<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) and Rule 14a-12
FIRST COMMERCIAL CORPORATION
------------------------------------------------------------------
(Name of Registrant as Specified In its Charter)
------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title or each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
FIRST COMMERCIAL CORPORATION
400 West Capitol Avenue
Little Rock, Arkansas 72201
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
April 15, 1997
------------------------
To the Shareholders of First Commercial Corporation:
Notice is hereby given that the annual meeting of shareholders of First
Commercial Corporation ("Company") will be held at the DoubleTree Hotel, 424
West Markham Street, Little Rock, Arkansas, on Tuesday, April 15, 1997, at
3:00 p.m. local time for the following purposes:
1. To elect seven (7) Directors.
2. To consider and act upon a proposal to approve and ratify the
adoption of the 1997 Incentive Stock Plan.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only shareholders of record on February 20, 1997, will be entitled to
vote at the meeting or any adjournment thereof.
The Company's Proxy Statement and 1996 Annual Report to Shareholders are
enclosed.
Shareholders are cordially invited to attend the meeting in person.
Management requests that you sign and return the enclosed proxy card as
promptly as possible, regardless of whether or not you plan to be present in
person. A postage paid envelope is enclosed for your convenience in
returning your proxy.
By Order of the Board of Directors,
/s/ Donna Rogers
Donna B. Rogers, Secretary
Little Rock, Arkansas
March 17, 1997
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY SO THAT YOUR
SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE
PRESENCE OF A QUORUM MAY BE ASSURED. THE PROMPT RETURN OF YOUR SIGNED
PROXY, REGARDLESS OF THE NUMBER OF SHARES YOU HOLD, WILL AID THE COMPANY IN
REDUCING THE EXPENSE OF ADDITIONAL PROXY SOLICITATION. YOU MAY REVOKE YOUR
PROXY AT ANY TIME BEFORE IT IS VOTED AT THE MEETING BY WRITTEN NOTICE TO THE
SECRETARY OF THE BOARD OF DIRECTORS OR BY ATTENDING THE MEETING AND VOTING
IN PERSON.
<PAGE>
FIRST COMMERCIAL CORPORATION
400 West Capitol Avenue
Little Rock, Arkansas 72201
----------------------------
PROXY STATEMENT
ANNUAL SHAREHOLDERS MEETING
April 15, 1997
----------------------------
Approximate date proxy material first sent to shareholders:
March 17, 1997
SOLICITATION OF PROXIES
This Proxy Statement is furnished to the shareholders of First
Commercial Corporation ("Company") in connection with solicitation of
proxies for the purposes stated herein by the Company's Board of Directors
for use at the annual meeting of shareholders ("Annual Meeting") to be held
at the DoubleTree Hotel, 424 West Markham Street, Little Rock, Arkansas, on
April 15, 1997, at 3:00 p.m. local time, or any adjournment thereof. Such
solicitation is being made by mail and may also be made in person or by
telephone or telegraph by officers, directors or employees of the Company.
All expenses incurred in such solicitation will be paid by the Company. The
shares represented by proxy will be voted in accordance with the directions
therein, unless the proxy is received in such form or at such time as to
render it ineligible to be voted or unless properly revoked. If no
directions are given in the proxy, it will be voted "FOR" all of the
proposals identified in the proxy and discussed herein. If other matters of
business properly come before the Annual Meeting, the persons named in the
proxy will vote in accordance with their best judgment on such matters.
REVOCATION OF PROXY
The Company encourages the personal attendance of shareholders at the
Annual Meeting, and the giving of the proxy does not preclude the right to
vote in person should the person giving the proxy so desire. The person
giving the proxy has the power to revoke the same by so informing, in
writing, the Secretary of the Board of Directors of the Company at any time
prior to its use or by attending the meeting and voting in person.
The proxy shall not confer the authority to vote at any meeting of
shareholders other than the Annual Meeting or any adjournment thereof.
OUTSTANDING SHARES; VOTING RIGHTS; VOTE REQUIRED FOR APPROVALS
At the close of business on February 20, 1997, the record date for the
meeting, the Company had outstanding 30,177,849 shares of $3.00 par value
per share common stock, each of which is entitled to one vote on all matters
to be presented at the Annual Meeting. Each nominee for Director, to be
elected, must receive a plurality of the votes cast for that position.
Cumulative voting for directors is not permitted. Approval and ratification
of the Board of Directors' adoption of the 1997 Incentive Stock Plan
requires the affirmative vote of a majority of the votes cast on the
proposal at the Annual Meeting. Abstentions will not be counted as votes
cast, but will be counted as present at the meeting for the purpose of
calculating whether a quorum exists. If shares are held by a broker which
has indicated that it does not have discretionary authority to vote on a
particular matter, those shares will not be considered as present and
entitled to vote with respect to that matter but will count toward the
existence of a quorum.
<PAGE>
PRINCIPAL HOLDERS OF SHARES
Listed in the following table are those shareholders, as of February 20,
1997, who owned beneficially more than 5% of the Company's common stock and
the number of shares owned by the named executive officers in the Summary
Compensation Table and by all Directors and Executive Officers as a group:
<TABLE>
<CAPTION>
Percentage of
Name and Address of Amount of Common Stock
Beneficial Owner Beneficial Ownership Outstanding
----------------------------------------- -------------------- -------------
<S> <C> <C>
Charles H. Murphy...................... 1,796,193 5.95%
Union Building, Suite 400
El Dorado, Arkansas
Barnett Grace ......................... 431,928 <F1> 1.43%
Jack Fleischauer, Jr. ................. 12,897 <F2> .05%
Edwin P. Henry ........................ 122,973 <F3> .43%
Neil S. West .......................... 17,387 <F4> .06%
Howard M. Qualls ...................... 37,152 <F5> .13%
All Directors and Executive Officers
as a Group ........................... 5,589,614 <F6> 18.38%
- ----------
<FN>
<F1> For information with regard to form of ownership, see the footnotes to the table that appears in
"Election of Directors."
<F2> Includes an interest in 910 shares under the Company's payroll based stock ownership plan and employee
stock ownership plan and includes exercisable options for 11,863 shares granted under the 1987
Incentive and Nonqualified Stock Option Plan.
<F3> Includes an interest in 27,492 shares under the Company's payroll based stock ownership plan and
employee stock ownership plan and includes exercisable options for 82,093 shares granted under the 1987
Incentive and Nonqualified Stock Option Plan.
<F4> Includes an interest in 1,589 shares under the Company's payroll based stock ownership plan and
employee stock ownership plan and includes exercisable options for 15,384 shares granted under the 1987
Incentive and Nonqualified Stock Option Plan.
<F5> Includes an interest in 2,185 shares under the Company's payroll based stock ownership plan and
employee stock ownership plan and includes exercisable options for 1,262 shares granted under the 1987
Incentive and Nonqualified Stock Option Plan.
<F6> Includes interests in 96,526 shares under the Company's payroll based stock ownership plan and employee
stock ownership plan and includes exercisable options for 236,703 shares granted under the 1987
Incentive and Nonqualified Stock Option Plan.
</FN>
</TABLE>
<PAGE>
ELECTION OF DIRECTORS
Seven (7) persons have been nominated for election as directors at the
Annual Meeting to serve for a term of three years, with the exception of
Directors Bowen and Cupp, who have been nominated for a term of one year.
Such persons and the eight (8) directors whose terms have not expired will
serve as the full Board of Directors of the Company. Should any of the
nominees listed below become unavailable for election for any reason,
presently unknown, the persons named in the enclosed proxy will vote for the
election of such other person or persons as management may recommend. For
information regarding the composition of the Company affiliate banks' Boards
of Directors, see the listing in the Company's Annual Report to Shareholders
accompanying this Proxy Statement.
The following table presents for each nominee and present director of
the Company his or her principal occupation, the number of shares of common
stock of the Company beneficially owned at February 20, 1997, and certain
other information.
<TABLE>
<CAPTION>
Percentage
Common Stock of Common
Name and Principal Occupation Director Beneficially Stock
or Employment<F1> Age Since Owned<F2> Outstanding
------------------------------------- ----- -------- ----------------- -----------
<S> <C> <C> <C> <C>
(D) John W. Allison
President and Chief Executive
Officer, Spirit Homes, Inc. 50 1985 738,018<F4> 2.45%
(C) Truman Arnold
Chairman and Chief Executive
Officer, Truman Arnold Companies, Inc. 59 1994 910,426<F5> 3.02%
(B) William H. Bowen
Retired Chairman of the Company;
Dean, University of Arkansas at
Little Rock School of Law 73 1971 659,904<F3><F6> 2.19%
(A) Peggy Clark
Manager/Partial Owner,
Clark Timberlands 47 1994 1,483 .01%
(A) Robert G. Cress
Chairman and Chief Executive Officer,
J.A. Riggs Tractor Company 64 1985 27,722 .09%
(B) Cecil W. Cupp, Jr.
Retired Chairman,
Arkansas Bank & Trust Company 72 1990 744,603<F7> 2.46%
(D) Barnett Grace
Chairman, President and Chief Executive
Officer of the Company 52 1981 431,928<F3><F8> 1.43%
(C) Frank D. Hickingbotham
Chairman,
TCBY Enterprises, Inc. 60 1995 1,408,615 4.67%
<PAGE>
<CAPTION>
Percentage
Common Stock of Common
Name and Principal Occupation Director Beneficially Stock
or Employment<F1> Age Since Owned<F2> Outstanding
------------------------------------- ----- -------- ----------------- -----------
<S> <C> <C> <C> <C>
(A) Walter E. Hussman, Jr.
Publisher,
Arkansas Democrat-Gazette 50 1994 2,089<F9> .01%
-------------------------
(C) Frederick E. Joyce, M.D.
Physician 62 1994 228,786 .76%
(D) Jack G. Justus
Executive Vice President,
Arkansas Farm Bureau Federation 65 1984 7,512<F10> .03%
(A) William M. Lemley
Retired Associate Professor of
Accounting, Arkansas Tech University 69 1987 31,785<F11> .11%
(D) Michael W. Murphy
President,
Marmik Oil Company 49 1985 9,290<F12> .03%
(A) Sam C. Sowell
Chairman,
Harvey Press, Inc. 63 1976 27,185<F13> .09%
(C) Paul D. Tilley
President and Chief Executive Officer,
Highland Resources, Inc. 55 1989 130,042<F14> .43%
- ---------------
(A) Nominee for election at this year's Annual Meeting for a three year term.
(B) Nominee for election at this year's Annual Meeting for a one year term.
(C) Term expires at Annual Meeting in 1998.
(D) Term expires at Annual Meeting in 1999.
<FN>
<F1> All persons have been engaged in the occupation identified in the foregoing table for at least five
years with the exception of William H. Bowen, Cecil W. Cupp, Jr., and William M. Lemley Mr. Bowen's
retirement was effective December 31, 1990, and his employment with the University of Arkansas School
of Law began in July 1995. Mr. Bowen also served as president and chief executive officer to
Healthsource Arkansas Ventures, Inc., from September 1993 to December 1995. Mr. Lemley's retirement
was effective May 16, 1992. Mr. Cupp's retirement was effective December 31, 1994.
