<PAGE> 1
04/20/94 - D R A F T
As filed with the Securities and Exchange Registration No. 33-
Commission on April 28, 1994
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FIRST TENNESSEE NATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
TENNESSEE 6021 62-0803242
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
165 MADISON AVENUE
MEMPHIS, TENNESSEE 38103
(901) 523-4444
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
HARRY A. JOHNSON, III
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
FIRST TENNESSEE NATIONAL CORPORATION
165 MADISON AVENUE
MEMPHIS, TENNESSEE 38103
(901) 523-5624
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With Copies to:
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<S> <C>
CLYDE A. BILLINGS, JR. JEFFREY C. GERRISH
Vice President & Counsel Gerrish & McCreary, P.C.
First Tennessee National Corporation 700 Colonial Road, Ste. 200
165 Madison Avenue Memphis, TN 38117
Memphis, Tennessee 38103 (901) 767-0900
(901) 523-5679
</TABLE>
Approximate date of commencement of proposed sale of the securities to
the public: As soon as practicable after this Registration Statement becomes
effective and after conditions contained in Merger Agreement have been
satisfied.
If any of the securities being registered on this Form are being
offered in connection with the formation of a holding company and there is
compliance with General Instruction G, check the following box: / /
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<CAPTION>
CALCULATION OF REGISTRATION FEE
Title of each Amount Proposed Maximum Proposed Maximum Amount
class of to be Offering Price Aggregate of
securities Registered(1) per Unit(2) Offering Price(2) Registration Fee
to be registered
<S> <C> <C> <C> <C>
Common Stock and
Associated Rights 468,000 $12.13 $5,675,229 $1,957
</TABLE>
(1) Based upon the assumed number of shares that may be issued in the Merger
described herein. Such assumed number is based on the number of shares of
Planters Bank Common Stock that may be outstanding immediately prior to the
Merger and the assumed minimum price per share for Registrant's Common Stock
under Section (B)(1)(c) of Article I of the Merger Agreement.
(2) Estimated solely for purpose of computing the registration fee
pursuant to Rule 457(f)(2) on the basis of the book value of a share of Planters
Bank Common Stock on December 31, 1993, divided by 6.882, the maximum number of
shares of the Registrant's Common Stock to be exchanged for each share of
Planters Bank Common Stock in the proposed merger to which this Registration
Statement relates, based on the assumed value for Registrant's Common Stock used
in Note (1).
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE> 2
FIRST TENNESSEE NATIONAL CORPORATION
CROSS REFERENCE SHEET
PURSUANT TO REGULATION S-K, ITEM 501(B)
<TABLE>
<CAPTION>
FORMS S-4 ITEM AND CAPTION LOCATION OR CAPTION IN PROSPECTUS
-------------------------- ---------------------------------
<S> <C>
A. Information About the Transaction
1. Forepart of the Registration Statement and Facing page of Registration Statement; Outside Front Cover
Outside Front Cover Page of Prospectus Page
2. Inside Front and Outside Back Cover Pages Available Information; Table of Contents
of Prospectus
3. Risk Factors, Ratio of Earnings to Fixed Charges Summary; The Special Meeting; The Merger
and Other Information
4. Terms of the Transaction Summary; The Merger; Incorporation of Certain Documents by
Reference; Certain Regulatory Considerations; Effect of the
Merger on Rights of Shareholders; Description of FTNC
Capital Stock
5. Pro Forma Financial Information Index to Pro Forma Financial Information
6. Material Contacts with the Company Being The Merger
Acquired
7. Additional Information Required for Reoffering Not Applicable
by Persons and Parties Deemed to Be Underwriters
8. Interests of Named Experts and Counsel Validity of Common Stock; Experts
9. Disclosure of Commission Position on Not Applicable
Indemnification for Securities Act Liabilities
B. Information About the Registrant
10. Information with Respect to S-3 Registrants Incorporation of Certain Documents by Reference
11. Incorporation of Certain Information by Incorporation of Certain Documents by Reference
Reference
12. Information with Respect to S-2 or S-3 Not Applicable
Registrants
13. Incorporation of Certain Information by Not Applicable
Reference
14. Information with Respect to Registrants Other Not Applicable
Than S-3 or S-2 Registrants
C. Information About the Company Being Acquired
15. Information with Respect to S-3 Companies Not Applicable
16. Information with Respect to S-2 or S-3 Not Applicable
Companies
17. Information with Respect to Companies Other Summary; Information concerning Planters Bank; Index to
Than S-2 or S-3 Companies Planters Bank Financial Information
D. Voting and Management Information
18. Information if Proxies, Consents or Incorporation of Certain Documents by Reference; Summary;
Authorizations are to be Solicited The Special Meeting; Experts; The Merger; Cover Page of
Proxy Statement-Prospectus
19. Information if Proxies, Consents or Not Applicable
Authorizations are not to be Solicited or in
an Exchange Offer
</TABLE>
i
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________________, 1994
Dear Planters Bank Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders
of Planters Bank to be held at the main office of Planters Bank, 1202 E.
Edwards Avenue, Tunica, Mississippi on ___________________, 1994 at 10:00 a.m.,
local time.
At this meeting, you will have an opportunity to consider and vote on
the terms of an Agreement and Plan of Merger (the "Merger Agreement") that
provides for the merger of First Tennessee Interim Bank, a newly chartered and
wholly-owned subsidiary of First Tennessee National Corporation, with and into
Planters Bank (the "Merger"), as a result of which Planters Bank will become a
wholly-owned subsidiary of First Tennessee National Corporation.
The Merger Agreement generally provides for a tax-free exchange in
which Planters Bank shareholders will receive shares of First Tennessee
National Corporation common stock in exchange for shares of Planters Bank
common stock.
The enclosed Notice of Special Meeting of Shareholders and Proxy
Statement-Prospectus explain the Merger and provide specific information
relative to the Special Meeting. Please carefully read these materials and
thoughtfully consider the information contained in them. Your vote is of great
importance, as the approval of Planters Bank shareholders is required to
consummate the Merger.
Whether or not you plan to attend the Special Meeting, you are urged
to complete, date, sign and promptly return the enclosed proxy card to assure
that your shares will be voted at the Special Meeting. For your convenience,
there is included a postage-paid, addressed envelope for your proxy card. No
additional postage is required if mailed in the United States.
THE MERGER IS AN IMPORTANT STEP FOR PLANTERS BANK AND ITS
SHAREHOLDERS. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
THE MERGER.
Sincerely,
WILLIAM C. WOOD
President and Chief Executive Officer
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PLANTERS BANK
================================================================================
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD __________________, 1994
================================================================================
Notice is hereby given that a Special Meeting of Shareholders of
Planters Bank has been called by the Board of Directors and will be held at the
main office of Planters Bank, 1202 E. Edwards Avenue, Tunica, Mississippi, on
_____________________, 1994 at 10:00 a.m., local time, for the following
purposes:
1. To consider and vote upon a proposal to approve an Agreement and
Plan for Merger dated as of March 29, 1994 (the "Merger Agreement") by and
between First Tennessee National Corporation ("FTNC") and Planters Bank. The
Merger Agreement provides for the merger of First Tennessee Interim Bank, a
newly chartered and wholly-owned subsidiary of FTNC, with and into Planters
Bank, as a result of which Planters Bank will become a wholly-owned subsidiary
of FTNC, all as more fully described in the accompanying Proxy
Statement-Prospectus.
2. To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The Board of Directors is not aware of any other business to come
before the meeting.
Whether or not you plan to attend, please complete, date and sign the
enclosed proxy card and return it at once in the stamped return envelope in
order to insure that your shares will be represented at the meeting. If you
attend in person, the proxy can be disregarded, if you wish, and you may vote
your own shares.
Only shareholders of record at the close of business on
_____________________, 1994 will be entitled to receive notice of and to vote
at the meeting and any adjournments or postponements thereof.
By Order of the Board of Directors,
Betty R. Davis, Secretary
Tunica, Mississippi
Dated: ____________________, 1994
THE BOARD OF DIRECTORS OF PLANTERS BANK UNANIMOUSLY RECOMMENDS THAT
THE HOLDERS OF PLANTERS BANK COMMON STOCK VOTE TO APPROVE THE PROPOSAL.
<PAGE> 5
PROXY STATEMENT
PLANTERS BANK
SPECIAL MEETING TO BE HELD ON _________________, 1994
PROSPECTUS
FIRST TENNESSEE NATIONAL CORPORATION
468,000 SHARES OF COMMON STOCK
This Proxy Statement-Prospectus is being furnished to the holders of
common stock, par value $10.00 per share (the "Planters Bank Common Stock"), of
Planters Bank, a Mississippi state bank, in connection with the solicitation of
proxies by the Planters Bank Board of Directors (the "Planters Bank Board") for
use at the Special Meeting of Planters Bank shareholders to be held at 10:00
a.m., local time, on __________________________, 1994, at the main office of
Planters Bank, 1202 E. Edwards Avenue, Tunica, Mississippi, and at any
adjournments or postponements thereof (the "Special Meeting").
At the Special Meeting, the shareholders of record of Planters Bank
Common Stock as of the close of business on ____________ ____________, 1994
will consider and vote upon a proposal to approve the Agreement and Plan of
Merger dated as of March 29, 1994 (the "Merger Agreement") by and between First
Tennessee National Corporation ("FTNC"), a Tennessee corporation registered as
a bank holding company under the Bank Holding Company Act of 1956, as amended,
and Planters Bank, pursuant to which, among other things, First Tennessee
Interim Bank, a newly chartered and wholly-owned subsidiary of FTNC, will merge
with and into Planters Bank, with Planters Bank surviving the merger (the
"Merger"), and as a result of which, Planters Bank will become a wholly-owned
subsidiary of FTNC. Upon consummation of the Merger, each outstanding share of
Planters Bank Common Stock (other than shares held directly or indirectly by
FTNC or any of its subsidiary banks, except in a fiduciary capacity or in
satisfaction of a debt previously contracted, and shares held in the treasury
of Planters Bank, which shares shall be canceled, retired and cease to exist by
virtue of the Merger and without any payment made in respect thereof) will be
converted into the right to receive shares of common stock, par value $2.50 per
share, of FTNC ("FTNC Common Stock") as described herein. For a description of
the Merger Agreement, which is included herein in its entirety as Appendix "A"
to this Proxy Statement-Prospectus, see "The Merger."
This Proxy Statement-Prospectus also constitutes a prospectus of FTNC
in respect of up to 468,000 shares of FTNC Common Stock to be issued to
shareholders of Planters Bank in connection with the Merger. The shares of
FTNC Common Stock to be issued in connection with the Merger are based upon the
conversion of each outstanding share of Planters Bank Common Stock into shares
of FTNC Common Stock as described herein. See "The Merger -- Terms of the
Merger."
The outstanding shares of FTNC Common Stock are, and the shares
offered hereby will be, included for quotation on the National Association of
Securities Dealers Automated Quotation System - National Market System
("NASDAQ/NMS"). The last reported sale price of FTNC Common Stock on the
NASDAQ/NMS on ___________________, 1994 was $_______ per share.
All information contained in this Proxy Statement-Prospectus relating
to FTNC and its subsidiaries has been supplied by FTNC and all information
relating to Planters Bank has been supplied by Planters Bank. This Proxy
Statement-Prospectus and the accompanying proxy card are first being mailed to
shareholders of Planters Bank on or about ____________________, 1994.
THE SHARES OF FTNC COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS,
DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT
INSURED BY THE BANK INSURANCE FUND OR THE SAVINGS ASSOCIATION INSURANCE FUND OF
THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY OTHER GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT-PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROXY STATEMENT-PROSPECTUS IS ____________________, 1994
<PAGE> 6
TABLE OF CONTENTS
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Page
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<S> <C>
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 4 -
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 4 -
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 6 -
THE SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 15 -
Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 15 -
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 16 -
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 16 -
Background of and Reasons for the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 16 -
Opinion of Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 18 -
Terms of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 21 -
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 22 -
Surrender of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 22 -
Conditions to Consummation of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 23 -
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 25 -
Conduct of Business Pending Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 26 -
No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 26 -
Waiver and Amendment; Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 27 -
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 29 -
No Shareholders' Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 29 -
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 29 -
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 30 -
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 30 -
Resale of FTNC Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 31 -
NASDAQ/NMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 31 -
CERTAIN REGULATORY CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 31 -
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 31 -
Payment of Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 32 -
Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 33 -
Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 34 -
Holding Company Structure and Support of Subsidiary Banks . . . . . . . . . . . . . . . . . . . . . . . - 34 -
FDICIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 35 -
Brokered Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 36 -
FDIC Insurance Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 37 -
Depositor Preference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 37 -
INFORMATION CONCERNING PLANTERS BANK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 37 -
Description of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 37 -
Selected Statistical Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 40 -
Management's Discussion & Analysis of Financial Condition & Results of Operations . . . . . . . . . . . - 42 -
Ownership of Planters Bank Common Stock and Dividends . . . . . . . . . . . . . . . . . . . . . . . . . - 45 -
</TABLE>
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<PAGE> 7
<TABLE>
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Page
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<S> <C>
DESCRIPTION OF FTNC CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 46 -
Authorized Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 47 -
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 47 -
FTNC Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 47 -
Shareholder Protection Rights Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 48 -
Subordinated Capital Notes due 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 48 -
EFFECT OF THE MERGER ON RIGHTS OF SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 49 -
Required Vote for Authorization of Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . . . - 49 -
Shareholder Proposals and Nominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 50 -
Action by Written Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 50 -
Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 50 -
Amendment of Articles of Incorporation or Charter and Bylaws . . . . . . . . . . . . . . . . . . . . . - 50 -
Loans Secured by and Acquisitions of Issuer's Stock . . . . . . . . . . . . . . . . . . . . . . . . . - 51 -
Voluntary Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 51 -
Business Combinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 52 -
Control Share Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 52 -
Tender Offers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 53 -
Greenmail Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 53 -
Dividends and Other Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 53 -
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 53 -
Rights of Holders of Capital Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 54 -
Shareholder Rights Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 54 -
VALIDITY OF COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 54 -
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 54 -
INDEX TO PRO FORMA FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 56 -
INDEX TO PLANTERS BANK FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 56 -
APPENDICES:
Appendix A - Agreement and Plan of Merger
Appendix B - Opinion of Southard Financial
</TABLE>
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<PAGE> 8
AVAILABLE INFORMATION
FTNC is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "SEC"). The reports, proxy statements
and other information filed by FTNC with the SEC can be inspected and copied at
the public reference facilities maintained by the SEC at 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549. In addition, such reports,
proxy statements and other information can be inspected and copied at the SEC's
Regional Offices at 7 World Trade Center, 13th Floor, New York, New York 10048
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60621-2511. Copies of such material can be obtained from the Public Reference
Section of the SEC at 450 Fifth Street, N.W., Washington, D.C., at prescribed
rates. The FTNC Common Stock is included for quotation on NASDAQ/NMS and such
reports, proxy statements and other information concerning FTNC should be
available for inspection and copying at the offices of the National Association
of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006. FTNC
has filed with the SEC a Registration Statement on Form S-4 (together with any
amendments thereto, the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the shares of FTNC
Common Stock and associated rights to be issued pursuant to the Merger
Agreement. As permitted by the rules and regulations of the SEC, this Proxy
Statement-Prospectus does not contain all the information set forth in the
Registration Statement. Such additional information may be obtained from the
SEC's principal office in Washington, D.C. Statements contained in this Proxy
Statement-Prospectus or in any document incorporated by reference in this Proxy
Statement-Prospectus as to the contents of any contract or other document
referred to herein or therein are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement or such other document, each such
statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the SEC are hereby incorporated by
reference in this Proxy Statement-Prospectus and made a part hereof: (a)
FTNC's Annual Report on Form 10-K for the fiscal year ended December 31, 1993,
and its Form 10-K/A filed on April 27, 1994, amending its Annual Report on
Form 10-K; (b) FTNC's Current Report on Form 8-K, dated October 1, 1993, filed
October 18, 1993; (c) FTNC's proxy statement dated March 14, 1994, exclusive of
the Board Compensation Committee Report and the Total Shareholder Return
Performance Graph on pages 11-16 thereof; (e) the description of FTNC Common
Stock contained in FTNC's registration statement on Form 10 (File No. 0-4491),
filed April 14, 1970, pursuant to Section 12 of the Exchange Act (and any
amendments or reports filed for the purpose of updating the description); and
(f) the description of the FTNC's rights to purchase Participating Preferred
Stock included in FTNC's registration statement on Form 8-A (File No. 0-4491),
filed September 8, 1989, pursuant to Section 12 of the Exchange Act pursuant to
which FTNC registered the Shareholder Protection Rights under the Exchange Act.
All documents filed by FTNC pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Proxy Statement-Prospectus and
prior to the Special Meeting shall be deemed to be incorporated by reference in
this Proxy Statement-Prospectus and to be a part hereof from the date of
filing of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated herein by reference will be deemed to
be modified or superseded for the purpose of this Proxy Statement-Prospectus to
the extent that a statement contained herein or in any other subsequently filed
document which also is, or is deemed to be, incorporated herein by reference
modifies or supersedes
- 4 -
<PAGE> 9
such statement. Any such statement so modified or superseded will not be
deemed, except as so modified or superseded, to constitute a part of this Proxy
Statement Prospectus.
THIS PROXY STATEMENT-PROSPECTUS INCORPORATES DOCUMENTS RELATING TO
FTNC BY REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH
DOCUMENTS, OTHER THAN CERTAIN EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS
ARE SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH DOCUMENTS, ARE AVAILABLE
WITHOUT CHARGE UPON REQUEST TO THE TREASURER, FIRST TENNESSEE NATIONAL
CORPORATION, P.O. BOX 84, MEMPHIS, TENNESSEE 38101, TELEPHONE NUMBER (901)
523-5630. COPIES OF EXHIBITS THAT ARE NOT SPECIFICALLY INCORPORATED BY
REFERENCE IN SUCH DOCUMENTS MAY BE OBTAINED FOR A CHARGE COVERING THE COST OF
REPRODUCTION AND MAILING. IN ORDER TO INSURE TIMELY DELIVERY OF THE DOCUMENTS,
ANY REQUEST SHOULD BE MADE BY __________________, 1994.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED HEREIN AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS DOCUMENT NOR ANY DISTRIBUTION OF
SECURITIES MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF FTNC OR PLANTERS BANK SINCE THE
DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT
TO THE DATE HEREOF.
- 5 -
<PAGE> 10
SUMMARY
The following summary is not intended to be a complete description of
all material facts regarding FTNC, Planters Bank and the matters to be
considered at the Special Meeting and is qualified in all respects by the
information appearing elsewhere and incorporated by reference in this Proxy
Statement-Prospectus, the Appendices hereto and the documents referred to
herein.
PARTIES TO THE MERGER
FTNC. FTNC is a regional bank holding company incorporated under the
laws of Tennessee, which, through First Tennessee Bank National Association,
Memphis, Tennessee ("FTB") and its other banking and banking-related
subsidiaries, provides a broad range of financial services. FTNC was
incorporated in Tennessee in 1968. At December 31, 1993, FTNC had consolidated
total assets of approximately $9.6 billion, consolidated total deposits of
approximately $7.1 billion and equity capital of approximately $679.0 million.
At December 31, 1993, FTNC ranked 63rd among bank holding companies in the
United States and first among bank holding companies headquartered in Tennessee
in terms of total assets.
FTNC coordinates the financial resources of the consolidated
enterprise and maintains systems of financial, operational and administrative
control that allow coordination of selected policies and activities. FTNC
operates principally through FTB, which was chartered as a national banking
association in 1864. As of December 31, 1993, FTB was the largest commercial
bank headquartered in Tennessee both in terms of total assets and deposits. At
December 31, 1993, FTB had total assets of approximately $9.4 billion, total
deposits of approximately $7.0 billion and equity capital of approximately
$627.4 million. FTB conducts a broad range of retail and commercial banking
and fiduciary services and had 211 banking locations at December 31, 1993. FTB
also offers a comprehensive range of financial services, including bond
broker/agency services, mortgage banking and check clearing, to companies
nationally. Bond broker/agency services provided by FTB consist primarily of
the sale of bank-eligible securities to other financial institutions.
Subsidiaries of FTNC and FTB are engaged primarily in providing mortgage
banking, integrated check processing solutions, discount brokerage, equipment
finance, venture capital, investment management and credit life insurance.
The principal executive offices of FTNC are located at 165 Madison
Avenue, Memphis, Tennessee 38103, and its telephone number is (901) 523-4444.
Planters Bank. Planters Bank is a Mississippi state bank, which was
chartered in 1912. It operates a general banking business with its main office
in Tunica, Mississippi. Planters Bank has received approval to construct and
open a new branch near Robinsonville, Mississippi. At December 31, 1993,
Planters Bank had total assets of approximately $65.7 million, total deposits
of approximately $55.5 million, and equity capital of approximately $5.7
million.
The executive offices of Planters Bank are located at 1202 E. Edwards
Avenue, Tunica, Mississippi 38676 and the telephone number is (601) 363-2311.
- 6 -
<PAGE> 11
Additional information about FTNC and its subsidiaries is included in
documents incorporated by reference in this Proxy Statement-Prospectus. See
"Incorporation of Certain Documents by Reference."
SPECIAL MEETING OF SHAREHOLDERS
The Special Meeting will be held on _______________________, 1994 at
10:00 a.m., local time, at the main office of Planters Bank, 1202 E. Edwards
Avenue, Tunica, Mississippi. The purpose of the Special Meeting is to
consider and vote upon a proposal to approve the Merger Agreement.
VOTE REQUIRED; RECORD DATE
Only Planters Bank shareholders of record at the close of business on
_________________, 1994, (the "Planters Bank Record Date") will be entitled to
vote at the Special Meeting. The affirmative vote of the holders of two-thirds
(2/3) of the shares outstanding on such date is required to approve the Merger
Agreement. "Abstentions" and broker "non votes" will have the same effect as a
vote "against" approval of the Merger Agreement. See "The Special Meeting Vote
Required." As of the Planters Bank Record Date, there were 60,000 shares of
Planters Bank Common Stock entitled to be voted.
The directors and executive officers of Planters Bank and their
affiliates beneficially owned, as of the Planters Bank Record Date, 21,378
shares, or approximately 35.6% of the outstanding shares of Planters Bank Common
Stock. Planters Bank has been advised that such directors and executive
officers intend to vote their shares for approval of the Merger Agreement.
As of the Planters Bank Record Date, FTB, through its Trust
Department, held of record or in the name of nominees 384 shares (or
approximately 0.6% of the outstanding shares) of Planters Bank Common Stock as
fiduciary for the beneficiaries of a trust and the directors and executive
officers of FTNC beneficially owned no shares of Planters Bank Common Stock
except for one director, whose spouse owned 96 shares, or approximately 0.2% of
the outstanding shares. As of such date, other than the shares held through
FTB's Trust Department, FTNC and its subsidiaries owned no shares of Planters
Bank Common Stock.
TERMS OF THE MERGER
On the Effective Date (as defined below) of the Merger, First
Tennessee Interim Bank ("Interim Bank"), a newly chartered and wholly-owned
subsidiary of FTNC formed for the purpose of effecting the Merger, will merge
with and into Planters Bank with Planters Bank being the surviving entity. As
a result of the merger of Interim Bank and Planters Bank, Planters Bank will
become a wholly-owned subsidiary of FTNC. Planters Bank will continue to
operate after the Merger under the same name and with the same Charter and
Bylaws as were in effect immediately prior to the Merger. The directors and
officers of Planters Bank after the Merger will remain the same as prior to the
Merger without any prejudice to the rights of FTNC as Planters Bank's sole
shareholder.
