EX-10.25 LEASE AGREEMENT

 

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                                                                   Exhibit 10.25

 

                                 LEASE AGREEMENT

 

      THIS LEASE AGREEMENT (this "Lease"), is made and entered into this 7th

day of October, 2003, by and between EVALINA HARWELL ANDREWS, BUCKHEAD

INVESTMENTS LLC, a Tennessee limited liability company, SAM K. HARWELL, IV, FRED

RUSSELL HARWELL AND JAMES D. HARWELL (hereinafter collectively called

"Landlord"), and PINNACLE NATIONAL BANK, a nationally chartered bank

(hereinafter called "Tenant").

 

                                   WITNESSETH:

 

1. PREMISES.

 

      Landlord, for and in consideration of the rents, covenants and agreements

hereinafter mentioned and hereby agreed to be paid, kept and performed by

Tenant, hereby leases to Tenant, and Tenant hereby accepts and leases from

Landlord, the office building, other improvements and land (the "Premises")

situated at the corner of West End Avenue and 23rd Avenue North in Nashville,

Davidson County, Tennessee. The Premises is more particularly described on

Exhibit "A" attached hereto and incorporated herein by reference. The depiction

and location of the Premises as described on Exhibit "A" shall be subject to

such changes during the alterations to the Premises made by Tenant and Tenant's

contractors, as set forth more fully in Section 9 of this Lease. Upon such

changes being approved by Landlord pursuant to said Section 9, Exhibit "A" shall

be deemed to have been expressly modified and amended herein in accordance with

such changes.

 

      TO HAVE AND TO HOLD the Premises unto Tenant for the term, and subject to

all the covenants, agreements, terms, provisions and conditions as herein set

forth.

 

2. TERM.

 

      (a). Original Term. The commencement of the term of this Lease shall be

the date of delivery of possession of the Premises by the Landlord to the

Tenant, which shall be the date Landlord furnishes written notice to Tenant that

the current tenant of the Premises (the "Current Tenant") has vacated the

Premises (the "Commencement Date"), which date shall not be earlier than January

1, 2004, and the term of this Lease shall end, unless sooner terminated as

herein provided, on the day preceding the tenth (10th) anniversary of the

Commencement Date (the "Expiration Date"), both dates inclusive (the "Original

Term"). The Target Commencement Date is January 1, 2004. In the event the

Premises shall not be ready for possession by Tenant on the Target Commencement

Date for whatever reason, Landlord shall not be subject to any liability (other

than as provided in Section 4 hereof) for the failure to deliver possession on

said date, and this Lease shall remain in full force and effect. In such event,

the Original Term hereof shall begin on the first day the Premises are

thereafter ready for possession, with the Commencement Date and the Expiration

Date being extended accordingly. Landlord shall use its good faith efforts to

furnish possession to Tenant on the Target Commencement Date, provided, however,

Tenant understands and acknowledges that the lease with the Existing Tenant

contains an expiration date of May 31, 2004. If the Commencement Date shall be

other than the first day of a month, then the Original Term shall be extended

for the number of days from the Commencement Date through and including the last

day of the calendar month in which the Commencement Date occurs so that the last

day of the Original Term will normally fall on the last day of a calendar month.

 

      (b). Option Term. Tenant shall have and is hereby given two (2) separate

options to renew and extend the Original Term of this Lease for a period of five

(5) years each (each of the five (5) year option periods shall hereinafter be

referred to separately as the "First Option Term" and the "Second Option Term,"

and collectively the First Option Term and the Second Option Term shall be

referred to as the "Option Terms"). The lease of the Premises during the Option

Terms shall be on the same terms and conditions as herein set forth except that

the rental to be paid during the period of the Option Terms shall be as

hereinafter specifically provided. Tenant shall not have the right to exercise

the First Option Term if: (1) Tenant is, or has been, in default beyond the

applicable cure period

 

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under any of the terms, provisions and covenants of the Lease at any time during

the Original Term, or (2) Tenant has assigned or sublet any or all of its

interest in this Lease. Tenant shall not have the right to exercise the Second

Option Term if: (1) Tenant did not exercise the First Option Term, or (2) Tenant

is, or has been, in default beyond the applicable cure period under any of the

terms, provisions and covenants of the Lease at any time during the Original

Term or the First Option Term, or (3) Tenant has assigned or sublet any or all

of its interest in this Lease. In order to exercise the Option Terms, Tenant

shall give Landlord written notice of its election at least twelve (12) months

prior to the expiration of the Original Term or the First Option Term, whichever

is applicable. Upon the furnishing of such notice, this Lease shall thereupon be

so extended and renewed without the execution of any other document. Failure by

Tenant to notify Landlord of Tenant's exercise of any option herein granted in

the manner and within the time period set forth herein shall constitute a waiver

of said option to renew, and all subsequent options to renew. All references in

this instrument to the term of this Lease shall mean and include the Original

Term and the Option Terms.