<F2> All shares listed are owned of record, except as described in notes (3) through (14).
<F3> Includes interests in the Company's common stock under the Company's payroll based stock ownership plan
and employee stock ownership plan as of December 31, 1995, which interests include sole voting power
with respect to the shares, as follows: Mr. Bowen (28,793) and Mr. Grace (29,373).
<PAGE>
<F4> John W. Allison owned of record 608,073 shares; 16,638 shares were owned by his wife; 15,873 shares,
for which Mr. Allison and his wife have custodial power, were owned by Mr. Allison's children and
grandchildren; 97,434 shares were owned by Capital Buyers, Inc., of which Mr. Allison is president.
<F5> Truman Arnold owned of record 552,867 shares; 85,706 shares, of which Mr. Arnold has the right to
direct the voting, were owned by a trust; 231,000 shares were owned by Truman Arnold Companies, Inc.,
of which Mr. Arnold is chairman and chief executive officer; 40,853 shares, of which Mr. Arnold has the
right to direct the voting, were owned by Truman Arnold Companies, Inc., Retirement Trust.
<F6> William H. Bowen owned of record 544,398 shares; 86,713 shares were owned by his wife.
<F7> 741,513 shares were owned by a trust for which Cecil W. Cupp, Jr. is trustee with the right to vote
such shares; 3,090 shares were owned by a trust for which his wife is trustee with the right to vote
such shares.
<F8> Barnett Grace owned of record 205,047 shares; 1,810 shares were owned by his wife; 2,388 shares, for
which Mr. Grace has custodial power, were owned by Mr. Grace's children; 92,208 shares were owned by
various trusts for which Mr. Grace is trustee with the right to vote such shares. Includes exercisable
options granted under the 1987 Incentive and Nonqualified Stock Option Plan of 101,102.
<F9> Walter E. Hussman, Jr., owned of record 1,510 shares; 579 shares were owned by various trusts for which
Mr. Hussman is trustee with the right to vote such shares.
<F10>Jack G. Justus owned 7,512 shares jointly with his wife.
<F11>William M. Lemley owned of record 3,099 shares; 28,686 shares were owned by his wife.
<F12>Michael W. Murphy owned of record 1,529 shares; 2,275 shares were owned by his wife; 5,486 shares were
owned by trusts for which Mr. Murphy is trustee with the right to vote such shares.
<F13>Sam C. Sowell owned of record 10,937 shares; 16,248 shares were owned jointly with his wife.
<F14>Paul D. Tilley owned of record 3,144 shares; 126,898 shares were owned by Highland Resources, Inc., of
which Mr. Tilley is president and chief executive officer.
</FN>
</TABLE>
The following directors occupy directorships in other registered
companies as indicated:
William H. Bowen TCBY Enterprises, Inc.
Frank D. Hickingbotham TCBY Enterprises, Inc.
Frederick E. Joyce, M.D. Southwestern Electric Power Company
Michael W. Murphy Murphy Oil Corporation
<PAGE>
OTHER INFORMATION
The Board of Directors of the Company held twelve meetings during 1996.
The Board of Directors has Audit and Compensation committees. The Board of
Directors does not have a standing nominating committee.
The Audit Committee, which met four times during 1996, presently
consists of Directors Clark, Cress, Joyce and Lemley. The functions of the
Audit Committee are (a) to review and approve the adequacy of the Company's
internal audit program, internal audit staff and financial organization;
(b) to evaluate the Company's internal control structure; (c) to recommend
annually to the Board of Directors the appointment of independent auditors
at determined fees; (d) to approve the scope of the prospective annual
audit; and (e) to review the results of various examinations of the Company
and its affiliates and management's response thereto.
The Compensation Committee, which met five times during 1996, presently
consists of Directors Allison, Arnold, Cress, Sowell and Tilley. The
function of the Compensation Committee is to establish and review the
compensation and benefits of certain officers of the Company.
All of the incumbent members of the Board of Directors attended at least
75% of the aggregate number of meetings of the Board and of the Committees
on which they served during the last fiscal year, with the exceptions of
Directors Hickingbotham, Hussman and Murphy.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
ELECTION AS DIRECTORS OF THE SEVEN PERSONS IDENTIFIED ABOVE AS NOMINEES FOR
ELECTION AT THIS YEAR'S ANNUAL MEETING.
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Cash and Other Compensation
The following table sets forth the annual and long-term compensation for
the Company's Chief Executive Officer and the four highest-paid executive
officers during the Company's previous three fiscal years:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-term Compensation
------------------------
Annual Compensation Awards
--------------------------------- ------------------------
Other Annual Restricted Securities All Other
Compensation Stock Underlying Compensation
Name and Principal Position Year Salary($) Bonus($) ($)<F1> Awards(s)($) Options(#) ($)<F2>
- ------------------------------ ---- --------- -------- ------------ ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Barnett Grace 1996 382,736 229,028 -- -- 10,000 15,666
Chairman, President and 1995 363,216 210,549 -- -- 25,279<F3> 11,341
Chief Executive Officer of 1994 357,782 164,270 -- -- -- 6,032
the Company
Jack Fleischauer, Jr.<F4> 1996 230,736 117,900 -- -- 7,000 5,966
Chairman, President and 1995 220,801 107,768 -- -- 14,483<F3> 1,980
Chief Executive Officer, 1994 129,400 91,558 -- -- 22,414<F3> 870
First Commercial Bank, N.A.,
Little Rock, Arkansas
Edwin P. Henry 1996 215,211 111,720 -- -- 3,000 10,323
Executive Vice President 1995 203,316 90,291 -- -- 13,463<F3> 7,501
of the Company 1994 182,333 79,235 -- -- -- 5,205
Neil S. West 1996 211,925 97,674 -- -- 5,000 9,154
Executive Officer of the 1995 199,500 69,564 -- -- 19,080<F3> 6,504
Company; Chairman and Chief 1994 182,333 52,752 -- -- -- 3,128
Executive Officer, Tyler
Bank and Trust Company, N.A.,
Tyler, Texas
Howard M. Qualls 1996 186,888 50,832 -- -- 5,000 11,066
Chairman, President and 1995 N/A N/A N/A N/A N/A N/A
Chief Executive Officer, 1994 N/A N/A N/A N/A N/A N/A
State First National Bank,
Texarkana, Arkansas
- ---------------
<FN>
<F1> Amounts representing personal benefits are not included in this table. The Company has a policy of
providing country club memberships to some of its officers. The recipients of these items are selected
by the Company's executive management. The Company also provides a medical expense allowance to
certain executive officers. In the Company's estimation, the dollar amount of such items for the
personal benefit of each named officer does not exceed the lesser of $50,000 or ten percent (10%) of
the aggregate remuneration for any individual.
<PAGE>
<F2> "All Other Compensation" for the year ended December 31, 1996, includes the following for Messrs.
Grace, Fleischauer, Henry, West and Qualls: (i) Company contributions to the 401(k) Retirement Savings
Plan of $3,950, $3,243, $3,950, $4,319 and $5,682 on behalf of each of the named executives,
respectively, (ii) Company contributions to the Non-Qualified Deferred Compensation Plan of $10,276,
$1,853, $4,123, $3,395 and $1,874 on behalf of each of the named executives, respectively, and (iii)
Company contributions to the Company's group life insurance policy of $1,440, $870, $2,250, $1,440 and
$3,510, respectively. There is no arrangement or understanding, formal or informal, whereby the named
executive officers have or will receive or be allocated an interest in any cash surrender value under
the Company's insurance policy.
<F3> Reflects a five percent stock dividend paid November 15, 1996, a seven percent stock dividend paid
January 2, 1996, and a five percent stock dividend paid January 3, 1995.
<F4> Jack Fleischauer, Jr., was employed with the Company as president and chief executive officer of First
Commercial Bank, N.A., in May 1994.
</FN>
</TABLE>
<PAGE>
Options Granted and Options Exercised in the Last Fiscal Year
The following table sets forth certain information concerning options
granted during 1996 to the named executive officers:
<TABLE>
<CAPTION>
OPTION GRANTS IN 1996
Individual Grants
- -------------------------------------------------------------------------------------
Number of % of Total
Securities Options Grant Date Present Value
Underlying Granted to Exercise or as Calculated per the
Options Employees in Base Price Black-Scholes Option
Name Granted(#)<F1> Fiscal Year ($/Share) Expiration Date Pricing Model($)<F2>
- --------------------- -------------- -------------- ----------- ----------------- ------------------------
<S> <C> <C> <C> <C> <C>
Barnett Grace ....... 10,000 7.6 37.25 December 17, 2006 91,300
Jack Fleischauer, Jr. 7,000 5.3 37.25 December 17, 2006 63,910
Edwin P. Henry ...... 3,000 2.3 37.25 December 17, 2006 27,390
Neil S. West ........ 5,000 3.8 37.25 December 17, 2006 45,650
Howard M. Qualls .... 5,000 3.8 37.25 December 17, 2006 45,650
- ----------
<FN>
<F1> Options become exercisable with respect to 20% of the shares covered thereby on the anniversary of the
grant date in 1997, 1998, 1999, 2000 and 2001. If the Company is acquired by another company, any
unexercisable portion of the options will become immediately exercisable.
<F2> Based on the Black-Scholes option pricing model as adjusted for the payment of dividends. Valuations
under the model depend on such factors as the volatility of a security's return, the level of interest
rates, the relationship of the underlying stock's price to the strike price of the option, current
dividends and the time remaining until the option expires. Valuations under the same model could
change if different assumptions as to factors such as volatility and interest rates were made. Option
values are dependent on the future performance of the common stock and overall stock market conditions.
There can be no assurance that the values reflected in this table will be realized. The specific
variables used for the Black-Scholes valuation in the above table are as follows: annual volatility of
the Company's rate of return on stock of .18; risk-free interest rate of 6.3%; annual dividend yield as
of date of option grant of 2.7%; and time to exercise of ten years. The option's exercise price equals
100% of the fair market value of the Company's stock on the date of the grant.
</FN>
</TABLE>
<PAGE>
The following table summarizes options exercised during 1996 and
presents the value of unexercised options held by the named executive
officers at December 31, 1996:
<TABLE>
<CAPTION>
OPTION EXERCISES IN 1996 AND YEAR-END OPTION VALUES
Value Realized Number of Securities Value of Unexercised
(Market price Underlying Unexercised in-the-Money
Shares at exercise Options at 12/31/96(#) Options at 12/31/96($)<F1>
Acquired on less exercise --------------------------- ---------------------------
Name Exercise(#) price)($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------- ----------- -------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Barnett Grace ...... 986 28,811 101,102 44,720 2,674,844 476,066
Jack Fleischauer, Jr. -- -- 11,863 32,034 201,983 375,818
Edwin P. Henry ..... -- -- 82,093 18,310 2,322,665 197,543
Neil S. West ....... -- -- 15,384 25,165 252,917 229,842
Howard M. Qualls ... -- -- 1,262 10,041 14,221 55,580
- ----------
<FN>
<F1> Amounts represent the excess of the market value over the exercise price for all exercisable shares and
all unexercisable shares at December 31, 1996.