Upon consummation of the Merger, each outstanding share of Planters
Bank Common Stock (other than shares held directly or indirectly by FTNC or any
subsidiary of FTNC, except in a fiduciary capacity or in satisfaction of a debt
previously contracted, and shares held in the treasury of Planters Bank, which
shares shall be canceled, retired and cease to exist by virtue of the Merger
and without any payment made in respect thereof) will be converted into the
right to receive shares of FTNC Common
- 7 -
<PAGE> 12
Stock. Each share of Planters Bank Common Stock issued and outstanding at the
Effective Date will become and be converted into the right to receive the
number of shares of FTNC Common Stock equal to the Conversion Number (the
"Conversion Number") determined as follows:
The Conversion Number shall be equal to the quotient of
$234.00 divided by the FTNC Common Stock Average Price (as
defined below); provided, however, if the FTNC Common Stock
Average Price is greater than $42 per share, then $42 will be
used, and if it is less than $34 per share, then $34 shall be
used; provided further, if the FTNC Common Stock Average Price
is less than $34, either FTNC or Planters Bank may terminate
the Merger Agreement, subject to FTNC's right to require
Planters Bank to consummate the Merger using the actual FTNC
Common Stock Average Price. "FTNC Common Stock Average Price"
means the average of the closing prices of the FTNC Common
Stock for the twenty (20) business days (the "Calculation
Period") immediately prior to the tenth (10th) calendar day
preceding the Effective Date.
If the Effective Date had been _____________________, 1994, the
Conversion Number would have been ___.___, and the number of shares of FTNC
Common Stock exchanged for all outstanding shares of Planters Bank Common Stock
would have been ___,___,___.
No fractional shares of FTNC Common Stock will be issued in connection
with the Merger. In lieu of fractional shares, FTNC will make a cash payment
equal to the fractional interest which a Planters Bank shareholder would
otherwise receive multiplied by the FTNC Common Stock Average Price. The
holders of Planters Bank Common Stock at the Effective Date will become holders
of FTNC Common Stock. Each outstanding share of FTNC Common Stock will remain
outstanding and unchanged as a result of the Merger. See "The Merger -- Terms
of the Merger."
EFFECTIVE DATE
The Merger will become effective at the time of the filing of a
certificate of merger or on such date as the certificate of merger may specify
(the "Effective Date"). Unless otherwise mutually agreed upon by FTNC and
Planters Bank, the Effective Date will occur on the last business day of the
month during which the expiration of all applicable waiting periods in
connection with governmental approvals occurs and all conditions to the
consummation of the Merger Agreement have been satisfied or waived.
REASONS FOR THE MERGER; RECOMMENDATION OF PLANTERS BANK BOARD OF DIRECTORS
The Planters Bank Board believes the Merger is fair to and in the best
interest of Planters Bank and its shareholders and recommends that Planters
Bank's shareholders vote FOR approval of the Merger Agreement. The Planters
Bank Board believes that the Merger will provide significant value to all
Planters Bank shareholders and also enable them to participate in opportunities
for growth that the Planters Bank Board believes that the Merger makes
possible. See "The Merger -- Background of and Reasons for the Merger." For
information on the interests of certain officers and directors of Planters Bank
in the Merger, see "The Merger -- Interests of Certain Persons in the Merger."
OPINION OF FINANCIAL ADVISER
Southard Financial ("Southard"), Memphis, Tennessee, has delivered its
written opinion to the Planters Bank Board to the effect that, as of March 28,
1994, the terms of the Merger are fair to the
- 8 -
<PAGE> 13
holders of Planters Bank Common Stock from a financial point of view. A copy
of the opinion of Southard dated as of March 28, 1994 is attached hereto as
Appendix "B." The opinion should be read in its entirety for a description of
the procedures followed, assumptions and qualifications made, matters
considered, and the limitations undertaken by Southard. See "The Merger --
Opinion of Financial Adviser."
CONDITIONS; REGULATORY APPROVALS
Consummation of the Merger is subject to various conditions, including
receipt of the shareholder approval solicited hereby, receipt by Planters Bank
of a fairness opinion, which has been received, receipt of the necessary
regulatory approvals, receipt of opinions of counsel to FTNC regarding certain
tax aspects of the Merger, receipt of assurances that the Merger qualifies for
pooling-of-interests accounting treatment, receipt of audited financial
statements for Planters Bank that confirm that its unaudited financial
statements fairly present its financial position and results of operations,
implementation, to the extent consistent with generally accepted accounting
principles ("GAAP"), of certain adjustments to Planters Bank's loan, litigation
and real estate valuation policies and practices (including loan
classifications and levels of reserves), and satisfaction of customary closing
conditions.
The regulatory approvals and consents necessary to consummate the
transactions contemplated by the Merger Agreement include the approval of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
the Federal Deposit Insurance Corporation ("FDIC"), and the Mississippi
Commissioner of Banking and Consumer Finance (the "Mississippi Commissioner").
Applications have been submitted for such approvals. There can be no
assurances as to when, if or with what conditions such approvals or waiver will
be granted. See "The Merger -- Conditions to Consummation of the Merger,"
"--Regulatory Approvals," "-- Conduct of Business Pending the Merger" and
"--Certain Regulatory Considerations."
TERMINATION OF THE MERGER AGREEMENT
The Merger Agreement may be terminated at any time prior to the
Effective Date by the mutual consent of FTNC and Planters Bank, by either of
them individually under certain specified circumstances, including, if the
Merger has not become effective by March 29, 1995, or if FTNC's Common Stock
Average Price is less than $34.00 per share, subject to FTNC's right to require
Planters Bank to consummate the Merger using the actual FTNC Common Stock
Average Price, or by FTNC under certain specified circumstances. In certain
situations if the Merger is not consummated and Planters Bank engages in a
specified transaction with another party within 12 months following
termination of the Merger Agreement, Planters Bank must pay to FTNC liquidated
damages in the amount of $950,000. See "The Merger -- Waiver and Amendment;
Termination."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Planters Bank's management and the Planters Bank
Board have certain interests in the Merger that are in addition to their
interests as shareholders of Planters Bank generally. These consist of
provisions relating to indemnification in the Merger Agreement and employment
agreements that are contemplated for William C. Wood, President and Chief
Executive Officer of Planters Bank, and B. Rich Knox, Executive Vice President
of Planters Bank. See "The Merger - Interests of Certain Persons in the
Merger."
- 9 -
<PAGE> 14
CERTAIN DIFFERENCES IN SHAREHOLDERS' RIGHTS
At the Effective Date, shareholders of Planters Bank automatically
will become shareholders of FTNC, and their rights as shareholders of FTNC will
be determined by the Tennessee Business Corporation Act ("TBCA") and by FTNC's
Charter and Bylaws. The rights of shareholders of FTNC differ from rights of
the shareholders of Planters Bank with respect to certain important matters,
including, but not limited to, their rights to make loans secured by and
acquire issuer stock, act by written consent, dissolve the corporation, receive
dividends, amend the charter and bylaws, submit shareholder proposals or
nominations of director candidates, dissent with respect to their shares, and
exercise preemptive rights, the rights of the holders of debt securities, the
required shareholder vote as to certain matters, indemnification provisions,
and statutory and other restrictions on certain share acquisitions. For a
summary of these differences, see "Effect of the Merger on Rights of
Shareholders."
NO SHAREHOLDERS' DISSENTERS' RIGHTS
Under applicable Mississippi law, no dissenters' rights of appraisal
exist for the shareholders of Planters Bank Common Stock. See "The Merger--No
Shareholders' Dissenters' Rights."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
It is intended that for federal income tax purposes the Merger will be
treated as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and, accordingly, for
federal income tax purposes, no gain or loss will be recognized by either
Planters Bank or FTNC as a result of the Merger and Planters Bank's
shareholders will not recognize gain or loss upon the receipt of FTNC Common
Stock in exchange for Planters Bank Common Stock, except to the extent of any
cash received in lieu of fractional shares. Consummation of the Merger is
dependent upon, among other conditions, receipt by each of FTNC and Planters
Bank of an opinion of counsel to FTNC, dated as of the Effective Date,
substantially to this effect. See "The Merger -- Certain Federal Income Tax
Consequences."
ACCOUNTING TREATMENT
It is intended that the Merger will be accounted for as a
pooling-of-interests of FTNC and Planters Bank under GAAP. Consummation of the
Merger is conditioned upon receipt by FTNC of a letter from its independent
public accountants to the effect that the Merger should be accounted for in
such manner. See "The Merger -- Accounting Treatment."
MARKET PRICES OF COMMON STOCK
The FTNC Common Stock is included for quotation on the NASDAQ/NMS
(symbol: FTEN). The following table sets forth the high and low closing price
of FTNC Common Stock as reported on NASDAQ/NMS for the first and second
quarters of 1994 through _________ _________, 1994, and on a quarterly basis
for the two years ended December 31, 1993 and 1992. The price of FTNC Common
Stock has been adjusted for a 3-for-2 stock split effected in the form of a 50%
stock dividend, which was distributed on May 22, 1992.
- 10 -
<PAGE> 15
<TABLE>
<CAPTION>
1994 1993 1992
------------------ --------------------------------------- ---------------------------------------
2nd 1st 4th 3rd 2nd 1st 4th 3rd 2nd 1st
Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr
--- --- --- --- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
39 3/4 40 1/2 43 1/2 47 43 1/4 37 1/4 38 36 3/4 34 7/8
37 3/8 36 1/4 38 7/8 37 3/4 36 1/8 35 33 1/8 32 7/8 26 3/8
</TABLE>
There is no established public trading market for Planters Bank Common
Stock, and trading in such shares is extremely sporadic and generally confined
to the Tunica community. Management of Planters Bank occasionally becomes
aware of the price at which Planters Bank Common Stock is transferred. Since
January 1, 1992 through the date of this Proxy Statement-Prospectus, management
of Planters Bank is aware of approximately 14 sales transactions aggregating
approximately 5,100 shares of Planters Bank Common Stock at per share prices
ranging from $68 - $70 in 1992, $72 - $85 in 1993, and $90 in January of 1994.
The following table sets forth the closing price per share of FTNC
Common Stock and the equivalent per share price for Planters Bank Common Stock
giving effect to the Merger as of March 28, 1994, the last business day
preceding public announcement of the execution of the Merger Agreement; and as
of _____________________, 1994, the last practicable date prior to the mailing
of this Proxy Statement-Prospectus. The equivalent price per share of Planters
Bank Common Stock at each specified date represents the closing price of a
share of FTNC Common Stock on such date multiplied by 6.049 and ___________,
respectively, assuming that to be the Conversion Number provided for in the
Merger Agreement. The most recent sale price known to management of Planters
Bank in a transaction on or before March 28, 1994, for a sale of Planters Bank
Common Stock was $90.00 per share on January 18, 1994.
<TABLE>
<CAPTION>
FTNC Equivalent Price
Common Stock Per Planters Bank Share
------------ --------------------------
<S> <C> <C>
March 28, 1994 $38.50 $232.89
____________________, 1994 __.__ ___.__
</TABLE>
Planters Bank shareholders are advised to obtain current market
quotations for FTNC Common Stock. The market price of FTNC Common Stock at the
Effective Date may be higher or lower than the market price at the time the
Merger Agreement was executed, at the date of mailing of this Proxy
Statement-Prospectus, at the time of the Special Meeting, or at the time of
calculation of the Conversion Number.
EQUIVALENT AND PRO FORMA SHARE DATA
The following table presents selected comparative unaudited per share
data for FTNC Common Stock and Planters Bank Common Stock on a historical basis
and for FTNC Common Stock on a pro forma combined basis and Planters Bank
Common Stock on a pro forma equivalent basis giving effect to the Merger on a
pooling-of-interests accounting basis. Per share amounts have been adjusted
for FTNC's 3-for-2 stock split effected May 22, 1992. The data is not
necessarily indicative of the results of the future operations of the combined
entity or the actual results that would have occurred had the Merger been
consummated prior to the periods indicated. For a description of the
pooling-of-interests accounting basis with respect to the Merger and the
related effects on the historical financial statements
- 11 -
<PAGE> 16
of FTNC, see "The Merger -- Accounting Treatment." The information is derived
from and should be read in conjunction with the consolidated historical
financial statements of FTNC and Planters Bank, including the related notes
thereto, contained herein or incorporated herein by reference. See
"Incorporation of Certain Documents by Reference," "Index to Pro Forma
Financial Information," and "Index to Planters Bank Financial Information."
FIRST TENNESSEE NATIONAL CORPORATION
Equivalent and Pro Forma Share Data (Unaudited)
<TABLE>
<CAPTION>
Twelve Months Ended
----------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Income Per Common Share: (1)
FTNC $ 4.26 $ 3.19 $ 2.63
Planters Bank 8.44 10.01 3.87
FTNC pro forma (lower exchange ratio) 4.23 3.17 2.61
FTNC pro forma (upper exchange ratio) 4.22 3.16 2.60
Planters Bank pro forma equivalent (lower exchange ratio) 23.57 17.66 14.54
Planters Bank pro forma equivalent (upper exchange ratio) 29.04 21.75 17.89
Fully Diluted Income Per Common Share: (1)
FTNC $ 4.18 $ 3.12 $ 2.60
Planters Bank 8.44 10.01 3.87
FTNC pro forma (lower exchange ratio) 4.15 3.11 2.57
FTNC pro forma (upper exchange ratio) 4.14 3.10 2.57
Planters Bank pro forma equivalent (lower exchange ratio) 23.12 17.33 14.32
Planters Bank pro forma equivalent (upper exchange ratio) 28.49 21.33 17.69
Dividends Declared Per Common Share: (2)
FTNC $ 1.50 $ 1.26 $ 1.14
Planters Bank 4.00 5.00 4.00
FTNC pro forma 1.50 1.26 1.14
Planters Bank pro forma equivalent (lower exchange ratio) 8.36 7.02 6.35
Planters Bank pro forma equivalent (upper exchange ratio) 10.32 8.67 7.85
Book Value Per Common Share (end of period): (3)
FTNC $ 23.97 $ 21.25 $ 19.39
Planters Bank 94.59 88.67 80.43
FTNC pro forma (lower exchange ratio) 23.89 21.18 19.33
FTNC pro forma (upper exchange ratio) 23.82 21.12 19.28
Planters Bank pro forma equivalent (lower exchange ratio) 133.09 117.99 107.69
Planters Bank pro forma equivalent (upper exchange ratio) 163.93 145.35 132.68
</TABLE>
(1) Pro forma income per share is calculated using combined historical income
for FTNC and Planters Bank divided by the average pro forma common shares
of the combined entity. The average pro forma common shares of the
combined entity have been calculated by combining FTNC's historical
average shares with the historical average shares of Planters Bank as
adjusted by a lower exchange ratio of 5.571 and an upper exchange ratio
of 6.882. The lower exchange ratio of 5.571 is based on a constant for
Planters Bank common stock of $234 per share and $42 for FTNC common
stock. The upper exchange ratio of 6.882 is based on a constant for
Planters Bank common stock of $234 per share and $34 for FTNC common
stock. The Planters Bank pro forma equivalent income per share amounts
are computed by multiplying the FTNC pro forma amounts by the applicable
exchange ratios.
(2) FTNC pro forma dividends per share represent historical dividends paid by
FTNC. Planters Bank pro forma equivalent dividends per share represent
such amounts multiplied by the lower exchange ratio of 5.571 and the upper
exchange ratio of 6.882.
(3) FTNC pro forma book value per common share is based upon the historical
total common equity of the combined entity divided by the total pro forma
common shares of the combined entity assuming conversion of Planters
Bank's common stock at the lower exchange ratio of 5.571 and the upper
exchange ratio of 6.882. Planters Bank pro forma equivalent book value
per common share is based on the exchange ratios.
-12-
<PAGE> 17
SELECTED FINANCIAL DATA AND RATIOS
The following tables present for FTNC and Planters Bank, on a
historical basis, selected unaudited consolidated financial data and ratios.
This information is based on the consolidated financial statements of FTNC and
Planters Bank included herein or incorporated herein by reference and should be
read in conjunction therewith and with the notes thereto. Per share amounts
have been adjusted for FTNC's 3-for-2 stock split effected May 22, 1992. See
"Incorporation of Certain Documents by Reference," "Index to Pro Forma
Financial Information," and "Index to Planters Bank Financial Information."
- 13 -
<PAGE> 18
First Tennessee National Corporation
Selected Financial Data and Ratios (Unaudited)
(Thousands, except per share data)
<TABLE>
<CAPTION>
Twelve Months Ended
-------------------------------------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total Interest Income and Other Income:
FTNC $ 856,956 $ 824,246 $ 831,796 $ 814,457 $ 782,312
Planters Bank 3,873 3,615 3,903 4,496 4,215
FTNC pro forma 860,829 827,861 835,699 818,953 786,527
Net Income Applicable to Common Stock:
FTNC $ 120,665 $ 89,165 $ 73,022 $ 56,580 $ 37,355
Planters Bank 506 601 232 596 512
FTNC pro forma 121,171 89,766 73,254 57,176 37,867
Net Income per Common Share:
FTNC $ 4.26 $ 3.19 $ 2.63 $ 2.01 $ 1.33
Planters Bank 8.44 10.01 3.87 9.93 8.53
FTNC pro forma (lower exchange ratio) (1) 4.23 3.17 2.61 2.01 1.33
FTNC pro forma (upper exchange ratio) (1) 4.22 3.16 2.60 2.00 1.33
Dividends Declared per Common Share:
FTNC $ 1.50 $ 1.26 $ 1.14 $ 1.09 $ .96
Planters Bank 4.00 5.00 4.00 5.00 7.00
FTNC pro forma (2) 1.50 1.26 1.14 1.09 .96
Total Assets (end of period):
FTNC $ 9,608,848 $ 8,925,774 $ 8,760,715 $ 7,485,199 $ 7,149,357
Planters Bank 65,679 52,339 43,734 44,908 41,490
FTNC pro forma 9,674,527 8,978,113 8,804,449 7,530,107 7,190,847
Long-Term Debt and Capital Leases:
(end of period):
FTNC $ 90,642 $ 127,637 $ 128,671 $ 129,057 $ 129,955
Planters Bank -- -- -- -- --
FTNC pro forma 90,642 127,637 128,671 129,057 129,955
Performance Ratios:
Return on Average Assets
FTNC 1.35 % 1.07 % .95 % .79 % .54 %
Planters Bank .89 1.37 .52 1.38 1.22
FTNC pro forma 1.34 1.08 .95 .79 .55
Return on Average Shareholders' Equity
FTNC 18.99 15.44 14.14 11.63 7.95
Planters Bank 9.20 11.85 4.81 12.58 11.10
FTNC pro forma 18.91 15.41 14.06 11.64 7.99
Shareholders' Equity to Total Assets
(end of period)
FTNC 7.07 6.69 6.15 6.64 6.69
Planters Bank 8.64 10.16 11.03 10.71 11.24
FTNC pro forma 7.08 6.71 6.17 6.66 6.72
</TABLE>
(1) Pro forma income per share is calculated using combined historical
income for FTNC and Planters Bank divided by the average pro forma common
shares of the combined entity. The average pro forma common shares of
the combined entity have been calculated by combining FTNC's
historical average shares with the historical average shares of
Planters Bank as adjusted by a lower exchange ratio of 5.571 and an upper
exchange ratio of 6.882. The lower exchange ratio of 5.571 is based
on a constant for Planters Bank common stock of $234 per share and $42
for FTNC common stock. The upper exchange ratio of 6.882 is based on a
constant for Planters Bank common stock of $234 per share and $34 for
FTNC common stock.
(2) FTNC pro forma dividends per share represent historical dividends paid
by FTNC.
-14-
<PAGE> 19
THE SPECIAL MEETING
Each copy of this Proxy Statement-Prospectus mailed to holders of
Planters Bank Common Stock is accompanied by a proxy card furnished in
connection with the Planters Bank Board's solicitation of proxies for use at
the Special Meeting and at any adjournments or postponements thereof. The
Special Meeting is scheduled to be held at 10:00 a.m., local time, on
________________________, 1994, at the main office of Planters Bank, 1202 E.
Edwards Avenue, Tunica, Mississippi. Only holders of record of Planters Bank
Common Stock at the close of business on ________________, 1994 are entitled to
receive notice of and to vote at the Special Meeting. At the Special Meeting,
shareholders will consider and vote upon (a) a proposal to approve the Merger
Agreement and (b) such other matters as may properly be brought before the
Special Meeting or any adjournments or postponements thereof.
HOLDERS OF PLANTERS BANK COMMON STOCK ARE REQUESTED TO COMPLETE, DATE
AND SIGN THE ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY TO PLANTERS BANK IN
THE ENCLOSED, POSTAGE PAID ENVELOPE.
Any holder of Planters Bank Common Stock who has delivered a proxy may
revoke it any time before it is voted by attending the Special Meeting and
voting in person at the meeting or by giving notice of revocation in writing or
submitting a signed proxy card bearing a later date to Planters Bank, at the
main office, 1202 E. Edwards Avenue, Tunica, Mississippi 38767, Attention:
Secretary, provided such notice or proxy is actually received by Planters Bank
before the vote of shareholders. The shares of Planters Bank Common Stock
represented by properly executed proxy cards received at or prior to the
Special Meeting and not subsequently revoked will be voted as directed by the
shareholders submitting such proxies. If instructions are not given, proxy
cards received will be voted FOR approval of the Merger Agreement. If any
other matters are properly presented at the Special Meeting for consideration,
the persons named in the Planters Bank proxy card enclosed herewith will have
discretionary authority to vote on such matters in accordance with their best
judgment. The Planters Bank Board is unaware of any matter to be presented at
the Special Meeting other than the proposal to approve the Merger Agreement.
The cost of soliciting proxies from holders of Planters Bank Common
Stock will be borne by Planters Bank. Such solicitation will be made by mail
but also may be made by telephone or in person by the directors, officers and
employees of Planters Bank (who will receive no additional compensation for
doing so). In addition, Planters Bank will make arrangements with brokerage
firms and other custodians, nominees and fiduciaries to send proxy materials to
their principals.
PLANTERS BANK SHAREHOLDERS SHOULD NOT FORWARD ANY STOCK CERTIFICATES
WITH THEIR PROXY CARDS.
VOTE REQUIRED
The affirmative vote of the holders of two-thirds (2/3) of the
outstanding shares of Planters Bank Common Stock entitled to vote at the
Special Meeting is required in order to approve the Merger Agreement.
Therefore, a failure to return a properly executed proxy card or to vote in
person at the Special Meeting will have the same effect as a vote against the
Merger Agreement. As of the Planters Bank Record Date, there were 60,000
shares of Planters Bank Common Stock outstanding and entitled to vote at the
Special Meeting, with each share being entitled to one vote.
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A majority of the outstanding shares entitled to vote at the Special
Meeting constitutes a quorum for purposes of that meeting. An "abstention"
will be considered present for quorum purposes, but will have the same effect
as a vote "against" the proposal to approve the Merger Agreement. Broker "non
votes" will not be considered present for quorum purposes and will have the
same effect as a vote "against" the proposal to approve the Merger Agreement.
As of the Planters Bank Record Date, the directors and executive
officers of Planters Bank and their affiliates beneficially owned a total of
21,378 shares or approximately 35.6% of the outstanding shares of Planters Bank
Common Stock. Planters Bank has been advised that such directors and executive
officers intend to vote their shares in favor of approval of the Merger
Agreement.
As of the Planters Bank Record Date, FTB, through its Trust
Department, held of record or in the name of nominees 384 shares (or
approximately 0.6% of the outstanding shares) of Planters Bank Common Stock as
fiduciary for the beneficiaries of a trust and the directors and executive
officers of FTNC beneficially owned no shares of Planters Bank Common Stock
except for one director, whose spouse owned 96 shares, or approximately
0.2% of the outstanding shares. As of such date, other than the shares
held through FTB's Trust Department, FTNC and its subsidiaries owned no shares
of Planters Bank Common Stock.
