<PAGE>
NATIONAL COMMERCE BANCORPORATION
ONE COMMERCE SQUARE
MEMPHIS, TENNESSEE 38150
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 23, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of National
Commerce Bancorporation will be held in the Auditorium at National Bank of
Commerce, Concourse Level, Commerce Tower, One Commerce Square, Memphis,
Tennessee 38150, on Wednesday, April 23, 1997, at 10:00 a.m., local time, for
the following purposes:
1. To elect the five nominees named in the accompanying Proxy Statement
as directors of the Company;
2. To ratify the appointment of Ernst & Young LLP, independent certified
accountants, as auditors of the Company for 1997;
3. To consider and act upon a proposal to amend and restate the Company's
1994 Stock Plan primarily to increase by 1,000,000 shares the total number
of shares of the Company's Common Stock for which options to purchase may
be granted and make those additional changes described in the Proxy
Statement; and
4. To transact any and all other business as may properly come before the
meeting or any adjournment thereof.
Only shareholders of record at the close of business on March 7, 1997, will
be entitled to receive notice of and to vote at the Annual Meeting.
Information relating to the above matters is set forth in the accompanying
Proxy Statement dated March 27, 1997.
By Order of the Board of Directors,
Gus B. Denton
Secretary
Memphis, Tennessee
March 27, 1997
WHETHER OR NOT THEY INTEND TO BE PRESENT AT THE ANNUAL MEETING IN PERSON,
SHAREHOLDERS ARE URGED TO COMPLETE AND SIGN THE ENCLOSED PROXY AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.
<PAGE>
NATIONAL COMMERCE BANCORPORATION
ONE COMMERCE SQUARE
MEMPHIS, TENNESSEE 38150
---------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 23, 1997
---------------------
GENERAL
PURPOSES OF SOLICITATION
The Annual Meeting of the Shareholders of National Commerce Bancorporation
(the "Company" or "NCBC") will be held on April 23, 1997, for the purposes set
forth in the attached Notice of Annual Meeting of Shareholders and in this
Proxy Statement. The accompanying Proxy is solicited on behalf of the Board of
Directors of the Company in connection with such meeting and any adjournments
thereof. The term "NBC" as used in this Proxy Statement refers to National
Bank of Commerce, Memphis, Tennessee, the Company's principal banking
subsidiary. This Proxy Statement and the enclosed Proxy are being first mailed
to the Company's shareholders on or about March 30, 1997.
OUTSTANDING VOTING SECURITIES AND PERSONS ENTITLED TO VOTE
Only shareholders of record as of the close of business on March 7, 1997,
will be entitled to receive notice of and to vote at the Annual Meeting. As of
that date, the Company had outstanding 24,538,475 shares of Common Stock, each
share being entitled to one vote. Appraisal rights for dissenting shareholders
are not applicable to the matters being proposed.
VOTING PROCEDURES
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the election inspectors appointed for the meeting and will determine whether
or not a quorum is present. The election inspectors will treat abstentions as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum but as unvoted for purposes of determining the approval
of any matter submitted to the shareholders for a vote. If a broker indicates
that it does not have discretionary authority to vote certain shares, those
shares will not be considered as present and entitled to vote with respect to
that matter. A majority of the Common Stock outstanding on the record date
must be present to constitute a quorum.
ELECTION OF DIRECTORS
The Company's Charter provides for a Board consisting of not less than three
and not more than twenty-five directors. The Company's Charter divides the
Board into three classes as nearly equal in number as possible, with each
class serving a three-year term and one class elected at each Annual Meeting
of Shareholders. The Board of Directors has set at fourteen the number of
directors constituting the full Board for the ensuing year.
1
<PAGE>
At the Annual Meeting of Shareholders, five directors are to be elected as
Class II directors for terms that expire at the Annual Meeting of Shareholders
to be held in 2000. All of the nominees are members of the present Board and
were elected at the Annual Meeting of Shareholders in 1995 except for G. Mark
Thompson, who was elected by the Board of Directors in 1997.
The remaining nine directors presently on the Board will continue as members
of the Board until their respective terms expire as indicated in the table
below. In addition, the Board could, by a majority vote of the entire Board,
increase the number of directors to up to twenty-five and fill the vacancies
resulting from such increase for the remainder of the term of the classes in
which each new directorship is created. Although the Board from time to time
considers qualified candidates to become directors, the Board has made no
decision to increase the number of directors.
The Board of Directors has no reason to believe that any of the nominees for
director will not be available to stand for election as director. However,
should any of such nominees become unable to serve, the proxies may be voted
for a substitute nominee or nominees or to allow the vacancy created thereby
to remain open until filled by the Board.
The presence of a quorum at the Annual Meeting, either in person or by
written proxy, and a favorable vote of a plurality of the votes cast at the
meeting are necessary to elect a nominee as director.
MANAGEMENT OF THE COMPANY
DIRECTORS
The following table sets forth the names of the five nominees for election
to the Board as members of Class II, as well as those incumbent directors who
are members of Classes I and III. The table also contains, as to each nominee
and present director, his age, a brief description of his principal occupation
and business experience during the last five years, a description of any
position or office held by him with the Company or NBC, directorships of
certain publicly held companies (other than the Company) presently held by him
the year in which he was first elected or appointed a director of the Company,
the number of shares and percentage of the Company's outstanding Common Stock
beneficially owned by him as of February 1, 1997, and certain other
information. The information in the table has been furnished by the respective
individuals. Except as indicated in the notes to the following table, the
persons indicated possess sole voting and investment power with respect to all
shares set forth opposite their names.
2
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON PERCENT OF
STOCK CLASS
PRINCIPAL BENEFICIALLY BENEFICIALLY
OCCUPATION YEAR FIRST OWNED AS OWNED AS
FOR PAST FIVE YEARS ELECTED OF FEB. 1, OF FEB. 1,
NAME AGE AND DIRECTORSHIPS DIRECTOR 1997(1) 1997(1)
---- --- ------------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
CLASS II: NOMINEES TO SERVE UNTIL ANNUAL MEETING OF SHAREHOLDERS IN 2000:
John D. Canale, III* 51 President of D. Canale 1989 200,372(2)(3) .8
Food Services, Inc.
(wholesale food
distributor); President
and CEO of D. Canale &
Co; Secretary-Treasurer
of D. Canale Beverages,
Inc.
R. Lee Jenkins 67 Private investor 1990 13,071(4) .1
W. Neely Mallory, Jr.* 63 President of Memphis 1974 104,588(5) .4
Compress & Storage Co.
(warehousing firm);
Partner, Mallory
Partners; President,
Mallory Group
Incorporated.
James E. McGehee, Jr.* 67 President, McGehee 1976 916,019(6) 3.6
Realty and Development
Company.
G. Mark Thompson# 61 President, Nashville 1997 300 --
Marketing Area of The
Kroger Company
CLASS I: INCUMBENTS TO SERVE UNTIL ANNUAL MEETING OF SHAREHOLDERS IN 1999:
Frank G. Barton, Jr.# 64 Chairman of the Board of 1977 128,083(7) .5
the Barton Group, Inc.
(retail equipment
sales).
Edmond D. Cicala#+ 71 President, Edmond 1978 75,274(8) .3
Enterprises, Inc.
(consulting firm);
Director of Evans, Inc.
until April, 1994;
Director of Proffitts,
Inc.
Thomas C. Farnsworth, 59 Real Estate and 1977 214,584 .8
Jr.+ Investments.
Sidney A. Stewart, Jr.+ 70 Private investor 1985 30,402(9) .1
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON PERCENT OF
STOCK CLASS
PRINCIPAL BENEFICIALLY BENEFICIALLY
OCCUPATION YEAR FIRST OWNED AS OWNED AS
FOR PAST FIVE YEARS ELECTED OF FEB. 1, OF FEB. 1,
NAME AGE AND DIRECTORSHIPS DIRECTOR 1997(1) 1997(1)
---- --- ------------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
CLASS III: INCUMBENTS TO SERVE UNTIL ANNUAL MEETING OF SHAREHOLDERS IN 1998:
R. Grattan Brown, Jr.* 61 Member of the law firm 1978 37,918(10) .1%
of Glankler Brown, PLLC
Bruce E. Campbell, Jr.* 66 Chairman of the 1976 318,405(11) 1.3
Executive Committee
since May 1993; Chairman
of the Board and Chief
Executive Officer of the
Company and NBC until
1993; Director of RFS
Hotel Investors, Inc.
and Memphis Compress &
Storage Co.
Thomas M. Garrott* 59 President of the 1977 1,089,055(12) 4.3
Company; Chairman of the
Board and Chief
Executive Officer of the
Company and NBC since
May 1993; President of
NBC until May 1993.
Harry J. Phillips, Sr.+ 67 Chairman of the 1977 451,613(13) 1.8
Executive Committee of
Browning-Ferris
Industries, Inc. (waste
disposal service);
Director of RFS Hotel
Investors, Inc., Buckeye
Cellulose Corp., and
Buckman Laboratories
International, Inc.
Rudi E. Scheidt# 72 Private Investor 1977 1,304,941(14) 5.1
</TABLE>
- ----------
* Member of the Executive Committee of the Board of Directors
# Member of the Audit Committee of the Board of Directors
+ Member of the Salary and Benefits Committee
(1) Under the rules of the Securities and Exchange Commission, a person is
deemed to be a "beneficial owner" of a security if that person has or
shares "voting power," which includes the power to vote or direct the
voting of such security, or "investment power," which includes the power
to dispose or direct the disposition of such security. A person is also
deemed to be a beneficial owner of any securities of which that person has
the right to acquire beneficial ownership within 60 days. Under these
rules, more than one person may be deemed to be a beneficial owner of the
same securities and a person may be deemed to be a beneficial owner of
securities as to which he has no beneficial interest. For purposes of
calculating the percent of Common Stock beneficially owned, all shares
that are subject to options that are exercisable within 60 days are deemed
to be presently outstanding.
(2) Does not include shares owned by Peggy W. Canale, mother of John D.
Canale, III. See "PRINCIPAL SHAREHOLDERS".
(3) Includes 161,245 shares owned by the estate of his father, John D. Canale.
As an executor of the estate, Mr. Canale shares investment and voting
power and disclaims any beneficial ownership of the shares. Also includes
100 shares held by Mr. Canale as custodian for his nephew, as to which he
disclaims any beneficial interest.
4
<PAGE>
(4) Includes 1,500 shares owned by Mr. Jenkin's wife, as to which Mr. Jenkins
disclaims any beneficial interest.
(5) Does not include 1,006 shares owned by Mr. Mallory's wife, as to which
Mr. Mallory disclaims any beneficial interest.
(6) Includes 9,904 shares held as trustee for certain family members and
58,758 shares held by Mr. McGehee's wife, as to which Mr. McGehee
disclaims any beneficial interest.
(7) Includes 2,085 shares held by Mr. Barton and his wife as custodians for
their sons, as to which Mr. Barton disclaims any beneficial interest.
(8) Includes 29,079 shares held by Mr. Cicala's wife.
(9) Does not include 1,358 shares held by Mr. Stewart's wife.
(10) Includes 3,655 shares held by Mr. Brown's wife as to which he disclaims
any beneficial interest.
(11) Includes 135,000 shares that Mr. Campbell has the right to purchase upon
the exercise of stock options and 24,797 shares attributable to Mr.
Campbell in the Company's Employee Stock Option Plan as to which Mr.
Campbell has the power to direct voting. Also includes 16,725 shares held
by his wife and sons, as to which he disclaims any beneficial interest,
and 65,876 shares held jointly by Mr. Campbell and his wife.
(12) Includes 93,120 shares that Mr. Garrott has the right to purchase upon
the exercise of stock options. Also includes 17,916 shares attributable
to Mr. Garrott in the Company's Employee Stock Ownership Plan and 3,175
shares under the Company's Taxable Income Reduction Account ("TIRA") as
to which Mr. Garrott has the power to direct voting. Also includes
114,720 shares held by Mr. Garrott as trustee for the benefit of his
children, 23,450 shares held by Mr. Garrott's wife, and 105,000 shares
held by MBA Corp., all of which shares of MBA Corp. are owned by his
children, as to which Mr. Garrott disclaims any beneficial interest.
(13) Includes 60,083 shares owned by Mr. Phillips's wife, as to which Mr.
Phillips disclaims any beneficial interest.
(14) Includes 769,510 shares held by Mr. Scheidt as trustee for the benefit of
his children, of which he has sole voting and investment power, and as to
which Mr. Scheidt disclaims any beneficial interest. Does not include
383,023 shares held by his wife.
5
<PAGE>
COMPENSATION OF DIRECTORS
During 1996, the Company's directors were paid a fee of $500 per Board
meeting attended and, except for directors who are officers of the Company or
its subsidiaries, $150 per committee meeting attended. The Company's directors
were also directors of NBC and as such received a fee of $500 per NBC Board
meeting attended and, except for directors who are officers of the Company or
its subsidiaries, $150 per NBC committee meeting attended during 1996. Except
for directors who are officers of the Company or its subsidiaries, the
directors received an annual retainer of $2,000 from the Company, payable
semi-annually, and an annual retainer of $2,000 from NBC, payable semi-
annually. Pursuant to the provisions of the Company's 1994 Stock Plan, the
outside directors of National Bank of Commerce who attended 11 of 12 Board
meetings during 1994 and outside directors of the Company's banks in
Nashville, Knoxville and Belzoni who attended all four quarterly Board
meetings during 1995 received 100 shares of NCBC stock as compensation for
their attendance.