</FN>
</TABLE>
<PAGE>
Pension Plan
The following table sets forth the annual life annuity payable under the
Company's qualified pension plans to participating employees in the
specified remuneration and years of service classification:
<TABLE>
<CAPTION>
ESTIMATED ANNUAL BENEFITS
Final 5 Year Years of Service at Retirement
Average Annual --------------------------------------------------------------
Compensation 15 20 25 30 35
----------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$100,000 $25,507 $34,010 $42,512 $42,512 $42,512
150,000 40,507 54,010 67,512 67,512 67,512
200,000<F1> 40,507 54,010 67,512 67,512 67,512
300,000<F1> 40,507 54,010 67,512 67,512 67,512
400,000<F1> 40,507 54,010 67,512 67,512 67,512
500,000<F1> 40,507 54,010 67,512 67,512 67,512
600,000<F1> 40,507 54,010 67,512 67,512 67,512
- ----------
<FN>
<F1> As required by Section 415 of the Internal Revenue Code, the qualified pension plans' payments may not
provide annual benefits exceeding a maximum amount, currently $120,000. Pursuant to Section 401(a)(17)
of the Internal Revenue Code, annual compensation in excess of $150,000, for fiscal year 1996, cannot
be taken into account in determining qualified pension plan benefits.
</FN>
</TABLE>
Covered compensation comprises basic compensation and bonuses or
incentive compensation up to 20% of basic compensation, paid to all plans'
participants. The final average compensation is based on the highest five
consecutive years out of the final ten years of employment. Benefits
commence at age 70 1/2 or at retirement, if earlier, and continue for the
lifetime of the participant. The pension benefits are on the basis of a
life only annuity and are reduced for Social Security, but are not reduced
by other benefits received by the participants.
The maximum benefit under the qualified pension plans is limited by
Sections 415 and 401(a)(17) of the Internal Revenue Code; however, the
Company has adopted a Supplemental Executive Retirement Plan for Barnett
Grace. Under this plan, Mr. Grace would receive an amount equal to the
benefit payable under the Pension Plan, without regard to such limitations,
less the amount actually payable under the qualified pension plan. This
amount is further multiplied by a fraction, the numerator of which is the
number of years of service from January 1, 1995, and the denominator of
which is 15, unless Mr. Grace terminates employment within a period 45 days
prior to or 24 months after a change in control of the Company, in which
case the multiplier will not apply. The estimated annual benefit payable
for life at age 65, which has accrued as of the date of this proxy, is
$7,497. However, if the fractional reduction does not apply, the annual
benefit payable for life at age 65 is $56,229.
The estimated years of credited service at December 31, 1996, for each
of the named executive officers is as follows: Barnett Grace, 25; Jack
Fleischauer, Jr., 3; Edwin P. Henry, 35; Neil S. West, 4; and Howard M.
Qualls, 16.
<PAGE>
Employment Contracts, Termination of Employment and Change-in-Control
Arrangements
The Company has entered into change-in-control agreements with Messrs.
Grace, Fleischauer, Henry, West and Qualls. Pursuant to the terms of such
agreements, if any of these officers following a "change in control" of the
Company is terminated by the Company (prior to his normal retirement date)
within two years of the change in control without "cause," or if the officer
resigns for "good reason" within twelve months, then such officer is
entitled to receive certain cash payments from the Company. Payments shall
be made under the agreements which range up to three times the participant's
current base salary plus the average bonus for the past two years. Certain
agreements are "grossed up" to provide for any excise tax imposed by Section
4999 of the Internal Revenue Code and the continuation of benefits for up to
three years.
Remuneration of Directors
The members of the Board of Directors are paid a fee of $350 per month
for advice and assistance called for on a day-to-day basis as well as $500
per meeting for all regular and special meetings of the Board which they
attend. In addition, those members of the Board who serve on Board
committees are paid a fee of $400 for each meeting they attend and $175 for
each meeting via telephone conference in which they participate. Those
members of the Board who are also executive officers of the Company do not
receive any fees.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee consists of the following directors:
Allison, Arnold, Cress, Sowell, and Tilley. There were no committee
interlocks or insider participation.
FIRST COMMERCIAL CORPORATION'S 1996 COMPENSATION
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of the Company
presents its report which documents the elements of the Company's executive
compensation programs and describes the basis on which 1996 compensation
determinations were made by the Committee with respect to the named
executive officers in the Proxy Statement.
COMPENSATION PHILOSOPHY
The following compensation guidelines have been adopted by the Committee
and represent the general principles that the Committee considers regarding
the remuneration of officers of the Company.
The compensation principles of the Company are:
- The Company should provide a compensation package that is competitive
given our relative size and performance within the banking industry. Our
pay posture should enable the Company to attract and retain key
executives.
- Our incentive programs should focus attention on the Company's annual and
long-term business objectives and strategy, and should focus executive
behavior on meeting those goals.
<PAGE>
- Our pay programs should not provide incentives for our executives to take
undue risks in managing the enterprise, nor lead executives to expose the
Company and our customers to policies or practices that would undermine
the financial strength and reputation of our institution.
- Our pay program should provide incentive opportunities to improve overall
corporate performance relative to other financial institutions with which
we compete.
- The Company should provide stock-based, long-term incentive opportunities
to key executives so that executives experience a link between their
performance and the returns they generate on behalf of shareholders.
COMPENSATION PROGRAM COMPONENTS
The particular pay programs for executive officers currently in place at
the Company are described below. The Committee actively administers these
programs to ensure that they adhere to our compensation principles.
Base Salary
The Committee establishes base pay levels for executives according to
industry salary practices as reflected by published salary surveys. Base
pay levels are determined through comparisons with other financial
institutions of similar asset size to the Company with a return on assets of
at least 1.00%. These comparisons are with companies contained in national,
regional and local salary surveys conducted by compensation consultants.
These surveys differ from the NASDAQ Financial Stocks Index which the
Company uses for the performance graph appearing herein. This index was
selected because it is broad-based and thus less subject to volatility on a
year-to-year basis. While median levels of compensation are used in survey
comparisons, experience within the Company and experience within the actual
position are taken into consideration when establishing appropriate salary
levels. It is generally the Committee's practice to move executives toward
the midpoint of their salary range once they have attained three to five
years experience within the position. Thus, executive salary increases are
based on competitive practices (i.e., industry survey research), corporate
guidelines (i.e., the Company's annual budget and salary administration
process), and individual performance (i.e., each executive's stated personal
objectives established on an annual basis in accordance with the Company's
three year strategic and annual operating plans).
Annual Incentive Compensation
All executive officers are eligible for and participate in incentive
compensation plans. The purpose of the plans is to encourage the
achievement of the Company's key financial and operational objectives and to
directly link total cash compensation to the performance of the Company and
its affiliates. In addition to a stated target award percentage for each
participant, there is a threshold level of performance before any incentive
pay can be generated from a plan. Basic components of the Corporate plan
for Messrs. Grace and Henry include growth (earnings per share),
profitability (return on average common stockholders' equity) and quality
(accomplishment of personal objectives of each executive officer), each
weighted equally. For 1996, the Company's Growth Factor target and the
Profitability Factor target were exceeded; and for the third factor,
Quality, each executive's accomplishment of personal objectives was reviewed
and found to be acceptable.
<PAGE>
In their capacities as affiliate bank chief executive officers, Messrs.
Fleischauer, West and Qualls received their incentive compensation which was
determined by the performance of First Commercial Bank, N.A., Tyler Bank and
Trust, N.A., and State First National Bank, Texarkana, Arkansas,
respectively. Mr. West also received a portion of his incentive
compensation determined by the combined performance of all affiliate banks
which report to him. Basic components of the affiliate bank chief executive
officer plan include bank performance indicators (return on average assets,
growth in pre-tax, pre-provision for loan and lease losses income and loan
portfolio rating), the Company's earnings per share and an individual
rating. The bank performance is weighted 50%, with earnings per share and
individual rating weighted 25% each. For 1996, the bank performance targets
and earnings per share target were exceeded for each bank and the individual
ratings were reviewed and found to be acceptable.
Stock Option Program
In 1987, the Company adopted the 1987 Incentive and Nonqualified Stock
Option Plan. The purpose of the Plan is to retain employees with a high
degree of training, experience and ability, to attract highly qualified new
employees, to encourage a sense of ownership in the Company, and to
stimulate the active interest of participants in the development and
financial success of the Company. The Plan allows for the issuance of
incentive stock options and nonqualified stock options at no less than fair
market value of the Company's stock on the date the option is granted.
Options granted under the Plan vest in 20% cumulative installments after the
first, second, third, fourth and fifth anniversaries of the granting of the
option. No executive officer may receive in a single year more than 25% of
the total number of options granted in that year or receive over the life of
the Plan more than 25% of the total number of options granted over the life
of the Plan.
Prior to any grant, the Committee reviews the performance of the Company
as well as the authorized and outstanding options. The Company's Board of
Directors' policy is that five percent will be the maximum number of options
outstanding as a percent of total shares outstanding at any one time.
DISCUSSION OF 1996 COMPENSATION FOR THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER
The following is a description of the decisions made by the Committee
regarding compensation for Mr. Barnett Grace for 1996:
- Base salary was increased to $382,736 per annum in 1996. The Committee
regards Mr. Grace's pay as being appropriate considering his years of
experience in this position and competitive compared to financial
institutions of similar size to the Company. Mr. Grace's base
compensation is reviewed annually utilizing the process discussed under
the heading "Base Salary."
- The Compensation Committee has awarded Mr. Grace an annual bonus for 1996
in the amount of $229,028. The Company has exceeded target levels
established in the annual incentive plan, as described under the heading,
"Annual Incentive Compensation," in terms of earnings per share growth
and return on average common stockholders' equity. The Committee has
deemed the 14.5% growth in earnings per share and the 15.09% return on
average common stockholders' equity in comparison with Company target and
peer group performance to be of a sufficient magnitude to warrant this
payout under the Company's incentive plan.
<PAGE>
SUMMARY
The Committee's compensation decisions for the chairman and other
executive officers in 1996 are consistent with the Company's performance,
our stated compensation guidelines, and the provisions of our compensation
programs. The Committee will continue to monitor and administer all
compensation programs for the Company.
The Compensation Committee
Sam C. Sowell, Chairperson
John W. Allison
Truman Arnold
Robert G. Cress
Paul D. Tilley
STOCK PERFORMANCE CHART
The following chart compares the yearly percentage change in the
cumulative total stockholder return on the Company's Common Stock during the
five fiscal years ended December 31, 1996, with the cumulative total returns
on the S&P SmallCap 600 Index and the NASDAQ Financial Stocks Index. The
comparison assumes $100 was invested on December 31, 1991, in the Company's
Common Stock and in each of the foregoing indices and assumes reinvestment
of dividends.