 

3. RENT.

 

      Tenant shall, without deduction, abatement or setoff of any nature

whatsoever, pay to Landlord during the first year of the Term beginning on the

Commencement Date (as defined herein) of this Lease as rent for the Premises an

amount equal to $140,000 per year, or $11,666.67 per month. The rent shall

escalate each year thereafter in the Original Term by two percent (2%) annually.

 

      Rent in the first year of the First Option Term shall equal the greater

of: (1) a two percent (2%) increase over the rent paid in year ten (10) of the

Original Term, or (2) $140,000 multiplied by the percentage increase in the

Consumer Price Index for all items for all Urban Consumers (CPI-U) as published

by the Bureau of Labor Statistics for the period from January 1, 2004 to the

month preceding the last month of the Original Term. Rent for each successive

year during the First Option Term shall escalate by two percent (2%) annually.

 

      Rent in the first year of the Second Option Term shall equal the greater

of: (1) a two percent (2%) increase over the rent paid in year five (5) of the

First Option Term, or (2) $140,000 multiplied by the percentage increase in the

Consumer Price Index for all items for all Urban Consumers (CPI-U) as published

by the Bureau of Labor Statistics for the period from January 1, 2004 to the

month preceding the last month of the First Option Term. Rent for each

successive year during the Second Option Term shall escalate by two percent (2%)

annually.

 

      Rent is payable in equal monthly installments, in advance and without

demand on the first day of each and every month during the term of this Lease

to:

 

      (1) one third of each monthly rent payment shall be paid to Evalina

Harwell Andrews, 1624 Chickering Road, Nashville, Tennessee 37215;

 

      (2) one third of each monthly rent payment shall be paid to Buckhead

Investments LLC, 1181 Northmoor Court, Atlanta, Georgia, 30327;

 

      (3) one ninth of each monthly rent payment shall be paid to Sam Harwell,

IV, 42 Wyn Oak, Nashville, Tennessee 37205;

 

      (4) one ninth of each monthly rent payment shall be paid to Fred Russell

Harwell, 3804 Brighton Road, Nashville, Tennessee 37205;

 

      (5) one ninth of each monthly rent payment shall be paid to James D.

Harwell, c/o Fred Russell Harwell, 3804 Brighton Road, Nashville, Tennessee

37205;

 

(or such other address furnished in writing by Tenant to Landlord following

execution of this Lease).

 

      Tenant shall pay the first monthly installment of rent on the execution of

this Lease. In the event that Landlord shall not have received any payment due

hereunder within ten (10) days of the date due, Tenant shall pay a late payment

fee equal to five percent (5%) of the amount not paid. In the event that the

Original Term of this Lease

 

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shall commence on a date other than on the first day of a calendar month, the

Original Term shall be extended as provided in Section 2 and Tenant shall pay

pro rated rent for such period based on the number of days involved multiplied

by the then current rent, which payment, together with the rent for the

immediately succeeding full calendar month, shall be due and payable on the

Commencement Date of the Original Term.

 

4. RENT ABATEMENT.

 

