISA or a
material Tax
imposed pursuant to Section
4975 or 4976 of the Code, and (ix) to the knowledge of PNFP there are no
pending, threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the PNFP Benefit Plans or any
trusts related thereto.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (either alone or
in
conjunction with any other event) (i) result (either alone or upon the
occurrence of any additional acts or
events) in any payment (including, without
limitation, severance, unemployment compensation, "excess parachute payment"
(within the meaning of Section 280G of the
Code), forgiveness of indebtedness or
otherwise) becoming due to any director or any employee of PNFP
or any of its
14
<PAGE>
affiliates from PNFP or any of its
affiliates
under any PNFP
Benefit Plan or
otherwise, (ii) increase any benefits
otherwise payable
under any PNFP Benefit
Plan or (iii) result in any acceleration of the time of payment or vesting
of
any such benefits that will, either individually or in the aggregate, have a
Material Adverse Effect on PNFP.
3.12 SEC
Reports. PNFP has
previously
made available to CAVB
an accurate
and complete copy of each (a) final
registration statement, prospectus, report,
schedule and definitive proxy statement
filed since January 1, 2000 by PNFP with
the SEC pursuant to the Securities
Act or the Securities
Exchange Act of
1934,
as amended (the "Exchange Act"), and prior to the date hereof and (b)
communication mailed by PNFP to its
shareholders since January 1, 2000. PNFP has
filed all required reports, schedules, registration statements and other
documents with the SEC since January 1,
2000 (the "PNFP
Reports"). As of
their
respective dates of filing with the SEC (or, if amended or superseded by a
filing prior to the date hereof, as of the date of such filing), the PNFP
Reports complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder
applicable to such
PNFP Reports, and none
of
the PNFP Reports when filed contained any
untrue statement of a material fact or
omitted to state a material fact
required to be stated
therein or necessary
to
make the statements therein, in light of
the circumstances under which they were
made, not misleading.
3.13 Compliance
with Applicable Law.
(a) PNFP and each of its Subsidiaries hold all material licenses,
franchises, permits, patents, trademarks and authorizations
necessary for the
lawful conduct of their respective businesses under and pursuant to each,
and
have complied in all material respects with and are not in default in any
material respect under any, applicable law, statute,
order, rule,
regulation,
policy, agreement and/or guideline of any
Governmental Entity
relating to PNFP
or any of its Subsidiaries, except where the failure to hold such license,
franchise, permit or authorization
or such noncompliance or default will
not,
either individually or in the aggregate,
have a Material Adverse Effect on PNFP.
(b) Except as
will not have, either
individually
or in the aggregate,
a
Material Adverse Effect on PNFP, PNFP and
each of its Subsidiaries have properly
administered all accounts for which it acts
as a fiduciary,
including accounts
for which it serves as a trustee,
agent, custodian, personal representative,
guardian, conservator or investment
advisor, in accordance with the terms of the
governing documents, applicable state and federal law
and regulation and common
law. None of PNFP, any of its Subsidiaries,
or any director, officer or employee
of PNFP or of any of its Subsidiaries, has committed any breach of trust
with
respect to any such fiduciary account that will have a Material
Adverse Effect
on PNFP, and the accountings for each such fiduciary account are true and
correct in all material respects and accurately reflect the assets of such
fiduciary account.
3.14 Certain
Contracts.
(a) Except as
disclosed in Section 3.11(a) of the PNFP Disclosure Schedule,
neither PNFP nor any of its Subsidiaries is
a party to or bound by any contract,
arrangement, commitment or understanding (whether written or oral) (i) with
respect to the employment of any directors,
officers or employees
other than in
15
<PAGE>
the ordinary course of business consistent
with past practice,
(ii) which, upon
the consummation or shareholder
approval of the
transactions
contemplated by
this Agreement will (either alone or upon
the occurrence of any additional acts
or events) result in any payment (whether of severance pay or otherwise)
becoming due from PNFP, CAVB, the Surviving Corporation, or any of their
respective Subsidiaries to any officer or employee
thereof, (iii) which is a
"material contract" (as such term is defined in Item
601(b)(10) of
Regulation
S-K of the SEC) to be performed
after the date of this
Agreement that has not
been filed or incorporated by reference in the PNFP Reports, (iv) which
materially restricts the conduct of any line of business by PNFP or upon
consummation of the Merger will materially
restrict the ability of the Surviving
Corporation to engage in any line of business
in which a bank
holding company
may lawfully engage, (v) with or to a labor
union or guild (including any
collective bargaining agreement) or (vi)
(including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock
purchase plan) any of
the benefits of which will be increased, or
the vesting of the benefits of which
will be accelerated, by the occurrence of any shareholder approval or the
consummation of any of the transactions
contemplated by this
Agreement, or the
value of any of the benefits of which will
be calculated on the
basis of any of
the transactions contemplated by this Agreement.