<TABLE>
<CAPTION>
Comparison of First Commercial Corporation, S&P SmallCap 600 Index,
and NASDAQ Financial Stocks Index
[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]
First Commercial S&P SmallCap 600 NASDAQ Financial
---------------- ---------------- ----------------
<S> <C> <C> <C>
1991 $ 100.00 $ 100.00 $ 100.00
1992 109.44 121.04 143.02
1993 114.04 143.78 166.23
1994 120.82 136.92 166.62
1995 184.53 177.94 242.61
1996 237.20 215.88 311.07
</TABLE>
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers and persons who own more than ten
percent of the Company's common stock to file with the Securities and
Exchange Commission (the "Commission") initial reports of ownership and
reports of changes in ownership of Company stock.
Based upon a review of copies of such reports filed with the Commission
and written representations that no other reports were required to be filed,
it is the Company's belief that all Section 16(a) filing requirements
applicable to its directors, executive officers and greater than ten percent
beneficial owners were complied with during the year ended December 31,
1996.
An initial ownership report was filed late for each of Bill I.
Crutchfield and Douglas L. Jackson. Both individuals are current on their
Section 16(a) filings at the time of this mailing.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Company and its subsidiaries have had, and expect to have in the
future, banking transactions in the ordinary course of business with
executive officers of the Company, directors of the Company and principal
shareholders. Loans made to members of this group, including companies in
which they are principal owners (10% or more ownership interest) amounted to
approximately $24.7 million at the highest point in 1996, which represents
5.4% of the Company's average equity capital. Such transactions have been
made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons. The loans do not include more than a normal risk of
collectibility and do not involve any unfavorable features.
PROPOSAL TO APPROVE THE 1997 INCENTIVE STOCK PLAN
General
In 1987 the Company's stockholders approved the 1987 Incentive and
Nonqualified Stock Option Plan. Under its terms, this plan expired on
February 17, 1997. On February 18, 1997, the Company's Board of Directors
adopted, subject to shareholder approval, the 1997 Incentive Stock Plan (the
"1997 Plan").
The purpose of the 1997 Plan is to promote the interests of the Company
and its shareholders through the attraction and retention of executive
officers and other key employees, to motivate such employees using
performance-related incentives linked to longer-range performance goals, and
to enable such employees to share in the long-term growth and success of the
Company.
The 1997 Plan permits the grant of nonqualified stock options, incentive
stock options (intended to qualify under Section 422A of the Internal
Revenue Code of 1986, as amended (the "Code")), stock appreciation rights,
restricted stock and restricted stock units, performance shares and
performance units, bonus stock, and any other stock unit awards as the
committee administering the 1997 Plan may determine under its sole and
complete discretion at the time of grant.
<PAGE>
The 1997 Plan shall be administered and interpreted by a committee (the
"Committee") consisting of the members of the Compensation Committee of the
Company's Board of Directors. The Compensation Committee currently is
composed of individuals who are non-employee directors as defined in Rule
16b-3 of the Securities and Exchange Commission, and all of whom are outside
directors as defined in applicable Treasury Regulations. The Committee in
its sole and complete discretion shall determine those employees who shall
be eligible for participation under the 1997 Plan. Subject to certain
restrictions, the Committee has broad authority to determine the terms and
conditions upon which awards may be granted, including, among other things,
when they may be granted, their duration, and conditions for their exercise
and forfeiture.
Participants shall include officers and other key employees of the
Company or its subsidiaries, who, in the opinion of the Committee, can
contribute significantly to the growth and profitability of, or perform
services of major importance to, the Company and its subsidiaries. The
maximum aggregate number of shares that may be issued pursuant to awards
made under the Plan shall not exceed 1,200,000 shares of the Company's
common stock, which may be in any combination of options, restricted stock,
restricted stock units, performance shares, bonus shares, or any other right
or option. No participant in the Plan may receive an award which would
cause such participant to be issued more than twenty-five percent (25%) of
the total number of shares issued over the life of the 1997 Plan.
Stock Options
The Committee from time to time may grant stock options to key employees
as it shall determine. The Committee shall have sole and complete
discretion in determining the type of option granted, the option price, the
duration of the option, the number of shares to which an option pertains,
any conditions imposed upon the exercisability of the options, the
conditions under which the option may be terminated and any such other
provisions as the Committee may deem to be warranted. The Committee shall
determine whether the option is intended to be an incentive stock option
within the meaning of Section 422A of the Code, or a nonqualified stock
option not intended to be within the provisions of Section 422A of the Code.
The option price per share for any options granted under the 1997 Plan shall
not be less than 100% of the fair market value of a share of the Company's
common stock on the date of grant of the option.
The 1997 Plan provides that in the event of a "Change in Control," all
outstanding options that have not previously terminated, expired, lapsed or
forfeited shall become immediately vested and, if they are not yet
exercisable, shall become immediately exercisable. A Change in Control is
deemed to have occurred under the 1997 Plan if (i) any person becomes the
beneficial owner of twenty-five percent (25%) or more of the voting power of
the Company's then outstanding securities; (ii) the Company shall enter into
a merger, consolidation, share exchange, division or other reorganization or
transaction of the Company unless such transaction results in the voting
securities of the Company outstanding immediately prior thereto continuing
to represent at least sixty percent (60%) of the combined voting power
immediately after such transaction of either (a) the Company's outstanding
securities, (b) the surviving entity's outstanding securities or (c) in the
case of a division, the outstanding securities of each entity resulting from
the division; (iii) the shareholders of the Company approve a plan of
liquidation or a sale of all or substantially all of the Company's assets;
or (iv) during any period of twenty-four (24) consecutive months,
<PAGE>
individuals who at the beginning of such period constituted the Board cease
for any reason to constitute at least a majority of the Board.
The option price shall be payable to the Company in cash or by delivery
of already-owned shares of common stock of the Company, or by a combination
of the foregoing. Additionally, the Company may, but shall not be required
to, cooperate in cashless exercises of options whereby the participant
through the use of a brokerage firm makes payment to the Company of the
option price either from the proceeds of a loan obtained through the
brokerage firm or from the proceeds of the sale of stock issued pursuant to
the exercise of the option.
Stock Appreciation Rights
The Committee from time to time may grant freestanding stock
appreciation rights or stock appreciation rights in tandem with an option.
A stock appreciation right gives the grantee the right to receive an amount
equal to the excess of the fair market value of a share of the Company's
common stock as determined on the date of exercise over the fair market
value of a share on the date of grant of the stock appreciation right. The
exercise price of a stock appreciation right shall not be less than 100% of
the fair market value of the common stock on the date of grant. The
Committee shall determine whether the appreciation is paid in cash or stock,
or a combination thereof.
Restricted Stock and Restricted Stock Units
The Committee from time to time may grant shares of restricted stock and
restricted stock units to participants under the 1997 Plan. The Committee
shall determine the restrictions to be applied, the period of restriction,
and the number of shares of restricted stock granted. Conditions for
removal of the restrictions may include, but shall not be limited to,
achievement of business or financial goals of the Company such as absolute
or relative increases in total shareholder returns, revenues, sales, net
income, or net worth of the Company or any of its subsidiaries.
Participants receiving restricted stock and restricted stock unit awards are
not required to pay the Company for such awards other than the rendering of
services and/or until other considerations are satisfied as determined by
the Committee in its sole discretion. Participants to whom restricted stock
is granted are entitled to all other benefits of stockholders, including the
receipt of dividends and voting rights.
Performance-Based Awards
The Committee from time to time may issue performance awards in the form
of either performance units or performance shares to participants subject to
such performance goals and performance periods as the Committee shall
determine. Participants receiving performance awards are not required to
pay the Company for such awards other than the rendering of services. The
Committee shall determine the number and value of performance units or
performance shares granted to each participant as a performance award. The
Committee shall set performance goals in its discretion for each participant
who is granted such an award. The extent to which such performance goals
are met will determine the value of the performance unit or performance
shares. Such performance goals may be particular to a participant, may
relate to the performance of the Company or the subsidiary which employs the
participant, may be based on the performance of the Company generally, or a
combination of the foregoing. The performance goals may be absolute in
<PAGE>
their terms or measured against or in relationship to other companies
comparably situated. Payment of the amount to which a participant shall be
entitled upon the settlement of a performance award shall be made in cash,
stock, or a combination thereof as determined by the Committee.
Bonus Stock
The Committee from time to time may award shares of bonus stock to
participants under the 1997 Plan without cash consideration. Such awards
may or may not, in the discretion of the Committee, be subject to
performance criteria.
Performance-Based Compensation in General
Section 162(m) of the Code prevents public corporations from deducting
as a business expense that portion of compensation exceeding $1,000,000 paid
to a named executive officer (i.e., any individual named in the Summary
Compensation Table included in a proxy statement). This deduction limit
does not apply, however, to "performance-based compensation." Performance-
based compensation is compensation that is paid solely on account of the
attainment of one or more preestablished, objective performance goals. It
is the Company's intention with respect to awards made to named executive
offices under the 1997 Plan that such awards will be deemed to be
performance-based compensation.
Stock options and stock appreciation rights awarded under the 1997 Plan
will be performance-based compensation because the exercise price of such
awards may not be less than the fair market value of a share of Company
common stock on the date of grant. Any other awards made to named executive
officers under the 1997 Plan will be performance-based compensation because
such awards will be subject to the attainment of preestablished objective
performance goals including: (i) total stockholder return (stock price
appreciation plus dividends), (ii) net income, (iii) earnings per share,
(iv) return on sales, (v) return on equity, (vi) return on assets, (vii)
increase in the market price of the Company's common stock or other
securities of the Company, (viii) the performance of the Company in any of
the items mentioned in clauses (i) through (vii) in comparison to the
average performance of companies combined into a Company-constructed peer
group established before the beginning of the performance period.
All performance measures for a relevant performance period shall be
established by the Committee in writing prior to the beginning of the
performance period or by such other later date as may be permitted under
Section 162(m) of the Code. Performance measures may be based on one or
more of the business criteria listed above. No performance measures shall
allow for any discretion by the Committee to increase any award, but
discretion to lower awards is permissible. The payment of any award under
the 1997 Plan to a named executive officer with respect to a relevant
performance period shall be contingent upon written certification by the
Committee prior to any such payment that the applicable performance measure
relating to the award has been satisfied. Failure of stockholders to
approve the 1997 Plan shall result in no awards being granted to named
executive officers under the 1997 Plan.
Tax Information
As discussed above, some of the stock options issuable under the 1997
Plan are intended to constitute "incentive stock options" within the meaning
of Section 422A of the Code, while other stock options granted under the
<PAGE>
1997 Plan will be "non-qualified stock options." Under currently applicable
provisions of the Code, an optionee will not be deemed to receive any income
for federal income tax purposes upon the grant of any option under the 1997
Plan, nor will the Company be entitled to a tax deduction at that time.