   Landlord and Tenant understand that the date of delivery of possession of

the Premises and the corresponding commencement of this Lease is subject to the

Current Tenant vacating the Premises, as described more fully in Section 2 of

this Lease. For each day in which possession is delayed between the Target

Commencement Date and the Commencement Date (both as defined in Section 2),

Tenant shall be entitled to free rent in the amount of $537 per day (the "Daily

Free Rent Abatement Amount"). For example, if the Commencement Date of this

Lease is January 31, 2004, Tenant shall be entitled to free rent of $16,647 (31

days times $537 per day) and Tenant, instead of paying the fixed rent of

$11,666.67 for each of the months of February and March of 2004, would pay no

rent for the month of February 2004, would pay rent of $6687.34 for the month of

March 2004, and would pay rent of $11,666.67 for the month of April 2004 and

continue to pay the rent set forth in this Lease thereafter. Notwithstanding the

foregoing, if this Lease is not executed by both Landlord and Tenant on or

before Tuesday, September 30, 2003, despite the good faith efforts of both

parties in the negotiation and execution of the Lease, the Daily Free Rent

Abatement Amount shall be reduced by each day following September 30, 2003 until

the Lease is executed by Landlord and Tenant. For example, if the Lease is fully

executed on October 15, 2003 (15 days after September 30, 2003), the Daily Free

Rent Abatement Amount to be calculated by the parties for the period of time

between the Target Commencement Date and the Commencement Date, as provided in

this Section 4, shall be reduced by $8,055.00 (or 15 days times $537.00 per

day).

 

5. NET LEASE.

 

   This Lease is intended to be, and shall be construed as, an absolutely net

lease, whereby under all circumstances and conditions (whether now or hereafter

existing or within the contemplation of the parties) the rent payable to

Landlord shall be a completely net return to Landlord throughout the term of

this Lease; and Tenant shall pay, and shall indemnify, defend and hold harmless

Landlord from and against any and all claims, losses, damages, impositions,

offsets, expenses, costs, liabilities, obligations and charges of any kind

whatsoever (including, without limitation, reasonable attorney's fees) which

shall arise or be incurred, or shall become due, during the Original Term and

any Option Terms of this Lease, with respect to or in connection with, the

Premises and/or the maintenance, repair, rebuilding, use or occupation thereof,

or any portion thereof. Landlord shall not be required to provide any services

or do any act in connection with the Premises, and the rent under this Lease

shall be paid to Landlord without any claim on the part of Tenant for diminution

or abatement, and the fact that Tenant's use and occupancy of the Premises shall

be disturbed or prevented by any cause whatsoever shall not in any way suspend,

abate or reduce the rent to be paid under this Lease, or otherwise affect

Tenant's obligations under this Lease.

 

6. UTILITIES.

 

      (a). Charges. Tenant agrees to pay all charges for all utilities used,

rendered or supplied upon or in connection with the Premises. Tenant shall make

application for and arrange for and pay or cause to be paid all charges for

electricity, gas, water, telephone and any other utility services used, rendered

or supplied upon or in connection with the Premises and shall indemnify and save

harmless Landlord against any liability or charges on account thereof.

 

      (b). Liability. Landlord shall not be liable to Tenant for any damage

should any utility service be interrupted because of repairs, renewals,

improvements, alterations, strikes, lockouts, accidents, or any other cause. Any

such interruption of service shall never be deemed an eviction or disturbance of

Tenant's use and possession of the Premises or any part thereof or relieve

Tenant from performance of Tenant's obligations under this Lease.

 

7. ASSIGNMENT AND SUBLETTING.

 

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      (a). No Assignment. Tenant shall not, without the prior written consent of

Landlord, not to be unreasonably withheld, assign this Lease or any interest

therein or sublet the Premises, or any part thereof, or permit the use of the

Premises by any party other than Tenant, and in the case of any such assignment

or subletting to which Landlord shall have consented, a copy of the instrument

of assignment or subletting shall be delivered to Landlord promptly upon the

making of such assignment or upon such subletting. The sale, issuance or

transfer, at any time, of fifty percent (50%) or more of the voting capital

stock of Tenant or Pinnacle Financial Partners, Inc. shall be deemed to be an

assignment of this Lease within the meaning of this Section, unless such sale

issuance or transfer is to an entity whose assets are equal to or greater than

Tenant and Pinnacle Financial Partners, Inc. as of the Commencement Date of this

Lease. Consent to any assignment, subrent or sublease shall not be deemed to be

a consent to any subsequent assignment, subrent or sublease; and all subsequent

assignments, subrentals or subleases shall be made likewise only on the prior

written consent of Landlord. If Landlord shall consent to an assignment, the

assignee of Tenant shall, in writing, assume the obligations of Tenant

hereunder, so as to become directly liable to Landlord for all such obligations.