RECOMMENDATION
FOR THE REASONS DESCRIBED BELOW, THE PLANTERS BANK BOARD HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT, BELIEVES THE MERGER IS IN THE BEST
INTEREST OF PLANTERS BANK AND ITS SHAREHOLDERS AND RECOMMENDS THAT SHAREHOLDERS
OF PLANTERS BANK VOTE FOR APPROVAL OF THE MERGER AGREEMENT. IN MAKING ITS
RECOMMENDATION TO SHAREHOLDERS, THE PLANTERS BANK BOARD CONSIDERED, AMONG OTHER
THINGS, THE OPINION OF SOUTHARD THAT THE TERMS OF THE MERGER AGREEMENT ARE FAIR
TO THE HOLDERS OF PLANTERS BANK COMMON STOCK FROM A FINANCIAL POINT OF VIEW.
SEE "THE MERGER -- BACKGROUND OF AND REASONS FOR THE MERGER" AND "-- OPINION OF
FINANCIAL ADVISER."
THE MERGER
The following information concerning the Merger, insofar as it relates
to matters contained in the Merger Agreement, is qualified in its entirety by
reference to the Merger Agreement, which is incorporated herein by reference
and attached hereto as Appendix "A." Planters Bank shareholders are urged to
read carefully the Merger Agreement.
BACKGROUND OF AND REASONS FOR THE MERGER
Background. Beginning in 1992 and throughout 1993, Planters Bank
experienced extraordinary growth largely due to the commencement of gaming
operations in Tunica County. Management of Planters Bank believed that the
bank would continue to experience well-above-normal growth for the foreseeable
future because of the early successes of the gaming businesses in Tunica
County. In the summer of 1993, the Planters Bank Board and management retained
counsel to assist the Board in evaluating what effect future growth of Planters
Bank would have on its legally required capital ratios.
Historically, Planters Bank has maintained capital ratios well in
excess of the minimum requirements of its federal and state regulators. The
Planters Bank Board and management concluded, however, that anticipated future
growth at Planters Bank likely would result in the need for Planters Bank
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to materially increase its capital accounts to accommodate the growth and allow
Planters Bank to meet or exceed the minimum capital ratio requirements of its
state and federal bank regulators. The Planters Bank Board considered a number
of alternatives to increase the capital accounts of Planters Bank when such
capital would be needed and decided to proceed with the formation of a bank
holding company and instructed counsel in the fall of 1993 to begin that
process.
In early January 1994 prior to formation of a holding company, members
of the Executive Committee of the Planters Bank Board and certain other members
of the Planters Bank Board met with the chief executive officer and one other
senior management official of a large regional financial institution at the
request of the other institution. At that meeting, the chief executive officer
of the other institution indicated a desire to acquire Planters Bank and
discussed in general the price which it would be willing to pay for the shares
of Planters Bank. Though no written offer was made by the other institution, a
special meeting of the Planters Bank Board was called and held to discuss the
proposal made by the other institution and to solicit advice from the Planters
Bank Board on how to proceed in light of this proposal. The Planters Bank
Board determined that it would be in the best interest of Planters Bank's
shareholders for a special committee of the Planters Bank Board to be appointed
to work with bank counsel and solicit acquisition offers from other financial
institutions that would be interested in acquiring Planters Bank.
The special committee of the Planters Bank Board was composed of
Directors Ray Smith, William P. Dulaney and William C. Wood. Acting through
counsel for Planters Bank, the special committee, contacted approximately two
dozen regional financial institutions, including FTNC, in an effort to
determine if those financial institutions would be interested in making an
offer to acquire Planters Bank. Hal D. Crenshaw, an FTB Vice President was
contacted on January 21, 1994. The special committee limited its inquiries
only to those financial institutions that had securities listed on a major
stock exchange or on the over the counter market. As a result of that process,
the special committee received written acquisition proposals from four large
regional financial institutions, including FTNC and the other institution that
originally met with the Executive Committee and certain of the directors in
early January 1994.
FTNC and the two other large financial institutions that submitted
written acquisition proposals made separate presentations to the full Planters
Bank Board. FTNC's presentation was made on February 15, 1994, by Ralph Horn,
President and Chief Operating Office of FTNC, John C. Kelley, Jr.,
President-Memphis Banking Group of FTB, and Elbert L. Thomas, Jr., Senior Vice
President of FTNC. Following those presentations, each of the four
institutions that had made written acquisition proposals was asked to submit
final proposals for review and action by the Planters Bank Board. On March 2,
1994, Messrs. Smith, Wood and Delaney met with Messrs. Horn, Kelley and Thomas
in Memphis. On March 8, 1994, the Planters Bank Board met and reviewed each of
the four written offers received and, based on the offer submitted by FTNC,
instructed the special committee to pursue negotiations for a definitive
agreement with FTNC. A confidentiality agreement was then executed and was
followed by the exchange of information and discussions between FTNC and
Planters Bank relative to the proposed transaction. On March 28, 1994, the
Planters Bank Board met for purposes of considering and acting upon the
proposed Merger Agreement between FTNC and Planters Bank. During that meeting,
Planters Bank heard a presentation from and received the written opinion of
Southard setting forth that the terms of the Merger Agreement were fair to the
holders of Planters Bank Common Stock from a financial point of view. Based
upon the opinion of Southard, the recommendation of the special committee that
the Merger Agreement be approved, and other factors as described below, the
Planters Bank Board
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unanimously approved the Merger Agreement at its meeting on March 28, 1994.
The report of Southard is described below in the section entitled "Opinion of
Financial Adviser."
At a special meeting held on March 29, 1994, the FTNC Board
unanimously approved the Merger Agreement with one FTNC director abstaining
because of an ownership interest by his spouse in Planters Bank Common Stock.
Reasons for the Merger. In reaching its determination that the Merger
and Merger Agreement are fair to, and in the best interest of, Planters Bank
and its shareholders, the Planters Bank Board consulted with its advisers, as
well as with Planters Bank management, and considered a number of factors,
including, without limitation, the following:
a. The Planters Bank Board's familiarity with and review of
Planters Bank's business, operations, earnings and financial condition and
future capital requirements;
b. The Planters Bank Board's belief that the terms of the Merger
Agreement are attractive in that the Merger Agreement allows Planters Bank
shareholders to become shareholders in FTNC, an institution which is the
largest bank holding company headquartered in the area, whose stock is traded
over NASDAQ's National Market System, and the recent earnings performance of
FTNC;
c. FTNC's wide range of banking products and services and its
dividend payment history;
d. The Planters Bank Board's belief, based upon analysis of the
anticipated financial effects of the Merger, that upon consummation of the
Merger, FTNC and its banking subsidiaries would be well capitalized
institutions, the financial positions of which would be well in excess of all
applicable regulatory capital requirements;
e. The current and prospective economic and regulatory
environment and competitive constraints facing the banking industry and
financial institutions in Planters Bank's market area;
f. The recent business combinations involving financial
institutions, either announced or completed, during the past twelve months in
the Unites States, the State of Mississippi and contiguous states and the
effect of such combinations on competitive conditions in Planters Bank's market
area;
g. The Planters Bank Board's belief that, in light of the reasons
discussed above, FTNC was the most attractive choice as a long term affiliation
partner of Planters Bank; and
h. The expectation that the Merger will generally be a tax-free
transaction to Planters Bank and its shareholders. (See "Certain Federal
Income Tax Consequences" ).
The Planters Bank Board did not assign any specific or relative weight
to the foregoing factors in their considerations.
OPINION OF FINANCIAL ADVISER
Planters Bank retained Southard to render its opinion as to the
fairness, from a financial point of view, to the holders of Planters Bank
Common Stock of the consideration to be paid in the Merger. In connection with
this engagement, Southard evaluated the financial terms of the Merger, but was
not asked
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<PAGE> 23
to, and did not, recommend the specific ratio of exchange between FTNC and
Planters Bank common stocks and did not assist in the Merger negotiations. The
ratio of exchange was determined by the FTNC and Planters Bank Boards of
Directors after arm's length negotiations. Planters Bank did not place any
limitations of the scope of Southard's investigation or review.
Southard is a financial valuation consulting firm, specializing in the
valuation of closely-held companies and financial institutions. Since its
founding in 1987, Southard has provided approximately 1,000 valuation opinions
for clients in 40 states. Further, Southard provides valuation services for
approximately 100 financial institutions annually.
Southard provided the Planters Bank Board with a fairness opinion
letter and supporting documentation and presented its conclusions at a Special
Meeting of the Board of Directors. The full text of the opinion letter of
Southard, dated March 28, 1994, which sets forth certain assumptions made,
matters considered, and limitations on the review performed, is attached hereto
as Appendix "B" and is incorporated herein by reference. The summary of the
opinion of Southard set forth in this Proxy Statement- Prospectus is qualified
in its entirety by reference to the opinion.
In arriving at its opinion, Southard conducted interviews with
officers of FTNC and Planters Bank, and reviewed the documents indicated in
the fairness letter. Southard did not independently verify the accuracy and/or
the completeness of the financial and other information reviewed in rendering
its opinion. Southard did not, and was not requested to, solicit third party
indications of interest in acquiring any or all the assets of Planters Bank.
In connection with rendering its opinion, Southard performed a variety
of financial analyses, which are summarized below. Southard believes that its
analyses must be considered as a whole and that considering only selected
factors could create an incomplete view of the analyses and the process
underlying the opinion. The preparation of a fairness opinion is a complex
process involving subjective judgments and is not susceptible to partial
analyses or summary description. In its analyses, Southard made numerous
assumptions, many of which are beyond the control of Planters Bank and FTNC.
Any estimates contained in the analyses prepared by Southard are not
necessarily indicative of future results or values, which may vary
significantly from such estimates. Estimates of value of companies do not
purport to be appraisals or necessarily reflect the prices at which companies
or their securities may actually be sold. None of the analyses performed by
Southard was assigned a greater significant than any other.
Dividend Yield Analysis. In evaluating the impact of the proposed
Merger on the shareholders of Planters Bank, Southard reviewed the dividend
paying histories of Planters Bank and FTNC. Based upon this review, it is
reasonable to expect that the shareholders of Planters Bank, in total, will
receive dividends at or above the level currently paid by Planters Bank, after
the Merger is completed (defined as post Merger combined dividends per share
times the exchange ratio). Based upon 1993 dividend payments for FTNC and
Planters Bank and an exchange ratio of 6.0 shares of FTNC Common Stock for each
share of Planters Bank Common Stock, the shareholders of Planters Bank will see
an increase in dividends of 125.0%.
Earnings Yield Analysis. In evaluating the impact of the proposed
Merger on the shareholders of Planters Bank, Southard determined that, based
upon exchange ratio of 6.0 shares of FTNC Common Stock for each share of
Planters Bank Common Stock, the shareholders of Planters Bank would have seen
an increase of 125.2% in their share of earnings based upon reported 1993
earnings of FTNC and
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<PAGE> 24
Planters Bank. The analysis also suggests expected higher earnings yields for
Planters Bank shareholders in subsequent years if the Merger is consummated.
Book Value Analysis. In evaluating the impact of the proposed Merger
on the shareholders of Planters Bank, Southard determined that the shareholders
of Planters Bank would have seen a substantial increase in the book value of
their investment had the Merger been consummated prior to year-end 1993.
Reported book value of Planters Bank at December 31, 1993 was $97.50 per share.
Reported book value of FTNC at December 31, 1993 was $23.97 per share. Had the
Merger been consummated prior to December 31, 1993, each former Planters Bank
share would have book value of $143.82 (FTNC year-end 1993 book value of $23.97
per share times six shares). This represents 147.5% of Planters Bank book
value at year-end.
Analysis of Alternatives. In evaluating the fairness of the proposed
Merger to the shareholders of Planters Bank, Southard reviewed with management
other offers received for the purchase/merger of Planters Bank. Further,
Southard considered recent public market merger pricing information.
Analysis of Market Transactions. Based upon the Merger terms,
Planters Bank shareholders will receive 240% of year-end 1993 book value per
share, and 20.62x reported 1993 earnings. Based upon the review conducted by
Southard, the pricing for Planters Bank in the Merger is above the multiples
seen in recent bank acquisitions.
Fundamental Analysis. Southard reviewed the financial characteristics
of Planters Bank and FTNC with respect to profitability, capital ratios,
liquidity, asset quality, and other factors. Southard compared Planters Bank
and FTNC to a universe of publicly traded banks and bank holding companies and
to peer groups prepared by the Federal Financial Institutions Examination
Council (FFIEC). Southard found that the post-Merger combined entity will have
capital ratios and profitability ratios near those of the public peer group.
Liquidity. Unlike Planters Bank stock, shares of FTNC Common Stock to
be received in the Merger will be registered with the SEC, and FTNC Common
Stock is actively traded on the NASDAQ market. Further, except in the case of
officers, directors, and certain large shareholders of Planters Bank
("affiliated parties"), FTNC shares received will be freely tradeable with no
restrictions.
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<PAGE> 25
For rendering its opinion, Southard received a fee of $6,000, plus
reasonable out-of-pocket expenses. Southard has never been previously engaged
by Planters Bank or FTNC. Neither Southard nor its principals owns an
interest in the securities of Planters Bank or FTNC.
TERMS OF THE MERGER
At the Effective Date, Interim Bank, a newly chartered and wholly
owned subsidiary of FTNC formed for the purpose of effecting the Merger, will
merge with and into Planters Bank, with Planters Bank being the surviving
entity. As a result of the Merger, Planters Bank will become a wholly-owned
subsidiary of FTNC and will continue to operate after the Merger under the same
name and with the same Charter and Bylaws as were in effect immediately prior
to the Merger. The directors and officers of Planters Bank after the Merger
will remain the same as prior to the Merger without any prejudice to the rights
of FTNC as Planters Bank's sole shareholder. Upon consummation of the Merger,
each share of Planters Bank Common Stock outstanding immediately prior to the
Effective Date (other than shares held directly or indirectly by FTNC or any
subsidiary of FTNC, except in a fiduciary capacity or in satisfaction of a debt
previously contracted, and shares held in the treasury of Planters Bank, which
shares shall be canceled, retired and cease to exist by virtue of the Merger
and without any payment made in respect thereof) will be converted into the
right to receive shares of FTNC Common Stock. Each share of Planters Bank
Common Stock issued and outstanding at the Effective Date will become and be
converted into the right to receive the number of shares of FTNC Common Stock
equal to the conversion number ("Conversion Number") determined as follows:
The Conversion Number shall be equal to the quotient of
$234.00 divided by the FTNC Common Stock Average Price (as
defined below); provided, however, if the FTNC Common Stock
Average Price is greater than $42 per share, then $42 will be
used, and if it is less than $34 per share, the $34 shall be
used; provided further, if the FTNC Common Stock Average Price
is less than $34, either FTNC or Planters Bank may terminate
the Merger Agreement, subject to FTNC's right to require
Planters Bank to
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<PAGE> 26
consummate the Merger using the actual FTNC Common Stock
Average Price. "FTNC Common Stock Average Price" means the
average of the closing prices of the FTNC Common Stock as
reported on the NASDAQ/NMS for the twenty (20) business days
(the "Calculation Period") immediately prior to the tenth
(10th) calendar day preceding the Effective Date. A business
day shall be a day on which the New York Stock Exchange is
generally open for trading.
If the Effective Date had been ___________________, 1994, the
Conversion Number would have been ___________, and the number of shares of FTNC
Common Stock exchanged for all outstanding shares of Planters Bank Common Stock
would have been ___________.
Any shares of Planters Bank Common Stock held directly or indirectly
by Planters Bank other than in a fiduciary capacity or in satisfaction of a
debt previously contracted will be cancelled and retired and will cease to
exist as of the Effective Date of the Merger and no payment will be made with
respect thereto. No fractional shares of FTNC Common Stock will be issued in
connection with the Merger. In lieu of fractional shares, FTNC will make a
cash payment equal to the fractional interest which a Planters Bank shareholder
would otherwise receive multiplied by the FTNC Common Stock Average Price. If
prior to the Effective Date the outstanding shares of FTNC Common Stock are
increased, decreased, changed into or exchanged for a different number or class
of shares through a change in FTNC's capitalization, then the Conversion Number
will be adjusted accordingly.
Each share of Interim Bank common stock outstanding immediately prior
to the Merger shall by virtue of the Merger be converted into and exchanged for
one share of Planters Bank Common Stock, as the surviving corporation in the
Merger. From and after the Merger, each outstanding certificate theretofore
representing shares of Interim Bank common stock shall be deemed to evidence
ownership of and represent the number of shares of Planters Bank Common Stock
into which such shares of Interim Bank common stock shall have been converted.
Promptly after the Merger, Planters Bank shall issue FTNC a certificate or
certificates representing such shares of Planters Bank Common Stock in exchange
for the certificates which formerly represented shares of Interim Bank common
stock, which shall be cancelled.
EFFECTIVE DATE
The Effective Date of the Merger will be the date the certificate of
merger is filed in accordance with the MBL or on such date as the certificate
may specify. Unless otherwise mutually agreed upon by FTNC and Planters Bank,
the Effective Date will occur on the last business day of the month during
which the expiration of all applicable waiting periods in connection with
governmental approvals occurs and all conditions to the consummation of the
Merger Agreement have been satisfied or waived.
SURRENDER OF CERTIFICATES
As promptly as practicable after the Effective Date, The First
National Bank of Boston, acting in the capacity of exchange agent for FTNC (the
"Exchange Agent"), will mail to each former holder of record of Planters Bank
Common Stock a form of letter of transmittal, together with instructions for
the exchange of such holder's certificates representing shares of Planters Bank
Common Stock for certificates representing shares of FTNC Common Stock.
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<PAGE> 27
HOLDERS OF PLANTERS BANK COMMON STOCK SHOULD NOT SEND IN THEIR
CERTIFICATES UNTIL THEY RECEIVE THE LETTER OF TRANSMITTAL FORM AND INSTRUCTIONS
FROM THE EXCHANGE AGENT.
Upon surrender to the Exchange Agent of one or more certificates for
Planters Bank Common Stock together with a properly completed letter of
transmittal and any other required documents, there will be issued and mailed
to the holder of Planters Bank Common Stock surrendering such items a
certificate or certificates representing the number of shares of FTNC Common
Stock to which such holder is entitled and, where applicable, a check for the
amount representing any fractional share determined in the manner described
above.
No dividend or other distribution payable after the Effective Date
with respect to FTNC Common Stock will be paid to the holder of any
unsurrendered Planters Bank certificate until the holder properly surrenders
such certificate(s) together with all required documents, at which time the
holder will be entitled to receive all previously withheld dividends and
distributions, without interest.
After the Effective Date, there will be no transfers on Planters
Bank's stock transfer books of shares of Planters Bank Common Stock which were
issued and outstanding at the Effective Date and converted pursuant to the
Merger into the right to receive FTNC Common Stock. If certificates
representing shares of Planters Bank Common Stock are presented for transfer
after the Effective Date, they will be returned to the presenter together with
a form of letter of transmittal and exchange instructions.
Neither FTNC nor Planters Bank nor any other person will be liable to
any former holder of Planters Bank Common Stock for any amount properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
If a certificate for Planters Bank Common Stock has been lost, stolen
or destroyed, FTNC will issue the consideration properly payable in accordance
with the Merger Agreement upon receipt of appropriate evidence as to such loss,
theft or destruction, appropriate evidence as to the ownership of such
certificate by the claimant, and appropriate and customary indemnification
including, when appropriate, the posting of a bond.
CONDITIONS TO CONSUMMATION OF THE MERGER
The respective obligations of FTNC and Planters Bank to effect the
Merger are subject to the satisfaction of the following conditions prior to the
Effective Date: (a) approval of the Merger Agreement and the transactions
contemplated thereby by the affirmative vote of the holders of two-thirds (2/3)
of the outstanding shares of Planters Bank Common Stock entitled to vote
thereon and by FTNC as sole shareholder of Interim Bank; (b) receipt by the
Planters Bank Board of a fairness opinion from its investment banker, which has
been received; (c) receipt of all regulatory consents and approvals necessary
to consummate the transactions contemplated by the Merger Agreement including
the Federal Reserve Board, the Mississippi Commissioner, and the FDIC and the
expiration of any statutory waiting periods (provided, however, that no such
consent or approval referred to herein will be deemed to have been received if
it includes any conditions or requirements which would reduce the benefits of
the transactions contemplated by the Merger Agreement to such a degree that
FTNC or Planters Bank would not have entered into the Merger Agreement had such
conditions or requirements been known at the date thereof); (d) the
satisfaction of all other requirements prescribed by law necessary to the
consummation of the
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<PAGE> 28
transactions contemplated by the Merger Agreement; (e) neither FTNC nor
Planters Bank is subject to any order, decree or injunction of a court or
agency of competent jurisdiction which enjoins or prohibits the consummation of
the Merger; (f) no statute, rule, regulation, order, injunction, or decree has
been enacted, entered, promulgated or enforced by any governmental authority
which prohibits, restricts or makes illegal consummation of the Merger; (g) the
Registration Statement of which this Proxy Statement-Prospectus forms a part
has become effective and no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that purpose has
been initiated or threatened by the Securities & Exchange Commission; and (h)
receipt by each party from counsel of a legal opinion to the effect that the
Merger qualifies as a tax-free reorganization under the provisions of Section
368(a) of the Internal Revenue Code.
The obligations of FTNC to effect the Merger are further subject to
the satisfaction (or waiver by FTNC) of the following conditions: (a) FTNC
will have received from Planters Bank's independent certified public
accountants certain customary letters with respect to certain financial
information of Planters Bank; (b) FTNC will have received a customary legal
opinion, dated the date of closing, from counsel to Planters Bank; (c) each of
the representations, warranties and covenants of Planters Bank set forth in the
Merger Agreement will, in all material respects, be true on, or complied with
by, the Effective Date and FTNC will have received a certificate signed by the
President of Planters Bank to such effect [provided, however, that any effect
on Planters Bank as a result of any action taken by Planters Bank pursuant to
its obligations under the Merger Agreement to, consistent with GAAP, modify and
change its loan, litigation and real estate valuation policies and practices
(including loan classifications and levels of reserves) (see "Conduct of
Business Pending the Merger") will be disregarded for purposes of determining
the truth or correctness of any representation or warranty of Planters Bank and
for purposes of determining whether any conditions are satisfied]; (d) FTNC
will have received all necessary state securities laws and "Blue Sky" permits;
(e) FTNC will have received a letter dated as of the Effective Date from its
independent certified public accountants to the effect that the Merger will
qualify for pooling-of-interests accounting treatment if closed and consummated
in accordance with the Merger Agreement; (f) no litigation or proceeding will
be pending against either FTNC or Planters Bank or any of their subsidiaries by
any governmental agency seeking to prevent consummation of the transactions
contemplated by the Merger Agreement nor is any litigation or proceeding
pending which in the reasonable judgment of the CEO of Planters Bank is likely
to have a material adverse effect (defined as an amount exceeding $250,000) on
Planters Bank; (g) Planters Bank's audited financial statements confirm that
its unaudited financial statements fairly present its financial position and
results of operations; and (h) each director, executive officer and other
affiliate of Planters Bank will have delivered to FTNC a written agreement
satisfactory to FTNC providing, among other matters, that such person will not
sell or otherwise dispose of any shares of FTNC Common Stock received in the
Merger except in compliance with applicable securities laws and will not sell,
pledge, transfer or otherwise dispose of or take any action to reduce his risk
with respect to any shares of Planters Bank Common Stock or FTNC Common Stock
during any period when such sale, pledge, transfer, disposition or action would
disqualify the Merger for pooling-of-interests accounting treatment.
The obligations of Planters Bank to effect the Merger are further
subject to the satisfaction (or waiver by Planters Bank) of the following
conditions: (a) Planters Bank will have received from FTNC's independent
certified public accountants certain customary letters with respect to certain
financial information of FTNC; (b) Planters Bank will have received a customary
legal opinion, dated the date of closing, from counsel to FTNC; (c) each of the
representations, warranties and covenants of FTNC set forth in the Merger
Agreement will, in all material respects, be true on, or complied with by, the
Effective Date and Planters Bank will have received a certificate signed by the
President or Chief
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<PAGE> 29
Financial Officer of FTNC to such effect; and (d) no litigation or proceeding
will be pending against either FTNC or Planters Bank or any of their
subsidiaries by any governmental agency seeking to prevent consummation of the
transactions contemplated by the Merger Agreement nor is any litigation or
proceeding pending which in the reasonable judgment of the President and Chief
Financial Officer of FTNC is likely to have a material adverse effect on FTNC.