Upon the exercise of a nonqualified stock option, the optionee will be
deemed to have received ordinary income in an amount equal to the difference
between the exercise price and the market price of the shares on the
exercise date. The Company will be allowed an income tax deduction equal to
the excess of market value of the shares on the date of exercise over the
cost of such shares to the optionee. Upon the exercise of an incentive
stock option, there is no regular income tax recognized by the optionee at
the time of exercise, except if the exercise price is less than the stock's
fair market value at the time of exercise, the difference is a tax
preference item for minimum tax purposes. If the stock is held at least one
(1) year following the exercise date and at least two (2) years from the
date of grant of the option, the optionee will realize a capital gain or
loss upon sale, measured as the difference between the exercise price and
the sale price. If both of these holding period requirements are not
satisfied, ordinary income tax treatment will apply to the amount of gain at
sale or exercise, whichever is less. If the actual gain exceeds the amount
of ordinary income, the excess will be considered short-term or long-term
capital gain depending on how long the shares are actually held. No income
tax deduction will be allowed by the Company with respect to shares
purchased by an optionee upon the exercise of an incentive stock option,
provided such shares are held for the required periods as described above.
Upon the exercise of a stock appreciation right, the grantee recognizes
as taxable income an amount equal to any cash received plus an amount equal
to the fair market value of any stock received. The Company is entitled to
a deduction for federal tax purposes in an amount equal to the income
recognized by the grantee.
At the time restricted stock or bonus stock granted under the 1997 Plan
is either transferable or no longer subject to a substantial risk of
forfeiture, the grantee recognizes taxable income in an amount equal to the
then fair market value of the stock. However, the grantee may make an
election to be taxed as of the date the restricted stock or bonus stock is
granted, in which case the grantee recognizes taxable income in an amount
equal to the fair market value of the stock as of the grant date.
Other Matters
The 1997 Plan terminates February 17, 2007. The Committee or Board of
Directors may amend, suspend, or terminate the Plan or any portion thereof
at any time, provided such amendment is made with shareholder approval if
such approval is necessary to comply with any tax or regulatory requirement,
any requirement under Section 16(b) of the Securities Exchange Act of 1934,
or any requirement for the performance-based compensation exception under
Section 162(m) of the Code.
Approval of the 1997 Plan requires the affirmative vote of a majority of
the votes cast on the proposal at the Annual Meeting. Abstentions will not
be counted as votes cast.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL
OF THE 1997 INCENTIVE STOCK PLAN.
<PAGE>
RELATIONSHIP WITH INDEPENDENT AUDITORS
The principal auditors for the Company is the independent certified
public accounting firm of Ernst & Young LLP. The Audit Committee
recommended to the Board of Directors the appointment of Ernst & Young LLP
to examine the Company's consolidated financial statements for the year
ended December 31, 1996. The Company has been advised by Ernst & Young LLP
that neither it nor any of its partners or associates has any relationship
with the Company other than the usual relationships that exist between
independent auditors and clients. The Audit Committee will recommend to the
Board of Directors the principal auditors for the year ended December 31,
1997, at the Board's July 1997 meeting.
Representatives of Ernst & Young LLP will be present at the
shareholders' meeting, will have an opportunity to make a statement to the
shareholders, if desired, and will be available to respond to appropriate
questions from shareholders.
OTHER MATTERS
So far as is now known to the management of the Company, there is no
business other than that described above to be presented to the shareholders
for action at the Annual Meeting. Should any other matters properly come
before the Annual Meeting, the persons named in the attached Proxy will have
discretionary authority to vote all proxies in accordance with their
judgment.
FINANCIAL STATEMENTS
Financial statements of the Company appear in the Company's 1996 Annual
Report to Shareholders which is being delivered herewith.
SHAREHOLDER PROPOSALS
Shareholder proposals, if any, to be included in the Company's 1998
Proxy Statement and presented at the Company's 1998 annual meeting of
shareholders must be received by the Company at its office in Little Rock,
Arkansas, addressed to the Secretary, not later than November 17, 1997.
By Order of the Board of Directors,
/s/ Donna Rogers
Donna B. Rogers, Secretary
Little Rock, Arkansas
March 17, 1997
<PAGE>
APPENDIX A
PROXY CARD [FRONT]
FIRST COMMERCIAL CORPORATION
First Commercial Building
400 West Capitol Avenue
Little Rock, Arkansas 72201
Telephone No. (501) 371-7000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
The undersigned hereby appoints Guy Amsler, Jr. and James H. Rice, Jr.
as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all the
shares of the common stock of First Commercial Corporation, held of record
by the undersigned on February 20, 1997, at the annual meeting of
shareholders to be held on April 15, 1997, or any adjournment thereof.
A vote "FOR" the following proposals is recommended by the Board of
Directors.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all
nominees
(INSTRUCTION: To withhold authority to vote for an individual nominee,
strike a line through the nominee's name in the list below.)
Nominees:
WILLIAM H. BOWEN * PEGGY CLARK * ROBERT G. CRESS * CECIL W. CUPP, JR.
WALTER E. HUSSMAN, JR. * WILLIAM M. LEMLEY * SAM C. SOWELL
2. To approve and ratify the adoption by the Board of Directors of the 1997
Incentive Stock Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(Continued on other side)
<PAGE>
PROXY CARD [BACK]
(Continued from other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE PROXY
WILL BE VOTED FOR PROPOSAL 1 AND 2.
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Dated , 1997
------------------------ ---------------------------------
Signature
---------------------------------
Signature if jointly held
PLEASE MARK, SIGN, DATE AND
RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE.
<PAGE>
APPENDIX B
FIRST COMMERCIAL CORPORATION
1997 INCENTIVE STOCK PLAN
Section 1. Purpose
First Commercial Corporation(hereinafter referred to as the "Company")
hereby establishes the 1997 Incentive Stock Plan (the "Plan") to promote the
interests of the Company and its shareholders through the (i) attraction and
retention of executive officers and other key employees essential to the
success of the Company; (ii) motivation of executive officers and other key
employees using performance-related incentives linked to longer range
performance goals and the interests of Company shareholders; and (iii)
enabling of such employees to share in the long term growth and success of
the Company. The Plan permits the grant of Nonqualified Stock Options,
Incentive Stock Options (intended to qualify under Section 422 of the
Internal Revenue Code of 1986, as amended), Stock Appreciation Rights,
Restricted Stock, Restricted Stock Units, Performance Shares, Performance
Units, Bonus Stock, and any other Stock Unit Awards or stock based forms of
awards as the Committee may determine under its sole and complete discretion
at the time of grant.
Section 2. Definitions
Except as otherwise defined in the Plan, the following terms shall have the
meanings set forth below:
2.1 "Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
under the Exchange Act.
2.2 "Agreement" means a written agreement which sets forth the terms of
each Award and is signed by an authorized officer of the Company.
2.3 "Award" means individually or collectively, a grant under this Plan of
Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation
Rights, Restricted Stock, Restricted Stock Units, Performance Units,
Performance Shares, Bonus Stock or other Stock Unit Awards.
2.4 "Award Date" or "Grant Date" means the date on which an Award is made
by the Committee under this Plan
2.5 "Beneficial Owner" shall have the meaning ascribed to such term in Rule
13d 3 under the Exchange Act.
2.6 "Board" or "Board of Directors" means the Board of Directors of the
Company.
2.7 "Bonus Stock" means an Award granted pursuant to Section 10 of the Plan
expressed as a Share of Common Stock which may or may not be subject to
restrictions.
<PAGE>
2.8 "Cashless Exercise" means the exercise of an option by the Participant
through the use of a brokerage firm to make payment to the Company of
the exercise price either from the proceeds of a loan to the
Participant from the brokerage firm or from the proceeds of the sale of
Stock issued pursuant to the exercise of the option, and upon receipt
of such payment, the Company delivers the exercised shares to the
brokerage firm.
2.9 "Change in Control" shall be deemed to have occurred if the conditions
set forth in any one of the following paragraphs shall have been
satisfied:
(a) any person or persons (as defined in Section 3(a)(9) of the
Exchange Act, and shall also include any syndicate or group deemed
to be a "person" under Section 13(d)(3) of the Exchange Act)
acting together, excluding employee benefit plans of the Employer,
are or become the "beneficial owner" (as defined in Rules 13d 3
and 13d 5 under the Exchange Act or any successor provisions
thereto), directly or indirectly, of securities of the Company
representing twenty five percent (25%) or more of the combined
voting power of the Company's then outstanding securities; or
(b) the Company's shareholders approve (or, in the event no approval
of the Company's shareholders is required, the Company
consummates) a merger, consolidation, share exchange, division or
other reorganization or transaction of the Company (a "Fundamental
Transaction") with any other corporation, other than a Fundamental
Transaction which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least sixty
percent (60%) of the combined voting power immediately after such
Fundamental Transaction of (i) the Company's outstanding
securities, (ii) the surviving entity's outstanding securities, or
(iii) in the case of a division, the outstanding securities of
each entity resulting from the division; or
(c) the shareholders of the Company approve a plan of complete
liquidation or winding up of the Company or an agreement for the
sale or disposition (in one transaction or a series of
transactions) of all or substantially all of the Company's assets;
or
(d) during any period of twenty four consecutive months, individuals
who at the beginning of such period constituted the Board
(including for this purpose any new director whose election or
nomination for election by the Company's shareholders was approved
by a vote of at least two thirds (2/3) of the directors then still
in office who were directors at the beginning of such period)
cease for any reason to constitute at least a majority of the
Board.
2.10 "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
<PAGE>
2.11 "Committee" means the Compensation Committee of the Board which will
administer the Plan pursuant to Section 3 herein.
2.12 "Common Stock" or "Stock" means the Common Stock of the Company, with a
par value of $3.00 per share, or such other security or right or
instrument into which such common stock may be changed or converted in
the future.
2.13 "Company" means First Commercial Corporation, including all Affiliates
and wholly owned Subsidiaries, or any successor thereto.
2.14 "Covered Participant" means a Participant who is a "covered employee"
as defined in Section 162(m)(3) of the Code, and the regulations
promulgated thereunder, or who the Committee believes will be such a
covered employee for a Performance Period, and who the Committee
believes will have remuneration in excess of $1,000,000 for the
Performance Period, as provided in Section 162(m) of the Code.
2.15 "Department" means the Human Resources Department of the Company.
2.16 "Designated Beneficiary" means the beneficiary designated by the
Participant, pursuant to procedures established by the Department, to
receive amounts due to the Participant in the event of the
Participant's death. If the Participant does not make an effective
designation, then the Designated Beneficiary will be deemed to be the
Participant's estate.
2.17 "Disability" means (i) the mental or physical disability, either
occupational or non-occupational in origin, of the Participant defined
as "Total Disability" in the Disability Plan of the Company currently
in effect and as amended from time to time, or (ii) a determination by
the Committee of "Total Disability," based on medical evidence that
precludes the Participant from engaging in any occupation or employment
for wage or profit for at least twelve months and appears to be
permanent.
2.18 "Divestiture" means the sale of, or closing by, the Company of the
business operations in which the Participant is employed, or the
elimination of the Participant's position at the Company's discretion.
2.19 "Early Retirement" means retirement of a Participant from employment
with the Company after age 55, but prior to age 65, as approved by the
Committee.
2.20 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.21 "Executive Officer" means any employee designated by the Company as an
officer or any employee covered by Rule 16b 3 of the Exchange Act.