Effective January, 1997 the Company's directors are being paid a fee of
$2,000 per Board meeting attended and, except for directors who are officers
of the Company or its subsidiaries, $150 per committee meeting attended ($250
for the committee chairman). Also effective January, 1997 NBC's directors are
being paid a fee of $2,000 per Board meeting attended and, except for
directors who are officers of the Company or its subsidiaries, $150 per
committee meeting attended ($250 for the committee chairman). Except for
directors who are officers of the Company or its subsidiaries, the directors
receive an annual retainer of $4,000 from the Company, payable semi-annually,
and an annual retainer of $4,000 from NBC, payable semi-annually. Pursuant to
the provisions of the Company's 1994 Stock Plan, the outside directors of the
Company and National Bank of Commerce who attend six of six of each of the
Boards' meetings during the year and outside directors of the Company's banks
in Nashville, Knoxville and Belzoni who attend all four quarterly Board
meetings during the year will receive 100 shares of NCBC stock as additional
compensation for their attendance.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors and greater than 10% shareholders ("Reporting
Powers") to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission. Executive officers and
directors are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file. Based solely on a review of the copies
of such forms furnished to the Company and written representations from such
Reporting Persons with respect to the period from January 1, 1996 through
December 31, 1996, all filing requirements applicable to Reporting Persons
have been met.
6
<PAGE>
MANAGEMENT STOCK OWNERSHIP
The following table sets forth the number of shares of Common Stock and the
percentage of shares of Common Stock outstanding beneficially owned by the
Company's Chief Executive Officer, the four other most highly compensated
executive officers of the Company and its subsidiaries, and all directors and
officers as a group, as of February 1, 1997.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK BENEFICIALLY PERCENT OF
OWNED AS OF FEBRUARY 1, 1997 CLASS
---------------------------- ----------
<S> <C> <C>
Thomas M. Garrott...................... 1,089,055(1) 4.3%
Lewis E. Holland....................... 56,320(2) 0.2
William R. Reed, Jr.................... 147,118(3) 0.6
Gary L. Lazarini....................... 148,180(4) 0.6
Mackie H. Gober........................ 130,221(5) 0.5
All directors and executive officers as
a group
(20 persons).......................... 5,662,809(6)(7) 22.3
</TABLE>
- --------
(1) See Note 12 under the caption "MANAGEMENT OF THE COMPANY--Directors"
above.
(2) Includes 378 shares attributable to Mr. Holland pursuant to the Company's
Employee Stock Ownership Plan and 45,800 shares that he has the right to
purchase upon the exercise of stock options, and 142 shares attributable
to him under the Company's Taxable Income Reduction Account ("TIRA").
(3) Includes 14,671 shares attributable to Mr. Reed pursuant to the Company's
Employee Stock Ownership Plan and 42,840 shares that he has the right to
purchase upon the exercise of stock options. Includes 89,607 shares held
by Mr. Reed's wife as to which Mr. Reed disclaims any beneficial interest.
(4) Includes 22,348 shares attributable to Mr. Lazarini pursuant to the
Company's Employee Stock Ownership Plan and 27,340 shares that he has the
right to purchase upon the exercise of stock options, and 1,959 shares
attributable to him under the Company's Taxable Income Reduction Account
("TIRA"). Includes 45,168 shares held by Mr. Lazarini's wife as to which
Mr. Lazarini disclaims any beneficial interest.
(5) Includes 14,939 shares attributable to Mr. Gober pursuant to the Company's
Employee Stock Ownership Plan and 26,040 shares that he has the right to
purchase upon the exercise of stock options.
(6) Includes an aggregate of 344,100 shares of Common Stock purchasable upon
the exercise of stock options by the Chief Executive Officer, the four
other most highly compensated executive officers and all directors and
executive officers as a group. Also includes an aggregate of 130,037
shares under the Company's Employee Stock Ownership Plan and 9,945 under
the Taxable Income Reduction Account attributable to the Chief Executive
Officer, the four other most highly compensated executive officers and all
directors and executive offices as a group.
(7) Does not include Common Stock beneficially owned by Directors Emeritus,
NBC Directors, other officers of the Company, or officers of NBC's
Management Committee who are not listed above (approximately 4%).
7
<PAGE>
BOARD COMMITTEES AND ATTENDANCE
The Company's Board of Directors has four principal standing committees--the
Executive Committee, the Audit Committee, the Salary and Benefits Committee,
and the Management/Nominating Committee. The Executive Committee, composed of
Messrs. Campbell (Chairman), Brown, Canale, Garrott, Mallory and McGehee, has,
and may exercise, all the authority of the full Board between Board meetings
with respect to matters other than the amendment of the Charter or By-laws of
the Company, the adoption of a plan of merger or consolidation, or the
disposition of substantially all of the assets or dissolution of the Company.
The membership and principal functions of the Audit Committee are described
under the caption "ACCOUNTING MATTERS" below.
The membership and principal functions of the Salary and Benefits Committee
are described under the caption "REPORT OF THE STOCK OPTION AND MANAGEMENT
COMPENSATION COMMITTEE" below.
The Company has a Management/Nominating Committee which consults with the
Chairman and Chief Executive Officer concerning management succession. Any
nominees submitted to the full Board of Directors to fill vacancies or new
seats on the Board are the result either of recommendations to the Board by
the Chairman and Chief Executive Officer with a consensus of the Committee, or
recommendations by a majority of the Committee with the concurrence of the
Chairman. Presently, the Company has no formal procedures by which
shareholders may submit nominees to the Committee. The members of the
Management/Nominating Committee are Messrs. Stewart (Chairman), Brown, John
Canale, Jenkins, McGehee, Mallory and Phillips.
During 1996, the Board of Directors held twelve meetings. Due to the
frequent meetings of both the Company's and NBC's Boards and the fact that the
Executive Committee of NBC met bi-weekly and the Audit Committee of NBC met
eleven times during 1996 (the memberships of both committees being identical
to their Company counterparts during 1996), neither the Executive Committee
nor the Audit Committee of the Company met during 1996. The Salary and
Benefits Committee held one meeting and the Management/Nominating Committee
held two meetings during 1996.
Because of conflicting schedules, in 1996 Messrs. Jenkins, Mallory and
Phillips attended fewer than 75% of the Company's Board meetings and meetings
of committees of the Board on which they served.
8
<PAGE>
COMPENSATION OF MANAGEMENT AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain summary information for the years
indicated with respect to the compensation awarded to, earned by, or paid to
the Company's Chief Executive Officer and each of the four other most highly
compensated executive officers of the Company and its subsidiaries
(hereinafter referred to as the "named executive officers").
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION(1) COMPENSATION
-------------------- ---------------------
AWARDS
--------------------- ALL OTHER
SECURITIES UNDERLYING COMPENSA-
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS GRANTED (#) TION ($)
--------------------------- ---- ---------- --------- --------------------- ---------
<C> <S> <C> <C> <C> <C> <C>
Thomas M. Garrott. Chairman of the Board, 1996 417,000 303,750 50,000 4,826(2)
President, Chief 1995 334,000 241,500 50,000 9,317(3)
Executive
Officer and Director of 1994 334,000 161,000 50,000 29,672(4)
the
Company; Chairman of the
Board, Chief Executive
Officer and Director of
NBC
Lewis E. Holland . Executive Vice 1996 206,000 120,000 25,000 4,826(2)
President,
Treasurer, and Chief 1995 166,000 156,000 15,000 1,962(3)
Financial
Officer of the Company 1994 83,000 70,000 58,000 1,135(4)
and
Director of NBC
William R. Reed, Executive Vice President 1996 190,000 72,000 15,000 4,826(2)
Jr. ............. of the
Company, Director of 1995 165,000 54,250 15,000 4,273(3)
NBC,
Chairman of the Board of 1994 165,000 52,700 15,000 12,859(4)
Nashville Bank of Com-
merce
and NBC Bank, FSB (Knox-
ville), Chairman and
Chief Executive Officer
of NBC Bank, FSB (Belzo-
ni)
Gary L. Lazarini.. Chairman of NBC Capital 1996 175,000 70,000 5,000 4,826(2)
Markets Group, Inc.; 1995 161,000 75,670 7,500 4,951(3)
Executive
Vice President of NBC 1994 161,000 41,860 -- 16,748(4)
Mackie H. Gober... President of National 166,000 52,000 15,000 4,826(2)
Bank of 1996
Commerce and Director 1995 126,000 46,800 15,000 4,266(3)
of NBC 1994 122,000 60,000 8,000 10,365(4)
</TABLE>
- ----------
(1) The Company also provides certain perquisites and other personal benefits
(i.e., auto allowance) to the named executive officers which do not exceed
either $50,000 or 10% of each named executive officer's total annual
salary and bonus. Includes directors' fees of an aggregate of $12,000 paid
to Mr. Garrott, $6,000 paid to Mr. Holland, $10,000 to Mr. Reed and $6,000
to Mr. Gober for 1996; an aggregate of $12,000 paid to Mr. Garrott, $6,000
paid to Mr. Holland, $10,000 paid to Mr. Reed and $6,000 paid to Mr. Gober
for 1995; an aggregate of $12,000 paid to Mr. Garrott, $3,000 paid to
Mr. Holland, $10,000 paid to Mr. Reed and $2,000 paid to Mr. Gober for
1994.
(2) In 1996, all other compensation to named executive officers included an
allocation of company contributions under the Company's Employee Stock
Ownership Plan of $4,826 each to Messrs. Garrott, Holland, Reed, Lazarini,
and Gober.
(3) In 1995, all other compensation to named executive officers included (i)
split dollar life insurance premiums of $7,355 for Mr. Garrott, $2,311 for
Mr. Reed, $2,989 for Mr. Lazarini, and $2,304 for Mr. Gober, and (ii)
allocation of Company contributions under the Company's Employee Stock
Ownership Plan of $1,962 to each Messrs. Garrott, Holland, Reed, Lazarini,
and Gober.
(4) In 1994, all other compensation to named executive officers included (i)
split dollar life insurance premiums of $27,544 for Mr. Garrott, $10,731
for Mr. Reed, $14,620 for Mr. Lazarini, and $8,663 for Mr. Gober, and (ii)
allocation of Company contributions under the Company's Employee Stock
Ownership Plan of $2,128 to each Messrs. Garrott, Reed, and Lazarini,
$1,135 to Mr. Holland, and $1,702 to Mr. Gober.
9
<PAGE>
STOCK OPTION PLANS
During 1994, the shareholders approved the Company's 1994 Stock Plan (the
"1994 Plan"), which reserved 1,050,000 shares of Company's Common Stock for
use under the 1994 Plan. Unoptioned shares under previous plans were
transferred to reserved shares for the 1994 Plan. During 1990, the Board of
Directors and shareholders approved the Company's 1990 Stock Plan (the "1990
Plan"), which reserved 675,000 shares of the Company's Common Stock for the
granting of options and restricted stock to key employees. The 1990 Plan
amended the Company's 1986 Stock Option Plan (the "1986 Plan") and the 1982
Incentive Stock Option Plan (the "1982 Plan") and merged such amended and
restated plans into the 1990 Plan.
Options are granted at the then prevailing market price. Options became
exercisable six months subsequent to the date of grant under the 1982 Plan and
become exercisable in equal parts at the end of the year of grant over the
succeeding five to ten years under the 1986, 1990 and 1994 Plans. At the
discretion of the 1982 Plan's administering committee, stock appreciation
rights were attached to some of the options, whereby the optionee may receive
cash for the difference between the exercise price of the related option and
the fair market value of the Company's Common Stock. The Plans are restricted
to eligible officers and key employees. Amounts set forth in the following
tables reflect the effect of all stock dividends and splits declared through
1996.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information with respect to the grant
of stock options under the Company's Stock Plans to the named executive
officers for the year ended December 31, 1996.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
- ------------------------------------------------------------
POTENTIAL
REALIZABLE VALUE
PERCENT OF AT ASSUMED
TOTAL ANNUAL RATES
NUMBER OF OPTIONS OF STOCK PRICE
SECURITIES GRANTED TO EXERCISE APPRECIATION
UNDERLYING EMPLOYEES OR FOR OPTION TERM
OPTIONS IN BASE PRICE EXPIRATION -------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% 10%
---- ----------- ----------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Thomas M.
Garrott..... 50,000 18.6% $28.75 3-20-04 $701,213 $1,726,150
Lewis E. Hol-
land........ 25,000 9.3 28.75 3-20-04 350,606 863,075
William R.
Reed, Jr. .. 15,000 5.6 28.75 3-20-04 210,364 517,845
Gary L.
Lazarini.... 5,000 1.9 28.75 3-20-04 70,121 172,615
Mackie H. Go-
ber......... 15,000 5.6 28.75 3-20-04 210,364 517,845
</TABLE>
- --------
(1) Options become exercisable in equal parts over the five years succeeding
the date of grant.
10
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
The following table sets forth certain information with respect to options
exercised during 1996 and the value of unexercised options and SARs held by
the named executive officers of the Company and its subsidiaries at December
31, 1996.