No assurance can be provided as to when, if ever, the regulatory
consents and approvals necessary to consummate the Merger will be obtained (or,
if so obtained, that such consents and approvals will not contain conditions or
requirements which cause such approvals to fail to satisfy the conditions to
the Merger set forth in the Merger Agreement) or whether all of the other
conditions precedent to the Merger will be satisfied or waived by the party
permitted to do so. See "Regulatory Approvals." If the Merger is not effected
on or before March 29, 1995, the Merger Agreement may be terminated, and the
Merger abandoned, by a vote of a majority of the Board of Directors of either
FTNC or Planters Bank, unless the failure to effect the Merger by such date is
due to the breach of the Merger Agreement by the party seeking to terminate the
Merger Agreement.
REGULATORY APPROVALS
The Merger is subject to prior approval by the Federal Reserve Board
under Section 3 of the Bank Holding Company Act of 1956, as amended (the
"BHCA"), which requires that the Federal Reserve Board take into consideration,
among other factors, the financial and managerial resources and future
prospects of the institutions and the convenience and needs of the communities
to be served. Application for such approval has been filed with the Federal
Reserve Board. The BHCA prohibits the Federal Reserve Board from approving the
Merger if it would result in a monopoly or be in furtherance of any combination
or conspiracy to monopolize or to attempt to monopolize the business of banking
in any part of the United States, or if its effect in any section of the
country may be substantially to lessen competition or to tend to create a
monopoly, or if it would in any other manner be a restraint of trade, unless
the Federal Reserve Board finds that the anticompetitive effects of the Merger
are clearly outweighted in the public interest by the probable effect of the
transaction in meeting the convenience and needs of the communities to be
served. The Federal Reserve Board has the authority to deny an application if
it concludes that the combined organization would have an inadequate capital
position or if the acquiring organization does not meet the requirements of the
Community Reinvestment Act of 1977. Under applicable regulations, the Merger
may not be consummated until thirty days after Federal Reserve Board approval
and the expiration of any other applicable waiting periods.
The formation of Interim Bank and the Merger are also subject to
approval by the FDIC and the Mississippi Commissioner. Applications for such
approvals have been filed. Under Section 18(c) of the Federal Deposit
Insurance Act (the "Bank Merger Act"), the Merger may not be consummated until
the 30th calendar day after the FDIC's approval, during which time the United
States Department of Justice may challenge the Merger on antitrust grounds.
The commencement of an antitrust action would stay the effectiveness of the
FDIC's approval unless a court specifically orders otherwise.
The Merger cannot proceed in the absence of the requisite regulatory
approvals. See "Conditions to Consummation of the Merger" and "Waiver and
Amendment; Termination."
THERE CAN BE NO ASSURANCE THAT THE REGULATORY AUTHORITIES DESCRIBED
ABOVE WILL APPROVE THE MERGER, AND IF THE MERGER IS APPROVED, THERE CAN BE NO
ASSURANCE AS TO THE DATE OF SUCH APPROVAL. THERE CAN ALSO BE NO ASSURANCE THAT
ANY SUCH APPROVALS WILL NOT CONTAIN A CONDITION OR REQUIREMENT
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WHICH CAUSES SUCH APPROVALS TO FAIL TO SATISFY THE CONDITIONS TO CONSUMMATION
OF THE MERGER SET FORTH IN THE MERGER AGREEMENT. THERE CAN LIKEWISE BE NO
ASSURANCE THAT THE DEPARTMENT OF JUSTICE WILL NOT CHALLENGE THE MERGER, OR IF
SUCH A CHALLENGE IS MADE, AS TO THE RESULT THEREOF.
CONDUCT OF BUSINESS PENDING MERGER
The Merger Agreement contains certain restrictions on the conduct of
Planters Bank's business pending consummation of the Merger. In particular,
the Merger Agreement provides that, without the prior written consent of FTNC,
Planters Bank may not, among other things, (a) make, declare or pay any
dividend on the Planters Bank Common Stock for a quarter in 1994 greater than
the amount paid for the corresponding quarter in 1993 or declare or make any
distribution on, or directly or indirectly combine, redeem, reclassify or
purchase or otherwise acquire any shares of its capital stock (other than in a
fiduciary capacity or in respect of a debt previously contracted in good faith)
or authorize the creation or issuance of or issue or sell any additional shares
of Planters Bank Common Stock, or any options, calls or commitments relating to
such stock; or (b) merge or consolidate or permit any significant subsidiary to
merge or consolidate with any other entity or engage in any similar
transactions. In addition, without the prior written consent of FTNC, which
will not be unreasonably withheld, Planters Bank will not (a) pay any bonus to,
or increase the rate of compensation of, any of its directors, officers or
employees except in the ordinary course of business consistent with past
practice; (b) enter into or modify or permit any subsidiary to enter into or
modify (except as may be required by law and except for renewal of any existing
plan in the ordinary course of business consistent with past practice) any
employee benefit plan covering any of Planters Bank's directors, officers or
other employees; (c) except as may be required to, consistent with GAAP, modify
and change its loan, litigation and real estate valuation policies and
practices so as to be applied consistently on a mutually satisfactory basis
with those of FTNC, substantially modify the manner in which it has conducted
its business, taken as a whole, or amend its Articles of Incorporation or
Bylaws; (d) except for disposition of loans and cash equivalent assets in the
ordinary course of banking business, sell, dispose of or discontinue or permit
any subsidiary to sell, dispose or discontinue any of its business, assets
(including investment securities) or property; (e) except for the acquisition
of loans, investment securities and cash equivalent assets in the ordinary
course of its banking business, acquire any assets or business or permit any
subsidiary to acquire any assets or business that is material to such party;
(f) take any other action or permit any subsidiary to take any action not in
ordinary course of business; or (g) directly or indirectly agree to take any of
the foregoing actions.
NO SOLICITATION
Planters Bank has agreed with FTNC and FTNC has agreed with Planters
Bank in the Merger Agreement that neither it nor any of its subsidiaries will
solicit or encourage inquiries or proposals with respect to, or, subject to the
fiduciary duties of its directors, furnish any information relating to or
participate in any negotiations or discussions concerning, any acquisition or
purchase of all or a material portion of its assets (whether owned by it
directly or owned by any of its subsidiaries), or of a substantial equity
interest in, it or any business combination with it or any of its subsidiaries
other than, in the case of FTNC, a business combination in which FTNC or a
company which is its subsidiary following the transaction is as a practical
matter the surviving corporation. Planters Bank will notify FTNC immediately
if any such inquiries or proposals are received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated with, it or any of its subsidiaries; and it has instructed its
officers, directors, agents, advisers and affiliates to comply with the same
restrictions.
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WAIVER AND AMENDMENT; TERMINATION
Prior to the Effective Date, any provision of the Merger Agreement may
be waived by the party benefitted by the provision or amended or modified
(including the structure of the transaction) by an agreement in writing
approved by the FTNC and Planters Bank Boards (to the extent allowed by law),
provided that after the vote of the shareholders of Planters Bank, Article I(B)
of the Merger Agreement, which concerns conversion of the Planters Bank Common
Stock and the Conversion Number, may not be amended or revised.
The Merger Agreement may be terminated at any time prior to the
Effective Date, either before or after its approval by the shareholders of
Planters Bank, as follows: (a) by the mutual consent of FTNC and Planters
Bank; (b) by either FTNC or Planters Bank in the event of a failure by the
shareholders of Planters Bank to approve the Merger Agreement; (c) by the
non-breaching party in the event a material breach of the Merger Agreement is
not cured or curable within 60 days after written notice of such breach is
given to the breaching party; (d) by either FTNC or Planters Bank in the event
that the Merger has not been consummated by March 29, 1995, unless the failure
to consummate the Merger is due to the breach of the Merger Agreement by the
party seeking to terminate the Merger Agreement; (e) by either FTNC or Planters
Bank if the FTNC Common Stock Average Price is less than $34.00 per share,
adjusted accordingly for stock splits, stock dividends, and other changes in
FTNC's capitalization, provided written notice (a "termination notice") is
delivered to the other party within three business days after the last day of
the Calculation Period; provided further, FTNC has the right to require
Planters Bank to consummate the Merger using the actual FTNC Common Stock
Average Price by giving written notice to Planters Bank within 3 business days
of receipt of a Planters Bank termination notice; (f) by FTNC in certain
situations specified in the Merger Agreement which did not occur; and (g) by
FTNC if it determines that adequate documentation concerning certain large
loans has not been provided by Planters Bank within a certain time period upon
request by FTNC. The parties presently are discussing and expect to execute an
amendment to the Merger Agreement which would extend the time period until
June 16, 1994.
Except as set forth below, in the event of the termination of the
Merger Agreement by either FTNC or Planters Bank, as provided above, the Merger
Agreement will become void, and there will be no liability on the part of
either FTNC or Planters Bank or their respective officers or directors, except
that such termination will be without prejudice to the rights of any party
arising out of a willful breach by any other party of any covenant or a willful
misrepresentation contained in the Merger Agreement. If the Merger is not
consummated and both an Initial Triggering Event (as defined below) and a
Subsequent Triggering Event (as defined below) occur prior to a Termination
Event (as defined below), Planters Bank is required to pay to FTNC liquidated
damages in the amount of $950,000.
For purposes hereof the following terms have the indicated meanings:
"Initial Triggering Event" shall mean any of the following
events or transactions occurring after March 29, 1994:
(1) Planters Bank shall have entered into an
agreement to engage in an Acquisition Transaction (as
hereinafter defined) with any person (other than FTNC or a
subsidiary of FTNC), or the Planters Bank Board shall have
recommended that the shareholders of Planters Bank approve or
accept any Acquisition Transaction (other than that
contemplated by the Merger Agreement). The term "Acquisition
Transaction" shall mean (x) a merger or consolidation, or any
similar transaction, involving Planters Bank, (y) a purchase,
lease or other acquisition of all or any substantial part of
the assets of Planters Bank, or (z) a purchase or other
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<PAGE> 32
acquisition (including by way of merger, consolidation, share
exchange or otherwise) of securities representing 10% or more
of the voting power of Planters Bank. The term "person" for
purposes of this Paragraph shall have the meaning assigned
thereto in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and the rules and
regulations thereunder;
(2) Any person (other than FTNC, a subsidiary of
FTNC or any subsidiary acting under any employee benefit plan
for FTNC or any of its subsidiaries) shall have acquired
beneficial ownership or the right to acquire beneficial
ownership of 10% or more of the outstanding shares of the
Planters Bank Common Stock (the term "beneficial ownership"
having the meaning assigned thereto in Section 13(d) of the
Exchange Act, and the rules and regulations thereunder);
(3) Any person (other than FTNC or a subsidiary
of FTNC) shall have made a proposal (in writing or orally) to
Planters Bank or any one or more of its shareholders owning
ten percent (10%) or more (singly or in the aggregate) of the
outstanding shares of Planters Bank Common Stock that results
in or is a part of an Acquisition Transaction;
(4) After a proposal is made by any person (other
than FTNC or a subsidiary of FTNC) to Planters Bank or its
shareholders to engage in an Acquisition Transaction, Planters
Bank shall have breached any covenant or obligation contained
in the Merger Agreement and such breach would entitle FTNC to
terminate the Merger Agreement (without regard to the cure
periods provided for therein) and such breach shall not have
been cured within (7) days; or
(5) Any person (other than FTNC or a subsidiary
of FTNC), shall have filed an application or notice with the
Board of Governors of the Federal Reserve System, or other
federal or state bank regulatory authority, which application
or notice has been accepted for processing, for approval to
engage in an Acquisition Transaction.
"Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after March 29, 1994:
(1) The acquisition by any person of beneficial
ownership of 25% or more of the then outstanding Planters Bank
Common Stock; or
(2) The occurrence of the Initial Triggering
Event described in clause (1) of the definition of "Initial
Triggering Event", except that the percentage referenced in
clause (z) shall be 25%.
"Termination Event" shall mean each of the following:
(1) The Effective Date of the Merger;
(2) Termination of the Merger Agreement in
accordance with the provisions thereof if
such termination occurs prior to the
occurrence of an Initial Triggering Event; or
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<PAGE> 33
(3) The passage of 12 months after termination of
the Merger Agreement if such termination
follows the occurrence of an Initial
Triggering Event.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Planters Bank's management and the Planters Bank
Board have certain interests in the Merger that are in addition to their
interests as shareholders of Planters Bank generally. The Planters Bank Board
was aware of these interests and considered them, among other matters, in
approving the Merger Agreement and the transactions contemplated thereby.
Indemnification. Pursuant to the Merger Agreement, FTNC has agreed,
among other things, to (a) indemnify any person who is, has been or becomes,
prior to the Effective Date, a director, officer, employee, fiduciary or agent
of Planters Bank or any of its subsidiaries against any claims, based upon or
arising out of or pertaining to the Merger Agreement or any of the transactions
contemplated thereby, whether asserted or threatened; and (b) maintain the
indemnification with respect to matters occurring before the Effective Date for
such persons provided by Planters Bank's Articles of Incorporation and Bylaws
for a period of not less than 3 years following the Effective Date.
Employment After The Merger. FTNC has had conversations with Messrs.
Wood and Knox concerning their continued employment after the Merger. Although
no written employment agreements have been entered into as of the date of this
Proxy Statement- Prospectus, the parties presently contemplate that written
agreements will be executed, which will provide for an annual compensation of
approximately $80,000 and $49,000, respectively, exclusive of standard FTB
employee benefits and participation in FTNC's existing employee plans. In
addition, it is contemplated that the agreements will contain covenants not to
compete.
NO SHAREHOLDERS' DISSENTERS' RIGHTS
Under applicable Mississippi law, no dissenters' rights of appraisal
exist for the shareholders of Planters Bank Common Stock.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The federal income tax discussion set forth below represents a summary
of the opinion of Heiskell, Donelson, Bearman, Adams, Williams & Caldwell, a
Professional Corporation, counsel to FTNC. It may not be applicable to a
shareholder who acquired his shares of Planters Bank Common Stock pursuant to
the exercise of employee stock options or rights or otherwise as compensation.
Planters Bank shareholders are urged to consult their own tax advisers as to
the specific tax consequences to them of the Merger, including the
applicability and effect of federal, state, local and other tax laws.
General. It is intended that for federal income tax purposes the
Merger will be treated as a reorganization within the meaning of Section 368(a)
of the Code, and that, accordingly, (a) no gain or loss will be recognized by
either FTNC or Planters Bank as a result of the Merger, (b) no gain or loss
will be recognized by the Planters Bank shareholders upon the receipt of FTNC
Common Stock in exchange for Planters Bank Common Stock in connection with the
Merger (except as discussed below with respect to cash received in lieu of a
fractional share interest in FTNC Common Stock); (c) the tax basis of the FTNC
Common Stock to be received by the Planters Bank shareholders in connection
with
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<PAGE> 34
the Merger will be the same as the basis in the Planters Bank Common Stock
surrendered in exchange therefor (reduced by any amount allocable to a
fractional share interest in which cash is received); and (d) the holding
period of the FTNC Common Stock to be received by the Planters Bank
shareholders in connection with the Merger will include the holding period of
the Planters Bank Common Stock surrendered in exchange therefor, provided that
the Planters Bank Common Stock is held as a capital asset at the Effective
Date. Consummation of the Merger is dependent upon, among other conditions,
receipt by FTNC and Planters Bank of an opinion of counsel to FTNC, dated as of
the Effective Date, substantially to this effect.
Consequences of Receipt of Cash in Lieu of Fractional Shares. A
Planters Bank shareholder who is entitled to receive cash in lieu of a
fractional share interest of FTNC Common Stock in connection with the Merger
will recognize, as of the Effective Date, gain (or loss) equal to the
difference between such cash amount and the shareholder's basis in the
fractional share interest. Any gain (or loss) recognized will be capital gain
(or loss) if the Planters Bank Common Stock is held by such shareholder as a
capital asset at the Effective Date.
ACCOUNTING TREATMENT
Consummation of the Merger is conditioned upon the receipt by FTNC of
a letter from FTNC's independent public accountants to the effect that the
Merger qualifies for pooling-of-interests accounting treatment if closed and
consummated in accordance with the terms of the Merger Agreement. Under the
pooling-of-interests method of accounting, the historical basis of the assets
and liabilities of FTNC and Planters Bank will be combined at the Effective
Date and carried forward at their previously recorded amounts and the
shareholders' equity accounts of Planters Bank and FTNC will be combined on
FTNC's consolidated balance sheet. FTNC does not intend to restate
retroactively income and other financial statements of FTNC issued after
consummation of the Merger to reflect the consolidated operations of FTNC and
Planters Bank as if the Merger had taken place prior to the periods covered by
such financial statements because the transaction is not material to FTNC.
In order for the Merger to qualify for pooling-of-interests accounting
treatment, substantially all (90% or more) of the outstanding shares of
Planters Bank Common Stock must be exchanged for FTNC Common Stock. Planters
Bank has agreed to use its best efforts to cause the Merger to qualify for
pooling-of-interests treatment. See "Resale of FTNC Common Stock."
The unaudited pro forma financial information contained in this Proxy
Statement--Prospectus has been prepared using the pooling-of-interests
accounting method to account for the Merger. See "Summary -- Equivalent and
Pro Forma Share Data," "--Selected Financial Data and Ratios" and "Index to Pro
Forma Financial Information."
EXPENSES
The Merger Agreement provides, in general, that FTNC and Planters Bank
will each pay its own expenses in connection with the Merger Agreement and the
transactions contemplated thereby, including fees and expenses of brokers,
finders, financial consultants, investment bankers, accountants and counsel,
except that FTNC and Planters Bank will divide equally the costs of printing
this Proxy Statement-Prospectus and any other documents required in connection
with the Merger. In addition, Planters Bank has agreed that its transaction
expenses will not exceed $125,000. See "Waiver and Amendment; Termination."
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RESALE OF FTNC COMMON STOCK
The shares of FTNC Common Stock issued pursuant to the Merger
Agreement will be freely transferable under the Securities Act except for
shares issued to any shareholder who may be deemed to be an "affiliate" of
Planters Bank for purposes of Rule 145 under the Securities Act as of the date
of the Special Meeting. Affiliates may not sell their shares of Planters Bank
Common Stock acquired in connection with the Merger except pursuant to an
effective registration statement under the Securities Act covering such shares
or in compliance with Rule 145 promulgated under the Securities Act or another
applicable exemption from the registration requirements of the Securities Act.
Persons who may be deemed to be affiliates of Planters Bank generally include
individuals or entities that control, are controlled by or are under common
control with Planters Bank and may include certain officers and directors of
Planters Bank as well as principal shareholders of Planters Bank.
Planters Bank has agreed in the Merger Agreement to use its best
efforts to cause each director, executive officer and other person who is an
affiliate of Planters Bank to enter into and deliver to FTNC an agreement at
the time of execution of the Merger Agreement or on such later date (not later
than 40 days prior to the Effective Date) as a person becomes an affiliate
providing that such person will not, directly or indirectly, (a) sell, pledge,
transfer or otherwise dispose of shares of FTNC Common Stock to be received by
such person in the Merger except in compliance with the applicable provisions
of the Securities Act and rules and regulations thereunder, or (b) sell,
pledge, transfer or otherwise dispose of or take any action which would reduce
such person's risk with respect to shares of Planters Bank Common Stock owned
by such person or shares of FTNC Common Stock to be received by such person in
the Merger during the periods when any such sale, pledge, transfer, disposition
or action would, under GAAP or the rules, regulations or interpretations of the
SEC, disqualify the Merger for pooling-of-interests accounting treatment. Such
periods in general encompass the period commencing 30 days prior to the Merger
and ending at the time of the publication of financial results covering at
least 30 days of combined operations of FTNC and Planters Bank.
NASDAQ/NMS
FTNC Common Stock is included for quotation on the NASDAQ/NMS. The
FTNC Common Stock issued to the shareholders of Planters Bank pursuant to the
Merger Agreement will be included for quotation on the NASDAQ/NMS.
CERTAIN REGULATORY CONSIDERATIONS
GENERAL
As a bank holding company, FTNC is subject to the regulation and
supervision of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") under the Bank Holding Company Act of 1956, as amended
(the "BHCA"). Under the BHCA, bank holding companies may not in general
directly or indirectly acquire the ownership or control of more than 5% of the
voting shares or substantially all of the assets of any company, including a
bank, without the prior approval of the Federal Reserve Board. The BHCA also
restricts the types of activities in which a bank holding company and its
subsidiaries may engage. Generally, activities are limited to banking and
activities found by the Federal Reserve Board to be so closely related to
banking as to be a proper incident thereto.
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<PAGE> 36
In addition, the BHCA prohibits the Federal Reserve Board from
approving an application by a bank holding company to acquire shares of a bank
or bank holding company located outside the acquiror's principal state of
operations unless such an acquisition is specifically authorized by statute in
the state in which the bank or bank holding company whose shares are to be
acquired is located. Tennessee has adopted legislation that authorizes
nationwide interstate bank acquisitions, subject to certain state law
reciprocity requirements, including the filing of an application with and
approval of the Tennessee Commissioner of Financial Institutions. The
Tennessee Bank Structure Act of 1974 restricts the acquisition by bank holding
companies of banks in Tennessee. A bank holding company is prohibited from
acquiring any bank in Tennessee as long as banks that it controls retain 16
1/2% or more of the total deposits in individual, partnership and corporate
demand and other transaction accounts and in savings accounts and time deposits
in all federally insured financial institutions in Tennessee, subject to
certain limitations and exclusions. As of December 31, 1993, FTNC estimates
that it held approximately 12% of such deposits. Also, under this act, no bank
holding company may acquire any bank in operation for less than five years or
begin a de novo bank in any county in Tennessee with a population, in 1970, of
200,000 or less, subject to certain exceptions. Under Tennessee law, branch
banking is permitted in any county in the state.
FTNC's subsidiary banks (the "Subsidiary Banks") are subject to
supervision and examination by applicable federal and state banking agencies.
FTB is a national banking association subject to regulation and supervision by
the Comptroller of the Currency (the "Comptroller"), as is First Tennessee Bank
National Association Mississippi, which is headquartered in Southaven,
Mississippi. The remaining Subsidiary Banks, Cleveland Bank & Trust Company,
which was acquired on March 16, 1994, and Peoples and Union Bank, are Tennessee
state-chartered banks that are not members of the Federal Reserve System, and
therefore are subject to the regulations of and supervision by the Federal
Deposit Insurance Corporation (the "FDIC") as well as state banking
authorities. The Subsidiary Banks are also subject to various requirements and
restrictions under federal and state law, including requirements to maintain
reserves against deposits, restrictions on the types and amounts of loans that
may be granted and the interest that may be charged thereon and limitations on
the types of investments that may be made and the types of services that may be
offered. Various consumer laws and regulations also affect the operations of
the Subsidiary Banks. In addition to the impact of regulation, commercial
banks are affected significantly by the actions of the Federal Reserve Board as
it attempts to control the money supply and credit availability in order to
influence the economy.
PAYMENT OF DIVIDENDS
FTNC is a legal entity separate and distinct from its banking and
other subsidiaries. The principal source of cash flow of FTNC, including cash
flow to pay dividends on its stock or principal (premium, if any) and interest
on debt securities, is dividends from the Subsidiary Banks. There are
statutory and regulatory limitations on the payment of dividends by the
Subsidiary Banks to FTNC, as well as by FTNC to its shareholders.
Each Subsidiary Bank that is a national bank is required by federal
law to obtain the prior approval of the Comptroller for the payment of
dividends if the total of all dividends declared by the board of directors of
such Subsidiary Bank in any year will exceed the total of (i) its net profits
(as defined and interpreted by regulation) for that year plus (ii) the retained
net profits (as defined and interpreted by regulation) for the preceding two
years, less any required transfers to surplus. A national bank also can pay
dividends only to the extent that retained net profits (including the portion
transferred to surplus) exceed bad debts (as defined by regulation).
