Company Name: Green Bankshares, Inc. (Frank Inman)
Public Availability Date: February 13, 2008
Document Sections:
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
January11, 2008
VIA FEDERAL EXPRESS
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
100 F Street, N.E.
Washington, D.C. 20549
Re: Green Bankshares, Inc. Shareholder Proposal Submitted by Frank Coleman Inman
Ladies and Gentlemen:
Our client, Green Bankshares, Inc., a Tennessee corporation (the "Company"), has
received from Frank Coleman Inman (the "Proponent") a shareholder proposal and
supporting statement (the "Proposal") for inclusion in the Company's proxy
statement and form of proxy for its 2008 Annual Meeting of Shareholders (the
"Proxy Materials"). A copy of the Proposal and the accompanying letter from the
Proponent are attached to this letter as Exhibit A. The Company believes that it
properly may omit the Proposal from the Proxy Materials for the reasons
discussed in this letter. The Company also hereby requests a waiver from the
requirement of Rule 14a-8(j)(1) that this letter be submitted at least 80
calendar days before the Company files the Proxy Materials with the Securities
and Exchange Commission (the "Commission").
A. Description of the Proposals
On December 20, 2007, the Company received from the Proponent a proposal in the
form of a resolution stating that "[t]he shareholders request that our Board
establish a rule (firmly specified in our charter or bylaws if feasible) that
our director nominees must each receive support from at least fifty percent of
share votes cast to obtain a seat on our board of directors. Shareholders will
be provided in the proxy materials with the director nominee names, SEC-required
declarations, biographical sketches, and photographs."
B. Summary of the Company's Position
On behalf of the Company, we respectfully request confirmation that the staff of
the Division of Corporation Finance (the "Staff") will not recommend any
enforcement action to the Commission if the Company excludes the Proposal from
its Proxy Materials, in reliance on those provisions of Rule 14a-8 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), discussed
below. The Company has advised us as to the factual matters set forth herein.
Pursuant to Rule 14a-8(j) under the Exchange Act, we have enclosed, on behalf of
the Company, six (6) copies of this request letter and its attachments. We have
also enclosed an additional copy of this letter, which we would appreciate
having file stamped and returned to us in the enclosed, pre-paid envelope. As
also required by Rule 14a-8(j), we are sending today a copy of this letter and
its attachments to the Proponent as notice of the Company's intention to omit
the Proposal from the Proxy Materials.
C. Proposal May Be Omitted Under Rule 14a-8(b)
On May 18, 2007, the Company merged with and thereby acquired Civitas BankGroup,
Inc. ("Civitas"), with the Company remaining as the surviving entity. On that
date, each share of Civitas common stock issued and outstanding was converted,
at the election of each Civitas shareholder, into the right to receive cash,
Company common stock, or a combination of cash and Company common stock subject,
in each case, to certain adjustment procedures.
The eligibility requirements of Rule 14a-8(b) establish that a proponent must
continuously have held at least $2,000 in market value, or 1%, of the Company's
securities entitled to be voted on the proposal at the meeting for at least one
year by the date of the proposal's submission. The Company, after consulting
with its transfer agent, could find no record of the Proponent owning Company
common stock prior to the effective time of the merger. In an attempt to confirm
with the Proponent whether or not he had held shares of the Company's common
stock prior to the effective time of the merger and for the required one year
holding period, the Company sent a letter to the Proponent asking that the
Proponent confirm, and provide evidence to the Company, that the Proponent had
held the necessary amount of shares of the Company's common stock for a period
of at least one year prior to the date of the Proponent's submission of his
Proposal. A copy of this letter, which was delivered to the Proponent on
December 29, 2007, is attached to this letter as Exhibit B. In response to the
Company's request, the Proponent sent a letter to the Company that was received
by the Company on January 3, 2008. This letter, a copy of which is attached to
this letter as Exhibit C, indicates that the Proponent holds his shares of
Company common stock in certificated form rather than in street name. Further,
the letter does not assert that the Proponent has held his shares of Company
common stock for the required one-year period. Instead, the Proponent suggests
in his letter that he has held his shares of Civitas common stock for longer
than one year and that the holding period for the Civitas common stock should be
added to the holding period of the Proponent's Company common stock for purposes
of determining whether or not he has satisfied the one-year holding period
required under Rule 14a-8(b). As a result of its review of its shareholder
record and the substance of the Proponent's letter dated January 2, 2008, the
Company believes that the Proponent's share ownership and holding period for
shares of the Company's common stock did not commence until May 18, 2007, the
effective date of the merger. Therefore, the Proponent has not held the
Company's securities for at least one year by the date of the Proposal's
submission, and the Proponent has failed to demonstrate his eligibility to
submit a shareholder proposal under Rule 14a-8 under the Exchange Act as a
holder of Company common stock.