Such assumption shall be incorporated in the instrument of assignment, a copy of

which shall be delivered to Landlord. No sublease, subrental or assignment by

Tenant shall relieve Tenant of any liability hereunder. In the event that

Landlord approves Tenant's assignment or subletting of this Lease, Tenant shall

pay to Landlord: (1) a fee of one thousand dollars ($1000.00) for the processing

by Landlord of the necessary documents in connection with such transaction and

(2) fifty percent (50%) of any monies received by Tenant as a result of the

assignment or subletting which are in excess of the rent payable by Tenant

hereunder.

 

      (b). Basis for Withholding Consent. Without limiting the other instances

in which it may be reasonable for Landlord to withhold its consent, Landlord and

Tenant acknowledge that it shall be reasonable for Landlord to withhold its

consent in the following instances: (1) if, at the time consent is requested or

at any time prior to the granting of consent, Tenant is or has been in default

under this Lease; (2) if, in Landlord's reasonable judgment, the quality or

character of the business to be conducted in the Premises is or may be adversely

affected during the term of this Lease as a result of the transaction for which

consent is requested; (3) if, in Landlord's reasonable judgment, the financial

worth of a proposed assignee or sublessee does not meet the credit standards

required by Landlord, or the experience of the proposed transferee, assignee,

sublessee, or licensee in the type of business conducted in the Premises is not

at least equal to that of Tenant, or its reputation for business integrity and

quality of operations is not excellent; and (4) in the case of a subletting, if

the subletting is of less than the entire Premises.

 

      (c). Landlord's Assignment. Landlord, at any time, and from time to time,

may make an assignment of its interest in this Lease, and, in the event of such

assignment and the assumption by the assignee of the covenants and agreements to

be performed by Landlord herein, Landlord and its successors and assigns (other

than the assignee of this Lease) shall be released from any and all liability

hereunder.

 

8. CONDITION OF PREMISES.

 

      Landlord to its knowledge upon reasonable investigation represents and

warrants to Tenant that it has no knowledge of any Hazardous Substances (as

defined in Section 29) in, on or under the Premises. Landlord further represents

and warrants to Tenant that it has good title to the Premises and said Premises

are not encumbered by any mortgage liens. As to all other matters, Tenant has

inspected the Premises and accepts them WITH ALL FAULTS and in their present "AS

IS" condition. Other than as set forth above, Landlord has made no statement,

representation or warranty regarding the condition of the Premises. As a

material consideration for Landlord to enter into this Lease, Tenant releases

and discharges Landlord from any and all duty or obligation to provide to Tenant

any notice or disclosure of any defect, latent or otherwise, in the Premises,

other than as set forth above.

 

9. TENANT'S ALTERATIONS.

 

      (a). Landlord Approval. Tenant shall make no alterations, installations,

additions or improvements in or to the Premises throughout the Original Term and

the Option Terms without Landlord's prior written consent. Landlord's consent

and approval required by the preceding sentence shall not be unreasonably

withheld or delayed. Landlord's consent shall be deemed given if Landlord has

not responded to such request within seven (7) business days following receipt

of Tenant's written request for approval. Provided however, Landlord has

approved in advance the conceptual drawings and construction work described on

attached Exhibit "B" (the "Initial Bank Improvements"). The Initial Bank

Improvements and all subsequent work, alterations, installations, additions and

 

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improvements shall be done at Tenant's sole cost and expense. Prior to

commencement of such work, Tenant shall obtain and deliver to Landlord written,

unconditional waivers of mechanic's or other liens on the real property (to the

extent permitted by law) in which the Premises are located, signed by all

architects, engineers, contractors, mechanics and designers to become involved

in such work. Tenant shall also provide at Landlord's request such financial

security as Landlord shall require to guarantee completion of Tenant's work and

payment of all contractors and suppliers utilized in connection therewith.

 

      Any Tenant's work in the Premises, other than the Initial Bank

Improvements, shall be effected solely in accordance with plans and

specifications first approved in writing by Landlord. Tenant shall reimburse

Landlord promptly upon demand for any costs and expenses incurred by Landlord in

connection with Landlord's review of such Tenant's plans and specifications.

Landlord will not unreasonably withhold or delay its consent to requests for

alterations, additions and improvements (provided they will not materially

adversely affect the Premises' structure, electrical, HVAC, plumbing or

mechanical systems).

 

       Any such approved alterations and improvements (including the Initial Bank

Improvements) shall be performed in accordance with the foregoing and the

following provisions of this Section:

 

      1. All work shall be done in a good and workmanlike manner.

 

      2. Tenant covenants and agrees to pay to its contractor, as the work

      progresses, the entire cost of supplying the materials and performing the

      work shown on Tenant's approved plans and specifications.