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<PAGE> 37
State-chartered banks are subject to varying restrictions on the
payment of dividends under applicable state laws. With respect to Cleveland
Bank & Trust Company and Peoples and Union Bank, Tennessee law imposes dividend
restrictions substantially similar to those imposed under federal law on
national banks, as described above.
If, in the opinion of the applicable federal bank regulatory
authority, a depository institution or a holding company is engaged in or is
about to engage in an unsafe or unsound practice (which, depending on the
financial condition of the depository institution or holding company, could
include the payment of dividends), such authority may require that such
institution or holding company cease and desist from such practice. The
federal banking agencies have indicated that paying dividends that deplete a
depository institution's or holding company's capital base to an inadequate
level would be such an unsafe and unsound banking practice. Moreover, the
Federal Reserve Board, the Comptroller and the FDIC have issued policy
statements which provide that bank holding companies and insured depository
institutions generally should only pay dividends out of current operating
earnings.
In addition, under the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA"), a FDIC-insured depository institution may
not pay any dividend if payment would cause it to become undercapitalized or
once it is under capitalized. See "--FDICIA."
At December 31, 1993, under dividend restrictions imposed under
applicable federal and state laws, the Subsidiary Banks, without obtaining
regulatory approvals, could legally declare aggregate dividends of
approximately $168.2 million.
The payment of dividends by FTNC and the Subsidiary Banks may also be
affected or limited by other factors, such as the requirement to maintain
adequate capital above regulatory guidelines.
TRANSACTIONS WITH AFFILIATES
There are various legal restrictions on the extent to which FTNC and
its nonbank subsidiaries can borrow or otherwise obtain credit from the
Subsidiary Banks. There are also legal restrictions on the Subsidiary Banks'
purchases of or investments in the securities of and purchases of assets from
FTNC and its nonbank subsidiaries, a bank's loans or extensions of credit to
third parties, collateralized by the securities or obligations of FTNC and its
nonbank subsidiaries, the issuance of guaranties, acceptances and letters of
credit on behalf of FTNC and its nonbank subsidiaries, and certain bank
transactions with FTNC and its nonbank subsidiaries, or with respect to which
FTNC and it nonbank subsidiaries, act as agent, participates or has a financial
interest. Subject to certain limited exceptions, a Subsidiary Bank (including
for purposes of this paragraph all subsidiaries of such Subsidiary Bank) may
not extend credit to FTNC or to any other affiliate (other than another
Subsidiary Bank) in an amount which exceeds 10% of the Subsidiary Bank's
capital stock and surplus and may not extend credit in the aggregate to such
affiliates in an amount which exceeds 20% of its capital stock and surplus.
Further, there are legal requirements as to the type, amount and quality of
collateral which must secure such extensions of credit by these banks to FTNC
or to such other affiliates. Also, extensions of credit and other transactions
between the Subsidiary Bank and FTNC or such other affiliates must be on terms
and under circumstances, including credit standards, that are substantially the
same or at least as favorable to such Subsidiary Bank as those prevailing at
the time for comparable transactions with non-affiliated companies. Also, FTNC
and its subsidiaries are prohibited from engaging in certain tie-in
arrangements in connection with any extension of credit, lease or sale of
property or furnishing of services.
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CAPITAL ADEQUACY
The Federal Reserve Board has adopted risk-based capital guidelines
for bank holding companies. The minimum guideline for the ratio of total
capital ("Total Capital") to risk-weighted assets (including certain
off-balance-sheet items, such as standby letters of credit) is 8%, and the
minimum ratio of Tier I Capital defined below) to risk--weighted assets is 4%.
At least half of the Total Capital must be composed of common stock, minority
interests in the equity accounts of consolidated subsidiaries, noncumulative
perpetual preferred stock and a limited amount of cumulative perpetual
preferred stock, less goodwill and certain other intangible assets ("Tier 1
Capital"). The remainder may consist of subordinated debt, other preferred
stock and a limited amount of loan loss reserves. At December 31, 1993, FTNC's
consolidated Tier 1 Capital and Total Capital ratios were 9.6% and 12.14%,
respectively.
In addition, the Federal Reserve Board has established minimum
leverage ratio guidelines for bank holding companies. These guidelines provide
for a minimum ratio of Tier 1 Capital to average assets, less goodwill and
certain other intangible assets (the "Leverage Ratio"), of 3% for bank holding
companies that meet certain specific criteria, including having the highest
regulatory rating. All other bank holding companies generally are required to
maintain a Leverage Ratio of at least 3%, plus an additional cushion of 100 to
200 basis points. FTNC's Leverage Ratio at December 31, 1993 was 6.55%. The
guidelines also provide that bank holding companies experiencing internal
growth or making acquisitions will be expected to maintain strong capital
positions substantially above the minimum supervisory levels without
significant reliance on intangible assets. Furthermore, the Federal Reserve
Board has indicated that it will consider a "tangible Tier 1 Capital leverage
ratio" (deducting all intangibles) and other indicia of capital strength in
evaluating proposals for expansion or new activities.
Each of the Subsidiary Banks is subject to risk-based and leverage
capital requirements similar to those described above adopted by the
Comptroller or the FDIC, as the case may be. FTNC believes that each of the
Subsidiary Banks was in compliance with applicable minimum capital requirements
as of December 31, 1993. Neither FTNC nor any of the Subsidiary Banks has been
advised by any federal banking agency of any specific minimum Leverage Ratio
requirement applicable to it.
Failure to meet capital guidelines could subject a bank to a variety
of enforcement remedies, including the termination of deposit insurance by the
FDIC, and to certain restrictions on its business. See "--FDICIA."
All of the federal banking agencies have proposed regulations that
would add an additional risk-based capital requirement based upon the amount of
an institution's exposure to interest rate risk. In addition, bank regulators
continue to indicate their desire generally to raise capital requirements
applicable to banking organizations beyond their current levels. However, the
management of FTNC is unable to predict whether and when higher capital
requirements would be imposed and, if so, at what levels and on what schedule.
HOLDING COMPANY STRUCTURE AND SUPPORT OF SUBSIDIARY BANKS
Because FTNC is a holding company, its right to participate in the
assets of any subsidiary upon the latter's liquidation or reorganization will
be subject to the prior claims of the subsidiary's creditors (including
depositors in the case of bank subsidiaries) except to the extent that FTNC may
itself be a creditor with recognized claims against the subsidiary.
- 34 -
<PAGE> 39
Under Federal Reserve Board policy, FTNC is expected to act as a
source of financial strength to, and commit resources to support, each of the
Subsidiary Banks. This support may be required at times when, absent such
Federal Reserve Board policy, FTNC may not be inclined to provide it. In
addition, any capital loans by a bank holding company to any of its subsidiary
banks are subordinate in right of payment to deposits and to certain other
indebtedness of such subsidiary bank. In the event of a bank holding company's
bankruptcy, any commitment by the bank holding company to a federal bank
regulatory agency to maintain the capital of a subsidiary bank will be assumed
by the bankruptcy trustee and entitled to a priority of payment.
Under the Federal Deposit Insurance Act (the "FDIA"), a depository
institution insured by the FDIC can be held liable for any loss incurred by, or
reasonably expected to be incurred by, the FDIC after August 9, 1989 in
connection with (i) the default of a commonly controlled FDIC-insured
depository institution or (ii) any assistance provided by the FDIC to any
commonly controlled FDIC-insured depository institution "in danger of default."
"Default" is defined generally as the appointment of a conservator or receiver
and "in danger of default" is defined generally as the existence of certain
conditions indicating that a default is likely to occur in the absence of
regulatory assistance. The FDIC's claim for damages is superior to claims of
shareholders of the insured depository institution or its holding company but
is subordinate to claims of depositors, secured creditors and holders of
subordinated debt (other than affiliates) of the commonly controlled insured
depository institution. The Subsidiary Banks are subject to these
cross-guarantee provisions. As a result, any loss suffered by the FDIC in
respect of any of the Subsidiary Banks would likely result in assertion of the
cross-guarantee provisions, the assessment of such estimated losses against
FTNC's other Subsidiary Banks and a potential loss of FTNC's investment in such
Subsidiary Banks.
FDICIA
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") which was enacted on December 19, 1991, substantially revised the
depository institution regulatory and funding provisions of the FDIA and made
revisions to several other federal banking statutes. Among other things,
FDICIA requires the federal banking regulators to take "prompt corrective
action" in respect of FDIC-insured depository institutions that do not meet
minimum capital requirements . FDICIA establishes five capital tiers: "well
capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized" and "critically undercapitalized." Under applicable
regulations, a FDIC-insured depository institution is defined to be well
capitalized if it maintains a Leverage ratio of at least 5%, a risk adjusted
Tier 1 Capital Ratio of at least 6% and a Total Capital Ratio of at least 10%
and is not subject to a directive, order or written agreement to meet and
maintain specific capital levels. An insured depository institution is defined
to be adequately capitalized if it meets all of its minimum capital
requirements as described above. In addition, an insured depository
institution will be considered undercapitalized it fails to meet any minimum
required measure, significantly undercapitalized if it is significantly below
such measure and critically undercapitalized if it fails to maintain a level of
tangible equity equal to not less than 2% of total assets. An insured
depository institution may be deemed to be in a capitalization category that is
lower than is indicated by its actual capital position if it receives an
unsatisfactory examination rating.
The capital-based prompt corrective action provisions of FDICIA and
their implementing regulations apply to FDIC-insured depository institutions
and are not directly applicable to holding companies which control such
institutions. However, the Federal Reserve Board has indicated that, in
regulating bank holding companies, it will take appropriate action at the
holding company level based on
- 35 -
<PAGE> 40
an assessment of the effectiveness of supervisory actions imposed upon
subsidiary depository institutions pursuant to such provisions and regulations.
Although the capital categories defined under the prompt corrective action
regulations are not directly applicable to FTNC under existing law and
regulations, if FTNC were placed in a capital category FTNC believes that it
would qualify as well-capitalized as of December 31, 1993.
FDICIA generally prohibits an FDIC-insured depository institution from
making any capital distribution (including payment of dividends) or paying any
management fee to its holding company if the depository institution would
thereafter be undercapitalized. Undercapitalized depository institutions are
subject to restrictions on borrowing from the Federal Reserve System. In
addition, undercapitalized depository institutions are subject to growth
limitations and are required to submit capital restoration plans. A depository
institution's holding company must guarantee the capital plan, up to an amount
equal to the lesser of 5% of the depository institution's assets at the time it
becomes undercapitalized or the amount of the capital deficiency when the
institution fails to comply with the plan. The federal banking agencies may
not accept a capital plan without determining, among other things, that the
plan is based on realistic assumptions and is likely to succeed in restoring
the depository institution's capital. If a depository institution fails to
submit an acceptable plan, it is treated as if it is significantly
undercapitalized.
Significantly undercapitalized depository institutions may be subject
to a number of requirements and restrictions, including orders to sell
sufficient voting stock to become adequately capitalized, requirements to
reduce total assets and cessation of receipt of deposits from correspondent
banks. Critically undercapitalized depository institutions are subject to
appointment of a receiver or conservator.
FTNC believes that at December 31, 1993 all of the Subsidiary Banks
were well capitalized under the criteria discussed above.
FDICIA contain numerous other provisions, including new accounting,
audit and reporting requirements, beginning in 1995 termination of the "too big
to fail" doctrine except in special cases, limitations on the FDIC's payment of
deposits at foreign branches, new regulatory standards in such areas as asset
quality, earnings and compensation and revised regulatory standards for, among
other things, powers of state banks, real estate lending and capital adequacy.
FDICIA also requires that a depository institution provide 90 days prior notice
of the closing of any branches. Complete regulations have not yet been issued
under FDICIA.
Various other legislation, including proposals to revise the bank
regulatory system and to limit the investments that a depository institution
may make with insured funds, is from time to time introduced in Congress. See
the "Effect of Governmental Policies" subsection.
BROKERED DEPOSITS
The FDIC has adopted regulations under FDICIA governing the receipt of
brokered deposits. Under the regulations, a bank cannot accept a rollover or
renew brokered deposits unless (i) it is well capitalized or (ii) it is
adequately capitalized and receives a waiver from the FDICIA. A bank that
cannot receive brokered deposits also cannot offer "pass-through" insurance on
certain employee benefit accounts. Whether or not it has obtained such a
waiver, an adequately capitalized bank may not pay an interest rate on any
deposits in excess of 75 basis points over certain prevailing market rates
specified by regulation. There are no such restrictions on a bank that is well
capitalized. Because it believes that
- 36 -
<PAGE> 41
all the Subsidiary Banks were well capitalized as of December 31, 1993, FTNC
believes the brokered deposits regulation will have no material effect on the
funding or liquidity of any of the Subsidiary Banks.
FDIC INSURANCE PREMIUMS
The Subsidiary Banks are required to pay semiannual FDIC deposit
insurance assessments. As required by FDICIA, the FDIC recently adopted a
risk-based premium schedule which has increased the assessment rates for most
FDIC-insured depository institutions. Under the new schedule, the premiums
initially range from $.23 to $.31 for every $100 of deposits. Each financial
institution is assigned to one of three capital groups -- well capitalized,
adequately capitalized or undercapitalized -- and further assigned to one of
three subgroups within a capital group, on the basis of supervisory evaluations
by the institution's primary federal and, if applicable, state supervisors and
other information relevant to the institution's financial condition and the
risk posed to the applicable FDIC deposit insurance fund. The actual
assessment rate applicable to a particular institution will, therefore, depend
in part upon the risk assessment classification so assigned to the institution
by the FDIC.
The FDIC is authorized by federal law to raise insurance premiums in
certain circumstances. Any increase in premiums would have an adverse effect
on the Subsidiary Banks' and FTNC's earnings.
Under the FDIA, insurance of deposits may be terminated by the FDIC
upon a finding that the institution has engaged in unsafe and unsound
practices, is in an unsafe or unsound condition to continue operations or has
violated any applicable law, regulation, rule, order or condition imposed by a
federal bank regulatory agency.
DEPOSITOR PREFERENCE
The recently adopted Omnibus Budget Reconciliation Act of 1993
provides that deposits and certain claims for administrative expenses and
employee compensation against an insured depositary institution would be
afforded a priority over other general unsecured claims against such an
institution, including federal funds and letters of credit, in the "liquidation
or other resolution" of such an institution by any receiver.
INFORMATION CONCERNING PLANTERS BANK
DESCRIPTION OF BUSINESS
General. Planters Bank was chartered as a Mississippi state bank in
1912. Planters Bank is a community oriented institution, which presently
operates a general banking business in Tunica, Mississippi, providing customary
banking services such as checking and savings accounts, various types of time
deposits, safe deposit facilities and money transfers and certain fiduciary
services through its trust department. Planters Bank also finances commercial
transactions and makes and services both secured and unsecured loans to
individuals, firms and corporations. Commercial lending operations include
various types of credit services for the customers of Planters Bank. Planters
Bank's installment loan department makes direct loans to individuals for
personal, automobile, real estate, home improvement, business and collateral
needs.
- 37 -
<PAGE> 42
The management of Planters Bank believes that the services presently
provided by Planters Bank are responsive to the convenience and needs of the
community served by Planters Bank. Management continually strives to provide
for the credit needs of the community it serves by providing its customers
competitive returns on each category of deposit on which interest is earned.
There is no individual customer or small group of customers the loss of which
would have a material impact on the operation of Planters Bank.
Competitive Conditions. Planters Bank does business in Tunica County,
Mississippi. One other commercial bank competes directly with Planters Bank in
Tunica County. Planters Bank is subject to substantial competition in all
aspects of its business. Intense competition for loans and deposits comes from
other financial institutions in the area. In certain aspects of its banking
business, Planters Bank also competes with credit unions, small loan companies,
insurance companies, mortgage companies, finance companies, brokerage houses
and other financial institutions, some of which are not subject to the same
degree of regulation and restriction as Planters Bank and many of which have
financial resources greater than those of Planters Bank.
Planters Bank currently employs 33 persons.
Supervision and Regulation. Planters Bank is subject to applicable
provisions of Mississippi law, insofar as they do not conflict with or are not
preempted by federal law, including laws related to usury, various consumer and
commercial loans and the operation of branch banks.
Property. All properties of Planters Bank are owned by Planters Bank.
Planters Bank operates from its main office facility at 1202 E. Edwards in
Tunica. The main office facility of Planters Bank consists of approximately
8,000 square feet in a one-story building. Recently, Planters Bank received
regulatory approval to construct and operate a branch on Highway 61 North near
Robinsonville, Mississippi.
Directors and Executive Officers. The members of the Board of
Directors of Planters Bank are elected by its shareholders at the annual
meeting to serve until the next annual meeting and until their successors are
duly elected and qualified.
The name of each director, his age, his current principal occupation
(which has continued for at least five years unless otherwise indicated), the
name and principal business of the organization in which his occupation is
carried on (which organization is not an affiliate of Planters Bank unless
indicated), his directorships, if any, in publicly held companies, and the year
he was first elected to his position with Planters Bank are as follows:
Scott A. Arnold, Jr., 68, is president of S. A. Arnold & Son, Tunica,
a farming operation and is also part owner of Hendrix Oil, Inc., Farm Equipment
Company and Arnold Farms, Inc., Tunica, Mississippi. He became a director of
Planters Bank in 1957.
Paul Battle, III, 42, is the owner of Battle Associates, a farming
operation. He became a director of Planters Bank in 1988.
Corneluis H. Block, 75, is owner of C. H. Block & Company, Inc., a
farming operation, and is also president of Tunica Gin Corporation. He became
a director of Planters Bank in 1957.
- 38 -
<PAGE> 43
William P. Dulaney, 61, is a partner in his Tunica, Mississippi law
firm and also serves on the board of various farming operations in the Tunica
area. He became a director of Planters Bank in 1985.
James W. Eubanks, Jr., 51, is owner of Tunica Pharmacy where he is a
pharmacist. Mr. Eubanks is also involved in various real estate interests. He
became a director of Planters Bank in 1989.
Edgar M. Hood, Jr., 72, is owner of Hood Farms, Inc., a farming
operation. Mr. Hood became a director of Planters Bank in 1970.
S. Richard Leatherman, III, 67, is the owner of various farming
operations in the Tunica area. He became a director of Planters Bank in 1965.
C. Penn Owen, III, 35, is a partner in Bowdre Place, an agri business
concern in Robinsonville, Mississippi and part owner of the Hollywood
Restaurant in Robinsonville, Mississippi. He became a director of Planters
Bank in 1993.
Sterling W. Seabrook, 70, is a partner in Withers & Seabrook, an agri
business concern in the Tunica area. He became a director of Planters Bank in
1970.
Ray Smith, 67, is owner of various farming operations in Dundee,
Mississippi. He became a director of Planters Bank in 1973.
A. Thomas Tucker, 76, is a retired owner of a farm implement business.
He became a director of Planters Bank in 1967.
William C. Wood, 53, is President and Chief Executive Officer of
Planters Bank. He became a director of Planters Bank in 1986.
The Executive Officers of Planters Bank consist of Mr. Wood and the
following individuals:
B. Rich Knox, 36, is Executive Vice President of Planters Bank, having
held such position since 1987.
Ronald E. Hughey, 52, is Executive Vice President of Planters Bank,
having held such position since 1986.
No family relationships exist among the individuals listed above,
except for Messrs. Leatherman and Seabrook, who are brothers-in-law.
- 39 -
<PAGE> 44
<TABLE>
<CAPTION>
SELECTED STATISTICAL DATA
Loans By Type
-------------
(In Thousands)
Description 12/31/93 12/31/92
----------- -------- --------
<S> <C> <C>
Real Estate 11,518 9,366
Commercial 4,322 2,635
Consumer 4,152 4,511
Other (Agri crop & other) 5,539 5,766
------ ------
25,531 22,278
Unearned interest and fees (223) (228)
Allowance for loan losses (959) (750)
------ ------
Loans, net 24,349 21,300
====== ======
</TABLE>
- 40 -
<PAGE> 45
Nonaccrual, Past Due and Restructured Loans
(In Thousands)
<TABLE>
<CAPTION>
12/31/93 12/31/92
-------- --------
<S> <C> <C>
Accruing loans contractually past due
90 days or more as to interest or
principal payments 58 380
Nonaccrual loans 228 61
Restructured loans 0 0
--- ---
Total nonperforming loans 286 441
=== ===
</TABLE>
Analysis of Allowance for Loan Losses
(In Thousands)
<TABLE>
<CAPTION>
Fiscal Year Ending
December 31,
------------------
1993 1992
---- ----
<S> <C> <C>
Balance, beginning of period 750 700
Amounts charged off:
Real Estate 11 43
Commercial 248 79
Consumer 83 19
---- ----
Total charged off 342 141
Recoveries on amounts charged off:
Real Estate 0 0
Commercial 65 7
Consumer 29 13
---- ----
Total recoveries 94 20
Net charge-offs 248 121
Provision for loan losses 457 171
---- ---
Balance, end of period 959 750
==== ====
Ratio of net charge-offs during
the period to average loans
outstanding during the period. 1.08% 0.52%
==== ====
</TABLE>
Allocation for Allowance for Loan Losses
(In Thousands)
<TABLE>
<CAPTION>
December 31,
------------
1993 1992
---- ----
<S> <C> <C>
Real Estate 179 139
Commercial 519 374
Consumer 122 88
Other (Agri crop & other) 139 149
--- ---
Total 959 750
=== ===
</TABLE>
- 41 -
<PAGE> 46
Percentage Distribution of Allowance for Loan Losses and Categories of Loans as
Percent of Gross Loans at December 31
<TABLE>
<CAPTION>
1993 1992
---------------------------------------- --------------------------------------
Allowance Loans Allowance Loans
--------- ----- --------- -----
<S> <C> <C> <C> <C>
Real Estate 18.67% 45.11% 18.53% 42.04%
Commercial 54.12% 16.93% 49.87% 11.83%
Consumer 12.72% 16.26% 11.73% 20.25%
Other (Agri crop & other) 14.49% 21.70% 19.87% 25.88%
------- ------- ------- -------
100.00% 100.00% 100.00% 100.00%
</TABLE>
Average Deposit Distribution and Average Interest Rates
(Dollars in Thousands)
<TABLE>
<CAPTION>
YEAR ENDED
December 31, 1993 December 31, 1992
------------------------------ ------------------------------
Average Interest Average Average Interest Average
Balance Expense Rate Balance Expense Rate
------- -------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Noninterest bearing accounts 9,050 - - 5,287 - -
NOW accounts 5,580 148 2.65% 4,076 157 3.85%
Money Market accounts 14,630 420 2.87% 9,312 362 3.89%
Savings accounts 2,718 77 2.83% 2,433 92 3.78%
Certificates of deposit
$100,000 and greater 7,606 228 3.00% 5,812 238 4.09%
Less than $100,000 10,416 407 3.91% 11,220 575 5.12%
------ ----- ----- ------ ----- -----
Total 50,000 1,280 2.56% 38,140 1,424 3.73%
====== ===== ===== ====== ===== =====
</TABLE>
Maturity Distribution of Certificates of Deposit of $100,000 and Over at
December 31, 1993
(In Thousands)
<TABLE>
<CAPTION>
Certificates of Deposit IRA Accounts Total
----------------------- ------------ -----
<S> <C> <C> <C>
Less than three months 7,909 7,909
Three to twelve months 3,201 155 3,356
More than twelve months 100 100
------ --- ------
Total 11,210 155 11,365
====== === ======
</TABLE>
MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
OPERATIONS
The following discussion provides certain information concerning
Planters Bank's financial condition and results of operations. For a more
complete understanding of the following discussion, reference should be made to
the financial statements of Planters Bank and related notes thereto presented
elsewhere in this Proxy Statement-Prospectus.
Results of Operations 1993 Compared to 1992. Net income for the year
1993 was $506,379 or approximately $94,000 less than 1992 net income of
$600,805. The decrease in net income was primarily due to increases in
operating expenses and provision for loan losses, offset by an increase of
approximately $292,000 in net interest income.