The Staff has repeatedly taken the position that when a proponent acquires
shares of voting securities in connection with a plan of merger, as is the case
in this situation, the transaction constitutes a separate sale and purchase of
securities for the purposes of the federal securities laws. Therefore, ownership
in the acquiring company's stock does not commence for purposes of Rule 14a-8
until the effective time of the merger. The Staff also has consistently granted
no action relief in similar situations where the merger occurred less than one
year before the shareholder proposal was submitted. See also, Applied Power
(available October 4, 1999); Sempra Energy (available February 8, 1999), Baker
Hughes Incorporated (available February 4, 1999), Exelon Corporation (available
March 15, 2001), Dow Chemical Company (available February 26, 2002) and AT&T
Corp. (available January 18, 2007).
Because the effective time of the merger of Civitas with and into the Company
did not occur at least one year before the date of the Proposal's submission,
the Proponent does not satisfy the one-year holding period required by Rule
14a-8(b) under the Exchange Act and, as such, is not eligible to submit the
Proposal to the Company under Rule 14a-8 for inclusion in the Proxy Materials.
Good-Cause Exception to Rule 14a-8(j)(1)
The Company also respectfully requests that the Staff waive the requirement
under Rule 14a-8(j)(1) under the Exchange Act that the Company file its reasons
for excluding the Proposal no later than 80 calendar days before it files the
Proxy Materials with the Commission. Rule 14a-8(j)(1) under the Exchange Act
provides that the Staff may permit the Company to seek relief from the 80-day
deadline upon a showing that good cause exists for missing a deadline.
The Proposal was received by the Company on December 20, 2007. On December 27,
2007, the Company sent notices of defect to the Proponent notifying the
Proponent of the procedural defects relating to the Proposal and requesting that
the Proponent provide the proof of ownership required by Rule 14a-8. The Company
received a response from the Proponent on January 3, 2008, but sufficient proof
of ownership was not provided. The Company promptly requested that we begin
preparing this request but is now within the 80-day deadline required by Rule
14a-8(j)(1) as the Company expects to file its Proxy Materials with the
Commission on or before March 27, 2008. Because of the desire of the Company to
give the Proponent sufficient time to confirm that he met the requirements of
Rule 14a-8(b) and the fact that this response has been filed within a reasonable
time after receiving the Proponent's response to the notices of defect, the
Company respectfully requests that the Commission waive the requirement under
Rule 14a-8(j)(1) that this letter be submitted at least 80 calendar days before
it files the Proxy Materials with the Commission.
D. Conclusion
For the foregoing reasons, and without addressing or waiving any other possible
grounds for exclusion, we respectfully request that the Staff concur in the
Company's judgment that the Proposal may be properly omitted from the Proxy
Materials and confirm that the Staff will not recommend any enforcement action
to the Commission if the Proposal is omitted from the Proxy Materials.
Please do not hesitate to call me at (615) 742-7721, if I can be of any further
assistance in this matter.
Sincerely,
/s/
D. Scott Holley
cc: Frank Coleman Inman
600 Cherry Drive, #3
Eugene, Oregon 97401-6644
James E. Adams
Green Bankshares, Inc.
100 North Main Street
Greenville, Tennessee 37743
[INQUIRY LETTER]
December 19, 2007
Secretary
Green Bankshares, Inc.
100 North Main Street
P.O. Box 1120
Greeneville, Tennessee 37743
Dear Corporate Secretary:
The following is my stockholder's proposal for consideration at the Green
Bankshares' 2008 Annual Meeting of Shareholders:
Stockholder Proposal Regarding Majority Election of Directors Resolved: The
shareholders request that our Board establish a rule (firmly specified in our
charter or bylaws if feasible) that our director nominees must each receive
support from at least fifty percent of share votes cast to obtain a seat on our
board of directors. Shareholders will be provided in the proxy materials with
the director nominee names, SEC-required declarations, biographical sketches,
and photographs.
Stockholder's Statement Supporting Item In typical corporate board elections,
stockholders have only one director nominee option for each open board position.
Any shareholder(s) can withhold votes for any or all nominees, but lacking the
need for a majority of share votes cast, the election results remain
preordained.
In most years (because of our typically uncontested elections), only one
stockholder need vote only one share for a board nominated director to ensure
that director's election. This is clearly sub-optimal, and raises accountability
and control issues for many shareholders. We can do better!
Director priorities other than maximizing shareholder wealth have often
contributed to corporations underperforming. While the merger with Civitas in
May 2007 gained GreenBank a footprint in a prestigious area, how many pre-merger
Green Bankshares stockholders would vote in favor again? Our stock price
dramatically fell (more than that of most similar sized banks) from the time of
pre-merger announcement to post-merger wrap-up.
Hopefully, we will be the smaller bank in any future merger, since smaller bank
stockholders are more likely to grow wealthier, i.e. Civitas stockholders.
Majority voting is recommended by nearly all corporate governance experts; forms
have been successfully implemented by many successful corporations, including
U.S. Bancorp, Lockheed Martin, Best Buy Co., and Bank of America.