Each contract,
arrangement,
commitment or understanding of the type described in this Section 3.14(a),
whether or not set forth in the PNFP
Disclosure Schedule,
is referred to herein
as a "PNFP Contract", and neither PNFP nor any of its
Subsidiaries knows of, or
has received notice of, any violation of the above by any of
the other parties
thereto which will have, individually or in the aggregate,
a Material
Adverse
Effect on PNFP.
(b) (i) Each
PNFP Contract is valid and binding on PNFP or any of its
Subsidiaries, as applicable, and in full
force and effect, (ii) PNFP and each of
its Subsidiaries has in all material
respects performed all obligations required
to be performed by it to date under each PNFP Contract, except where such
noncompliance, either individually or in
the aggregate, will not have a Material
Adverse Effect on PNFP, and (iii) no event
or condition exists which constitutes
or, after notice or lapse of time or both,
will constitute,
a material default
on the part of PNFP or any of its
Subsidiaries
under any such
PNFP Contract,
except where such default which will,
either individually or in the
aggregate,
have a Material Adverse Effect on PNFP.
3.15
Agreements
with Regulatory Agencies. Neither PNFP nor any of its
Subsidiaries is subject to any cease-and-desist or other order
issued by, or is
a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or
directive by, or has been since
January 1, 2000, a recipient of any
supervisory letter from, or since January 1,
2000, has adopted any board resolutions at
the request of, any Regulatory Agency
or other Governmental Entity that currently restricts in any material
respect
the conduct of its business, would restrict
the consummation of the transactions
contemplated by this Agreement, or that in any material manner
relates to its
capital adequacy, its credit policies, its management or its business
(each,
whether or not set forth in the PNFP
Disclosure
Schedule, a "PNFP Regulatory
Agreement"), nor to the knowledge of PNFP has PNFP or any
of its
Subsidiaries
been advised since January 1, 2001, by any Regulatory Agency or other
Governmental Entity that it is considering
issuing or requesting
any such PNFP
Regulatory Agreement.
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3.16
Interest Rate Risk Management Instruments. Except as would not be
reasonably likely to have, either
individually or in the
aggregate, a
Material
Adverse Effect on PNFP, (a) all interest rate swaps,
caps, floors and option
agreements and other interest rate risk
management arrangements, whether entered
into for the account of PNFP or for the account
of a customer of PNFP or one of
its Subsidiaries, were entered into in the ordinary
course of business and, to
PNFP's knowledge, in accordance with prudent
banking practice and applicable
rules, regulations and policies of any Regulatory Authority and with
counterparties believed to be financially responsible at the time, and are
legal, valid and binding obligations of PNFP or one of its Subsidiaries
enforceable in accordance with their terms (except as may be limited by
bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting the
rights of creditors generally and the
availability of equitable remedies), and
are in full force and effect; (b) PNFP and each of its
Subsidiaries
have duly
performed in all material respects all of
their material obligations thereunder
to the extent that such obligations to perform have
accrued; and (c) to
PNFP's
knowledge, there are no material breaches,
violations or defaults or allegations
or assertions of such by any party
thereunder.
3.17 Undisclosed
Liabilities.
Except for those
liabilities that are fully
reflected or reserved against on the
consolidated balance sheet of PNFP included
in the PNFP Form 10-Q and for liabilities incurred in the ordinary course of
business consistent with past practice
since June 30, 2005, neither PNFP nor any
of its Subsidiaries has incurred any
liability of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether due or to become
due)
that, either individually or in the
aggregate, has had or
will have, a Material
Adverse Effect on PNFP.
3.18 Insurance.
PNFP and its Subsidiaries have in effect insurance coverage
with reputable insurers or are self-insured, which in respect of amounts,
premiums, types and risks insured,
constitutes
reasonably
adequate coverage
against all risks insured against by bank
holding companies
comparable in size
and operations to PNFP and its
Subsidiaries.
3.19
Environmental Liability. There are no legal, administrative,
arbitral
or other proceedings, claims, actions, causes of action, private
environmental
investigations or remediation activities or governmental
investigations of
any
nature seeking to impose, or that could
reasonably result in the imposition, on
PNFP of any liability or obligation arising
under common law or under any local,
state or federal environmental statute, regulation or ordinance including,
without limitation, the Comprehensive
Environmental
Response, Compensation
and
Liability Act of 1980, as amended
("CERCLA"),
pending or, to the
knowledge of
PNFP, threatened against PNFP, which liability or obligation
will, either
individually or in the aggregate, have a
Material Adverse Effect on PNFP. To the
knowledge of PNFP, there is no reasonable
basis for any such proceeding, claim,
action or governmental investigation that would impose any liability or
obligation that will, individually or in
the aggregate, have a
Material Adverse
Effect on PNFP. PNFP is not subject to any
agreement, order,
judgment, decree,
letter or memorandum by or with any court,
governmental
authority,
regulatory
agency or third party imposing any liability or
obligation with
respect to the
foregoing that will have, either individually or in the aggregate,
a Material
Adverse Effect on PNFP.