Return on average assets for the year 1993 was .89% compared to 1.37%
for 1992. Return on average equity was 9.20% and 11.85% in 1993 and 1992,
respectively. Planters Bank paid dividends of $4.00 per share in 1993 as
compared to $5.00 per share in 1992.
Planters Bank's provision for loan losses is, in management's opinion,
sufficient to maintain an adequate allowance for loan losses and to support
increases in the loan portfolio. The provision for loan losses for 1993 was
$457,373 compared to $171,180 for 1992. Net loans charged-off in 1993 were
$248,256 versus $121,180 in 1992.
Net interest income is the major component of Planters Bank's income.
Net interest income for the year 1993 was $2,183,580, an increase of
approximately $292,000 over the amount reported for the year 1992. The
increase in net interest income was primarily attributable to the increase in
average earning assets during 1993. Loan fee income earned in 1993 and 1992
was not significant.
- 42 -
<PAGE> 47
Noninterest income was $373,507 in 1993, an increase of approximately
$81,000 over 1992. The primary sources of noninterest income are service
charges on deposit accounts and other fees and charges. Each of these
components increased in 1993, as compared to 1992. Planters Bank earned fees
on automated teller machine (ATM) transactions of $68,408 in 1993 and $2,245 in
1992. This increase was due to new casino account business in 1993. At
December 31, 1993, Planters Bank had a total of seven ATM's located at four
different casinos. In 1994 continued increases in noninterest income are
expected due to expected increases in the casino business.
Total noninterest expenses for 1993 were $1,632,542 or approximately
31% more than the $1,248,047 reported for 1992. Salaries and employee benefits
increased a combined $123,063 or 19.42%, as the number of full time equivalent
employees increased from 20 to 30 in 1993. Occupancy and equipment expenses
increased approximately $42,000 in 1993 primarily as a result of Planters Bank
investing approximately $380,000 in new equipment in 1993. A significant
portion of the investment was in ATM's. Other noninterest expenses increased
$218,939 compared to 1992. The majority of this increase related to
advertising, professional fees in connection with regulatory matters and loan
review, supplies, data processing due to increased transaction volumes and ATM
sites, and deposit insurance premiums due to deposit growth.
Effective January 1, 1993, Planters Bank adopted Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes." The
cumulative effect of this change in accounting principle, $51,000, is included
in Planters Bank's net income for 1993.
Financial Condition 1993 Compared to 1992. Total assets of Planters
Bank continued to grow in 1993, increasing 25% over total assets at December
31, 1992. Investment securities increased $10.9 million, or 47%, accounting
for the largest portion of the increase. Within the investment securities
portfolio, U.S. government and government agencies securities increased $7.3
million, while obligations of states and political subdivisions increased $4.4
million. At December 31, 1993, investment securities had an estimated market
value of approximately $650,000 greater than their carrying value. Management
does not foresee any significant change in its investment strategy as a
consequence of Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities." Planters Bank will
adopt Statement No. 115 effective January 1, 1994. It is anticipated that 60%
to 80% of the investment securities portfolio will be classified as "available
for sale" in the first quarter of 1994.
Loans increased $3.3 million to $25.3 million at December 31, 1993,
net of unearned interest. Substantially all of this increase was in
nonagricultural real estate and commercial loans. The allowance for loan
losses at December 31, 1993 was $959,117, an increase of $209,117 over the
allowance at December 31, 1992. A summary of the changes in the allowance for
1993 and 1992 is included in the Selected Statistical Data section. The
adequacy of the allowance for loan losses is determined on an ongoing basis
using historical loan loss experience of Planters Bank, portfolio growth and
asset quality trends, and economic conditions within Planters Bank's trade
area. Additional allocations are made to the allowance for specifically
identified potential losses in the portfolio. The allowance for loan losses
was 3.79% of loans outstanding at December 31, 1993, compared to 3.40% at
December 31, 1992.
It is Planters Bank's policy to place loans greater than 90 days past
due on nonaccrual status, unless certain criteria are met. At December 31,
1993, nonaccrual loans were $227,762 compared to $60,833 at December 31, 1992.
At December 31, 1993, other than approximately $5.5 million in
agricultural related loans, there were no concentrations of loans exceeding 10%
of total loans outstanding.
- 43 -
<PAGE> 48
As of December 31, 1993, Planters Bank had expended approximately
$865,000 on remodeling its banking facility. Management estimates additional
costs of approximately $500,000 will be incurred to complete the project in
1994. In 1993, Planters Bank received approval to construct and open a branch
in Robinsonville, Mississippi.
Total deposits grew 19% to $55.5 million at December 31, 1993, as
compared to $46.6 million at December 31, 1992. Of this increase, $5.8
million, or 65%, was represented by certificates of deposit of $100,000 and
over. The opening of the additional casino establishments in 1993, with which
Planters Bank maintains account relationships, contributed significantly to the
growth in total deposits.
In addition to deposits, additional liabilities at December 31, 1993
consisted of federal funds purchased of $2,000,000 and repurchase agreements of
$2,170,500.
Total stockholders' equity at December 31, 1993 was $5,675,229, an
increase of $355,308 since December 31, 1992. Net earnings retained during
1993, after paying dividends of $240,000, totaled $266,379. Also, Planters
Bank's unrealized loss on marketable equity securities decreased by $88,929.
The equity to assets ratio was 8.64% at December 31, 1993, compared to 10.16%
at December 31, 1992.
Results of Operations 1992 Compared to 1991. Net income for 1992 was
$600,805, an increase of 159% over 1991 net income of $231,966. Net income per
share was $10.01 in 1992 compared to $3.87 in 1991. The 1992 increase in net
income was primarily due to losses of approximately $233,000 on investment
securities in 1991 compared to gains on investment securities of approximately
$95,000 in 1992. A provision for bond losses in 1991 of approximately $115,000
related to investments in certain housing authority bonds whose value was
deemed to be permanently impaired in 1991.
Return on average assets for the year 1992 was 1.37% versus .52% for
1991. Return on average equity for 1992 was 11.85% compared to 4.81% for 1991.
Dividends per share were $5.00 in 1992 and $4.00 in 1991.
Net interest income, the major component of Planters Bank's income,
increased approximately $132,000 in 1992. The provision for loan losses
decreased approximately $44,000 in 1992.
Noninterest income decreased approximately $14,000 in 1992 versus
1991, excluding the provision for bond losses noted above. Equipment expenses
increased primarily as a result of implementation of a new data processing
system.
Financial Condition 1992 Compared to 1991. Total assets increased by
$8.6 million, or 20%. Investment securities increased $9.4 million over 1991.
Loans decreased $1.5 million during 1992. Planters Bank's allowance for loan
losses increased $50,000 to $750,000, or 3.40% of outstanding loans. The loan
to deposit ratio at December 31, 1992 was 46%. Planters Bank's loan portfolio
continued to be concentrated in the agricultural economic sector.
Total deposits at December 31, 1992 were $46.6 million, a 21% increase
over total deposits at December 31, 1991 of $38.4 million. Substantially all
of this growth occurred in the fourth quarter of 1992 and was primarily
attributable to the beginning of casino gambling in Tunica County, Mississippi
in October 1992. Certificates of deposit of $100,000 and over decreased
approximately $400,000 during 1992.
Total stockholders' equity increased $494,305 or 10.24% from December
31, 1991 to December 31, 1992. This increase consisted of net earnings
retained of $300,805 and a decrease in unrealized loss
- 44 -
<PAGE> 49
on marketable equity securities of $193,500. The equity to assets ratio at
December 31, 1992 and 1991 was 10.16% and 11.03%, respectively.
OWNERSHIP OF PLANTERS BANK COMMON STOCK AND DIVIDENDS
Ownership of Principal Shareholders. As of March 31, 1994, there were
60,000 shares of Planters Bank Common Stock, its only class of voting
securities, outstanding and approximately 163 shareholders of record of such
shares. The following table provides information concerning the number of
shares of Planters Bank Common Stock beneficially owned, directly or
indirectly, by more than 5% shareholders of Planters Bank Common Stock as of
March 31, 1994, and the number of shares of FTNC Common Stock to be owned by
such persons on the Effective Date of the Merger. Planters Bank is not aware
of any shares of FTNC Common Stock beneficially owned by the persons in the
tables except as disclosed therein. Except as set forth below, no person is
known by Planters Bank to be the beneficial owner of more than 5% of the
outstanding shares of Planters Bank Common Stock. The number and percentage of
shares of FTNC Common Stock beneficially owned on the Effective Date of the
Merger in the tables in this section are based upon a conversion ratio of .
FTNC Common Shares for each Planters Bank Common Share and assuming 3 , ,
First Tennessee Common Shares will be outstanding immediately prior to the
Merger. Unless otherwise noted, the named person has sole voting and
investment power with respect to the shares indicated.
<TABLE>
<CAPTION>
Percent of Total
Number of Percent of Number of FTNC FTNC Common
Planters Bank Total Planters Common Shares to Shares to be
Common Bank Shares be Beneficially Owned Outstanding on
Beneficial Owner Shares Owned Shares Outstanding on Effective Date Effective Date
---------------- ------------- ------------------ -------------------- ----------------
<S> <C> <C> <C> <C>
Paul Battle, Jr. 5,702 (1) 9.5% %
Robert B. Nance, III (3) 3,863 6.4% (3)
Ray Smith 11,283 (2) 18.8% %
(1) Includes 500 shares held by spouse and 1,426 shares held jointly with spouse.
(2) Includes 160 shares held by spouse and 3,200 shares held by corporations over
which Mr. Smith exercises voting control.
(3) Mr. Nance is employed as a Vice President in the Bond Division of FTNC's
subsidiary, FTB. His shares include 2,703 shares of FTNC Common Stock
presently beneficially owned.
</TABLE>
Ownership by Directors and Executive Officers of Planters Bank. The
following information pertains to shares of Planters Bank Common Stock
beneficially owned, directly or indirectly, by each director, by each executive
officer, and by all directors and executive officers as a group, as of March
31, 1994, and to the number of shares of FTNC Common Stock to be owned by such
persons on the Effective Date of the Merger. Unless otherwise noted, the named
persons have sole voting and investment power with respect to the shares
indicated.
- 45 -
<PAGE> 50
<TABLE>
<CAPTION>
Percent of
Percent of Number of FTNC Total
Number of Total Planters Common Shares to FTNC Common
Planters Bank Bank Shares be Beneficially Shares to be
Common Shares Owned Outstanding on
Beneficial Owner Shares Owned Outstanding on Effective Date Effective Date
---------------- ------------ ----------- -------------------- ---------------
<S> <C> <C> <C> <C>
Scott Arnold 914 (1) 1.5% (2)
Paul Battle, III 190 0.3 (2)
Cornelius H. Block 826 1.4 (2)
William P. Dulaney 2,249 (3) 3.7 (4) (2)
James W. Eubanks, Jr. 2,902 (5) 4.8 (2)
Edgar M. Hoods, Jr. 398 0.7 (2)
Ronald E. Hughey 20 (6) (2) (2)
B. Rich Knox 40 (7) (2) (2)
S. Richard Leatherman, III 946 1.6 (2)
C. Penn Owen, III 360 0.6 (2)
Sterling W. Seabrook 326 0.5 (2)
Ray Smith 11,283 (8) 18.8 (2)
A. Thomas Tucker 440 (9) 0.7
William C. Wood 484 0.8 (2)
All directors and executive officers
as a group (14 persons, including
those named above) 21,378 35.6% (4) %
(1) Includes 326 shares held by spouse.
(2) Less than 0.1%
(3) Includes 660 shares held by spouse, 61 shares held jointly with spouse,
60 shares held as trustee, and 1,427 shares held in IRA.
(4) Includes 40 shares of FTNC Common Stock presently owned.
(5) Includes 100 shares held by spouse.
(6) All shares held jointly with spouse.
(7) All shares held jointly with father.
(8) Includes 160 shares held by spouse and 3,200 shares held by corporations
over which Mr. Smith exercises voting control.
(9) Includes 400 shares held by spouse.
</TABLE>
Dividends. The shareholders of Planters Bank Common Stock are
entitled to such dividends as may be declared from time to time by the Planters
Bank Board. Cash dividends generally are declared quarterly and have been
declared as stated in the following table.
<TABLE>
<CAPTION>
Dividends Declared by Quarter
--------------------------------------------------------------------------------------------------------
1994 1993 1992
------------------ ----------------------------------------- ---------------------------------------
2nd 1st 4th 3rd 2nd 1st 4th 3rd 2nd 1st
Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr Qtr
--- --- --- --- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$1.00 $1.00 $1.00 $1.00 $1.00 $2.00 $1.00 $1.00 $1.00
</TABLE>
The Merger Agreement restricts the ability of Planters Bank to declare and pay
dividends. See "The Merger -- Conduct of Business Pending Merger." Planters
Bank's ability to pay dividends also is dependent upon the earnings and
financial condition of Planters Bank. Dividend payments by Planters Bank are
subject to certain regulatory restrictions. As of March 31, 1994, $350,228 was
available for distribution to Planters Bank's shareholders as dividends without
prior regulatory approval.
DESCRIPTION OF FTNC CAPITAL STOCK
The following summaries of certain provisions of the Restated Charter,
as amended (the "Charter"), and Bylaws, as amended, of FTNC, the Rights Plan
(defined below) and the Indenture (defined below) do not purport to be
complete, are qualified in their entirety by reference to such instruments,
each of which is an exhibit to the Registration Statement of which this Proxy
Statement- Prospectus is a part, and are subject, in all respects, to
applicable Tennessee law.
- 46 -
<PAGE> 51
AUTHORIZED CAPITAL STOCK
The authorized capital stock of FTNC currently consists of 5,000,000
shares of Preferred Stock, without par value ("Preferred Stock"), which may be
issued from time to time by resolution of the FTNC Board and 100,000,000 shares
of FTNC Common Stock. As of March 31, 1994, there were 31,826,717 shares of
FTNC Common Stock and no shares of Preferred Stock outstanding. Approximately
3.3 million shares of FTNC Common Stock are reserved for issuance under various
employee stock plans and FTNC's dividend reinvestment plan, and 318,268 shares
of Preferred Stock are reserved for issuance under the Rights Plan. Also, FTNC
has on file with the SEC an effective shelf registration pursuant to which it
may offer from time to time, at its discretion, senior or subordinated debt
securities, preferred stock, including depository shares, and FTNC Common Stock
at an aggregate initial offering price not to exceed $300 million.
PREFERRED STOCK
The FTNC Board is authorized, without further action by the
shareholders, to provide for the issuance of up to 5,000,000 shares of
Preferred Stock, without par value, from time to time in one or more series
and, with respect to each such series, has the authority to fix the powers
(including voting power), designations, preferences and relative,
participating, optional or other special rights and the qualifications,
limitations or restrictions thereof. Currently, no shares of Preferred Stock
are outstanding.
FTNC COMMON STOCK
The FTNC Board is authorized to issue a maximum of 100,000,000 shares
of Common Stock, $2.50 par value per share. The holders of the FTNC Common
Stock are entitled to receive, ratably, such dividends as may be declared by
the FTNC Board from funds legally available therefor. The holders of the
outstanding shares of FTNC Common Stock are entitled to one vote for each such
share on all matters presented to shareholders and are not entitled to cumulate
votes for the election of directors. Upon any dissolution, liquidation or
winding up of FTNC resulting in a distribution of assets to the shareholders,
the holders of FTNC Common Stock are entitled to receive such assets ratably
according to their respective holdings after payment of all liabilities and
obligations and satisfaction of the liquidation preferences of any shares of
Preferred Stock at the time outstanding. The shares of FTNC Common Stock have
no preemptive, redemption, subscription or conversion rights. The shares of
FTNC Common Stock will be, when issued in accordance with the Merger Agreement,
fully paid and nonassessable. Under FTNC's Charter, the FTNC Board is
authorized to issue authorized shares of FTNC Common Stock without further
action by FTNC's shareholders. However, the FTNC Common Stock is traded in the
over-the-counter market and is quoted on the NASDAQ/NMS, which requires
shareholder approval of the issuance of additional shares of FTNC Common Stock
in certain situations. The Transfer Agent for the Common Stock is The First
National Bank of Boston.
The FTNC Board is divided into three classes, which results in
approximately 1/3 of the directors being elected each year. In addition, the
Charter and the Bylaws, among other things, generally give to the FTNC Board
the authority to fix the number of directors on the FTNC Board and to remove
directors from and fill vacancies on the FTNC Board, other than removal for
cause and the filling of vacancies created thereby which are reserved to
shareholders exercising at least a majority of the voting power of all
outstanding voting stock of FTNC. To change these provisions of the Bylaws,
other than by action of the FTNC Board, and to amend these provisions of the
Charter or to adopt any provision of the Charter inconsistent with such Bylaw
provisions, would require approval by the holders of at least 80%
- 47 -
<PAGE> 52
of the voting power of all outstanding voting stock. Such classification of
the FTNC Board and such other provisions of the Charter and the Bylaws may have
a significant effect on the ability of the shareholders of FTNC to change the
composition of an incumbent FTNC Board or to benefit from certain transactions
which are opposed by the FTNC Board.
SHAREHOLDER PROTECTION RIGHTS PLAN
Each share of FTNC Common Stock has, and each share of the FTNC Common
Stock issued in the Merger will have, attached to it one right (a "Right")
issued pursuant to a Shareholder Protection Rights Agreement dated as of
September 7, 1989 (the "Rights Plan"). Each Right entitles its holder to
purchase 1/100th of a share of Participating Preferred Stock, without par
value, for $76.67 (the "Exercise Price"), subject to adjustment, upon the
business day following the earlier of (i) the 10th day after commencement of a
tender or exchange offer which, if consummated, would result in a person's
becoming the beneficial owner of 10% or more of the outstanding shares of FTNC
Common Stock (an "Acquiring Person") and (ii) the first date (the "Flip-in
Date") of public announcement that a person has become an Acquiring Person.
The Rights will expire on the earliest of (i) the Exchange Time
(defined below), (ii) September 18, 1999 and (iii) the date on which the Rights
are redeemed as described below. The FTNC Board may, at its option, at any
time prior to the Flip-in Date, redeem all the Rights at a price of $.01 per
Right.
If a Flip-in Date occurs, each Right (other than Rights beneficially
owned by the Acquiring Person or its affiliates, associates or transferees,
which Rights will become void), to the extent permitted by applicable law, will
constitute the right to purchase shares of FTNC Common Stock or Participating
Preferred Stock having an aggregate market price equal to twice the Exercise
Price for an amount in cash equal to the then-current Exercise Price. In
addition, the FTNC Board may, at its option, at any time after a Flip-in Date
and prior to the time that an Acquiring Person becomes the beneficial owner of
more than 50% of the outstanding shares of FTNC Common Stock, elect to exchange
the Rights (other than Rights beneficially owned by the Acquiring Person or its
affiliates, associates or transferees) for shares of FTNC Common Stock or
Participating Preferred Stock at an exchange ratio of one share of FTNC Common
Stock or 1/100th of a share of Participating Preferred Stock per Right (the
"Exchange Time").
FTNC may not agree to be acquired by an Acquiring Person without
providing that each Right, upon such acquisition, will constitute the right to
purchase common stock of the Acquiring Person having an aggregate market price
equal to twice the Exercise Price for an amount in cash equal to the
then-current Exercise Price.
The Rights will not prevent a takeover of FTNC. The Rights, however,
may have certain anti-takeover effects. The Rights may cause substantial
dilution to a person or group that acquires 10% or more of the outstanding FTNC
Common Stock unless the Rights are first redeemed by the FTNC Board.
SUBORDINATED CAPITAL NOTES DUE 1999
On June 10, 1987, FTNC issued $75,000,000 principal amount of 10 3/8%
Subordinated Capital Notes Due 1999 (the "Capital Notes"). The Capital Notes
currently constitute Tier 2 capital under the Federal Reserve Board's
risk-based capital guidelines. Pursuant to the Indenture, dated as of June 1,
1987 (the "Indenture"), between FTNC and BankAmerica National Trust Company,
formerly Security Pacific National Trust Company (New York), Trustee, at
maturity the Capital Notes are required to be
- 48 -
<PAGE> 53
exchanged for Common Stock, Preferred Stock or certain other eligible capital
securities to be issued by FTNC ("Capital Securities") having a market value
equal to the principal amount of the Capital Notes, except to the extent that
FTNC, at its option, shall elect to pay in cash such principal amount from
amounts representing proceeds of other issuances of Capital Securities
designated for such use.
EFFECT OF THE MERGER ON RIGHTS OF SHAREHOLDERS
FTNC is a Tennessee corporation subject to the provisions of the TBCA.
Planters Bank is a Mississippi state bank subject to the banking laws contained
in the Mississippi Code 1972 Annotated (such Mississippi banking laws referred
to herein as "MBL"). Shareholders of Planters Bank, whose rights are governed
by Planters Bank's Charter of Incorporation and Bylaws and by the MBL, will,
upon consummation of the Merger, become shareholders of FTNC whose rights will
then be governed by the Charter and Bylaws of FTNC and by the TBCA. The
following is a summary of the material differences in the rights of
shareholders of FTNC and Planters Bank and is qualified in its entirety by
reference to the governing law and the Charter of Incorporation or Charter and
Bylaws of each of Planters Bank and FTNC. Certain topics discussed below are
also subject to federal law and the regulations promulgated thereunder. See
"Certain Regulatory Considerations."
REQUIRED VOTE FOR AUTHORIZATION OF CERTAIN ACTIONS
The MBL provides that the approval of two-thirds of the outstanding
shares of Planters Bank entitled to vote thereon is required to effect a merger
or consolidation.
The TBCA provides that the approval of the FTNC Board and of a
majority of the outstanding shares of FTNC entitled to vote thereon would also
generally be required to approve a merger or to sell, lease, exchange or
otherwise dispose of substantially all of the FTNC's assets. In accordance
with the TBCA, submission by the FTNC Board of any such action may be
conditioned on any basis, including without limitation, conditions regarding a
super-majority voting requirement or that no more than a certain number of
shares indicate that they will seek dissenters' rights.
With respect to a merger, no vote of the shareholders of FTNC would be
required if FTNC were the surviving corporation and (i) FTNC's Charter would
remain unchanged after the merger, subject to certain exceptions, (ii) each
shareholder of FTNC immediately before the merger would hold an identical
number of shares, with identical rights and preferences, after the merger,
(iii) the number of voting shares outstanding immediately after the merger plus
the number of voting shares issuable as a result of the merger (either by
conversion of securities issued pursuant to the merger or the exercise of
rights and warrants issued pursuant to the merger), will not exceed by more
than 20% the number of voting shares of the surviving corporation outstanding
immediately before the merger; and (iv) the number of participating shares
outstanding immediately after the merger, plus the number of participating
shares issuable as a result of the merger (either by conversion of securities
issued pursuant to the merger or the exercise of rights and warrants issued
pursuant to the merger) will not exceed by more than 20% the total number of
participating shares outstanding immediately before the merger.
With respect to a sale, lease, exchange or other disposition of
substantially all the assets of FTNC, no vote of the shareholders of FTNC would
be required if such transfer were conducted in the regular course of business
or if such transfer were made to a wholly-owned subsidiary of FTNC.
- 49 -
<PAGE> 54
SHAREHOLDER PROPOSALS AND NOMINATIONS
The MBL does not expressly provide procedures for shareholder proposals or
nominations.
Pursuant to FTNC's Bylaws, shareholder proposals and director
nominations must be in writing and delivered or mailed to the Secretary of FTNC
not less than 30 nor more than 60 days prior to the date of a meeting of
shareholders; provided, however, that if fewer than 40 days' notice or prior
public disclosure of the date of the meeting is given or made to shareholders,
notice by the shareholder will be timely if it is delivered or received not
later than the close of business on the 10th day following the earlier of the
day on which such notice of the date of such meeting was mailed or the date on
which such public disclosure was made.