2.22 "Fair Market Value" means, on any given date, the (i) average of the
closing bid and ask price as reported by the Nasdaq National Market on
that date or (ii) if the stock hereafter becomes listed on a stock
exchange, the closing price of Stock as reported on the exchange on
such day or, if no Shares were traded on the exchange on such day,
then on the next preceding day that Stock was traded on such exchange,
all as reported by such source as the Committee may select.
<PAGE>
2.23 "Full time Employee" means an employee designated by the Company's
Department as being a "permanent, full time employee" who is eligible
for all plans and programs of the Company set forth for such employees.
This designation excludes all part time, temporary, or contract
employees or consultants to the Company.
2.24 "Incentive Stock Option" or "ISO" means an option to purchase Stock,
granted under Section 6 herein, which is designated as an incentive
stock option and is intended to meet the requirements of Section 422A
of the Code.
2.25 "Key Employee" means an officer or other key employee of the Company or
its Subsidiaries, who, in the opinion of the Committee, can contribute
significantly to the growth and profitability of, or perform services
of major importance to, the Company and its Subsidiaries.
2.26 "Nonqualified Stock Option" or "NQSO" means an option to purchase
Stock, granted under Article 6 herein, which is not intended to be an
Incentive Stock Option.
2.27 "Normal Retirement" means the retirement of any Participant at age 65
or at some earlier date if approved by the Committee.
2.28 "Option" means an Incentive Stock Option or a Nonqualified Stock
Option.
2.29 "Other Stock Unit Award" means awards of Stock or other awards that are
valued in whole or in part by reference to, or are otherwise based on,
Shares or other securities of the Company.
2.30 "Participant" means a Key Employee who has been granted an Award under
the Plan.
2.31 "Performance Criteria" or "Performance Goals" or "Performance Measures"
mean the objectives for a Performance Period established by the
Committee based upon Stockholder Approved Standards, for the purpose of
determining when an Award subject to such objectives are earned.
2.32 "Performance Award" means a performance based Award, which may be in
the form of either Performance Shares or Performance Units.
2.33 "Performance Period" means the time period designated by the Committee
during which performance goals must be met.
2.34 "Performance Share" means an Award, designated as a Performance Share,
granted to a Participant pursuant to Section 9 herein, the value of
which is determined, in whole or in part, by the value of Company Stock
in a manner deemed appropriate by the Committee and described in the
Agreement.
2.35 "Performance Unit" means an Award, designated as a Performance Unit,
granted to a Participant pursuant to Section 9 herein, the value of
which is determined, in whole or in part, by the attainment of pre
established goals relating to Company financial or operating
performance as deemed appropriate by the Committee and described in the
Agreement.
<PAGE>
2.36 "Period of Restriction" means the period during which the transfer of
Shares of Restricted Stock is restricted, pursuant to Section 8 herein.
2.37 "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d).
2.38 "Plan" means the First Commercial Corporation 1997 Incentive Stock Plan
as herein described and as hereafter from time to time amended.
2.39 "Restricted Stock" means an Award of Stock granted to a Participant
pursuant to Section 8 herein.
2.40 "Restricted Stock Unit" means a fixed or variable dollar denominated
right to acquire Stock, which may or may not be subject to
restrictions, contingently awarded under Section 8 of the Plan.
2.41 "Rule 16b 3" means Rule 16b-3 under Section 16(b) of the Exchange Act
as adopted in Exchange Act Release No. 34 37260 (May 31, 1996), or any
successor rule as amended from time to time.
2.42 "Section 162(m)" means Section 162(m) of the Code, or any successor
section under the Code, as amended from time to time and as interpreted
by final or proposed regulations promulgated thereunder from time to
time.
2.43 "Securities Act" means the Securities Act of 1933 and the rules and
regulations promulgated thereunder, or any successor law, as amended
from time to time.
2.44 "Stock" or "Shares" means the Common Stock of the Company.
2.45 "Stock Appreciation Right" means the right to receive an amount equal
to the excess of the Fair Market Value of a share of Stock (as
determined on the date of exercise) over the Exercise Price of a
related Option or the Fair Market Value of the Stock on the Date of
Grant of the Stock Appreciation Right.
2.46 "Stock Unit Award" means an award of Common Stock or units granted
under Section 11.
2.47 "Stockholder Approved Standard" means any pre established objective
performance goal qualifying under Section 162(m) and approved by the
shareholders of the Company in accordance with Section 162(m),
including (a) total stockholder return (Stock price appreciation plus
dividends), (b) net income, (c) earnings per share, (d) return on
sales, (e) return on equity, (f) return on assets, (g) increase in the
market price of Stock or other securities of the Company, (h) the
performance of the Company in any of the items mentioned in clause (a)
through (g) in comparison to the average performance of companies
combined into a Company constructed peer group established before the
beginning of the performance period.
2.43 "Subsidiary" means a corporation in which the Company owns, either
directly or through one or more of its Subsidiaries, at least 50% of
the total combined voting power of all classes of stock.
<PAGE>
Section 3. Administration
3.1 The Committee. The Plan shall be administered and interpreted by the
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Committee which shall have full authority and all powers necessary or
desirable for such administration. The express grant in this Plan of any
specific power to the Committee shall not be construed as limiting any power
or authority of the Committee. In its sole and complete discretion the
Committee may adopt, alter, suspend and repeal any such administrative
rules, regulations, guidelines, and practices governing the operation of the
Plan as it shall from time to time deem advisable. In addition to any other
powers and, subject to the provisions of the Plan, the Committee shall have
the following specific powers: (i) to determine the terms and conditions
upon which the Awards may be made and exercised; (ii) to determine all terms
and provisions of each Agreement, which need not be identical for types of
awards nor for the same type of award to different participants; (iii) to
construe and interpret the Agreements and the Plan; (iv) to establish,
amend, or waive rules or regulations for the Plan's administration; (v) to
accelerate the exercisability of any Award, the length of a Performance
Period or the termination of any Period of Restriction; and (vi) to make all
other determinations and take all other actions necessary or advisable for
the administration of the Plan. The Committee may take action by a meeting
in person, by unanimous written consent, or by meeting with the assistance
of communications equipment which allows all Committee members participating
in the meeting to communicate in either oral or written form. The Committee
may seek the assistance or advice of any persons it deems necessary to the
proper administration of the Plan.
3.2 Selection of Participants. The Committee shall have sole and complete
- -------------------------------
discretion in determining those Key Employees who shall participate in the
Plan. The Committee may request recommendations for individual awards from
the Chief Executive Officer of the Company and may delegate to the Chief
Executive Officer of the Company the authority to make Awards to
Participants who are not Executive Officers of the Company, subject to a
fixed maximum Award amount for such a group and a maximum Award amount for
any one Participant, as determined by the Committee. Awards made to the
Executive Officers shall be determined by the Committee.
3.3 Committee Decisions. All determinations and decisions made by the
- -------------------------
Committee pursuant to the provisions of the Plan shall be final, conclusive,
and binding upon all persons, including the Company, its stockholders,
employees, Participants, and Designated Beneficiaries, except when the terms
of any sale or award of shares of Stock or any grant of rights or Options
under the Plan are required by law or by the Articles of Incorporation or
Bylaws of the Company to be approved by the Company's Board of Directors or
shareholders prior to any such sale, award or grant.
3.4 Rule 16b 3 Requirements. Notwithstanding any other provision of the
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Plan, the Committee may impose such conditions on any Award, and the Board
may amend the Plan in any such respects, as may be required to satisfy the
requirements of Rule 16b 3 under the Exchange Act, as amended (or any
successor or similar rule), or Section 162(m) of the Internal Revenue Code.
<PAGE>
3.5 Indemnification of Committee. In addition to such other rights of
- ----------------------------------
indemnification as they may have as directors or as members of the
Committee, the members of the Committee shall be indemnified by the Company
against reasonable expenses incurred from their administration of the Plan.
Such reasonable expenses include, but are not limited to, attorneys' fees,
actually and reasonably incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, to
which they or any of them may be a party by reason of any action taken or
failure to act under or in connection with the Plan or any Award granted or
made hereunder, and against all amounts reasonably paid by them in
settlement thereof or paid by them in satisfaction of a judgment in any such
action, suit or proceeding, if such members acted in good faith and in a
manner which they believed to be in, and not opposed to, the best interests
of the Company and its Subsidiaries.
Section 4. Eligibility
The Committee in its sole and complete discretion shall determine the Key
Employees, including officers, who shall be eligible for participation under
the Plan, subject to the following limitations: (i) no non Employee director
of the Company shall be eligible to participate under the Plan; (ii) no
member of the Committee shall be eligible to participate under the Plan;
(iii) no person owning, directly or indirectly, more than 5% of the total
combined voting power of all classes of stock of the Company shall be
eligible to participate under the Plan; and (iv) only Full time Employees
shall be eligible to participate under the Plan.
Section 5. Shares Subject to the Plan
5.1 Number of Shares. Subject to adjustment as provided in Section 5.4
- ----------------------
herein, the maximum aggregate number of Shares that may be issued pursuant
to Awards made under the Plan shall not exceed One Million Two Hundred
Thousand (1,200,000) Shares of Stock, which may be in any combination of
Options; Restricted Stock, Restricted Stock Units, Performance Shares, Bonus
Shares, or any other right or option. No Participant may receive an Award
which would cause such Participant to be issued more than 25% of the total
number of Shares issued over the life of the Plan. Shares of Stock may be
available from the authorized, but unissued Shares of Stock or treasury
Shares. Except as provided in Sections 5.2 and 5.3 herein, the issuance of
Shares in connection with the exercise of, or as other payment for, Awards
under the Plan shall reduce the number of Shares available for future Awards
under the Plan.
5.2 Lapsed Awards of Forfeited Shares. In the event that (i) any Option or
- ---------------------------------------
other Award granted under the Plan terminates, expires, or lapses for any
reason other than exercise of the Award, or (ii) if Shares issued pursuant
to the Awards are canceled or forfeited for any reason, such Shares subject
to such Award shall thereafter be again available for grant of an Award
under the Plan.
<PAGE>
5.3 Delivery of Shares as Payment. In the event a Participant pays for any
- -----------------------------------
Option or other Award granted under the Plan through the delivery of
previously acquired shares of Stock, the number of shares of Stock available
for Awards under the Plan shall be increased by the number of shares
surrendered by the Participant, subject to Rule 16b 3 under the Exchange Act
as interpreted by the Securities and Exchange Commission or its staff.
5.4 Capital Adjustments. The number and class of Shares subject to each
- -------------------------
outstanding Award, the Option Price and the aggregate number, type and class
of Shares for which Awards thereafter may be made shall be subject to
adjustment, if any, as the Committee deems appropriate, based on the
occurrence of a number of specified and non specified events. Such
specified events are discussed herein this Section 5.4, but such discussion
is not intended to provide an exhaustive list of such events which may
necessitate such adjustments.