Providing positive, practical, and meaningful director elections for
stockholders may increase our Green Bankshares stock price, via more stockholder
control of our GreenBank investments and more interest from sophisticated
investors who demand best practices. Corporate governance may improve most via
better board elections, and this practical solution makes sense for the vast
majority of Green Bankshares stockholders.
Please vote "FOR" this pro-stockholder proposal.
The above concludes my stockholder's proposal to be included in the proxy
statement for the 2008 Annual Meeting of Shareholders. At this meeting, I plan
to present this proposal. As I am submitting this proposal prior to the December
24, 2007 proxy statement deadline, the favor of a prompt reply is requested.
Of course, I intend to continually hold at least $2,000 worth of Green
Bankshares common stock through the 2008 Green Bankshares annual stockholders'
meeting, per SEC requirements for a stockholder's proposal.
Sincerely,
/s/
Frank Coleman Inman
[INQUIRY LETTER]
January15, 2008
Via Priority Mail with Delivery Confirmation
U.S. Securities and Exchange Commission
Division of Corporate Finance
Office of Chief Counsel
100 F Street, N.E.
Washington, D.C. 20549
Re: Green Bankshares, Inc. Shareholder Proposal Submitted by Frank Coleman Inman
Ladies and Gentlemen:
I am seeking inclusion of my stockholder's proposal (Exhibit A) in the Green
Bankshares, Inc. proxy materials for the 2008 Annual Meeting of Shareholders.
Green Bankshares, Inc is seeking to exclude this timely submitted proposal
penalty free. Plus, the bank seeks "...a waiver from requirement of Rule
14a-8(j)(1) that this [their] letter be submitted at least 80 calender days..."
before Green Bankshares, Inc. files the Proxy Materials with the SEC.
Enclosed, beyond this letter, should be the same correspondence from GreenBank,
the bank's lawyer, and myself (sent from Bass, Berry & Sims PLC) received by the
SEC on 1/14/08, if you received it on the same day as me.
Supporting the inclusion of the stockholder's proposal is a letter (Exhibit C)
proving the continuous multi-year ownership of Green Bankshares, Inc. or Civitas
BankGroup, Inc. Civitas BankGroup, Inc. and Greene County Bancshares, Inc. were
the two banks that merged, resulting in Green Bankshares, Inc. With this letter,
I also sent Green Bankshares, Inc. a plethora of copied Green Bankshares, Inc.
and Civitas BankGroup, Inc. common stock certificates and dividend receipts
proving my continuous stock ownership for many years. My common stock
certificates are held by me in paper form.
Since the two aforementioned banks in our merger (Civitas Bankgroup, Inc. and
Greene County Bancshares, Inc.) were close enough in value that shareholders of
each bank had to vote to approve the merger, I believe that the examples cited
by Bass, Berry & Sims PLC (middle of page 3 of their letter) do not apply. Thus,
I believe that I have met the SEC eligibility requirements (Rule 14a-8(b)) of
holding at least $2,000 in market value of our stock for at least one year, and
that Green Bankshares, Inc. does not have the right to exclude my proposal
penalty free.
As to GreenBank's request for an exemption to the 80 day rule, I ask that you
give the bank the same level of scrutiny that GreenBank has given to my
stockholder's proposal.
Like Green Bankshares, Inc., I am sending six (6) sets of this material to you.
Please contact me for further information. Thank you.
Sincerely,
/s/
Frank Coleman Inman
Green Bankshares, Inc. Stockholder
cc: James E. Adams
Green Bankshares, Inc.
100 North Main Street
Greeneville, Tennessee 37743
[STAFF REPLY LETTER]
February13, 2008
Response of the Office of Chief Counsel Division of Corporation Finance
Re: Green Bankshares, Inc. Incoming letter dated January 11, 2008
The proposal relates to a majority vote standard.
There appears to be some basis for your view that Green Bankshares may exclude
the proposal under rule 14a-8(b), because at the time the proponent submitted
the proposal, he did not own for one year 1% or $ 2,000 in market value of Green
Bankshares securities entitled to be voted at the meeting, as required by rule
14a-8(b). We note in particular that the proponent acquired shares of Green
Bankshares voting securities in connection with a plan of merger involving Green
Bankshares. In light of the fact that the transaction in which the proponent
acquired these shares appears to constitute a separate sale and purchase of
securities for the purposes of the federal securities laws, it is our view that
the proponent's holding period for Green Bankshares shares did not commence
earlier than May 18, 2007, the effective time of the merger. Accordingly, we
will not recommend enforcement action to the Commission if Green Bankshares
omits the proposal from its proxy materials in reliance on rule 14a-8(b).
We note that Green Bankshares did not file its statement of objections to
including the proposal at least 80 days before the date on which it will file
definitive proxy materials as required by rule 14a-8(j)(1). Noting the
circumstances of the delay, we do not waive the 80-day requirement.
Sincerely,
/s/
William A. Hines
Special Counsel
|