 

      3. All such alterations shall be effected in compliance with all

      applicable laws, ordinances, rules and regulations of governmental bodies

      having or asserting jurisdiction in the Premises and in accordance with

      Landlord's rules and regulations, as from time to time promulgated, with

      respect to alterations.

 

      4. With respect to the Initial Bank Improvements, Tenant shall furnish to

      Landlord a complete set of the plans and specifications when available.

      The work by Tenant and Tenant's contractor to complete the Initial Bank

      Improvements shall not be materially different than as shown on the

      description of the Initial Bank Improvements attached as Exhibit "B"

      hereto.

 

      5. During the progress of the work to be done by Tenant, all work shall be

      subject to inspection by representatives of Landlord who shall be

      permitted access and the opportunity to inspect, at all reasonable times,

      but this provision shall not in any way whatsoever create any obligation

      on Landlord to conduct such an inspection.

 

      6. Prior to commencement of any work, Tenant shall furnish to Landlord

      certificates from its general contractor evidencing the existence of:

 

            (i) workmen's compensation insurance covering all persons employed

            for such work; and

 

            (ii) comprehensive general liability and property insurance naming

            Landlord, its designees and Tenant as insureds, with coverage of at

            least Five Million ($5,000,000) Dollars single limit.

 

      7. Upon completion of any work, including the Initial Bank Improvements,

      Tenant shall provide to Landlord a complete set of as-built plans for the

      Premises.

 

      (b). No Landlord Liability. Notice is hereby given that Landlord shall not

be liable for any labor or materials furnished or to be furnished to Tenant upon

credit, and that no mechanic's or other lien for any such labor or materials

shall attach to or affect the reversion or other estate or interest of Landlord

in and to the Premises.

 

      (c). Mechanic's Liens. Any mechanic's lien filed against the Premises for

work claimed to have been done for or materials claimed to have been furnished

to Tenant shall be discharged by Tenant at its expense within thirty (30) days

after such filing, by payment, filing of the bond required by law or otherwise.

 

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      (d). Fixtures. All alterations, installation, additions and improvements

made and installed by Tenant, or at Tenant's expense, upon or in the Premises

which are of a permanent nature and which cannot be removed without damage to

the Premises shall become and be the property of Landlord, and shall remain upon

and be surrendered with the Premises as a part thereof at the end of the term of

the Lease, except that Landlord shall have the right and privilege at any time

up to six (6) months prior to the expiration of the term of this Lease to serve

notice upon Tenant that any of such alterations, installations, additions and

improvements shall be removed and, in the event of service of such notice,

Tenant will, at Tenant's own cost and expense, remove the same in accordance

with such request, and restore the Premises to its original condition, ordinary

wear and tear excepted.

 

      (e). Trade Fixtures. Where furnished by or at the expense of Tenant, all

furniture, furnishings and trade fixtures, and any other movable property shall

remain the property of Tenant which may at its option remove all or any part

thereof at any time prior to the expiration of the term of this Lease. In case

Tenant shall decide not to remove any part of such property, Tenant shall notify

Landlord in writing no less than three (3) months prior to the expiration of the

term of this Lease, specifying the items of property which it has decided not to

remove. If, within thirty (30) days after the service of such notice, Landlord

shall request Tenant to remove any of the said property, Tenant shall at its

expense remove the same in accordance with such request. As to such property

which Landlord does not request Tenant to remove, the same shall be, if left by

Tenant, deemed abandoned by Tenant and thereupon the same shall become the

property of Landlord.

 

      (f). Abandoned Property. If any alterations, installations, additions,

improvements or other property which Tenant shall have the right to remove or be

requested by Landlord to remove as provided herein are not removed on or prior

to the expiration of the term of this Lease, Landlord shall have the right to

remove the property and to dispose of the same without accountability to Tenant

and at the sole cost and expense of Tenant. In case of any damage to the

Premises resulting from the removal of the property, Tenant shall repair such

damage or, in default thereof, shall reimburse Landlord for Landlord's cost in

repairing such damage. This obligation shall survive any termination of this

Lease.

 

10. REPAIR.

 

   Tenant shall keep and maintain the interior and exterior of the Premises

in good condition