(a) If the outstanding shares of the Company are increased, decreased
or exchanged through merger, consolidation, sale of all or
substantially all of the property of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split or
other distribution in respect to such Shares, for a different number or
type of Shares, or if additional Shares or new or different Shares are
distributed with respect to such Share, an appropriate and
proportionate adjustment shall be made in: (i) the maximum number of
shares of Stock available for the Plan as provided in Section 5.1
herein, (ii) the type of shares or other securities available for the
Plan, (iii) the number of shares of Stock subject to any then
outstanding Awards under the Plan, and (iv) the price (including
Exercise Price) for each share of Stock (or other kind of shares or
securities) subject to then outstanding awards, but without change in
the aggregate purchase price as to which such Options remain
exercisable or Restricted Stock releasable.
(b) In the event other events not specified above in this Section 5.4, such
as any extraordinary cash dividend, split up, spin off, combination,
exchange of shares, warrants or rights offering to purchase Common
Stock, or other similar corporate event, affect the Common Stock such
that an adjustment is necessary to maintain the benefits or potential
benefits intended to be provided under this Plan, then the Committee in
its discretion may make adjustments to any or all of (i) the number and
type of shares which thereafter may be optioned and sold or awarded or
made subject to Stock Appreciation Rights under the Plan, (ii) the
grant, exercise or conversion price of any Award made under the Plan
thereafter, and (iii) the number and price (including Exercise Price)
of each share of Stock (or other kind of shares or securities) subject
to then outstanding awards, but without change in the aggregate
purchase price as to which such Options remain exercisable or
Restricted Stock releasable.
<PAGE>
(c) Any adjustment made by the Committee pursuant to the provisions of this
Section 5.4, subject to approval by the Board of Directors, shall be
final, binding and conclusive. A notice of such adjustment, including
identification of the event causing such an adjustment, the calculation
method of such adjustment, and the change in price and the number of
shares of Stock, or securities, cash or property purchasable subject to
each Award shall be sent to each Participant. No fractional interests
shall be issued under the Plan based on such adjustments.
Section 6. Stock Options
6.1 Grant of Stock Options. Subject to the terms and provisions of the
- ----------------------------
Plan and applicable law, the Committee, at any time and from time to time,
may grant Options to Key Employees as it shall determine. The Committee
shall have sole and complete discretion in determining the type of Option
granted, the Option Price (as hereinafter defined), the duration of the
Option, the number of Shares to which an Option pertains, any conditions
imposed upon the exercisability of the Options, the conditions under which
the Option may be terminated and any such other provisions as may be
warranted to comply with the law or rules of any securities trading system
or stock exchange. Each Option grant shall have such specified terms and
conditions detailed in an Award Agreement. The Agreement shall specify
whether the Option is intended to be an Incentive Stock Option within the
meaning of Section 422A of the Code, or a Nonqualified Stock Option not
intended to be within the provisions of Section 422A of the Code.
Notwithstanding the foregoing and any other provision in this Plan or an
Agreement to the contrary, in the event of a Change in Control, all
outstanding Options granted pursuant to this Plan which have not previously
terminated, expired, lapsed or forfeited shall become immediately vested
and, if they are not yet exercisable pursuant to the terms of the Agreement,
shall become immediately exercisable.
6.2 Option Price. The exercise price per share of Stock covered by an
- ------------------
Option ("Option Price") shall be determined at the time of grant by the
Committee, subject to the limitation that the Option Price shall not be less
than 100% of Fair Market Value of the Stock on the Grant Date.
6.3 Exercisability. Options granted under the Plan shall be exercisable at
- --------------------
such times and be subject to such restrictions and conditions as the
Committee shall determine, which will be specified in the Award Agreement
and need not be the same for each Participant. However, no Option granted
under the Plan may be exercisable until the expiration of at least six
months after the Grant Date (except that such limitations shall not apply in
the case of death or disability of the Participant, or a Change in Control
of the Company), nor after the expiration of ten years from the Grant Date.
<PAGE>
6.4 Method of Exercise. Options shall be exercised by the delivery of a
- ------------------------
written notice from the Participant to the Company in the form prescribed by
the Committee setting forth the number of Shares with respect to which the
Option is to be exercised, accompanied by full payment for the Shares. The
Option price shall be payable to the Company in full in cash, or its
equivalent, or by delivery of Shares of Stock (not subject to any security
interest or pledge) valued at Fair Market Value at the time of exercise or
by a combination of the foregoing. In addition, at the request of the
Participant, and subject to applicable laws and regulations, the Company may
(but shall not be required to) cooperate in a "Cashless Exercise" of the
Option. As soon as practicable, after receipt of written notice and
payment, the Company shall deliver to the Participant, stock certificates in
an appropriate amount based upon the number of Shares with respect to which
the option is exercised, issued in the Participant's name.
Section 7. Stock Appreciation Rights
7.1 Grant of Stock Appreciation Rights. Subject to the terms and
- ----------------------------------------
provisions of the Plan and applicable law, the Committee, at any time and
from time to time, may grant freestanding Stock Appreciation Rights, Stock
Appreciation Rights in tandem with an Option, or Stock Appreciation Rights
in addition to an Option. Stock Appreciation Rights granted in tandem with
an Option or in addition to an Option may be granted at the time of the
Option or at a later time. No Stock Appreciation Rights granted under the
Plan may be exercisable until the expiration of at least six months after
the Grant Date (except that such limitations shall not apply in the case of
death or disability of the Participant, or a change in control of the
Company), nor after the expiration of ten years from the Grant Date.
7.2 Price. The exercise price of each Stock Appreciation Right shall be
- ----------
determined at the time of grant by the Committee, subject to the limitation
that the grant price shall not be less than 100% of Fair Market Value of the
Stock on the Grant Date.
7.3 Exercise. The Participant is entitled to receive an amount equal to
- --------------
the excess of the Fair Market Value of a Share over the grant price thereof
on the date of exercise of the Stock Appreciation Right.
7.4 Payment. Payment upon exercise of the Stock Appreciation Right shall
- -------------
be made in the form of cash, cash installments, Shares of Common Stock, or a
combination thereof, as determined in the sole and complete discretion of
the Committee. However, if any payment in the form of Shares results in a
fractional share, such payment for the fractional share shall be made in
cash.
<PAGE>
Section 8. Restricted Stock and Restricted Stock Units
8.1 Grant of Restricted Stock. Subject to the terms and provisions of the
- -------------------------------
Plan and applicable law, the Committee, at any time and from time to time,
may grant shares of Restricted Stock and Restricted Stock Units under the
Plan to such Participants, and in such amounts and for such duration and/or
consideration as it shall determine. Participants receiving Restricted
Stock and Restricted Stock Unit Awards are not required to pay the Company
thereof (except for applicable tax withholding) other than the rendering of
services and/or until other considerations are satisfied as determined by
the Committee at its sole discretion.
8.2 Restricted Stock Agreement. Each Restricted Stock and Restricted Stock
- --------------------------------
Unit grant shall be evidenced by an Agreement that shall specify the Period
of Restriction; the conditions which must be satisfied prior to removal of
the restriction; the number of Shares of Restricted Stock granted; and such
other provisions as the Committee shall determine. The Committee may
specify, but is not limited to, the following types of restrictions in the
Award Agreement: (i) restrictions on acceleration or achievement of terms or
vesting based on any business or financial goals of the Company, including,
but not limited to, absolute or relative increases in total shareholder
return, revenues, sales, net income, or net worth of the Company, any of its
Subsidiaries, divisions or other areas of the Company; and (ii) any other
further restrictions that may be advisable under the law, including
requirements set forth by the Securities Act, any securities trading system
or stock exchange upon which such Shares under the Plan are listed.
8.3 Nontransferability. Except as provided in this Section 8, the Shares
- ------------------------
of Restricted Stock or Restricted Stock Units granted under the Plan may not
be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated until the termination of the applicable Period of Restriction
or upon earlier satisfaction of other conditions as specified by the
Committee in its sole discretion and set forth in the Agreement.
8.4 Removal of Restrictions. Except as otherwise noted in this Section 8,
- -----------------------------
Restricted Stock and Restricted Stock Units covered by each Award made under
the Plan shall be provided and become freely transferable by the Participant
after the last day of the Period of Restriction and/or upon the satisfaction
of other conditions as determined by the Committee. Except as specifically
provided in this Section 8, the Committee shall have no authority to reduce
or remove the restrictions or to reduce or remove the Period of Restriction
without the express consent of the stockholders of the Company. Any shares
of Restricted Stock or Restricted Stock Units issued pursuant to this
Section 8, shall provide that the minimum Period of Restrictions shall be
three (3) years, which Period of Restriction would permit the removal of
restrictions on no more than one third (1/3) of the shares of Restricted
Stock or Restricted Stock Units at the end of the first year following the
Grant Date, and the removal of the restrictions on an additional one third
(1/3) of the shares at the end of each subsequent year. In no event shall
any restrictions be removed from shares of Restricted Stock or Restricted
Stock Units during the first year following the Grant Date. If the grant of
Restricted Stock or Restricted Stock Units is performance based, the total
Restricted Period for any or all shares or units of Restricted Stock and
Restricted Stock Units so granted shall be no less than one (1) year.
<PAGE>
8.5 Voting Rights. During the Period of Restriction, Participants in whose
- -------------------
name Restricted Stock is granted under the Plan may exercise full voting
rights with respect to those shares.
8.6 Dividends and Other Distributions. During the Period of Restriction,
- ---------------------------------------
Participants in whose name Restricted Stock is granted under the Plan shall
be entitled to receive all dividends and other distributions paid with
respect to those Shares. If any such dividends or distributions are paid in
Shares, the Shares shall be subject to the same restrictions on
transferability as the Restricted Stock with respect to which they were
distributed.
Section 9. Performance Based Awards
9.1 Grant of Performance Awards. Subject to the terms and provisions of
- ---------------------------------
the Plan and applicable law, the Committee at any time and from time to time
may issue Performance Awards in the form of either Performance Units or
Performance Shares to Participants subject to the Performance Goals and
Performance Period as it shall determine. The Committee shall have complete
discretion in determining the number and value of Performance Units or
Performance Shares granted to each Participant. Participants receiving
Performance Awards are not required to pay the Company thereof (except for
applicable tax withholding) other than the rendering of services.
9.2 Value of Performance Awards. The Committee shall determine the number
- ---------------------------------
and value of Performance Units or Performance Shares granted to each
Participant as a Performance Award. The Committee shall set performance
goals in its discretion for each Participant who is granted a Performance
Award. The extent to which such performance goals are met will determine
the value of the Performance Unit or Performance Share to the Participant.
Such Performance Goals may be particular to a Participant, may relate to the
performance of the Subsidiary which employs him or her, may be based on the
division which employees him or her, may be based on the performance of the
Company generally, or a combination of the foregoing. The Performance Goals
may be based on achievement of balance sheet or income statement objectives,
or any other objectives established by the Committee. The Performance Goals
may be absolute in their terms or measured against or in relationship to
other companies comparably, similarly or otherwise situated. The terms and
conditions of each Performance Award will be set forth in an Agreement.
9.3 Settlement of Performance Awards. After a Performance Period has
- --------------------------------------
ended, the holder of a Performance Unit or Performance Share shall be
entitled to receive the value thereof based on the degree to which the
Performance Goals established by the Committee and set forth in the
Agreement have been satisfied.