3.20 State
Takeover Laws. The Board of Directors of
PNFP has approved the
transactions contemplated by this Agreement for
purposes of Sections 48-103-101
through 48-103-505 of the TBCA, if
applicable to PNFP, such that the provisions
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of such sections of the TBCA will not apply to this
Agreement or any of the
transactions contemplated hereby or
thereby.
3.21
Reorganization. As of the date of this Agreement, PNFP is not aware
of
any fact or circumstance that would
reasonably be expected to prevent the Merger
from qualifying as a "reorganization" within the meaning of Section
368(a) of
the Code.
3.22
Information
Supplied. None of the information supplied or to be
supplied by PNFP for inclusion or
incorporation by reference in (i) the Form S-4
will, at the time the Form S-4 is filed
with the SEC and at the time it becomes
effective under the Securities Act,
contain any untrue
statement of a
material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (ii) the Joint
Proxy Statement will, at the date of
mailing to shareholders and at the times of
the meetings of shareholders to be held in connection with the
Merger, contain
any untrue statement of a material fact or omit to state any
material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Joint Proxy Statement will comply as to form in all
material
respects with the requirements of the
Exchange Act and the rules and regulations
of the SEC thereunder, except that no
representation or warranty is made by PNFP
with respect to statements made or
incorporated
by reference
therein based on
information supplied by CAVB for inclusion or
incorporation by reference in the
Joint Proxy Statement.
3.23
Internal Controls. The records, systems, controls, data and
information of PNFP and its Subsidiaries are recorded,
stored, maintained and
operated under means (including any electronic, mechanical or photographic
process, whether computerized or not) that
are under the exclusive ownership and
direct control of PNFP or its Subsidiaries or accountants
(including all
means
of access thereto and therefrom), except for any non-exclusive ownership and
non-direct control that would not
reasonably
be expected to have a
Materially
Adverse Effect on the system of internal
accounting
controls described in the
following sentence. As and to the extent described in the PNFP Reports
filed
with the SEC prior to the date hereof,
PNFP and its
Subsidiaries
have devised
and maintain a system of internal
accounting
controls sufficient to provide
reasonable assurances regarding the reliability of
financial reporting and the
preparation of financial statements in accordance with GAAP. PNFP (i) has
designed disclosure controls and procedures
to ensure that material information
relating to PNFP, including its
consolidated Subsidiaries, is made known to the
management of PNFP by others within those entities, and (ii) has disclosed,
based on its most recent evaluation prior to the date hereof, to PNFP's
independent registered public accounting firm
and the audit committee of PNFP's
Board of Directors (x) any significant
deficiencies and
material weaknesses
in
the design or operation of internal
control over financial
reporting which
are
reasonably likely to adversely affect PNFP's ability to record, process,
summarize and report financial information and (y) any fraud, whether or not
material, that involves management or other employees who have a
significant
role in PNFP's internal control over financial reporting. PNFP has made
available to CAVB a summary of any such
disclosure made by
management to PNFP's
auditors and audit committee since January 1, 2002. PNFP is in
full compliance
with Section 404 of the Sarbanes-Oxley Act
of 2002.
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3.24 Opinion of
PNFP Financial
Advisor. PNFP has received the opinion
of
its
financial advisor, Raymond James & Associates,
Inc., dated the date of this
Agreement, to the effect that the Merger
Consideration is fair, from a financial
point of view, to PNFP and the holders of
PNFP Common Stock.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
OF CAVB
Except as disclosed in (a)
the CAVB Reports
(defined below) filed prior to
the date hereof or (b) the disclosure
schedule (the "CAVB Disclosure Schedule")
delivered by CAVB to PNFP prior to the execution of this Agreement (which
schedule sets forth, among other things, items the disclosure of which is
necessary or appropriate either in response
to an express disclosure requirement
contained in a provision hereof or as an exception to one or more
representations or warranties contained in this Article IV or to
one or more of
CAVB's covenants contained in Article V, provided, however, that,
notwithstanding anything in this Agreement to the
contrary, (i) no such item is
required to be set forth in such schedule
as an exception to a representation or
warranty if its absence would not result in the related representation or
warranty being deemed untrue or incorrect under the standard established by
Section 9.2, and (ii) the mere inclusion of an item in such schedule as an
exception to a representation or warranty shall not be deemed an
admission that
such item represents a material exception