<TABLE>
<CAPTION>
NUMBER OF
1996 EXERCISES SECURITIES VALUE OF
---------------------- UNDERLYING UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED ON VALUE OPTIONS/SARS OPTIONS/SARS
EXERCISE REALIZED AT FY-END (#) AT FY-END($)(2)
NAME (#) ($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- ---------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Thomas M. Garrott....... 207,900 $4,196,617 93,120/150,255 $1,344,079/$2,740,758
Lewis E. Holland........ -- -- 45,800/ 52,200 682,700/ 676,175
William R. Reed, Jr. ... -- -- 42,840/ 30,960 743,752/ 387,344
Gary L. Lazarini........ -- -- 53,327/ 12,460 1,181,005/ 157,906
Mackie H. Gober......... 9,000 226,377 26,040/ 27,260 371,876/ 329,094
</TABLE>
- ----------
(1) Market value of underlying securities at exercise minus the exercise
price.
(2) Market price at year end less exercise price.
PENSION PLAN TABLE
The Company maintains a non-contributory, defined benefit retirement plan,
which covers all eligible employees of the Company. The following table
describes estimated retirement benefits payable under the retirement plan to
employees in the specified period-of-service and compensation classifications,
assuming retirement at age 65 on February 1, 1997. Retirement benefits are not
subject to social security deductions or offsets.
<TABLE>
<CAPTION>
CREDITED SERVICE
FINAL --------------------------------------------------------------------
PAY 5 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- -------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$125,000 $11,886 $35,658 $47,544 $59,430 $71,314 $83,201
150,000 14,423 43,271 57,696 72,119 86,542 100,967
175,000 15,439* 46,317* 61,756* 77,195* 92,633* 108,073*
200,000 15,439* 46,317* 61,756* 77,195* 92,633* 108,073*
225,000 15,439* 46,317* 61,756* 77,195* 92,633* 108,073*
250,000 15,439* 46,317* 61,756* 77,195* 92,633* 108,073*
300,000 15,439* 46,317* 61,756* 77,195* 92,633* 108,073*
400,000 15,439* 46,317* 61,756* 77,195* 92,633* 108,073*
450,000 15,439* 46,317* 61,756* 77,195* 92,633* 108,073*
800,000 15,439* 46,317* 61,756* 77,195* 92,633* 108,073*
</TABLE>
- ----------
* Represents the maximum legal permissible benefit under the retirement plan
for individuals retiring in 1996.
The retirement plan contains a five-year vesting requirement, effective
January 1, 1989, and provides remuneration upon retirement at age 65 based
generally upon average compensation for the five calendar years preceding
retirement and years of service, with additional preretirement disability and
death benefits. Benefits are calculated on the normal retirement option
available to participants,
11
<PAGE>
which is ten years certain and life. Compensation covered by the retirement
plan includes base salaries, overtime pay, commissions and bonuses. Covered
compensation for commissioned employees is limited to $50,000. In 1996,
covered compensation for Messrs. Garrott, Holland, Lazarini, Reed and Gober
was $763,750, $345,000, $255,000, $272,000 and $217,000, respectively. At
December 31, 1996, Messrs. Garrott, Holland, Lazarini, Reed, and Gober had 14,
3, 37, 27 and 26 years of credited service, respectively, under the retirement
plan.
The Board of Directors has also adopted a restoration pension plan that
would restore any portion of the pension payable to any participant in the
retirement plan which cannot be paid from such retirement plan due to the
maximum benefit limitations imposed by Section 415 and by the maximum
compensation limitations imposed by Section 401(a)(17) of the Internal Revenue
Code. If Messrs. Garrott, Holland, Lazarini, Reed and Gober work for NBC until
age 65 at their 1996 rate of compensation, the restoration pension plan will
provide additional annual benefits of $431,690, $128,360, $125,643, $80,010
and $36,117, respectively.
EMPLOYMENT AGREEMENTS
NBC entered into employment agreements with Mr. Thomas M. Garrott dated as
of September 1, 1993, Mr. William R. Reed, Jr. dated as of January 1, 1992,
Mr. Mackie H. Gober and Mr. Gary L. Lazarini dated as of September 1, 1993 and
Mr. Lewis E. Holland dated as of July 1, 1994 (the "Agreements"). Except as
noted below, each Agreement contains substantially the same terms and
provisions. The Agreements supersede and terminate any other agreements
previously existing concerning employment or compensation for such officers,
except for the Deferred Compensation Agreement for Mr. Garrott described
below, which remains in effect.
Mr. Garrott will be employed by NBC in his current position for a
continuously renewing term of five years until he reaches age 65, at which
time the term automatically becomes a continuously renewing term of one year
until notice of termination is given by either party. Mr. Garrott is employed
at a guaranteed annual base salary of $485,000 (which may be increased at the
discretion of NBC). Mr. Reed will be employed by NBC in his current position
for a continuously renewing term of three years until he reaches age 65 at a
guaranteed annual base salary of $200,000 (which may be increased at the
discretion of NBC). Mr. Gober will be employed by NBC in his current position
for a continuously renewing term of three years until he reaches age 65 at a
guaranteed annual base salary of $165,000 (which may be increased at the
discretion of NBC). Mr. Lazarini will be employed by NBC in his current
position for a continuously renewing term of three years until he reaches age
65 at a guaranteed annual base salary of $185,000 (which may be increased at
the discretion of NBC). Mr. Holland will be employed by NBC in his current
position for a continuously renewing term of five years until he reaches age
65 at a guaranteed annual base salary of $225,000 (which may be increased at
the discretion of NBC).
Each Agreement may be terminated by NBC for cause (as defined in the
Agreements). In addition, the Agreements of Messrs. Garrott, Reed, Gober and
Lazarini may be terminated without cause upon the giving of five years' notice
for Mr. Garrott and upon the giving of three years' notice to Messrs. Reed,
Gober and Lazarini during which time the officer would be converted to part-
time status as described below. The Agreement of Mr. Holland may be terminated
without cause upon the giving of written notice to Mr. Holland and the officer
would immediately be placed on part-time status, as described below, until age
sixty-five (65). Further, under the Agreements of Messrs. Garrott, Reed,
Gober, Lazarini and Holland, in the event that (i) NBC breaches the terms of
the respective Agreements in any material
12
<PAGE>
respect, (ii) the respective officer is not reelected or reappointed to his
current position (without cause), or (iii) under Mr. Garrott's Agreement, the
officer's duties, responsibilities, powers, authority and functions are
increased, changed or diminished (without cause and without the officer's
consent), or under Mr. Reed's, Mr. Gober's, Mr. Lazarini's and Mr. Holland's
Agreement, their duties, powers, and authority are diminished (without cause
and without the officer's consent), the respective officers are entitled to
convert to part-time status for the terms permitted in their respective
Agreements.
If Messrs. Garrott, Reed, Gober or Lazarini are converted to part-time
status, the officer would be entitled to a guaranteed annual base salary equal
to seventy-five percent (75%) of the officer's average annual total direct
compensation (as defined in the Agreements) for a period of up to five years
for Mr. Garrott and three years for Mr. Reed, Mr. Gober and Mr. Lazarini. If
Mr. Holland converts to part-time status, the officer would be entitled to a
guaranteed minimum annual base salary (a) from the date the officer goes on
part-time status for a period of 5 years or (b) from the date he goes on part-
time status until he attains age 65, whichever is shorter, in an amount equal
to 75% of the officer's average of annual total direct compensation (as
defined in the Agreement) provided that the guaranteed minimum annual base
salary shall not be less than 75% of $300,000. Each Agreement also provides
that the officer may elect to terminate the Agreement at any time upon 90
days' notice (with or without cause) and upon such a termination receive his
salary as provided in the Agreement during the 90-day notice period and a
lump-sum payment equal to three months' pay upon the expiration of such 90-day
period. Under Mr. Garrott's Agreement, on or after November 3, 1999, and while
employed on active status, Mr. Garrott is entitled to convert to part-time
status until age 65.
The Agreements provide that in the event of a "change of control" (as
defined below) involving NBC or the Company, Mr. Garrott, if on full-time or
part-time status, and Mr. Reed, Mr. Gober and Mr. Lazarini, if on full-time
status or during the first twelve months of part-time status, may elect to
receive severance pay in an amount equal to three times his average annual
compensation for the most recent five-year period preceding the change in
control minus one dollar. Payment of such amount terminates the officer's
right to receive the guaranteed annual base salary pursuant to the Agreement;
however, such amount would be in addition to amounts otherwise payable to the
officer under the Agreement (including reimbursement of expenses and
attorney's fees) and other current or future oral or written agreements or
plans. The Agreements further provide that NBC will indemnify the officer for
adverse tax consequences arising out of the assertion that any payments under
the Agreements are subject to any special excise or similar purpose tax
directed at change of control payments. The value received from accelerated
vesting of stock options as a result of a change in control may also be deemed
to be change in control payments. If aggregate change of control payments
equal or exceed three times the officer's average annual compensation for the
most recent five-year period preceding the change in control, such an excise
tax could be asserted. In such case, the payments also will not be deductible
by the Company for federal income tax purposes. A change in control is deemed
to occur if, with or without the approval of NBC's Board of Directors, (i)
more than 25% of the voting stock of NBC or NBC's parent (a company owning 25%
of the voting stock of NBC) is acquired by any person other than a person that
includes the officer, or (ii) as the result of a tender offer, merger,
consolidation, sale of assets, contested election, or any combination of such
transactions, the persons who were directors of NBC or NBC's parent
immediately before the transaction shall cease to constitute a majority of the
Board of Directors of NBC, NBC's parent, or of any successor to either.
The Agreements also include provisions that prohibit Messrs. Garrott, Reed,
Gober, Lazarini and Holland during the terms of their respective Agreements
and for two years thereafter from engaging in commercial banking activity in
Shelby County, Tennessee (or in any other county in which NBC or its
13
<PAGE>
affiliates engage in banking activity representing a specified minimum amount
of income of NBC or its affiliates), unless the officer's employment is
terminated for cause (as defined in the Agreement). In addition, Mr. Garrott
is prohibited from engaging in any business related to banking in supermarkets
or other retail stores for the same period. The Agreements provide for
benefits to Messrs. Garrott, Reed, Gober, Lazarini and Holland (or their
designated beneficiaries) in the event of disability or death. Mr. Garrott's
Agreement also provides certain medical and dental insurance benefits for the
employee and his spouse.
On December 1, 1983, NBC and Mr. Garrott entered into a Deferred
Compensation Agreement which entitled Mr. Garrott to receive monthly
retirement benefits equal to the excess, if any, of the monthly retirement
benefits that would have been payable to Mr. Garrott under the Company's
Retirement Plan if Mr. Garrott had been employed by the Company since January
1, 1964, over the monthly retirement benefits actually payable to Mr. Garrott
under his previous employer's pension plan.
14
<PAGE>
REPORT OF THE SALARY AND BENEFITS COMMITTEE
The Salary and Benefits Committee (the "Committee") of the Board of
Directors of the Company reviews the Company's executive compensation policies
and programs and submits recommendations to the Board of Directors. The
members of the Committee are Messrs. Phillips (Chairman), Cicala, Farnsworth
and Stewart, all of whom are non-employee directors.
The Committee re-engaged the services of a nationally recognized
compensation consulting firm to update the findings and recommendations of the
1994 executive compensation study. The study compares the compensation
practices of NCBC to other financial institutions based on asset size,
earnings performance and survey data. Although none of the companies in the
Peer Group were included in the KBW 50 Bank Stock Index, an index of national
financial institutions which the Company uses in evaluating its financial
performance, the Committee believes that this is an appropriate Peer Group for
compensation comparison purposes. The Peer Group indicated how comparably
sized financial institutions were compensating executives with similar
responsibilities as those of the Company's executive officers.
Compensation awarded to executive officers is designed to assure that the
Company continues to attract, motivate and retain executives of superior
abilities. The Company's general goal for compensating its executive officers
is to provide competitive compensation in the median or upper range of that
received by executive officers with similar duties and responsibilities at
financial institutions in the Peer Group.
The compensation of the Company's top executive officers, including the
Chief Executive Officer, is specifically linked to the overall financial
performance of the Company. Annual incentive bonuses are awarded to executive
officers on the basis of group, division, individual and overall corporate
performance. The Company's compensation program rewards key officers for the
enhancement of shareholder value by providing key officers with appropriate
ownership interests in the Company through awards of stock options. In
reviewing the performance of the Company's key officers other than Mr.
Garrott, the Committee takes Mr. Garrott's recommendations into account. The
Committee will review the qualifying compensation regulations issued by the
Internal Revenue Service (the "Service"). Currently, compensation is not
expected to exceed the $1 million base; therefore, compensation should not be
affected by the Service's qualifying compensation regulations.
BASE SALARY
Each executive officer's base salary is based primarily upon the competitive
market for the executive officer's services. However, Messrs. Garrott,
Holland, Reed, Lazarini and Gober are guaranteed minimum base salaries in
accordance with the terms and conditions of each of their particular
employment agreements with NBC. See "COMPENSATION OF MANAGEMENT AND OTHER
INFORMATION--Employment Agreements."
ANNUAL INCENTIVE PLAN
The Company's annual incentive plan is designed to give executive officers
and other key employees additional incentive to maximize the Company's long-
term return for its shareholders. The cash awards under the Company's annual
incentive plan to its executive officers are determined by a two-step process
that considers both the performance of the Company as a whole during the year
and the individual performance of each executive officer. No awards are
granted if the Company fails to achieve the minimum financial goals approved
by the Board of Directors.
15
<PAGE>
Annual incentive awards for executive officers in 1996 were awarded pursuant
to an annual incentive plan approved by the Committee and ratified by the
Board of Directors. Under this plan, amounts awarded to executive management
were between 20% and 75% of base salary.