ACTION BY WRITTEN CONSENT
The MBL does not expressly provide for action by written consent by
the shareholders of Planters Bank without a meeting.
The TBCA provides that action may be taken without a shareholder
meeting and vote if all shareholders entitled to vote on the action consent to
taking such action without a meeting. Action by written consent of the FTNC
shareholders is impracticable given the number of holders of FTNC Common Stock.
PREEMPTIVE RIGHTS
Under the MBL, Planters Bank, with the approval of the Mississippi
Commissioner, can amend its Articles of Incorporation by a vote of 2/3 of the
outstanding Planters Bank Common Stock entitled to vote to increase its
authorized shares, either with or without preemptive rights (the right of a
shareholder to acquire proportional amounts of a corporation's unissued shares
upon a decision by the board of directors to issue such shares), subject to
certain limitations.
The Charter of FTNC provides that shareholders of FTNC have no
preemptive rights. If FTNC issues additional shares, a dilution of the equity
interest of each share could result.
AMENDMENT OF ARTICLES OF INCORPORATION OR CHARTER AND BYLAWS
The MBL provides that the Mississippi Commissioner must approve any
amendment to the Planters Bank Charter and that such amendment must be
authorized by the vote of a majority of all the outstanding voting shares. The
Bylaws of Planters Bank provide that the holders of a majority of the Planters
Bank Common Stock may alter, amend, modify or add to the Bylaws.
FTNC's Charter provides that any amendment to the Charter which is
inconsistent with any provision of the Bylaws may be adopted only by the
affirmative vote of the holders of at least 80 percent of the voting power of
all outstanding stock. FTNC's Bylaws may be amended or repealed by a vote of a
majority of all the directors of FTNC at any regular or special meeting of the
FTNC Board. In addition, the shareholders of FTNC may make, alter, amend or
repeal the Bylaws at any annual meeting or at a special meeting called for that
purpose, if at least 80 percent of the voting power of all outstanding voting
stock approves the amendment. The Charter also provides that at least 80
percent of the voting power of all outstanding voting stock must approve an
amendment to the Charter and Bylaws
- 50 -
<PAGE> 55
and to change the classification the FTNC's Board or the 80 percent voting
requirement for an amendment of the Bylaws.
INDEMNIFICATION
Neither the Charter nor the Bylaws of Planters Bank expressly provides
for the indemnification of directors and officers. Under the MBL, a
Mississippi bank may, with the prior approval of the Mississippi Commissioner,
amend its Charter to provide for indemnification to the same extent as a
national bank located in Mississippi could.
The TBCA provides in certain situations for mandatory and permissive
indemnification of directors and officers. The TBCA also provides that the
statutory indemnification is not to be deemed exclusive of any other rights to
which a director seeking indemnification may be entitled. No such
indemnification may be made if a final adjudication adverse to the director or
officer establishes his liability (1) for any breach of loyalty to the
corporation or its shareholders; (2) for acts of omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; or (3) for
unlawful distributions.
FTNC has provided additional indemnification to its directors and
certain officers designated by the FTNC Board in a shareholder-approved bylaw
amendment and individual indemnity agreements which provide indemnification to
the maximum extent not prohibited by law.
LOANS SECURED BY AND ACQUISITIONS OF ISSUER'S STOCK
Under the MBL, Planters Bank may not make any loan on the security of
Planters Bank Common Stock or purchase any such shares unless such security or
purchase is necessary to prevent loss upon a debt previously contracted in good
faith. Unless full payment of such debt is made, stock so purchased or
acquired must be disposed of within twelve months of its acquisition.
Under the TBCA, FTNC may purchase, redeem or acquire its own shares
unless, after such distribution, it would not be able to pay its debts as they
became due in the usual course of business or its total assets would be less
than the sum of its total liabilities plus (unless the Charter provides
otherwise) the amount that would be needed on dissolution to satisfy the claims
of shareholders with greater rights than those receiving the distribution.
FTNC must obtain the approval of the Federal Reserve Board to redeem 10% or
more of its shares during any 12 month period. FTNC is not restricted in
making loans secured by its stock.
VOLUNTARY DISSOLUTION
The MBL provides that Planters Bank may be dissolved upon approval by
the vote of two-thirds of the outstanding voting stock and written notice to
the Mississippi Commissioner.
The TBCA provides that FTNC may be dissolved if the FTNC Board
proposes dissolution and a majority of the shares of FTNC entitled to vote
thereon approves the dissolution. In accordance with the TBCA, the FTNC Board
may condition its submission of a proposal for dissolution on any basis,
including a greater shareholder vote requirement.
- 51 -
<PAGE> 56
BUSINESS COMBINATIONS
Tennessee's Business Combination Act ("BCA") provides that a party
owning 10% or more of stock in a "resident domestic corporation" (such party is
called an "interested shareholder") cannot engage in a business combination
with the resident domestic corporation unless the combination (i) takes place
at least 5 years after the interested shareholder first acquired 10% or more of
the resident domestic corporation, and (ii) either (A) is approved by at least
2/3 of the non-interested voting shares of the resident domestic corporation or
(B) satisfies certain fairness conditions specified in the BCA.
These provisions of the BCA apply unless one of two events occurs. A
business combination with an entity can proceed without delay when approved by
the target corporation's board of directors before that entity becomes an
interested shareholder, or the resident corporation may enact a charter
amendment or bylaw to remove itself entirely from the BCA. This charter
amendment or bylaw must be approved by a majority of the shareholders who have
held shares for more than one year prior to the vote. It may not take effect
for at least 2 years after the vote. FTNC has not adopted a charter or bylaw
amendment removing FTNC from coverage under the BCA.
The BCA further provides an exemption from liability for officers and
directors of resident domestic corporations who do not approve proposed
business combinations or charter amendments and bylaws removing their
corporations from the BCA's coverage as long as the officers and directors act
in "good faith belief" that the proposed business combination would adversely
affect their corporation's employees, customers, suppliers, or the communities
in which their corporation operates and such factors are permitted to be
considered by the board of directors under the charter.
The United States Court of Appeals for the Sixth Circuit has held that
the BCA is unconstitutional as it applies to target corporations organized
under the laws of states other than Tennessee (such as Planters Bank).
No statute similar to the BCA applies to Planters Bank under the MBC.
CONTROL SHARE ACQUISITIONS
The Tennessee Control Share Acquisition Act ("TCSAA") strips a
purchaser's shares of voting rights any time an acquisition of shares in a
covered corporation brings the purchaser's voting power to 1/5, 1/3 or a
majority of all voting power. The purchaser's voting rights can be established
only by a majority vote of the other shareholders. The purchaser may demand a
special meeting of shareholders to conduct such a vote if the purchaser
announces a good faith intention to make the control share acquisition. Under
the TCSAA, the purchaser can demand such a meeting before acquiring a control
share only if it holds at least 10% of the outstanding shares.
The TCSAA applies to corporations which have 100 or more shareholders
and its principal place of business or principal office in Tennessee and either
(i) 10% of its shareholders reside in Tennessee, (ii) more than 10% of its
shareholders reside in Tennessee, or (iii) 10,000 or more shareholders, and the
corporation elects to be governed by the TCSAA. In addition, pursuant to the
Tennessee Authorized Corporation Protection Act certain other corporations
which do not meet the criteria of TCSAA may elect to be covered by the TCSAA.
FTNC has not elected to be governed by the TCSAA.
No state similar to the TCSAA applies to Planters Bank under the MBL.
- 52 -
<PAGE> 57
TENDER OFFERS
Tennessee's Investor Protection Act ("TIPA") applies to tender offers
directed at corporations (called "offeree companies") that have "substantial
assets" in Tennessee and that are either incorporated in or have a principal
office in Tennessee. The TIPA requires an offeror making a tender offer for an
offeree company to file with the Commissioner of Commerce and Insurance (the
"Commissioner") a registration statement. When the offeror intends to gain
control of the offeree company, the registration statement must indicate any
plans the offeror has for the offeree. The Commissioner may require additional
information related to the takeover offer and may call for hearings. The TIPA
does not apply to an offer that the offeree company's board of directors
recommends to its shareholders.
No statute similar to the TIPA applies to Planters Bank under the MBL.
GREENMAIL ACT
The Tennessee Greenmail Act ("TGA") applies to any corporation
chartered under the laws of Tennessee which has a class of voting stock
registered or traded on a national securities exchange or registered with the
SEC pursuant to Section 12(g) of the Exchange Act, such as FTNC. The TGA
provides that it is unlawful for any corporation or subsidiary to purchase,
either directly or indirectly, any of its shares at a price above the market
value as defined in the TGA, from any person who holds more than three percent
of the class of the securities purchased if such person has held such shares
for less than two years, unless either the purchase is first approved by the
affirmative vote of a majority of the outstanding shares of each class of
voting stock issued or the corporation makes an offer of at least equal value
per share to all holders of shares of such class.
The TGA is not applicable to Planters Bank.
DIVIDENDS AND OTHER DISTRIBUTIONS
Planters Bank may declare dividends only from its undivided profits.
The TBCA provides that FTNC generally may make dividends or other
distributions to its shareholders unless after the distribution either (i) FTNC
would not be able to pay its debts as they `become due in the usual course of
business or (ii) FTNC's assets would be less than the sum of its liabilities
plus the amount that would be needed to satisfy the preferential dissolution
rights of its preferred stock. There are no shares of FTNC preferred stock
outstanding.
DISSENTERS' RIGHTS
The MBL does not provide dissenters' rights for mergers. Thus, the
shareholders of Planters Bank Common Stock do not have dissenters' rights with
respect to the Merger to be voted on at the Special Meeting. See "The Merger
- -- No Shareholders' Dissenters' Rights."
The TBCA generally provides dissenters' rights for mergers and share
exchanges that would require shareholder approval, sales of substantially all
the assets (other than sales that are in the usual and regular course of
business and certain liquidations and court-order sales), and certain
amendments to the charter that materially and adversely affect rights in
respect of a dissenter's shares. Under TBCA,
- 53 -
<PAGE> 58
however, dissenters' rights are not available as to any shares which are listed
on an exchange registered under Section 6 of the Exchange Act or are "National
Market System" securities as defined in rules promulgated pursuant to the
Exchange Act (such as FTNC Common Stock).
RIGHTS OF HOLDERS OF CAPITAL NOTES
On June 10, 1987, FTNC issued Capital Notes due in 1999. At maturity,
the Capital Notes will be exchanged for Capital Securities having a market
value equal to the principal amount of the notes. See "Description of FTNC
Capital Stock--Subordinated Capital Notes due 1999."
SHAREHOLDER RIGHTS PLAN
For a discussion of the FTNC Shareholder Rights Plan, see "Description
of FTNC Capital Stock--Shareholder Rights Plan." The Planters Bank Board has
not adopted a shareholder rights plan.
VALIDITY OF COMMON STOCK
A legal opinion to the effect that the shares of FTNC Common Stock and
associated Rights offered hereby, when issued in accordance with the Merger
Agreement, will be validly issued, fully paid and nonassessable, has been
rendered by Clyde A. Billings, Jr., Vice President and Counsel, First Tennessee
National Corporation. Mr. Billings beneficially owns approximately 10,400
shares of FTNC Common Stock.
Heiskell, Donelson, Bearman, Adams, Williams & Caldwell, a
Professional Corporation, has rendered an opinion, summarized above in the
section entitled "--Certain Federal Income Tax Consequences." Attorneys in the
firm beneficially own approximately 25,000 shares of FTNC Common Stock.
EXPERTS
The consolidated financial statements of FTNC and its subsidiaries
incorporated in this Proxy Statement-Prospectus by reference from FTNC's Annual
Report on Form 10-K for the year ended December 31, 1993 have been audited by
Arthur Andersen & Co., independent public accountants, as stated in their
report dated January 18, 1994, which is incorporated herein by reference, and
have been so incorporated in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
The financial statements of Planters Bank as of December 31, 1993, and
for the year ended December 31, 1993, included in this Proxy
Statement-Prospectus have been audited by Reynolds, Bone & Griesbeck, as set
forth in their report dated April 8, 1994, included herein. These financial
statements are included herein in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
Representatives of Reynolds, Bone & Griesbeck are expected to be
present at the Special Meeting, will have an opportunity to make a statement if
they desire to do so, and are expected to be available to respond to
appropriate questions.
- 54 -
<PAGE> 59
With respect to the 1991 financial statements of Home Financial
Corporation, a company acquired by FTNC during 1992 in a transaction accounted
for as a pooling-of-interests, Arthur Andersen & Co. relied upon the report of
Baylor and Backus, independent accountants, whose report dated February 21,
1992, except with respect to the information discussed in Note 27, as to which
the date is October 21, 1992, was incorporated by reference in FTNC's Form 10-K
for 1993 and is incorporated herein by reference.
The consolidated financial statements of Maryland National Mortgage
Corporation and subsidiaries, appearing in First Tennessee National
Corporation's Current Report on Form 8-K, dated October 1, 1993, for the year
ended December 31, 1992, have been audited by Ernst & Young, independent
auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements
referred to above are incorporated herein in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
- 55 -
<PAGE> 60
INDEX TO PRO FORMA FINANCIAL INFORMATION
<TABLE>
Page
-------
<S> <C>
FTNC Pro Forma Combined Condensed Statement of Condition as of December 31, 1993 . . . . . . . . . . . . . . . . . PF - 2
FTNC Pro Forma Combined Condensed Statements of Income for the Year Ended
December 31, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PF - 3
INDEX TO PLANTERS BANK FINANCIAL INFORMATION
As of and for the Years Ended December 31, 1993
Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
Balance Sheet as of December 31, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
Statement of Income for the Years Ended December 31, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Statement of Changes in Stockholders' Equity for the Year Ended December 31, 1993 . . . . . . . . . . . . . F-4
Statement of Cash Flows for the Year Ended December 31, 1993 . . . . . . . . . . . . . . . . . . . . . . . . F-5
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6
As of and for the Years Ended December 31, 1992 and 1991 (Unaudited)
Balance Sheet as of December 31, 1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-14
Statement of Income for the Years Ended December 31, 1992 and 1991 . . . . . . . . . . . . . . . . . . . . . F-15
Statement of Changes in Stockholders' Equity for the Years Ended
December 31, 1992 and 1991 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-16
Statement of Cash Flows for the Years Ended December 31, 1992 and 1991 . . . . . . . . . . . . . . . . . . . F-17
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-18
</TABLE>
-56-
<PAGE> 61
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma combined statement of condition and
statement of income reflect (i) the historical consolidated condensed
statements of condition of FTNC, adjusted for the completed acquisitions of
Cleveland Bank and Trust Company (CBT), Highland Capital Management Corp.
(HCMC), and SNMC Management Corporation (SNMC), and Planters Bank, as of
December 31, 1993, (ii) the pro forma combined condensed statement of condition
of FTNC as of December 31, 1993, (iii) the historical consolidated condensed
statements of income of FTNC, adjusted for the completed acquisitions. Of CBT,
HCMC, and SNMC, and Planters Bank, for the year ended December 31, 1993, and
(iv) the pro forma combined condensed statement of income of FTNC for the year
ended December 31, 1993, giving effect to the Merger on a pooling of interest
accounting basis.
Since December 31, 1993, FTNC has issued an aggregate of 3.4
million shares of its common stock to complete the following acquisitions. On
January 4, 1994, FTNC completed the acquisition of SNMC. SNMC became a wholly
owned subsidiary of First Tennessee Bank National Association, the principal
subsidiary of FTNC. At December 31, 1993, SNMC had total assets of
approximately $463.7 million. On March 1, 1994, HCMC merged with First
Tennessee Investment Management, Inc., a wholly-owned subsidiary of FTNC. The
combined organization became a wholly owned subsidiary of FTNC with the name
Highland Capital Management Corp. On March 16, 1994, FTNC completed the
acquisition of CBT. CBT became a wholly owned subsidiary of FTNC. At December
31, 1993, CBT had total assets of approximately $227.4 million. Results for the
year ended December 31, 1993, are not necessarily indicative of the results
which may be expected for any interim period or for the year as a whole. PF-1
<PAGE> 62
FIRST TENNESSEE NATIONAL CORPORATION
PRO FORMA COMBINED
STATEMENT OF CONDITION
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
FTNC Planters Adjust-
(Thousands) Pro Forma (1) Bank ment (2) Pro Forma
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 755,877 $ 4,469 $ $ 760,346
Investments in bank time deposits 7,637 7,637
Trading account securities 178,663 178,663
Assets held for sale 772,535 772,535
Investment securities 2,186,047 34,040 2,220,087
Net loans 5,685,532 24,349 5,709,881
Premises and equipment, net 134,792 1,438 136,230
Real estate acquired by foreclosure 31,650 8 31,658
Mortgage servicing rights 83,116 83,116
Other identifiable intangible assets 28,905 28,905
Goodwill 62,565 62,565
Customers' acceptances 4,871 4,871
Other assets 367,850 1,375 369,225
-------------- ----------- ------------ -----------------
Total assets $ 10,300,040 $ 65,679 $ -- $ 10,365,719
============== =========== ============ =================
LIABILITIES
Deposits $ 7,347,057 $ 55,525 $ $ 7,402,582
Federal funds purchased and securities
sold under agreements to repurchase 1,010,473 4,171 1,014,644
Other borrowings 746,561 746,561
Long term debt 92,043 92,043
Acceptances outstanding 4,871 4,871
Other liabilities 411,714 308 412,022
-------------- ----------- ------------ -----------------
Total liabilities 9,612,719 60,004 -- 9,672,723
SHAREHOLDERS' EQUITY
Common stock 79,363 600 324 80,287
Surplus 65,377 4,900 (324) 69,953
Retained earnings 544,996 175 545,171
Net unrealized loss on marketable
equity securities (40) (40)
Deferred compensation on restricted stock
incentive plan (2,375) (2,375)
-------------- ----------- ------------ -----------------
Total shareholders' equity 687,321 5,675 -- 692,996
-------------- ----------- ------------ -----------------
Total liabilities and shareholders' equity $ 10,300,040 $ 65,679 $ -- $ 10,365,719
============== =========== ============ =================
</TABLE>
(1) FTNC pro forma amounts as of December 31, 1993 include the pending
acquisitions of SNMC Management Corporation, Cleveland Bank and Trust
Company, and Highland Capital Management Corp. which have closed
during 1994.
(2) Reflects the conversion of 60,000 shares of Planters Bank's common stock
outstanding at December 31, 1993, into 369,473 shares of FTNC's $2.50
par value common stock (using an exchange ratio of 6.1579 which is
based on an FTNC stock price of $38.00). Planters Bank's exchange
ratio may actually vary within the range of 5.5714 to 6.8824 based on
the average stock price of FTNC's common stock.
PF-2
<PAGE> 63
FIRST TENNESSEE NATIONAL CORPORATION
PRO FORMA COMBINED CONDENSED
STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
FTNC
(Thousands) Pro Forma (1) Planters Pro Forma
Bank
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $ 434,544 $ 1,947 $ 436,491
Interest on investment securities 175,299 1,481 176,780
Interest on trading account securities 9,304 9,304
Interest on other earning assets 3,783 72 3,855
---------- -------- ---------
Total interest income 622,930 3,500 626,430
---------- -------- ---------
Interest expense:
Interest on deposits 195,823 1,280 197,103
Interest on short-term borrowings 56,486 37 56,523
Interest on long-term debt 9,315 9,315
---------- -------- ---------
Total interest expense 261,624 1,317 262,941
---------- -------- ---------
Net interest income 361,306 2,183 363,489
Provision for loan losses 35,425 457 35,882
---------- -------- ---------
Net interest income after provision
for loan losses 325,881 1,726 327,607
---------- -------- ---------
Noninterest income:
Bond division 91,525 91,525
Service charges on deposit accounts 57,253 167 57,420
Mortgage Banking 88,771 88,771
Bank card 26,417 26,417
Trust service 26,455 26,455
Securities gains (losses) 770 35 805
Other 45,605 172 45,777
---------- -------- ---------
Total noninterest income 336,796 374 337,170
---------- -------- ---------
Noninterest expense:
Salaries and employee benefits 267,089 757 267,846
Operations services 28,400 82 28,482
Occupancy 27,298 202 27,500
Communications and courier 19,082 19,082
Equipment rentals, depreciation, and
maintenance 18,833 18,833
Deposit insurance premium 15,909 105 16,014
Amortization of intangible assets 30,843 30,843
Other 85,070 487 85,557
---------- -------- ---------
Total noninterest expense 492,524 1,633 494,157
---------- -------- ---------
Income before income taxes and cumulative
effect of change in accounting principle 170,153 467 170,620
Applicable income taxes 64,542 12 64,554
Income before cumulative effect of change ---------- -------- ---------
in accounting principle 105,611 455 106,066
Cumulative effect of change in accounting principle 51 51
---------- -------- ---------
Net income $ 105,611 $ 506 $ 106,117
Net income per common share 3.33 8.44 3.30
---------- -------- ---------
Weighted average shares outstanding (2) 31,745 60 32,115
---------- -------- ---------
</TABLE>
(1) FTNC pro forma amounts as of December 31, 1993 include the pending
acquisitions of SNMC Management Corporation, Cleveland Bank and Trust
Company, and Highland Capital Management Corp. which have closed during
1994.
(2) Pro forma weighted average shares outstanding have been calculated by
increasing FTNC's current weighted average shares by the FTNC equivalent
weighted average shares for Planters Bank and by the number of shares
issued to acquire SNMC, CBT, and HCMC. The Merger Agreement with Planters
Bank provides for a range of exchange ratios of 5.571 to 6.882. The
exchange ratio used in the Planters Bank calculation above was the
approximate midpoint of the respective range.
PF-3
<PAGE> 64
PLANTERS BANK
FINANCIAL STATEMENTS
DECEMBER 31, 1993
<PAGE> 65
Reynolds, Bone & Griesbeck
INDEPENDENT AUDITOR'S REPORT
The Board of Directors
Planters Bank
Tunica, Mississippi
We have audited the accompanying balance sheet of Planters Bank as of December
31, 1993, and the related statements of income, changes in stockholders'
equity, and cash flows for the year then ended. These financial statements are
the responsibility of the Bank's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Planters Bank at December 31,
1993, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
As discussed in note 7 to the financial statements, the Bank adopted Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes" in
1993.
Reynolds, Bone & Griesbeck
Memphis, Tennessee
April 8, 1994
F-1
<PAGE> 66
<TABLE>
<CAPTION>
BALANCE SHEET
Planters Bank
December 31, 1993
- ------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Cash and cash equivalents $ 4,468,942
Investment securities (market value of
approximately $34,690,000) 34,039,821
Loans, less allowance for loan losses 24,348,890
Premises and equipment, net 1,437,825
Accrued interest receivable 910,960
Other real estate 8,000
Deferred income taxes 328,609
Other assets 135,659
-----------
Total assets $65,678,706
===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Deposits
Noninterest-bearing $11,165,828
Certificates of deposit of $100,000 and over 11,365,208
Other interest-bearing 32,993,804
-----------
Total deposits 55,524,840
Federal funds purchased 2,000,000
Repurchase agreements 2,170,500
Accrued interest payable 226,334
Other liabilities 81,803
-----------
Total liabilities 60,003,477
Commitments and contingencies
Stockholders' equity
Common stock, $10 par value, 60,000
shares authorized and issued 600,000
Surplus 4,900,000
Undivided profits 175,229
-----------
Total stockholders' equity 5,675,229
-----------
Total liabilities and stockholders' equity $65,678,706
===========
</TABLE>
See - Notes to Financial Statements.