9.4 Form of Payment. Payment of the amount to which a Participant shall be
- ---------------------
entitled upon the settlement of a Performance Award shall be made in cash,
stock, or a combination thereof as determined by the Committee. Payment may
be made in a lump sum or installments as prescribed by the Committee.
<PAGE>
Section 10. Bonus Stock
Subject to the terms and provisions of the Plan and applicable law, the
Committee, at any time and from time to time, may award shares of Bonus
Stock to participants under the Plan without cash consideration. The
Committee shall determine and indicate in the related Award Agreement
whether such shares of Bonus Stock awarded under the Plan shall be
unencumbered of any restrictions (other than those advisable to comply with
law) or shall be subject to restrictions and limitations similar to those
referred to in Section 9. In the event the Committee assigns any
restrictions on the shares of Bonus Stock awarded under the Plan, then such
shares shall be subject to at least the following restrictions:
(a) No shares of Bonus Stock may be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated if such shares are
subject to restrictions which have not lapsed or have not been vested.
(b) If any condition of vesting of the shares of Bonus Stock are not
met, all such shares subject to such vesting shall be delivered to the
Company (in a manner determined by the Committee) within 60 days of the
failure to meet such conditions without any payment from the Company.
Section 11. Other Stock Unit Awards
11.1 Grant of Other Stock Unit Awards. Subject to the terms and provisions
- ---------------------------------------
of the Plan and applicable law, the Committee, at any time and from time to
time, may issue to Participants, either alone or in addition to other Awards
made under the Plan, Stock Unit Awards which may be in the form of Stock or
other securities. The value of each such Award shall be based, in whole or
in part, on the value of the underlying Stock or other securities. The
Committee, in its sole and complete discretion, may determine that an Award,
either in the form of a Stock Unit Award under this Section 11 or as an
Award granted pursuant to Sections 6 through 10, may provide to the
Participant (i) dividends or dividend equivalents (payable on a current or
deferred basis) and (ii) cash payments in lieu of or in addition to an
Award. Subject to the provisions of the Plan, the Committee in its sole and
complete discretion, shall determine the terms, restrictions, conditions,
vesting requirements, and payment rules (all of which are sometimes
hereinafter collectively referred to as "rules") of the Award. The Award
Agreement shall specify the rules of each Award as determined by the
Committee. However, each Stock Unit Award need not be subject to identical
rules.
11.2 Rules. The Committee, in its sole and complete discretion, may grant
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a Stock Unit Award subject to the following rules:
(a) Stock or other securities issued pursuant to Stock Unit Awards may
not be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated by a Participant until the expiration of at least six
months from the Award Date, except that such limitation shall not apply
in the case of death or disability of the Participant. To the extent
Stock Unit Awards are deemed to be derivative securities within the
meaning of Rule 16b 3 under the Exchange Act, a Participant's rights
with respect to such Awards shall not vest or be exercisable until the
expiration of at least six months from the Award Date.
<PAGE>
(b) Stock Unit Awards may require the payment of cash consideration by
the Participant in receipt of the Award or provide that the Award, and
any Common Stock or other securities issued in conjunction with the
Award be delivered without the payment of cash consideration.
(c) The Committee, in its sole and complete discretion, may establish
certain performance criteria that may relate in whole or in part to
receipt of the Stock Unit Awards.
(d) Stock Unit Awards may be subject to a deferred payment schedule
and/or vesting over a specified employment period.
(e) The Committee, in its sole and complete discretion, as a result of
certain circumstances, may waive or otherwise remove, in whole or in
part, any restriction or condition imposed on a Stock Unit Award at the
time of grant.
Section 12. Special Provisions Applicable to Covered Participants
Awards subject to performance criteria paid to Covered Participants under
this plan shall be governed by the conditions of this Section 12 in addition
to the requirements of Sections 8, 9, 10 and 11 above. Should conditions
set forth under this Section 12 conflict with the requirements of Sections
8, 9, 10 and 11, the conditions of this Section 12 shall prevail.
(a) All Performance Measures for a relevant Performance Period shall be
established by the Committee in writing based upon one or more of the
Stockholder Approved Standards prior to the beginning of the Performance
Period, or by such other later date for the Performance Period as may be
permitted under Section 162(m) of the Code.
(b) The Performance Measures shall not allow for any discretion by the
Committee as to an increase in any Award, but discretion to lower an
Award is permissible.
(c) The Award and payment of any Award under this Plan to a Covered
Participant with respect to a relevant Performance Period shall be
contingent upon the attainment of the Performance Measures that are
applicable to such Covered Participant. The Committee shall certify in
writing prior to payment any such Award that such applicable Performance
Measure relating to the Award are satisfied. Approved minutes of the
Committee may be used for this purpose.
(d) All Awards to Covered Participants under this Plan shall be further
subject to such other conditions, restrictions, and requirements as the
Committee may determine to be necessary to carry out the purpose of this
Section 12.
Section 13. General Provisions
13.1 Plan Term. The Plan was adopted on February 18, 1997 by the Board.
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Subject to shareholder approval, the Plan shall be effective on February 18,
1997; however, no Stock, rights or Options may be sold, awarded or granted
under the Plan until the Company is in receipt of a Registration Statement
under the Securities Act covering the shares of Stock to be issued under the
Plan. Any Stock, rights, or Options granted under this Plan shall be
granted subject to stockholder approval of the Plan.
<PAGE>
The Plan terminates February 17, 2007; however, all Awards made prior to,
and outstanding on such date, shall remain valid in accordance with their
terms and conditions.
13.2 Withholding. The Company shall have the right to deduct or withhold,
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or require a Participant to remit to the Company, any taxes required by law
to be withheld from Awards made under this Plan. In the event an Award is
paid in the form of Common Stock, the Committee may require the Participant
to remit to the Company the amount of any taxes required to be withheld from
such payment in Common Stock, or, in lieu thereof, the Company may withhold
(or the Participant may be provided the opportunity to elect to tender) the
number of shares of Common Stock equal in Fair Market Value to the amount
required to be withheld.
13.3 Awards. Each Award granted under the Plan shall be evidenced in a
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corresponding Award Agreement provided in writing to the Participant, which
shall specify the terms, conditions and any rules applicable to the Award,
including but not limited to the effect of a Change in Control, or death,
Disability, Divestiture, Early Retirement, Normal Retirement or other
termination of employment of the Participant on the Award.
13.4 Nontransferability. No Award granted under the Plan may be sold,
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transferred, pledged, assigned, or otherwise alienated or hypothecated,
except by will or the laws of descent and distribution. Further, no lien,
obligation, or liability of the Participant may be assigned to any right or
interest of any Participant in an Award under this Plan.
13.5 Exercisability of Awards. All rights with respect to Awards granted
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to a Participant under the Plan shall be exercisable during his or her
lifetime only by such Participant or his or her guardian or legal
representative.
13.6 No Right to Employment. No granting of an Award shall be construed as
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a right to employment with the Company.
13.7 Rights as Shareholder. Subject to the Award provisions, no
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Participant or Designated Beneficiary shall be deemed a shareholder of the
Company nor have any rights as such with respect to any shares of Common
Stock to be provided under the Plan until he or she has become the holder of
such shares. Notwithstanding the aforementioned, with respect to stock
granted under a Restricted Stock Agreement under this Plan, the Participant
or Designated Beneficiary of such Award shall be deemed the owner of such
shares provided herein and in the related Agreement of any Restricted Stock
Award, Restricted Stock Unit Award, Bonus Stock Award or Option Stock Award.
As such, unless contrary to the provisions herein or in any such related
Award Agreement, such stockholder shall be entitled to full voting, dividend
and distribution rights as provided any other Company stockholder for as
long as the Participant remains the owner of such stock.
<PAGE>
13.8 Amendment of Plan. The Committee or Board of Directors may amend,
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suspend, or terminate the Plan or any portion thereof at any time, provided
such amendment is made with shareholder approval if such approval is
necessary to comply with any tax or regulatory requirement, including for
these purposes any approval requirement which is a requirement for exemptive
relief under Section 16(b) of the Exchange Act or which is a requirement for
the performance-based compensation exception under Section 162(m) of the
Code. The Committee in its discretion may amend the Plan so as to conform
with local rules and regulations subject to any provisions to the contrary
specified herein.
13.9 Amendment of Award. In its sole and complete discretion, the
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Committee may at any time amend any Award for the following reasons: (i)
additions and/or changes to the Code, any federal or state securities law,
or other law or regulations applicable to the Award, are made prior to the
Date of Grant, and such additions and/or changes have some effect on the
Award; or (ii) any other event not described in clause (i) occurs and the
Participant gives his or her consent to such amendment.
13.10 Exemption from Computation of Compensation for Other Purposes. By
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acceptance of an applicable Award under this Plan, subject to the conditions
of such Award, each Participant shall be considered in agreement that all
shares of Stock sold or awarded and all Options granted under this Plan
shall be considered special incentive compensation and will be exempt from
inclusion as "wages" or "salary" in pension, retirement, life insurance, and
other employee benefits arrangements of the Company, except as determined
otherwise by the Company. In addition, each Designated Beneficiary of a
deceased Participant shall be in agreement that all such Awards or grants
will be exempt from inclusion in "wages" or "salary" for purposes of
calculating benefits of any life insurance coverage sponsored by the
Company.
13.11 Legend. In its sole and complete discretion, the Committee may elect
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to legend certificates representing shares of Stock sold or awarded under
the Plan, to make appropriate references to the restrictions imposed on such
shares.
13.12 Certain Participants. All Award Agreements for Participants subject
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to Section 16(b) of the Exchange Act shall be deemed to include any such
additional terms, conditions, limitations and provisions as Rule 16b 3
requires, unless the Committee in its discretion determines that any such
Award should not be governed by Rule 16b 3. All performance-based Awards
shall be deemed to include any such additional terms, conditions,
limitations and provisions as are necessary to comply with the performance-
based compensation exemption of Section 162(m) of the Code, unless the
Committee in its discretion determines that any such Award to an Executive
Officer is not intended to qualify for the exemption for performance-based
compensation under Section 162(m).
<PAGE>
13.13 Restriction on Awards. In the event a Participant has received a
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hardship distribution from a Company plan which is qualified under Section
401 (a) of the Code with a Section 401(k) cash or deferred arrangement that
permits hardship withdrawals, then, as proscribed under the Code or by the
Internal Revenue Services' interpretation of the Code, such Participant must
cease all elective and employee contributions under the Plan for twelve
months following the hardship distribution.
13.14 Change in Control. In the event of a Change in Control, the Committee
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may, in its sole and complete discretion, accelerate the payment or vesting
of any Award and release any restrictions on any Awards.
13.15 Construction of the Plan. The Plan, and its rules, rights,
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agreements and regulations, shall be governed, construed, interpreted and
administered solely in accordance with the laws of the state of Arkansas. If
the event any provision of the Plan shall be held invalid, illegal or
unenforceable, in whole or in part, for any reason, such determination shall
not affect the validity, legality or enforceability of any remaining
provision, portion of provision or Plan overall, which shall remain in full
force and effect as if the Plan had been absent the invalid, illegal or
unenforceable provision or portion thereof.