In 1996, the annual incentive plan for certain executive officers allowed
participants to earn a bonus based upon (1) the Company's 1996 earnings
growth, defined as the Company's consolidated net income comparing 1996 to
1995, (2) the individual's performance, and (3) the Company's ranking on the
Keefe, Bruyette and Woods "Honor Roll". Each component was considered
separately. The individual performance criteria of Messrs. Holland, Reed,
Lazarini and Gober, included a targeted increase in the net income of certain
subsidiaries of the Company and the achievement of specific results for the
Company and its subsidiaries.
STOCK OPTION PLANS
The Committee considers stock options under the 1994 Plan for key employees,
including key executive officers of the Company and its subsidiaries. Stock
options are designed to align the interests of the Company's officers with
those of its shareholders. Stock options are granted by the Committee to those
key employees whose responsibilities place them in a position to make
contributions to the overall financial success of the Company. These options
are granted with an exercise price equal to the market price of the Common
Stock on the day of grant and vest ratably over a period of five years. Since
the full benefits of these options cannot be realized unless the Company's
stock price appreciates over time, the creation of shareholder value is
facilitated. More than 250 key employees of the Company and its subsidiaries
have been granted stock options. This represents approximately 20% of the
total full-time employees of the Company and its subsidiaries.
In 1996, the Committee approved grants of non-qualified stock options to
executive officers based upon the performance contributions of the particular
executive officer in light of the same individual performance factors utilized
in determining incentive awards, as described above, and the recommendations
of an independent executive compensation consulting firm. The consultants
considered comparable levels of responsibilities at peer banks based on asset
size and overall financial performance.
CHIEF EXECUTIVE OFFICER'S 1996 COMPENSATION
The base salary of Mr. Garrott was increased during 1996 to $405,000. The
Committee specifically considered (i) Mr. Garrott's individual performance as
Chairman, President and Chief Executive Officer, (ii) the Company's strong
financial performance and (iii) the compensation paid to the chief executive
officers of banking institutions of comparative size. The factors were
considered subjectively, and none were given any specific weight.
Based on the Company's attaining a growth in consolidated net income and an
improvement in the efficiency ratio, Mr. Garrott earned a bonus equal to 50%
of his base salary. Additionally, Mr. Garrott had an opportunity to earn an
additional 25% of base salary if the Company were to rank in the top five
banks of the Keefe, Bruyette and Woods Honor Roll. The Honor Roll includes
those banks with the highest growth in earnings per share over a rolling 10-
year basis with in earnings during the period.
The Company continued to be ranked in the top five for 1996, therefore Mr.
Garrott earned the maximum award of 25% for a total bonus award equal to 75%
of his base salary (i.e., $303,750 bonus award). Mr. Garrott was also awarded
an option grant of 50,000 shares of common stock. The Committee considered the
Company's overall performance, Mr. Garrott's contribution to the Company's
success and the number of options previously granted to Mr. Garrott.
16
<PAGE>
ELEVEN-YEAR STOCK PERFORMANCE
The line graph below reflects the cumulative eleven-year shareholder return
(assuming reinvestment of dividends) on the Company's Common Stock compared to
such return of the S&P 500 Stock Index, the Southeastern regional bank holding
companies listed below, and the Tennessee bank holding companies listed below.
The graph reflects investment of $100 on December 31, 1984 in the Company's
Common Stock, the S&P Stock Index, the Southeastern bank holding companies
listed below (weighted by market capitalization), and the Tennessee bank
holding companies listed below (weighted by market capitalization). In December
1984, the Company sold its headquarters building complex and reinvested the
proceeds in higher-yielding assets. It was a significant date in the financial
history of the Company.
[GRAPH APPEARS HERE]
<TABLE>
COMPARATIVE TOTAL RETURNS*
NCBC, S&P 500, SOUTHEASTERN BANKS, TENNESSEE BANKS
<CAPTION>
Measurement period NCBC SOUTHEASTERN TENNESSEE S&P 500
(Fiscal Year Covered) Index Index Index
- --------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Measurement PT -
FYE 12/31/84 $ 100 $ 100 $ 100 $ 100
FYE 12/31/85 $ 183.46 $ 118.83 $ 138.92 $ 131.57
FYE 12/31/86 $ 208.43 $ 127.95 $ 168.72 $ 155.87
FYE 12/31/87 $ 355.38 $ 114.80 $ 128.96 $ 164.03
FYE 12/31/88 $ 372.00 $ 143.05 $ 146.37 $ 191.60
FYE 12/31/89 $ 362.49 $ 181.54 $ 146.98 $ 251.93
FYE 12/31/90 $ 325.48 $ 139.60 $ 90.99 $ 243.94
FYE 12/31/91 $ 607.50 $ 246.22 $ 199.56 $ 318.46
FYE 12/31/92 $ 762.59 $ 314.52 $ 298.67 $ 343.24
FYE 12/31/93 $ 926.06 $ 316.53 $ 333.33 $ 377.57
FYE 12/31/94 $ 962.43 $ 317.07 $ 323.67 $ 382.57
FYE 12/31/95 $1,142.01 $ 479.99 $ 527.34 $ 526.06
FYE 12/31/96 $1,705,35 $ 673.90 $ 668.85 $ 648.36
</TABLE>
(1) Includes the following Southeastern bank holding companies, which are the
five largest Southeastern-based bank holding companies: Barnett Banks, Inc.,
First Union Corporation, NationsBank Corporation, SunTrust Banks, Inc.,
Wachovia Corporation.
(2) Includes the following Tennessee bank holding companies, which are the only
bank holding companies headquartered in Tennessee that are larger than the
Company: First American Corporation, First Tennessee National Corporation,
Union Planters Corporation.
Harry J. Phillips, Sr.
Edmond D. Cicala
Thomas C. Farnsworth, Jr.
Sidney A. Stewart, Jr.
17
<PAGE>
FIVE-YEAR STOCK PERFORMANCE GRAPH
The line graph below reflects the cumulative five-year shareholder return
(assuming reinvestment of dividends) on the Company's Common Stock compared to
such return of the S&P 500 Stock Index and the KBW 50 Bank Stock Index. The
graph reflects investment of $100 on December 31, 1990 in the Company's Common
Stock, the S&P 500 Index and the KBW 50 Bank Stock Index.
[GRAPH APPEARS HERE]
<TABLE>
COMPARATIVE FIVE-YEAR TOTAL RETURNS
AMONG NCBC, S&P 500 INDEX AND KBW 50 INDEX
<CAPTION>
Measurement period NCBC S&P 500 KBW 50
(Fiscal Year Covered) Index Index
- --------------------- -------- -------- --------
<S> <C> <C> <C>
Measurement PT -
12/31/91 $ 100 $ 100 $ 100
FYE 12/31/92 $ 125.53 $ 107.78 $ 127.40
FYE 12/31/93 $ 152.44 $ 118.56 $ 134.41
FYE 12/31/94 $ 158.43 $ 120.13 $ 127.55
FYE 12/31/95 $ 187.99 $ 165.19 $ 204.34
FYE 12/31/96 $ 280.72 $ 203.59 $ 289.14
</TABLE>
18
<PAGE>
CERTAIN TRANSACTIONS WITH DIRECTORS AND MANAGEMENT
Some of the officers and directors of the Company and its subsidiaries,
including some of the nominees described above, and certain of their
associates and immediate family members (including spouses, parents, children,
siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and
brothers- and sisters-in-law) are customers of the Company's subsidiaries. As
customers, they have had transactions in the ordinary course of business,
including borrowings. As of December 31, 1996, the Company's subsidiary banks
had an aggregate of approximately $44,696,000 (14.26% of NCBC's equity and
1.90% of NCBC's net loans) in loans outstanding to such persons. This
aggregate amount comprised loans to officers, directors and nominees in the
amount of $3,616,000 and loans to immediate family members and corporations or
other organizations that are associates of such persons in the amount of
approximately $41,080,000. An aggregate of approximately $39,735,000 of this
total represented loans outstanding to three directors and their associates.
All of the foregoing loans were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons, and, in the opinion of the
Company, do not involve more than normal risk of collectibility or present any
other unfavorable features.
Many of the officers, directors and nominees of the Company and their
associates and immediate family members maintain deposit relationships with
the Company's subsidiaries in various types of accounts, including
certificates of deposit. Interest rates paid on deposits of officers,
directors and nominees and their associates and immediate family members are
substantially similar to rates paid for comparable deposits of parties who are
not affiliated with the Company.
In December, 1987, NBC issued $1,025,000 in term notes to the Mallory
Partners, a Tennessee general partnership of which W. Neely Mallory, Jr., a
director of the Company, and two trusts for the benefit of his sons are
general partners. The term notes were issued on substantially the same terms,
including interest rates, as those prevailing for comparable transactions with
other persons.
R. Grattan Brown, Jr., a director of the Company, is a partner in the law
firm of Glankler Brown. That firm from time to time represents NBC and certain
other subsidiaries.
During 1993, Bruce E. Campbell, Jr., the former Chief Executive Officer of
the Company exercised his right under his employment agreement to convert to
part-time status until age 65. Upon reaching age 65 on March 7, 1996, Mr.
Campbell retired and has been retained by the Company as a consultant.
Pursuant to his employment agreement, Mr. Campbell was paid an annual part-
time base salary during 1996 of $88,382 prior to his retirement and, pursuant
to his consulting agreement, was paid a consulting fee of $41,667 for the
remainder of the year. During 1996, he received additional compensation
consisting of director's fees of $10,000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Cicala, Farnsworth, Phillips and Stewart, all of whom are non-
employee directors, served as members of the Company's Stock Option and
Management Compensation Committee. Some of the officers and directors of the
Company, including Messrs. Cicala, Farnsworth, Phillips and Stewart, and
certain of their associates and immediate family members (including spouses,
parents, children, siblings, mothers- and fathers-in-law, sons- and daughters-
in-law, and brothers- and sisters-in-law) are customers of the Company's
subsidiaries. As customers, they have had transactions in the ordinary course
of business, including borrowings. These loans were made on substantially the
same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with other persons, and, in the opinion
of the Company, do not involve more than normal risk of collectibility or
present any other unfavorable features.
19
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information concerning each person
known to the Board of Directors of the Company to be a "beneficial owner," as
such term is defined by the rules of the Securities and Exchange Commission,
of more than 5% of the outstanding shares of Common Stock of the Company as of
February 1, 1997.
<TABLE>
<CAPTION>
AMOUNT BENEFICIALLY
OWNED AS OF
NAME AND ADDRESS FEBRUARY 1, 1997 PERCENT OF CLASS(1)
---------------- ------------------- ------------------
<S> <C> <C>
National Bank of Commerce 1,816,229(2) 7.1%
One Commerce Square
Memphis, Tennessee 38150
D. Canale & Company 1,327,724(3) 5.2
P. O. Box 1739
Memphis, Tennessee 38101
Ruane, Cunniff & Co., Inc 1,379,365 5.4
767 Fifth Avenue
New York, NY 10153-4798
Rudi E. Scheidt 1,304,741(4) 5.1
54 South White Station
Memphis, Tennessee 38117
</TABLE>
- ----------
(1) For purposes of calculating the percent of Common Stock beneficially
owned, all shares that are subject to options that are exercisable within
60 days are deemed to be presently outstanding.
(2) NBC has sole voting and investment power with respect to 832,191 of such
shares, shares voting and investment power with respect to 256,527 of such
shares and has no voting or investment power with respect to 727,511 of
such shares. NBC has no beneficial interest in any of such shares. NBC
intends to vote all of the 832,191 shares that it has discretion to vote
in favor of each matter set forth in the attached Notice of Annual Meeting
of Shareholders and in this Proxy Statement. As a general rule, where NBC
shares voting power under these arrangements, it allows the person with
whom that power is shared to vote such shares. The shares shown are held
by NBC in various fiduciary or agency capacities and do not include
1,197,192 shares (4.7%) owned by the Company's Employee Stock Ownership
Plan.
(3) Includes 17,266 shares owned by Peggy W. Canale. Does not include shares
owned by her son John D. Canale, III, who is on the Board of Directors.
See "MANAGEMENT OF THE COMPANY--Directors" above.
(4) See Note 14 under the caption "MANAGEMENT OF THE COMPANY--Directors"
above.
20
<PAGE>
APPROVAL OF THE AMENDMENT AND RESTATEMENT OF 1994 STOCK PLAN
At its meeting on January 21, 1997, the Salary and Benefits Committee (the
"Committee") recommended to the Board of Directors, subject to shareholder
approval, the amendment and restatement of the National Commerce
Bancorporation 1994 Stock Plan, in the form of the National Commerce
Bancorporation 1994 Stock Plan as Amended and Restated (the "Plan"), to become
effective as of November 1, 1996. The Board recommends that the shareholders
of the Company approve the Plan. The affirmative vote of the majority of the
Shares of the Company's Common Stock outstanding as of March 7, 1997, the
record date for the annual meeting, is required for approval of the Plan. A
copy of the Plan is attached hereto as Exhibit A. Terms not otherwise defined
herein shall have the meaning given such terms in the Plan.
The purpose of the Plan is to promote the interests of the Company and its
subsidiaries by encouraging key employees to continue their association with
the Company and its subsidiaries and by providing such employees with
additional incentive to increase the value of the Company's Common Stock (the
"Stock"). The Plan provides for the Committee to grant incentive stock options
("ISOs") within the meaning of (S) 422 of the Internal Revenue Code of 1986,
as amended (the "Code") or nonqualified stock options ("NQOs"), options which
do not satisfy the requirements of (S) 422. The Committee also may award
grants of Restricted Stock which become effective upon the satisfaction of one
or more objective employment or other grant conditions. Additionally, the Plan
provides that the Company will distribute shares of Stock to directors who
satisfy certain meeting attendance requirements. The Plan provides that
1,000,000 shares of Stock be reserved for use under the plan in addition to
the shares which remain available as of October 31, 1996 from the 1,050,000
shares originally reserved under the Plan. Any shares subject to an Option
which remain unissued after the cancellation, expiration or exchange of such
Option and any Restricted Stock which is forfeited shall become available for
use again under the Plan. The terms of any grant to a key employee shall be
determined under the Plan and the related Option Agreement or Restricted Stock
Agreement.
The following discussion summarizes the principal features of the Plan. This
discussion does not purport to be complete and is qualified in its entirety by
reference to the Plan.
Administration. The Plan is administered in the absolute discretion of the
Committee, which shall be composed of at least three members who each shall in
the Company's judgment be a "non-employee director", under Rule 16b-3 of the
Securities Exchange Act of 1934 (the "Exchange Act") and an "outside director"
under (S) 162(m) of the Code.
Participants. Any employee of the Company or any subsidiary or affiliate of
the Company designated by the Committee may participate in the Plan; provided
the Committee, acting in its absolute discretion, determines such employee to
be key, directly or indirectly, to the success of the Company. The Company
estimates that approximately 350 employees of the Company, its subsidiaries
and affiliates presently are eligible to participate in the Plan.
The Committee may grant Options or Restricted Stock under the Plan to such
key employees as the Committee may determine, not to exceed 60,000 options for
shares for each key employee for each calender year, except for the Company's
Chief Executive Officer, to whom options for 100,000 shares may be granted
each calender year. Each grant of an Option shall be evidenced by an Option
Agreement stating whether the Option is an ISO or an NQO and such terms and
conditions as the Committee deems consistent with the terms of the Plan. No
Option shall be treated as an ISO to the extent that the
21
<PAGE>
aggregate fair market value of Stock which first becomes exercisable by an
individual in any calendar year exceeds $100,000 and any such Option shall be
treated as an NQO to the extent of such excess. Each grant of Restricted Stock
shall be evidenced by a Restricted Stock Agreement setting forth any
conditions under which the grant will be effective and the conditions under
which the key employee's interest will become nonforfeitable.
Under the Plan, the Committee also shall establish a program under which
grants of Options are conditioned on the purchase of Stock by the key employee
and on the key employee holding such Stock for a specified period. All Stock
purchases made by a key employee under such program shall be made in the open
market and the Committee shall grant any related Option at an Option Price
equal to the purchase price paid by the key employee for the Stock bought on
the open market.
Option Price. The Option Price of an Option granted under the Plan will be
no less than the fair market value of the Stock on the date the Option is
granted; provided, however, if the Option is an ISO granted to a key employee
who is a Ten Percent Shareholder, the Option Price shall be no less than 110%
of the fair market value of a share of Stock on the date of grant. The Option
Agreement may, at the discretion of the Committee, provide for payment of the
Option Price in cash, by check or in Stock which the key employee has held for
at least 90 days, or a combination of cash, check and such Stock.
Surrender of Options. The Committee in an Option Agreement can grant a key
employee the right to surrender an Option on any date that (1) the fair market
value of the Stock subject to the Option exceeds the Option Price, and (2) the
Option is otherwise exercisable. In exchange for the surrendered shares, the
key employee shall receive a payment (in cash or Stock, or a Combination of
cash and Stock) equal to the excess of the fair market value of such shares
over the Option Price for such shares on the date of surrender.
Exercise Period. Each Option granted under the Plan will be exercisable in
whole or in part as set forth in the Option Agreement under which such Option
is granted, but no Option will be exercisable during the six months after the
date such Option is granted, and each Option will expire after the earlier of
(1) the date such option is exercised in full, (2) the date which is the fifth
anniversary of the date the Option is granted, if the Option is an ISO granted
to a key employee who is a Ten Percent Shareholder, or (3) the date which is
the tenth anniversary of the date such option is granted if the Option is an
NQO or an ISO granted to a key employee who is not a Ten Percent Shareholder.
An Option Agreement may provide for the exercise of an Option after the
employment of the key employee has terminated.
In the case of Restricted Stock grants, the grant becomes effective as of
the date set by the Committee or upon the timely satisfaction of all
conditions to the grant. If a Restricted Stock grant fails to become
effective, in whole or in part, the underlying shares of Stock are treated as
forfeited. The holder of Restricted Stock is entitled to receive any cash
dividends and to vote the Stock underlying such grant. A share of Stock ceases
to be Restricted Stock when the key employee's interest becomes nonforfeitable
under the terms of the Plan and the related Restricted Stock Agreement. The
Committee may authorize a cash bonus to a key employee to pay any tax
liability attributed to the Restricted Stock grant becoming nonforfeitable or
to the payment of the cash bonus itself.
Stock For Meeting Attendance. The Plan provides that each Bank Director of
the Company and each Bank Director of certain subsidiaries and affiliates
shall receive for each calendar year beginning with 1997, 100 shares of Stock
if he or she attends all of the regularly scheduled meetings of each Board of
Directors on which he or she serves. Each Director shall be required to agree
upon request to hold such shares for at least 6 months and, further, for
investment only.
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<PAGE>
Securities Registration. The Company agrees to take all action it deems
necessary to register the original issuance of Stock issued pursuant to the
Plan under any applicable securities laws. The Company has no obligation,
however, to take any action in connection with the transfer, resale or other
disposition of such Stock by a key employee.
Non-transferability. No Option or Restricted Stock granted under the Plan
shall be transferable by a key employee other than by will or by the laws of
descent and distribution, and such option shall be exercisable during a key
employee's lifetime only by the key employee.
Adjustment of Shares. The Plan provides for adjustment by the Committee in
an equitable manner of the number, kind or class of shares of Stock (1)
reserved under the Plan, (2) subject to Options and granted under the Plan,
and (3) underlying Restricted Stock grants, to reflect changes in the
capitalization of the Company and in the event of certain transactions which
provide for the substitution or assumption of such Options or Restricted Stock
grants.
Sale or Merger of the Company. If the Company agrees to sell all or
substantially all of its assets or agrees to any merger, consolidation,
reorganization, division or other corporate transaction in which Stock is
converted into another security or into the right to receive securities or
property, and such agreement does not provide for the assumption or
substitution of all outstanding Options and Restricted Stock, the Board shall
(1) cancel unilaterally each Option granted a key employee as of any date set
in advance by the Board in exchange for (a) the number of whole shares of
Stock, if any, which the key employee would have received had he or she had
the right to surrender his or her outstanding Options in full or had exercised
that right exclusively for Stock on the date set by the Board, or (b) giving
advance notice of cancellation together with the right to exercise any
outstanding Option during a reasonable period before the date of the
transaction; (2) cancel unilaterally each Option for which the Option Price
equals or exceeds the Fair Market Value of the Stock on the set date; and
(3) deem any grant conditions and forfeiture conditions on all outstanding
Restricted Stock grants to be completely satisfied on the set date.
Term of the Plan. The Plan shall terminate either (1) on the tenth
anniversary of the Plan's original effective date (i.e., September 9, 2003),
in which case the Plan shall continue in effect until all outstanding grants
have been surrendered, exercised, forfeited, become forfeitable or are no
longer exercisable, or (2) if earlier, on the date on which all of the Common
Stock reserved under the Plan has been issued or is no longer available for
use under the Plan.
Amendment to the Plan. The Plan may be amended by the Board from time to
time to the extent that the Board deems necessary or appropriate; provided,
however, no such amendment shall be made absent the approval of the
shareholders of NCBC required under (S)(S) 162(m) and 422 of the Code. The
Board may also suspend the granting of Options and Restricted Stock under the
Plan at any time and may terminate the Plan at any time. The Board however,
may modify, amend or cancel any Options or Restricted Stock previously granted
only under certain circumstances.
Federal Income Tax Consequences Summary. This is a summary of the federal
income tax consequences of the grant, exercise, or surrender of an Option and
the grant of Restricted Stock under the Plan under present law. This summary
is based on current federal income tax laws, regulations (including certain
proposed regulations), and judicial and administrative interpretations of such
laws. The federal income tax laws and regulations are frequently amended, and
such amendments may or may not be retroactive with respect to transactions
described in this summary. Furthermore, employees participating in the Plan
may be subject to taxes other than federal income taxes, such as state and
23
<PAGE>
local income taxes and estate or inheritance taxes. Accordingly, prior to
surrendering or purchasing shares under the Plan, or selling or otherwise
disposing of such shares, or the lapse of any restrictions on any restricted
stock, each employee should consult his or her own tax adviser for advice
regarding the tax consequences resulting from his or her surrender, purchase,
sale, or other disposition of the shares or the lapse of such restrictions, in
light of his or her individual circumstances.
Grant of Options.
As identified in an option agreement, each Option granted under the Plan is
either an ISO or a NQO. An ISO or a NQO also may include a stock appreciation
right feature. Any employee is not subject to any federal income tax upon the
grant of an Option pursuant to the Plan nor will the grant of an Option result
in an income tax deduction for the Company.
Exercise of Incentive Stock Options.
As a result of the exercise of an ISO and the related transfer of Company
Stock to an employee, the employee normally will not recognize any income for
federal income tax purposes and the Company (or any subsidiary of the Company)
normally will not be entitled to any federal income tax deduction. However,
the excess of the fair market value of shares transferred upon the exercise of
an ISO over the Option Price of such shares (the "spread") generally will
constitute an item of alternative minimum tax adjustment for the year in which
the Option is exercised. Thus, notwithstanding that an employee will not
recognize income for federal income tax purposes upon the exercise of an ISO,
the employee's federal income tax liability may be increased as a result of
such exercise under the alternative minimum tax rules of the Code. The portion
of an employee's minimum tax liability, if any, attributable to the spread may
give rise to a credit against such employee's regular tax liability in later
years.
If the Company Stock transferred pursuant to the exercise of an ISO is
disposed of within two years from the date of the grant of the Option or
within one year from the date of exercise (the "holding periods"), the
employee generally will recognize ordinary income equal to the lesser of
(1) the gain realized (which would be the excess of the amount realized on the
disposition over the option price) or (2) the spread. The balance, if any, of
the employee's gain over the amount treated as ordinary income on a
disposition generally will be long- or short-term capital gain depending upon
whether the holding period applicable to long-term capital assets is
satisfied. Under current law, net capital gain (which would be the excess of
net long-term capital gain over net short-term capital loss) of individuals is
subject to a maximum marginal tax rate of 28%, while ordinary income may be
subject to tax at higher rates. The Company normally will be entitled to a
federal income tax deduction equal to any ordinary income recognized by the
employee.
Following satisfaction of the holding periods, the sale or other taxable
disposition of shares of Company Stock acquired by the exercise of an ISO
generally will result in long-term capital gain or loss treatment with respect
to the difference between the amount realized on the disposition and the ISO
Option Price. The Company will not be entitled to any federal income tax
deduction as a result of a disposition of such shares after the holding
periods.
Exercise of NQO.
As a result of the exercise of a NQO, the employee generally will recognize
ordinary income in an amount equal to the excess, if any, of the fair market
value of the shares transferred to the employee
24
<PAGE>
upon exercise over the Option Price. Such fair market value generally will be
determined on the date of such transfer (within the meaning of (S) 83 of the
Code). The employee will recognize ordinary income in the year such fair
market value is determined, and the Company generally will be entitled to a
corresponding federal income tax deduction, provided the Company satisfies
applicable federal income tax reporting requirements. Depending on the period
the Stock is held after exercise, the sale or other taxable disposition of
shares of Company Stock acquired through the exercise of a NQO generally will
result in a short- or long-term capital gain or loss equal to the difference
between the amount realized on such disposition and the fair market value of
such shares as determined for purposes of (S) 83 of the Code.
Special Rules.
Special rules will apply to an employee who exercises an Option by paying
the Option Price, in whole or in part, by the transfer to the Company of
previously acquired shares of Company Stock.
Stock Appreciation Right.
An employee will recognize ordinary income for federal income tax purposes
upon the exercise of a stock appreciation right which is granted as part of an
ISO or NQO under the Plan. An employee who exercises a stock appreciation
right will receive cash, Company Stock or a combination of cash and Company
Stock upon the exercise of such right in an amount equal to the excess of the
fair market value of the surrendered shares subject to the Option over the
Option Price for the surrendered shares. The employee will recognize ordinary
income on any cash received as of the date he actually or constructively
receives such cash and on the fair market value of any Company Stock
transferred to him as a result of the exercise of such right as of the date of
such transfer (as determined under (S) 83 of the Code). The Company,
generally, will be entitled to a federal income tax deduction in an amount
equal to the ordinary income recognized by the employee in the same taxable
year in which the employee recognizes such income if the Company satisfies the
federal income tax reporting requirements applicable to such transaction. Any
gain or loss recognized upon the disposition of Company Stock acquired
pursuant to the exercise of a stock appreciation right will qualify as long-
term or short-term capital gain or loss depending on how long the employee
holds such Stock before such disposition.
Restricted Stock.
The Committee has the right to grant Company Stock to an employee subject to
such restrictions as the Committee deems appropriate. The taxation of a grant
will be governed by (S) 83 of the Code. Thus the fair market value of the
Stock will be taxable to the employee (absent an election under (S) 83(b) of
the Code) as ordinary income at the time the Stock transferred to the employee
pursuant to the grant no longer is subject to a substantial risk of forfeiture
(as defined in (S) 83 of the Code) or the stock is transferable (within the
meaning of (S) 83 of the Code) taking into account that if the employee is
subject to suit under Section 16(b) of the Exchange Act of 1934, the date
there no longer is a substantial risk of forfeiture or the Stock is
transferable may be treated as delayed for up to six months. If an election is
made under (S) 83(b) of the Code, the fair market value of the Stock will be
taxable to the employee at the time the Stock is transferred to the employee
pursuant to the grant. The Company, generally, will be entitled to a federal
income tax deduction in an amount equal to the ordinary income recognized by
the employee in the taxable year the employee recognizes such income if the
Company satisfies the federal income tax reporting requirements applicable to
such transaction.
25
<PAGE>
ACCOUNTING MATTERS
At its March 13, 1997 meeting, the Executive Committee of the Board of
Directors appointed Ernst & Young LLP, independent certified public
accountants, as auditors for the Company for the current year. Ernst & Young
LLP has acted in this capacity since 1971. The Board of Directors considers
Ernst & Young LLP to be well qualified and recommends that the shareholders
vote to ratify that appointment.
In view of the difficulty and expense involved in changing auditors on short
notice, should the shareholders not ratify the selection of Ernst & Young LLP,
it is contemplated that the appointment of Ernst & Young LLP for the fiscal
year ending December 31, 1997 will be permitted to stand unless the Board of
Directors finds other compelling reasons for making a change. Such disapproval
by the shareholders will be considered a recommendation that the Board select
other auditors for the following year.
A representative of Ernst & Young LLP is expected to be available at the
Annual Meeting. The representative will be given the opportunity to make a
statement if he desires to do so and is expected to be available to respond to
appropriate questions from shareholders.
The Audit Committee serves the principal functions of recommending to the
Board of Directors the persons or firm to be employed as independent auditors
of the Company; reviewing with such auditors the scope of their engagement,
their report of audit and the accompanying management letter, if any;
consulting with the independent auditors and management with regard to the
Company's accounting methods and the adequacy of the Company's internal system
of accounting control; approving professional services provided by the
independent auditors; reviewing the independence of the independent auditors;
and considering the range of the independent auditors' audit and non-audit
fees. The members of the Audit Committee of the Board of Directors are Messrs.
Cicala (Chairman), Barton, Scheidt, and Thompson.
ANNUAL REPORT TO SHAREHOLDERS
The annual report of the Company for the fiscal year ended December 31,
1996, including all financial statements, is being mailed with this Proxy
Statement.
ANNUAL REPORT ON FORM 10-K
The Company will provide without charge, at the written request of any
beneficial shareholder of record on March 7, 1997, a copy of the Company's
Annual Report on Form 10-K, including the financial statements and financial
statement schedules, as filed with the Securities and Exchange Commission,
except exhibits thereto. The Company will provide copies of the exhibits,
should they be requested by eligible shareholders, and the Company may impose
a reasonable fee for providing such exhibits. Requests for copies of the
Company's Annual Report on Form 10-K should be mailed to:
NATIONAL COMMERCE BANCORPORATION
One Commerce Square
Memphis, Tennessee 38150
Attention: Kathy Shelton
Assistant Treasurer
26
<PAGE>
VOTING OF PROXIES AND REVOCABILITY
When the Proxy is properly executed and returned to the Board of Directors,
the shares represented by the Proxy will be voted as directed by the
shareholder executing the Proxy unless it is revoked. If no directions are
given on the Proxy with respect to any particular matter to be acted upon, the
shares represented by the Proxy will be voted in favor of such matter. Any
shareholder giving a Proxy may revoke it at any time before it is voted.
Revocation of a Proxy is effective upon receipt by the Secretary of the
Company of either (i) an instrument revoking it or (ii) a duly executed Proxy
bearing a later date. A shareholder who is present at the Annual Meeting may
revoke the Proxy and vote in person if he so desires.
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. The Board of
Directors will request banks and brokers to solicit their customers having a
beneficial interest in the Company's stock registered in the names of
nominees, and the Company will reimburse such banks and brokers for their
reasonable out-of-pocket expenditures made in such solicitations. Proxies may
be solicited by employees of the Company or NBC by mail, telephone, telecopy,
telegraph and personal interview. The Board of Directors does not presently
intend to pay compensation to any individual or firm for the solicitation of
proxies; however, if the Board of Directors should deem it necessary and
appropriate, it may retain the services of an outside individual or firm to
assist in the solicitation of Proxies.
SHAREHOLDER PROPOSALS
Any shareholder proposals intended to be presented at the Company's 1998
Annual Meeting of Shareholders must be received by the Company at its
corporate offices no later than December 24, 1997 in order to be considered by
the Board of Directors for inclusion in the proxy statement and form of proxy
relating to such meeting.
OTHER MATTERS
The minutes of the Annual Meeting of the Shareholders held on April 24,
1996, will be presented at the meeting for approval. It is not intended that
approval of the minutes will constitute ratification of the matters referred
to therein.
The Board of Directors knows of no other matters to be brought before the
Annual Meeting. However, if any other matter properly comes before the Annual
Meeting or any adjournment thereof, it is intended that the persons named in
the enclosed Proxy will vote such Proxy on such matter in accordance with
their best judgment.
Gus B. Denton
Secretary
March 27, 1997
27
<PAGE>
NATIONAL COMMERCE BANCORPORATION
1994 STOCK PLAN
AS AMENDED AND RESTATED
EFFECTIVE AS OF NOVEMBER 1, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
(S) 1. BACKGROUND AND PURPOSE........................................... 1
(S) 2. DEFINITIONS...................................................... 1
2.1 Bank Director............................................... 1
2.2 Board....................................................... 2
2.3 Change in Control........................................... 2
2.4 Code........................................................ 2
2.5 Committee................................................... 2
2.6 Director.................................................... 3
2.7 Fair Market Value........................................... 3
2.8 Insider..................................................... 3
2.9 ISO......................................................... 3
2.10 Key Employee................................................ 4
2.11 NCBC........................................................ 4
2.12 NQO......................................................... 4
2.13 Option...................................................... 4
2.14 Option Agreement............................................ 4
2.15 Option Price................................................ 4
2.16 Parent Corporation.......................................... 4
2.17 Plan........................................................ 4
2.18 Restricted Stock............................................ 4
2.19 Restricted Stock Agreement.................................. 4
2.20 Rule 16b-3.................................................. 5
2.21 Stock....................................................... 5
2.22 Subsidiary.................................................. 5
2.23 Surrendered Shares.......................................... 5
2.24 Ten Percent Shareholder..................................... 5
(S) 3. SHARES RESERVED UNDER PLAN....................................... 5
(S) 4. EFFECTIVE DATE................................................... 6
(S) 5. COMMITTEE........................................................ 6
(S) 6. ELIGIBILITY...................................................... 7
(S) 7. OPTIONS.......................................................... 7
7.1 Committee Action............................................ 7
7.2 $100,000 Limit.............................................. 8
7.3 Share NCBC Program.......................................... 8
(S) 8. OPTION PRICE..................................................... 8
(S) 9. EXERCISE PERIOD.................................................. 9
(S) 10. NONTRANSFERABILITY............................................... 10
</TABLE>
-i-
<PAGE>
<TABLE>
<C> <S> <C>
(S) 11. SURRENDER OF OPTIONS............................................. 10
11.1 General Rule................................................ 10
11.2 Procedure................................................... 11
11.3 Payment..................................................... 11
11.4 Restrictions................................................ 11
(S) 12. RESTRICTED STOCK................................................. 12
12.1 Committee Action............................................ 12
12.2 Effective Date.............................................. 12
12.3 Conditions.................................................. 12
12.4 Dividends and Voting Rights................................. 13
12.5 Satisfaction of Forfeiture Conditions; Provision for Income
and Excise Taxes................................................. 14
(S) 13. STOCK FOR ATTENDANCE AT MEETINGS................................. 15
(S) 14. SECURITIES REGISTRATION.......................................... 15
(S) 15. LIFE OF PLAN..................................................... 16
(S) 16. ADJUSTMENT....................................................... 17
(S) 17. SALE, MERGER OR CHANGE IN CONTROL................................ 18
(S) 18. AMENDMENT OR TERMINATION......................................... 19
(S) 19. MISCELLANEOUS.................................................... 19
19.1 Shareholder Rights.......................................... 19
19.2 No Contract of Employment................................... 20
19.3 Withholding................................................. 20
19.4 Construction................................................ 20
19.5 Other Conditions............................................ 21
</TABLE>
-ii-
<PAGE>
(S) 1.
BACKGROUND AND PURPOSE
The primary purpose of this Plan is to promote the interest of NCBC through
grants to Key Employees of Options to purchase Stock and grants to Key
Employees of Restricted Stock and the payment of certain compensation to
Directors and Bank Directors in Stock (instead of in cash) in order (1) to
attract Key Employees, Directors and Bank Directors , (2) to provide an
additional incentive to each Key Employee, Director and Bank Director to work
to increase the value of Stock and (3) to provide each Key Employee, Director
and Bank Director with a stake in the future of NCBC which corresponds to the
stake of each of NCBC's stockholders.
(S) 2.
DEFINITIONS
Each term set forth in this (S) 2 shall have the meaning set forth opposite
such term for purposes of this Plan and, for purposes of such definitions, the
singular shall include the plural and the plural shall include the singular.
2.1 Bank Director--means an individual who is a member of the Board of
Directors of National Bank of Commerce (or any successor to such bank),
Nashville Bank of Commerce (or any successor to such bank), NBC Knoxville Bank
(or any successor to such bank), NBC Bank, F.S.B. (or any successor to such
bank) or a member of the Board of Directors of any other bank Subsidiary of
NCBC or affiliate (as such term is defined in Rule 405 of the Securities Act
of 1933, as amended) of NCBC which the Board designates as a Board of
Directors eligible to participate in this Plan and who is not an employee of
NCBC or any Subsidiary or affiliate (as such term is defined in Rule 405 of
the Securities Act of 1933, as amended) of NCBC.
2.2 Board--means the Board of Directors of NCBC.
2.3 Change in Control--means (1) the acquisition of the power to direct, or
cause the direction of, the management and policies of NCBC by a person (not
previously possessing such power), acting alone or in conjunction with others,
whether through the ownership of Stock, by contract or otherwise, or (2) the
acquisition, directly or indirectly, of the power to vote 20% or more of the
outstanding Stock by any person or by two or more persons acting together,
except an acquisition from NCBC or by NCBC, NCBC's management or a NCBC
sponsored employee benefit plan, where (3) the term "person" means a natural
person, corporation, partnership, joint venture, trust, government or
instrumentality of a government and (4) customary agreements with or between
underwriters and selling group members with respect to a bona fide public
offering of Stock shall be disregarded for purposes of this definition.
2.4 Code--means the Internal Revenue Code of 1986, as amended.
2.5 Committee--means the Stock Option and Management Compensation Committee
of the Board or, if the Stock Option and Management Compensation Committee at
any time has less than 3 members or has a member who (in NCBC's judgment)
fails to come within the definition of a "non-employee director" under Rule
16b-3 or (in NCBC's judgment) fails to come within the definition of an
"outside director" under Code (S) 162(m), a committee which shall have at
least 3 members, each of
A-1
<PAGE>
whom shall be appointed by and shall serve at the pleasure of the Board and
shall come within (in NCBC's judgment) the definition of a "non-employee
director" under Rule 16b-3 and within (in NCBC's judgment) the definition of
an "outside director" under Code (S) 162(m).
2.6 Director--means a member of the Board who is not an employee of NCBC or
any Subsidiary or affiliate (as such term is defined in Rule 405 of the
Securities Act of 1933, as amended) of NCBC.
2.7 Fair Market Value--means (1) the midpoint between the closing bid and
asked prices as reported by the Memphis, Tennessee, Commercial Appeal or, if
the Commercial Appeal no longer reports such bid and asked prices, (2) such
bid and ask prices as reported by a newspaper or trade journal or as quoted on
a stock price quotation system selected by the Committee or, if no such prices
are available on such date, (3) such bid and ask prices as so reported or so
quoted in accordance with (S) 2.7(1) or (S) 2.7(2) for the immediately
preceding business day, or, if no newspaper or trade journal reports such bid
and ask prices or if no such price quotations are available on a stock price
quotation system, (4) the price which the Committee acting in good faith
determines through any reasonable valuation method that a share of Stock might
change hands between a willing buyer and a willing seller, neither being under
any compulsion to buy or to sell and both having reasonable knowledge of the
relevant facts.
2.8 Insider--means any individual who is subject to Section 16(a) of the
Securities Exchange Act of 1934, as amended.
2.9 ISO--means an option granted under this Plan to purchase Stock which is
intended to satisfy the requirements of (S) 422 of the Code.
2.10 Key Employee--means a full time, salaried employee of NCBC or any
Subsidiary or any affiliate of NCBC designated by the Committee who, in the
judgment of the Committee acting in its absolute discretion, is key directly
or indirectly to the success of NCBC.
2.11 NCBC--means National Commerce Bancorporation, a Tennessee corporation,
and any successor to such corporation.
2.12 NQO--means an option granted under this Plan to purchase Stock which is
intended to fail to satisfy the requirements of (S) 422 of the Code.
2.13 Option--means an ISO or a NQO.
2.14 Option Agreement--means the written agreement which sets forth the
terms of an Option granted to a Key Employee under (S) 7 of this Plan.
2.15 Option Price--means the price which shall be paid to purchase one share
of Stock upon the exercise of an Option granted under this Plan.
2.16 Parent Corporation--means any corporation which is a parent of NCBC
within the meaning of (S) 424(e) of the Code.
2.17 Plan--means this NCBC 1994 Stock Plan, as amended and restated
effective as of November 1, 1996 and thereafter amended from time to time, or,
where appropriate, this NCBC 1994 Stock Plan as in effect before November 1,
1996.
A-2
<PAGE>
2.18 Restricted Stock--means Stock granted to a Key Employee under (S) 12 of
this Plan.
2.19 Restricted Stock Agreement--means the written agreement which sets
forth the terms of a Restricted Stock grant to a Key Employee under (S) 12 of
this Plan.
2.20 Rule 16b-3--means Rule 16b-3 to Section 16(b) of the Securities
Exchange Act of 1934, as amended, as in effect for any relevant period, or any
successor to such rule.
2.21 Stock--means $2.00 par value common stock of NCBC.
2.22 Subsidiary--means a corporation which is a subsidiary corporation
(within the meaning of (S) 424(f) of the Code) of NCBC.
2.23 Surrendered Shares--means the shares of Stock described in (S) 11 which
(in lieu of being purchased) are surrendered for cash or Stock, or for a
combination of cash and Stock, in accordance with (S) 11.
2.24 Ten Percent Shareholder--means a person who owns (after taking into
account the attribution rules of (S) 424(d) of the Code) more than ten percent
of the total combined voting power of all classes of stock of either NCBC, a
Subsidiary or a Parent Corporation.
(S) 3.
SHARES RESERVED UNDER PLAN
There shall be 1,000,000 shares of Stock reserved for use under this Plan
plus the shares which remain available as of October 31, 1996 from the
1,050,000 shares originally reserved under this Plan. All such shares of Stock
shall be reserved to the extent that NCBC deems appropriate from authorized
but unissued shares of Stock and from shares of Stock which have been
reacquired by NCBC. Furthermore, any shares of Stock subject to an Option
which remain unissued after the cancellation, expiration or exchange of such
Option and any Restricted Shares which are forfeited thereafter shall again
become available for use under this Plan, but any Surrendered Shares which
remain unissued after the surrender of an Option under (S) 11 and any shares
of Stock used to satisfy a withholding obligation under (S) 19.3 shall not
again become available for use under this Plan.
(S) 4.
EFFECTIVE DATE
The effective date of this amended and restated Plan shall be November 1,
1996, provided the shareholders of NCBC (acting at a duly called meeting of
such shareholders) approve such adoption within twelve months of such date and
such approval satisfies the requirements for shareholder approval under (S)
422(b)(1) of the Code. Any Restricted Stock granted under this Plan from the
additional 1,000,000 shares of Stock reserved as of November 1, 1996
automatically shall be granted subject to such approval and, further, any
Option granted under this Plan from the additional 1,000,000 shares of Stock
reserved as of November 1, 1996 shall be granted subject to such approval.
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(S) 5.
COMMITTEE
This Plan shall be administered by the Committee. The Committee acting in
its absolute discretion shall exercise such powers and take such action as
expressly called for under this Plan and, further, the Committee shall have
the power to interpret this Plan and (subject to (S) 16, (S) 17 and (S) 18 and
Rule 16b-3) to take such other action in the administration and operation of
this Plan as the Committee deems equitable under the circumstances, which
action shall be binding on NCBC, on each affected Key Employee, Director or
Bank Director and on each other person directly or indirectly affected by such
action.
(S) 6.
ELIGIBILITY
Eligibility for the grant of NQOs shall be limited to Key Employees. Only
Key Employees who are employed by NCBC or a Subsidiary shall be eligible for
the grant of ISOs, and only Key Employees shall be eligible for the grant of
Restricted Stock under this Plan.
(S) 7.
OPTIONS
7.1 Committee Action. The Committee acting in its absolute discretion shall
have the right to grant Options to Key Employees under this Plan from time to
time to purchase shares of Stock; provided, however, that (1) no grants of
ISOs shall be made to Key Employees who are not employed by NCBC or a
Subsidiary and (2) the number of shares of Stock subject to Options granted to
a Key Employee during any calendar year shall not exceed 60,000 shares each
calendar year unless the Key Employee is NCBC's Chief Executive Officer in
which event such number shall not exceed 100,000 shares each calender year.
Each grant of an Option to a Key Employee shall be evidenced by an Option
Agreement, and each Option Agreement shall set forth whether the Option is an
ISO or a NQO and shall set forth such other terms and conditions of such grant
as the Committee acting in its absolute discretion deems consistent with the
terms of this Plan; however, if the Committee grants an ISO and a NQO to a Key
Employee on the same date, the right of the Key Employee to exercise or
surrender one such Option shall not be conditioned on his or her failure to
exercise or surrender the other such Option. The Committee shall have the
right to grant a NQO and Restricted Stock to a Key Employee at the same time
and to condition the exercise of the NQO on the forfeiture of the Restricted
Stock grant.
7.2 $100,000 Limit. No Option shall be treated as an ISO to the extent that
the aggregate Fair Market Value of Stock (determined as of the date such
Option is granted) which first become exercisable in any calendar year exceeds
$100,000, and any such Option to the extent of such excess shall be treated as
an NQO. The Fair Market Value of Stock subject to any other option (determined
as the date such option was granted) which (1) satisfies the requirements of
(S) 422 of the Code and (2) is granted to a Key Employee under a plan
maintained by NCBC, a Subsidiary or a Parent Corporation shall be treated (for
purposes of this $100,000 limitation) as if granted under this Plan. The
Committee shall interpret and administer the limitation set forth in this (S)
7.2 in accordance with (S) 422(d) of the Code.
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7.3 Share NCBC Program. The Committee as part of this Plan shall continue to
maintain a program under which the Committee shall have the right (where the
Committee deems appropriate) to condition the grant of an Option to a Key
Employee in whole or in part on the purchase of Stock by such Key Employee,
and the Committee shall establish such rules and procedures for the purchase
of Stock and the related grant of any Option under such program as the
Committee deems appropriate under the circumstances; provided, however, (1)
all Stock purchases under such program shall be made in the open market and
(2) the Committee shall grant any related Option at an Option Price equal to
the purchase price paid by a Key Employee in purchasing such Stock in the open
market.
(S) 8.
OPTION PRICE
The Option Price for each share of Stock subject to an Option which is
granted to a Key Employee shall (subject to (S) 7.3) be no less than the Fair
Market Value of a share of Stock on the date the Option is granted; provided,
however, if the Option is an ISO granted to a Key Employee who is a Ten
Percent Shareholder, the Option Price for each share of Stock subject to such
ISO shall be no less than 110% of the Fair Market Value of a share of Stock on
the date such ISO is granted. The Option Price shall be payable in full upon
the exercise of any Option, and at the discretion of the Committee an Option
Agreement can provide for the payment of the Option Price either in cash, by
check or in Stock which the Key Employee has held for at least 90 days and
which is otherwise acceptable to the Committee or in any combination of cash,
check and such Stock. Any payment made in Stock shall be treated as equal to
the Fair Market Value of such Stock on the date the properly endorsed
certificate for such Stock is delivered to the Committee or its delegate.
(S) 9.
EXERCISE PERIOD
Each Option granted under this Plan to a Key Employee shall be exercisable
in whole or in part at such time or times as set forth in the related Option
Agreement, but no Option Agreement shall make an Option granted to a Key
Employee exercisable before the end of the six consecutive month period
beginning on the date as of which the Option is granted or on or after the
earlier of
(1) the date such Option is exercised in full, or
(2) the date which is the fifth anniversary of the date the Option is
granted, if the Option is an ISO and the Key Employee is a Ten Percent
Shareholder on the date the Option is granted, or
(3) the date which is the tenth anniversary of the date the Option is
granted, if the Option is (a) an NQO or (b) an ISO which is granted to a
Key Employee who is not a Ten Percent Shareholder on the date the Option
is granted.
An Option Agreement may provide for the exercise of an Option after the
employment of a Key Employee has terminated for any reason whatsoever,
including death or disability.
(S) 10.
NONTRANSFERABILITY
Neither an Option granted under this Plan nor any related surrender rights
under (S) 11 nor any Restricted Stock shall be transferable by a Key Employee
other than by will or by the laws of descent
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and distribution, and any such Option and any such surrender rights shall be
exercisable during the lifetime of a Key Employee only by such Key Employee.
The person or persons to whom an Option or any related surrender rights or any
Restricted Stock is transferred by will or by the laws of descent and
distribution thereafter shall be treated as the Key Employee under this Plan.
(S) 11.
SURRENDER OF OPTIONS
11.1 General Rule. The Committee acting in its absolute discretion may
incorporate a provision in an Option Agreement to allow a Key Employee to
surrender his or her Option in whole or in part in lieu of the exercise in
whole or in part of that Option on any date that
(1) the Fair Market Value of the Stock subject to such Option exceeds the
Option Price for such Stock, and
(2) Option to purchase such Stock is otherwise exercisable.
11.2 Procedure. The surrender of an Option in whole or in part shall be
effected by the delivery of the Option Agreement to the Committee (or to its
delegate) together with a statement signed by the Key Employee which specifies
the number of shares of Stock as to which the Key Employee surrenders his or
her Option and (at the Key Employee's option) how he or she desires payment be
made for such Surrendered Shares.
11.3 Payment. A Key Employee in exchange for his or her Surrendered Shares
shall (to the extent consistent with the exemption under Rule 16b-3) receive a
payment in cash or in Stock, or in a combination of cash and Stock, equal in
amount on the date such surrender is effected to the excess of the Fair Market
Value of the Surrendered Shares on such date over the Option Price for the
Surrendered Shares. The Committee acting in its absolute discretion shall
determine the form and timing of such payment, and the Committee shall have
the right (1) to take into account whatever factors the Committee deems
appropriate under the circumstances, including any written request made by the
Key Employee and delivered to the Committee (or to its delegate) and (2) to
forfeit a Key Employee's right to payment of cash in lieu of a fractional
share of stock if the Committee deems such forfeiture necessary in order for
the surrender of his or her Option under this (S) 11 to come within the
exemption under Rule 16b-3.
11.4 Restrictions. Any Option Agreement which incorporates a provision to
allow a Key Employee to surrender his or her Option in whole or in part also
shall incorporate such additional restrictions on the exercise or surrender of
such Option as the Committee deems necessary to satisfy the conditions to the
exemption under Rule 16b-3.
(S) 12.
RESTRICTED STOCK
12.1 Committee Action. The Committee acting in its absolute discretion shall
have the right to grant Restricted Stock to any Key Employee under this Plan
from time to time and, further, shall have the right to make new Restricted
Stock grants in exchange for outstanding Restricted Stock grants. Each
Restricted Stock grant shall be evidenced by a Restricted Stock Agreement, and
each Restricted Stock Agreement shall set forth the conditions, if any, under
which the grant will be effective and the conditions under which the Key
Employee's interest in the underlying Stock will become nonforfeitable.
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12.2 Effective Date. A Restricted Stock grant shall be effective (1) as of
the date set by the Committee when the grant is made or, if the grant is made
subject to one, or more than one, condition, (2) as of the date such
conditions have been timely satisfied.
12.3 Conditions.
(a) Grant Conditions. The Committee acting in its absolute discretion may
make the grant of Restricted Stock to a Key Employee effective only upon the
satisfaction of one, or more than one, objective employment, performance or
other grant condition which the Committee deems appropriate under the
circumstances for Key Employees generally or for a Key Employee in particular,
and the related Restricted Stock Agreement shall set forth each such condition
and the deadline for satisfying each such grant condition. If a Restricted
Stock grant will be effective only upon the satisfaction of one, or more than
one, condition, the shares of Stock underlying such grant shall be unavailable
under (S) 3 for the period which begins on the date as of which such grant is
made and which ends as of the date, if any, that the grant becomes effective
under (S) 12.2. If a Restricted Stock grant fails to become effective in whole
or in part under (S) 12.2, the underlying shares of Stock subject to such
grant (if the entire grant fails to become effective) or the underlying shares
of Stock subject to that part of the grant which fails to become effective (if
only part of the grant fails to become effective) shall be treated under (S) 3
as forfeited and shall again become available under (S) 3 as of the date of
such failure.
(b) Forfeiture Conditions. Each Restricted Stock grant shall (when
effective) be subject to one, or more than one, objective employment,
performance or other forfeiture condition that the Committee acting in its
absolute discretion deems appropriate under the circumstances for Key
Employees generally or for a Key Employee in particular, including a condition
which results in a forfeiture if a Key Employee exercises a NQO granted in
tandem with his or her Restricted Stock grant, and the related Restricted
Stock Agreement shall set forth each such condition and the deadline for
satisfying each such forfeiture condition. A Key Employee's nonforfeitable
interest in the shares of Stock underlying a Restricted Stock grant shall
depend on the extent to which he or she timely satisfies each such condition.
Each share of Stock underlying a Restricted Stock grant shall be unavailable
under (S) 3 after such grant is effective unless such share is forfeited as a
result of a failure to timely satisfy a forfeiture condition, in which event
such share of Stock shall again become available under (S) 3 as of the date of
such failure.
12.4 Dividends and Voting Rights. If a cash dividend is declared on a share
of Stock underlying a Restricted Stock grant during the period which begins on
the date such grant is effective and ends immediately before the first date
that a Key Employee's interest in such underlying Stock (1) is forfeited
completely or (2) becomes completely nonforfeitable, NCBC shall pay such cash
dividend directly to such Key Employee. If a Stock dividend is declared on
such a share of Stock during such period, such Stock dividend shall be treated
as part of the grant of the related Restricted Stock, and a Key Employee's
interest in such Stock dividend shall be forfeited or shall become
nonforfeitable at the same time as the Stock with respect to which the Stock
dividend was paid is forfeited or becomes nonforfeitable. The disposition of
each other form of dividend which is declared on such a share of Stock during
such period shall be made in accordance with such rules as the Committee shall
adopt with respect to each such dividend. A Key Employee also shall have the
right to vote the Stock underlying his or her Restricted Stock grant during
such period.
12.5 Satisfaction of Forfeiture Conditions; Provision for Income and Excise
Taxes. A share of Stock shall cease to be Restricted Stock at such time as a
Key Employee's interest in such Stock becomes nonforfeitable under this Plan,
and the agreement representing such share shall be transferred
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to the Key Employee as soon as practicable thereafter. The Committee acting in
its absolute discretion shall have the power to authorize and direct the
payment of a cash bonus (or to provide in the terms of the Restricted Stock
Agreement for NCBC to make such payment) to a Key Employee to pay all, or any
portion of, his or her federal, state and local income and excise tax
liability which the Committee deems attributable to his or her interest in his
or her Restricted Stock grant becoming nonforfeitable and, further, to pay any
such tax liability attributable to such cash bonus.
(S) 13.
STOCK FOR ATTENDANCE AT MEETINGS
Subject to the approval of this Plan by the shareholders in accordance with
(S) 4, each Director and each Bank Director shall receive for 1997 and for
each calendar year thereafter 100 shares of Stock under this Plan if he or she
attends all of the regularly scheduled meetings of each Board of Directors for
which he or she serves as a Director or Bank Director for such calendar year.
The 100 shares of Stock shall be distributed under this Plan to each Director
and each Bank Director who satisfies his or her attendance requirement to
receive such shares, and such shares shall be distributed as soon as
practicable after such attendance requirement for a calendar year has been
satisfied. Each Director and each Bank Director as a condition to the
distribution of any shares under this (S) 13 shall be required to agree to
hold such shares of Stock for at least six months and, further, shall be
required (if so requested by NCBC) to agree to hold such shares of Stock for
investment and not with a view of resale or distribution to the public and (if
so requested by NCBC) to deliver to NCBC a written statement satisfactory to
NCBC to such effect or to each such effect.
(S) 14.
SECURITIES REGISTRATION
Each Option Agreement and Restricted Stock Agreement shall provide that,
upon the receipt of shares of Stock as a result of the surrender or exercise
of an Option or the satisfaction of the forfeiture conditions under a
Restricted Stock Agreement, the Key Employee shall, if so requested by NCBC,
hold such shares of Stock for investment and not with a view of resale or
distribution to the public and, if so requested by NCBC, shall deliver to NCBC
a written statement satisfactory to NCBC to that effect. As for Stock issued
pursuant to this Plan, NCBC at its expense shall take such action as it deems
necessary or appropriate to register the original issuance of such Stock to a
Key Employee or Director or Bank Director under the Securities Act of 1933, as
amended, or under any other applicable securities laws or to qualify such
Stock for an exemption under any such laws prior to the issuance of such Stock
to a Key Employee or Director or Bank Director; however, NCBC shall have no
obligation whatsoever to take any such action in connection with the transfer,
resale or other disposition of such Stock by a Key Employee or Director or
Bank Director.
(S) 15.
LIFE OF PLAN
No Option or Restricted Stock shall be granted under this Plan and no Stock
shall be purchased under (S) 7.3 or distributed under (S) 13 on or after the
earlier of
(1) the tenth anniversary of the original effective date of this Plan, in
which event this Plan otherwise thereafter shall continue in effect
until all outstanding Options have been
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surrendered or exercised in full or no longer are exercisable and all
Restricted Stock granted under this Plan has been forfeited or the
forfeiture conditions on such Stock have been satisfied in full, or
(2) the date on which all of the Stock reserved under (S) 3 of this Plan has
(as a result of the surrender or exercise of Options granted under this
Plan or purchases under (S) 7.3 or the satisfaction of the forfeiture
conditions on Restricted Stock or distributions under (S) 13) been
issued or no longer is available for use under this Plan, in which event
this Plan also shall terminate on such date.
(S) 16.
ADJUSTMENT
The number, kind or class (or any combination thereof) of shares of Stock
reserved under (S) 3 of this Plan, the number, kind or class (or any
combination thereof) of shares of Stock underlying Restricted Stock grants
under this Plan and any related grant conditions and forfeiture conditions and
the number, kind or class (or any combination thereof) of shares of Stock
subject to Options granted under this Plan and the Option Price of such
Options shall be adjusted by the Board in an equitable manner to reflect any
change in the capitalization of NCBC, including, but not limited to, such
changes as stock dividends or stock splits. Furthermore, the Board shall have
the right to adjust (in a manner which satisfies the requirements of (S)
424(a) of the Code) the number, kind or class (or any combination thereof) of
shares of Stock reserved under (S) 3 of this Plan, the number, kind or class
(or any combination thereof) of shares of Stock underlying Restricted Stock
grants under this Plan and any related grant conditions and forfeiture
conditions, and the number, kind or class (or any combination thereof) of
shares subject to Options granted under this Plan and the Option Price of such
Options in the event of any corporate transaction described in (S) 424(a) of
the Code which provides for the substitution or assumption of such Options or
Restricted Stock grants in order to take into account on an equitable basis
the effect of such transaction. If any adjustment under this (S) 16 would
create a fractional share of Stock or a right to acquire a fractional share of
Stock, such fractional share shall be disregarded and the number of shares of
Stock reserved under this Plan and the number subject to any Options or
Restricted Stock granted under this Plan shall be the next lower number of
shares of Stock, rounding all fractions downward. An adjustment made under
this (S) 16 by the Board shall be conclusive and binding on all affected
persons and, further, shall not constitute an increase in "the number of
shares reserved under (S) 3" within the meaning of (S) 18(1)(a) of this Plan.
(S) 17.
SALE, MERGER OR CHANGE IN CONTROL
If NCBC agrees to sell all or substantially all of its assets for cash or
property or for a combination of cash and property or agrees to any merger,
consolidation, reorganization, division or other corporate transaction in
which Stock is converted into another security or into the right to receive
securities or property and such agreement does not provide for the assumption
or substitution of all outstanding Options and all Restricted Stock or if
there is a Change in Control of NCBC or a tender or exchange offer is made for
Stock other than by NCBC, the Board shall (1) cancel unilaterally each such
Option granted to a Key Employee (other than an Option described in (S) 17(2))
as of any date set in advance by the Board in exchange for either (a) the
number of whole shares of Stock (and cash in lieu of a
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fractional share), if any, which he or she would have received if he or she
had the right to surrender his or her outstanding Option in full under (S) 11
of this Plan and he or she exercised that right exclusively for Stock (and
cash in lieu of a fractional share of Share) on the date set by the Board, or
(b) giving each Key Employee holding such an Option advance notice of such
cancellation together with the right to exercise his or her Option in full
during a reasonable period (which shall not be less than a 30 day period)
immediately before the effective date of such transaction, (2) cancel
unilaterally each Option for which the Option Price equals or exceeds the Fair
Market Value of a share of Stock on the date set in advance by the Board, and
(3) deem the grant conditions, if any, and forfeiture conditions, if any, on
all outstanding Restricted Stock grants to be completely satisfied on the date
set in advance by the Board.
(S) 18.
AMENDMENT OR TERMINATION
This Plan may be amended by the Board from time to time to the extent that
the Board deems necessary or appropriate; provided, however, no such amendment
shall be made absent the approval of the shareholders of NCBC required under
(S) 162(m) of the Code or under (S) 422 of the Code (a) to increase the number
of shares of stock reserved under (S) 3 or (b) to change the class of
employees eligible for Options or Restricted Stock grants under (S) 6.
The Board also may suspend the granting of Options and Restricted Stock
under this Plan or purchases under (S) 7.3 or elections under (S) 13.1 at any
time and may terminate this Plan at any time; provided, however, the Board
shall not have the right unilaterally to modify, amend or cancel any
Restricted Stock grant or Option granted before such suspension or termination
unless (1) the Key Employee consents in writing to such modification,
amendment or cancellation or (2) there is a dissolution or liquidation of NCBC
or a transaction described in (S) 16 or (S) 17 of this Plan.
(S) 19.
MISCELLANEOUS
19.1 Shareholder Rights. No Key Employee shall have any rights as a
shareholder of NCBC as a result of the grant of an Option under this Plan or
his or her exercise or surrender of such Option pending the actual delivery of
the Stock subject to such Option to such Key Employee. Subject to (S) 8.4, a
Key Employee's rights as a shareholder in the shares of Stock underlying a
Restricted Stock grant which is effective shall be set forth in the related
Restricted Stock Agreement.
19.2 No Contract of Employment. The grant of an Option or Restricted Stock
to a Key Employee under this Plan shall not constitute a contract of
employment and shall not confer on a Key Employee any rights upon his or her
termination of employment or service in addition to those rights, if any,
expressly set forth in the Option Agreement which evidences his or her Option
or the Restricted Stock Agreement related to his or her Restricted Stock.
19.3 Withholding. The exercise or surrender of any Option Plan under this
Plan and the acceptance of a Restricted Stock grant shall constitute a Key
Employee's full and complete consent to whatever action the Committee deems
necessary to satisfy the federal and state tax withholding requirements, if
any, which the Committee in its discretion deems applicable to such exercise
or surrender or such Restricted Stock. The Committee also shall have the right
to provide in an Option
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Agreement or Restricted Stock Agreement that a Key Employee may elect to
satisfy federal and state tax withholding requirements through a reduction in
the number of shares of Stock actually transferred to him or to her under this
Plan, and if the Employee is subject to the reporting requirements under
Section 16 of the Securities Exchange Act of 1934, as amended, any such
election and any such reduction shall be effected so as to satisfy the
conditions to the exemption under Rule 16b-3.
19.4 Construction. This Plan shall be construed under the laws of the State
of Tennessee.
19.5 Other Conditions. Each Option Agreement or Restricted Stock Agreement
may require that a Key Employee (as a condition to the exercise of an Option
or a Restricted Stock grant) enter into any agreement or make such
representations prepared by NCBC, including any agreement which restricts the
transfer of Stock acquired pursuant to the exercise of an Option or Restricted
Stock grant or provides for the repurchase of such Stock by NCBC under certain
circumstances.
IN WITNESS WHEREOF, NCBC has caused its duly authorized officer to execute
this Plan this day of , 1997 to evidence its adoption
of this Plan.
NATIONAL COMMERCE BANCORPORATION
By:
------------------------------------
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NATIONAL COMMERCE BANCORPORATION
PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF
SHAREHOLDERS APRIL 23, 1997
The undesigned hereby appoints THOMAS M. GARROTT; JAMES E. MCGEHEE, JR.;
and GUS B. DENTON, and each of them, proxies with full power of substitution and
resubstitution, for and in the name of the undersigned, to vote all shares of
stock of National Commerce Bancorporation which the undersigned would be
entitled to vote if personally present at the Annual Meeting of Shareholders to
be held on Wednesday, April 23, 1997, at 10:00 a.m. local time, in the
Auditorium at National Bank of Commerce, Concourse Level, Commerce Tower, One
Commerce Square, Memphis, Tennessee 38150, and at any adjournments thereof, upon
the matters described in the accompanying Notice of Annual Meeting of
Shareholders and Proxy Statement, receipt of which is hereby acknowledged, and
upon any other business that may properly come before the meeting or any
adjournments thereof. Said proxies are directed to vote on the matters described
in the Notice of Annual Meeting and Proxy Statement as follows, and otherwise in
their discretion upon such other business as may properly come before the
meeting and any adjournments thereof.
(Continued and to be dated and signed on the reverse side.)
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<PAGE>
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1. ELECTION OF DIRECTORS
FOR all nominees listed below (except as marked to the contrary below).
WITHHOLD AUTHORITY to vote for all nominees listed:
(INSTRUCTION: To withhold authority to vote for any individual
nominee(s), strike a line through the nominee's name in the list below.)
Class II to serve until Annual Meeting of Shareholders in 2000: John D.
Canale, III; R. Lee Jenkins; W. Neely Mallory, Jr.; James E. McGehee,
Jr.; G. Mark Thompson.
2. RATIFICATION OF THE BOARD OF DIRECTOR'S APPOINTMENT of Ernst & Young LLP,
independent certified public accountants, as auditors of the Company for
the year ending December 31, 1997.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. AMENDMENT OF THE COMPANY'S 1994 STOCK OPTION PLAN to increase by 1,000,000
shares the total number of the Company's Common Stock for which options to
purchase may be granted and make those additional changes described in the
Proxy Statement.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS INDICATED,
THE PROXY WILL BE VOTED "FOR" EACH OF THE ABOVE-STATED PROPOSALS.
Please sign and date below and return the proxy immediately in the enclosed
envelope, whether or not you plan to attend the annual meeting.
Please date this proxy and sign Date: 1997
exactly as your name or names -----------------------
appear hereon. When more than one
owner is shown below, each should --------------------------------
sign. When signing in fiduciary
or representative capacity, please
give full title. If this proxy is --------------------------------
submitted by a corporation, it
should be executed in the full
corporate name by a duly authorized --------------------------------
officer. If this proxy is submitted
by a partnership, it should be
executed in partnership name by an
authorized person.
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