F-2
<PAGE> 67
<TABLE>
<CAPTION>
STATEMENT OF INCOME
- -------------------------------------------------------------------
Planters Bank
Year Ended December 31, 1993
<S> <C>
Interest income
Loans, including fees $1,947,180
Investment securities
Taxable 1,065,083
Nontaxable 416,274
Federal funds sold 71,643
----------
Total interest income 3,500,180
Interest expense
Deposits 1,280,136
Other 36,464
----------
Total interest expense 1,316,600
----------
Net interest income 2,183,580
Provision for loan losses 457,373
Net interest income after
provision for loan losses 1,726,207
Noninterest income
Service charges on deposit accounts 167,010
Investment securities gains, net 34,555
Other 171,942
----------
Total noninterest income 373,507
Noninterest expenses
Salaries 537,017
Employee benefits 219,657
Occupancy and equipment, net 201,697
Other 674,171
----------
Total noninterest expenses 1,632,542
----------
Income before income taxes
and cumulative effect of
change in accounting
principle 467,172
Income taxes 11,793
----------
Income before cumulative
effect of change in
accounting principle 455,379
Cumulative effect of change in
accounting principle 51,000
----------
Net income $ 506,379
==========
Earnings per share based on 60,000
average common shares outstanding $ 8.44
==========
</TABLE>
See notes to financial statements.
F-3
<PAGE> 68
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Planters Bank
Year Ended December 31, 1993
Unrealized
Loss on
Marketable
Common Undivided Equity
Stock Surplus Profits Securities Total
-------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance at
December 31, 1992 $600,000 $4,350,000 $458,850 $(88,929) $5,319,921
Net income - - 506,379 - 506,379
Cash dividends
declared, $4
per share - - (240,000) - (240,000)
Transfer to surplus - 550,000 (550,000) - -
Change in unrealized
loss on
marketable
equity securities - - - 88,929 88,929
-------- ---------- -------- -------- ----------
Balance at December 31, 1993 $600,000 $4,900,000 $175,229 $ - $5,675,229
======== ========== ======== ======== ==========
</TABLE>
See notes to financial statements.
F-4
<PAGE> 69
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
Planters Bank
Year Ended December 31, 1993
- --------------------------------------------------------------------------------------------
<S> <C>
Cash Flows from operating activites
Net income $ 506,379
Adjustments to reconcile net income to
net cash provided by operating activities
Deferred income taxes (144,000)
Premium amortization 5,700
Discount accretion (71,217)
Depreciation 78,990
Provision for loan losses 457,373
Investment securities gains (34,555)
Writedown of other real estate 2,500
Changes in other assets and liabilities
Accrued interest receivable (5,722)
Other assets (75,238)
Accrued interest payable (52,117)
Income taxes payable (103,954)
Other liabilities 3,174
------------
Net cash provided by operating
activities 567,313
Cash flows from investing activities
Net decrease in federal funds sold 1,000,000
Proceeds from sales of investment securities 774,912
Proceeds from maturities of investment securities 12,295,343
Purchases of investment securities (23,775,311)
Net increase in loans (3,505,950)
Purchases of premises and equipment (1,256,272)
------------
Net cash used by investing
activities (14,467,278)
Cash flows from financing activities
Net increase in deposits 8,965,939
Net increase in repurchase agreements 2,170,500
Net increase in federal funds purchased 2,000,000
Cash dividends paid (240,000)
------------
Net cash provided by
financing activities 12,896,439
------------
Net decrease in cash and
cash equivalents (1,003,526)
Cash and cash equivalents at beginning of year 5,472,468
------------
Cash and cash equivalents at end of year $ 4,468,942
============
See notes to financial statements.
</TABLE>
F-5
<PAGE> 70
NOTES TO FINANCIAL STATEMENTS
Planters Bank
December 31, 1993
- -------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment Securities
Investment securities are stated at cost adjusted for amortization of
premiums and accretion of discounts, which are recognized as
adjustments to interest income. Gains or losses on disposition are
based on the net proceeds and the adjusted carrying amount of the
securities sold, using the specific identification method. Securities
are considered held for investment purposes since the Bank had the
ability and intent to hold such securities to maturity. No
securities are held for trading purposes.
In May 1993, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 115 "Accounting for Certain
Investments in Debt and Equity Securities." This statement is
effective for fiscal years beginning after December 15, 1993, with
earlier application allowed. The Bank has elected to defer adoption
of this statement until January 1, 1994. It is estimated that
adoption of Statement 115 will not have a material effect on the
Bank's financial statements.
Loans
Loans are stated at the amount of unpaid principal, reduced by
unearned interest and an allowance for loan losses. Unearned interest
on installment loans is reported as income using a method which
approximates the interest method. Interest on other loans is
calculated by using the simple interest method on daily balances of
the principal amount outstanding.
Loans on which the accrual of interest has been discontinued are
designated as nonaccrual loans. Accrual of interest is discontinued
on a loan when management believes, after considering economic and
business conditions and collection efforts, that the borrower's
financial condition is such that collection of interest is unlikely or
a specified loan meets the criteria for nonaccrual status by
regulatory authorities.
Allowance for Loan Losses
The allowance for loan losses is established through a provision for
loan losses charged to expense. Loans are charged against the
allowance for loan losses when management believes that the
collectibility of the principal is unlikely. The allowance is an
amount that management believes will be adequate to absorb possible
losses on existing loans that may become uncollectible, based on
evaluations of the collectibility of loans and prior loan loss
experience. The evaluations take into consideration such factors as
changes in the nature and volume of the loan portfolio, overall
portfolio quality, review of specific problem loans, and current
economic conditions and trends that may affect the borrowers' ability
to pay.
Continued
F-6
<PAGE> 71
NOTES TO FINANCIAL STATEMENTS
Planters Bank
December 31, 1993
- --------------------------------------------------------------------------------
Premises and Equipment
Premises and equipment are stated at cost less accumulated
depreciation. Depreciation is computed principally using the
straight-line method over the estimated useful lives of the assets.
Other Real Estate
Other real estate of $8,000 at December 31, 1993 represents real
estate held for sale and is stated at the lower of the recorded asset
or the estimated net realizable value.
Income Taxes
Deferred tax assets and liabilities are recognized for differences
between the financial statement and tax bases of assets and
liabilities and are measured using tax rates expected to apply to
taxable income in the year that these temporary differences reverse.
Cash Flows
For purposes of reporting cash flows, cash and cash equivalents
included cash and amounts due from banks.
2. INVESTMENT SECURITIES
The book value and estimated market value of investment securities at
December 31, 1993 are as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Book Unrealized Unrealized Market
Value Gains Losses Value
----------- --------- ------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury $ 9,924,603 $ 17,403 $ 3,800 $ 9,938,206
U.S. Government agencies
and corporations 9,836,776 55,716 63,516 9,828,976
States and political
subdivisions 8,564,058 513,875 3,753 9,074,180
Mortgage-backed securities 5,714,384 149,629 12,097 5,851,916
----------- --------- -------- -----------
Total $34,039,821 $736,623 $83,166 $34,693,278
============ ========= ======== ============
</TABLE>
Continued
F-7
<PAGE> 72
NOTES TO FINANCIAL STATEMENTS
Planters Bank
December 31, 1993
- --------------------------------------------------------------------------------
The book value and estimated market value of investment debt
securities at December 31, 1993, by contractual maturity, are shown
below. Expected maturities may differ from contractual maturities
because borrowers may have the right to call or prepay obligations
with or without call or prepayment penalties.
Estimated
Book Market
Value Value
----------- -----------
Due in one year or less $ 8,315,368 $ 8,332,080
Due after one year through five years 8,902,185 8,978,207
Due after five years through ten years 6,258,096 6,457,097
Due after ten years 4,849,788 5,073,978
Mortgage-backed securities 5,714,384 5,851,916
----------- -----------
$34,039,821 $34,693,278
=========== ===========
There were no sales of investment debt securities during 1993.
Proceeds from sale of investment equity securities during 1993
were $774,912.
Investment securities with aggregate book value of approximately
$13,100,000 at December 31, 1993 were pledged to secure certain
deposits and for other purposes.
3. LOANS
The Bank grants commercial, installment and real estate loans to
customers principally in the Tunica County, Mississippi area.
Primarily all installment and real estate loans are secured by
specific items of collateral including consumer assets, land and
residences. The majority of agricultural and commercial loans are
secured by real estate, crops, and other business assets. Although
the loan portfolio is diversified, a substantial portion of the
borrowers' ability to repay their loans is dependent upon the
agricultural economic sector.
Continued
F-8
<PAGE> 73
NOTES TO FINANCIAL STATEMENTS
Planters Bank
December 31, 1993
<TABLE>
- ----------------------------------------------------------------------------------------------------
Major categories of loans at December 31, 1993 are as follows:
<S> <C>
Real estate $ 11,518,574
Agricultural 5,538,603
Commercial 4,321,585
Consumer 4,151,948
------------
25,530,710
Less: Unearned interest 222,703
Allowance for loan losses 959,117
------------
$ 24,348,890
============
</TABLE>
Loans on which the accrual of interest has been discontinued totaled
$227,762 at December 31, 1993. The amount of income that would have
been earned had these loans been accruing interest was insignificant
for 1993. Loans past due 90 days or more and still accruing interest
were $58,000 at December 31, 1993.
The Bank grants loans to officers and directors and their related
interests. In management's opinion, these loans are made on
substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with
unrelated borrowers and do not involve more than normal risk of
collectibility. The aggregate amount of these loans at December 31,
1993 was approximately $3,130,000.
Changes in the allowance for loan losses for the year ended December
31, 1993 were as follows:
<TABLE>
<S> <C>
Balance at beginning of year $ 750,000
Provision for loan losses 457,373
Loans charged-off (341,973)
Recoveries 93,717
---------
Balance at end of year $ 959,117
=========
</TABLE>
Continued
F-9
<PAGE> 74
NOTES TO FINANCIAL STATEMENTS
Planters Bank
December 31, 1993
- -----------------------------------------------------------------------------
4. PREMISES AND EQUIPMENT
A summary of premises and equipment at December 31, 1993 follows:
Useful Life
in Years
-----------
Land N/A $ 47,078
Building and improvements 10-27 254,880
Construction in progress N/A 865,034
Equipment, furniture
and fixtures 3-10 918,189
----------
2,085,181
Less accumulated depreciation 647,356
----------
$1,437,825
==========
Remodeling of the Bank will be completed in 1994 at an estimated
additional cost of $500,000.
5. RETIREMENT PLAN
Prior to 1993, the Bank had an Employee Stock Ownership Plan (ESOP)
covering eligible employees. Contributions to the ESOP were made at
the discretion of the Board of Directors. Effective January 1, 1993,
the ESOP was converted to a defined contribution profit sharing plan
covering eligible employees as defined in the plan. The contribution
to the profit sharing plan, which is made at the discretion of the
Board of Directors, was $38,874 in 1993.
6. SUPPLEMENTARY INCOME STATEMENT INFORMATION
Components of other expenses for the year ended December 31, 1993 are:
Advertising $ 73,439
Professional fees 84,281
Supplies and printing 70,280
Data processing 82,216
FDIC insurance 104,844
Other 259,111
--------
$674,171
========
Continued
F-10
<PAGE> 75
NOTES TO FINANCIAL STATEMENTS
Planters Bank
December 31, 1993
- --------------------------------------------------------------------------------
7. INCOME TAXES
Income taxes consist of the following:
Current $104,793
Deferred (93,000)
-------
Total $ 11,793
=======
Income tax expense, as a percent of income before income taxes, varies
from the statutory federal income tax rate of 34%. The differences
are as follows:
Amount
------
Income taxes at statutory
federal rate $ 158,838
Add (deduct):
Tax-exempt income (139,510)
Other, net (7,535)
--------
Total $ 11,793
========
Effective January 1, 1993, deferred taxes are computed using the
liability method as prescribed in Statement of Financial Accounting
Standards No. 109 "Accounting for Income Taxes." The Bank has
reported the cumulative effect of this change in the method of
accounting for income taxes in the statement of income.
Deferred tax liabilities have been provided for taxable temporary
differences related to discount accretion and depreciation. Deferred
tax assets have been provided for deductible temporary differences
related to the allowance for loan losses, deferred income and
carryforward of minimum tax credits. The net deferred tax asset in
the accompanying balance sheet as of December 31, 1993, includes the
following components:
Deferred tax assets $359,500
Deferred tax liabilities (30,891)
-------
Net deferred tax asset $328,609
=======
F-11
<PAGE> 76
NOTES TO FINANCIAL STATEMENTS
Planters Bank
December 31, 1993
- -------------------------------------------------------------------------------
8. COMMITMENTS AND CONTINGENCIES
The Bank is a party to financial instruments with off-balance sheet
risk in the normal course of business to meet the financing needs of
its customers. These financial instruments include commitments to
extend credit and standby letters of credit.
The Bank's exposure to credit loss in the event of
nonperformance by the other party to the financial instrument for
commitments to extend credit and standby letters of credit is
represented by the contractual amount of those instruments. The Bank
uses the same credit policies to make such commitments as it does for
on-balance sheet items. Contract amounts for these financial
instruments at December 31, 1993 are as follows:
Commitments to extend credit $5,610,000
Standby letters of credit 300,000
Since many commitments to extend credit expire without being
used, the commitment amount does not necessarily represent future cash
requirements. Collateral obtained upon exercise of the commitment is
determined using management's credit evaluation of the borrower, and
may include property, land, business assets, and other items. The
credit risk involved in issuing letters of credit is essentially the
same as that involved in extending credit to customers.
9. UNDIVIDED PROFITS
Banking regulations limit the amount of dividends that may be
paid without prior approval of the agencies which regulate the Bank.
10. REGULATORY CAPITAL
The Bank is subject to regulatory capital requirements administered by
the Federal Deposit Insurance Corporation. Failure to meet capital
requirements can initiate certain mandatory (and possibly
additional discretionary) actions by regulators that could, in that
event, have a direct material effect on the Bank's financial
statements. The relevant regulations require the Bank to meet
specific capital adequacy guidelines that involve quantitative
measures of the Bank's assets and liabilities as calculated under
regulatory accounting principles. The regulations also require the
regulators to make qualitative judgements about the Bank. Those
qualitative judgements could also affect the Bank's capital status.
At December 31, 1993, management believes that the Bank meets all such
capital requirements to which it is subject.
Continued
F-12
<PAGE> 77
NOTES TO FINANCIAL STATEMENTS
Planters Bank
December 31, 1993
- -------------------------------------------------------------------------------
11. SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ 1,368,717
Income taxes paid 247,070
Noncash investing activity
Change in unrealized loss on
marketable equity securities 88,929
12. SUBSEQUENT EVENT
The Bank executed a merger agreement dated March 29, 1994 with First
Tennessee National Corporation. Consummation of the merger is
dependent upon the approval of the Bank's shareholders and applicable
regulatory authorities.
F-13
<PAGE> 78
PLANTERS BANK
FINANCIAL STATEMENTS
DECEMBER 31, 1992 AND 1991
<PAGE> 79
<TABLE>
<CAPTION>
BALANCE SHEET
Planters Bank
December 31, 1992
(Unaudited)
- ------------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
Cash and cash equivalents $ 5,472,468
Federal funds sold 1,000,000
Investment securities (market value of
approximately $23,580,000) 23,145,764
Loans, less allowance for loan losses 21,300,313
Premises and equipment, net 260,543
Accrued interest receivable 905,238
Other real estate 10,500
Deferred income taxes 184,609
Other assets 60,421
------------
Total assets $52,339,856
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing $10,377,251
Certificates of deposit of $100,000 and over 5,525,174
Other interest-bearing 30,656,476
------------
Total deposits 46,558,901
Accrued interest payable 278,451
Income taxes payable 103,954
Other liabilities 78,629
------------
Total liabilities 47,019,935
Commitments and contingencies
Stockholders' equity
Common stock, $10 par value, 60,000
shares authorized and issued 600,000
Surplus 4,350,000
Undivided profits 458,850
Unrealized loss on marketable equity securities (88,929)
------------
Total stockholders' equity 5,319,921
------------
Total liabilities and stockholders' equity $52,339,856
============
</TABLE>
See notes to financial statements.
F-14
<PAGE> 80
<TABLE>
<CAPTION>
STATEMENT OF INCOME
Planters Bank
Years Ended December 31,1992 and 1991
(Unaudited)
- ---------------------------------------------------------------------------------------------------------------------------------
1992 1991
---------- ----------
<S> <C> <C>
Interest income
Loans, including fees $2,168,602 $2,643,982
Investment securities
Taxable 817,840 833,584
Nontaxable 259,330 255,836
Federal funds sold 75,659 67,294
---------- ----------
Total interest income 3,321,431 3,800,696
Interest expense
Deposits 1,423,976 1,984,178
Other 5,873 56,819
---------- ----------
Total interest expense 1,429,849 2,040,997
---------- ----------
Net interest income 1,891,582 1,759,699
Provision for loan losses 171,180 215,486
---------- ----------
Net interest income after provision
for loan losses 1,720,402 1,544,213
Noninterest income
Service charges on deposit accounts 157,254 160,607
Investment securities gains (losses), net 95,266 (117,753)
Other 40,111 60,063
---------- ----------
Total noninterest income 292,631 102,917
Noninterest expenses
Salaries 447,819 440,711
Employee benefits 185,792 214,563
Occupancy and equipment, net 159,204 124,601
Provision for loss on municipal bonds - 114,978
Other 455,232 482,291
---------- ----------
Total noninterest expenses 1,248,047 1,377,144
---------- ----------
Income before income taxes 764,986 269,986
Income taxes 164,181 38,020
---------- ----------
Net income $ 600,805 $ 231,966
========== ==========
Earnings per share based on 60,000 average
common shares outstanding $ 10.01 $ 3.87
========== ==========
</TABLE>
See notes to financial statements.
F-15
<PAGE> 81
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Planters Bank
Years Ended December 31, 1992 and 1991
(Unaudited)
- -----------------------------------------------------------------------------------------------------------
Unrealized
Loss on
Marketable
Common Undivided Equity
Stock Surplus Profits Securities Total
------- --------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance at
December 31,
1990 $600,000 $4,050,000 $466,079 $(304,929) $4,811,150
Net income - - $231,966 - 231,966
Cash dividends
declared, $4
per share - - (240,000) - (240,000)
Change in
unrealized loss
on marketable
equity
securities - - - 22,500 22,500
-------- ---------- -------- --------- ----------
Balance at
December 31,
1991 600,000 4,050,000 458,045 (282,429) 4,825,616
Net income - - 600,805 - 600,805
Cash dividends
declared, $5
per share - - (300,000) - (300,000)
Tranfer to
surplus - 300,000 (300,000) - -
Change in
unrealized loss
on marketable
equity
securities - - - 193,500 193,500
-------- ---------- -------- --------- ----------
Balance at
December 31,
1992 $600,000 $4,350,000 $458,850 $ (88,929) $5,319,921
======== ========== ======== ========= ==========
</TABLE>
See notes to financial statements.
F-16
<PAGE> 82
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
Planters Bank
Years Ended December 31, 1992 and 1991
(Unaudited)
- ------------------------------------------------------------------------------------------
1992 1991
----------- ----------
<S> <C> <C>
Cash flows from operating activities
Net income $ 600,805 $ 231,966
Adjustments to reconcile net income
to net cash provided by operating
activities
Deferred income taxes (18,359) 31,483
Premium amortization 6,305 22,442
Discount accretion (33,707) (31,051)
Depreciation 55,447 52,341
Provision for loan losses 171,180 215,486
Provision for loss on municipal bonds - 114,978
Investment securities (gains) losses (95,266) 117,753
Writedown of other real estate 2,500 2,500
Changes in other assets and liabilities
Accrued interest receivable 185,004 153,679
Other assets 55,740 (86,707)
Accrued interest payable (196,469) (140,584)
Income taxes payable 103,954 (11,227)
Other liabilities 6,455 (11)
------------ -----------
Net cash provided by operating
activities 843,589 673,048
Cash flows from investing activities
Net decrease in federal funds sold 750,000 1,425,000
Proceeds from sales of investment securities 3,487,478 5,808,790
Proceeds from maturities of investment
securities 1,786,484 2,240,488
Purchases of investment securities (14,392,228) (8,334,500)
Net (increase) decrease in loans 1,481,782 (121,969)
Purchases of premises and equipment (69,639) (66,174)
Net cash provided by (used for) ------------ -----------
investing activities (6,956,123) 951,635
Cash flows from financing activities
Net increase (decrease) in deposits 8,196,911 (1,036,299)
Cash dividends paid (300,000) (240,000)
Net cash provided by (used for) ------------ -----------
financing activities 7,896,911 (1,276,299)
------------ -----------
Net increase in cash and cash
equivalents 1,784,377 348,384
Cash and cash equivalents at beginning of year 3,688,091 3,339,707
------------ -----------
Cash and cash equivalents at end of year $ 5,472,468 $ 3,688,091
============ ===========
</TABLE>
See notes to financial statements.
F-17
<PAGE> 83
NOTES TO FINANCIAL STATEMENTS
Planters Bank
December 31, 1992 and 1991
(Unaudited)
- -------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment Securities
Investment securities are stated at cost adjusted for amortization of
premiums and accretion of discounts, which are reported as adjustments
to interest income. Gains or losses on disposition are based on the
net proceeds and the adjusted carrying amount of the securities sold,
using the specific identification method. Securities are considered
held for investment purposes since the Bank had the ability and intent
to hold such securities to maturity. No securities are held for
trading purposes.
Loans
Loans are stated at the amount of unpaid principal, reduced by
unearned interest and an allowance for loan losses. Unearned interest
on installment loans is reported as income using a method which
approximates the interest method. Interest on other loans is
calculated by using the simple interest method on daily balances of
the principal amount outstanding.
Loans on which the accrual of interest has been discontinued are
designated as nonaccrual loans. Accrual of interest is discontinued
on a loan when management believes, after considering economic and
business conditions and collection efforts, that the borrower's
financial condition is such that collection of interest is unlikely or
a specified loan meets the criteria for nonaccrual status by
regulatory authorities.
Allowance for Loan Losses
The allowance for loan losses is established through a provision for
loan losses charged to expense. Loans are charged against the
allowance for loan losses when management believes that the
collectibility of the principal is unlikely. The allowance is an
amount that management believes will be adequate to absorb possible
losses on existing loans that may become uncollectible, based on
evaluations of the collectibility of loans and prior loan loss
experience. The evaluations take into consideration such factors as
changes in the nature and volume of the loan portfolio, overall
portfolio quality, review of specific problem loans, and current
economic conditions and trends that may affect the borrowers' ability
to pay.
Continued
F-18
<PAGE> 84
NOTES TO FINANCIAL STATEMENTS
Planters Bank
December 31, 1992 and 1991
(Unaudited)
- -------------------------------------------------------------------------------
Premises and Equipment
Premises and equipment are stated at cost less accumulated
depreciation. Depreciation is computed principally using the
straight-line method over the estimated useful lives of the assets.
Other Real Estate
Other real estate of $10,500 at December 31, 1992, represents real
estate held for sale and is stated at the lower of the recorded asset
or the estimated net realizable value.
Income Taxes
Deferred taxes are reported for temporary differences between items of
income or expense reported in the financial statements and those
reported for income tax purposes. The differences relate principally
to depreciation, provision for loan losses, and deferred income.
Cash Flows
For purposes of reporting cash flows, cash and cash equivalents
include cash and amounts due from banks.
Continued
F-19
<PAGE> 85
NOTES TO FINANCIAL STATEMENTS
Planters Bank
December 31, 1992 and 1991
(Unaudited)
- --------------------------------------------------------------------------------
2. INVESTMENT SECURITIES
The book value and estimated market value of investment securities
at December 31, 1992 are as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Book Unrealized Unrealized Market
Value Gains Losses Value
------------- ------------ ------------- -----------
<S> <C> <C> <C> <C>
U. S. Treasury $ 4,530,966 $ 97,207 $ 15 $ 4,628,158
U. S. Government
agencies and
corporations 7,895,971 5,844 18,241 7,883,574
States and
political
subdivisions 4,107,822 258,367 4,497 4,361,692
Mortgage-backed
securities 5,960,755 130,179 33,055 6,057,879
---------- ------- ------ ----------
Total debt
securities 22,495,514 $491,597 $ 55,808 22,931,303
======= ======
Equity securities 650,250 650,250
---------- ----------
Total
investment
securities $23,145,764 $23,581,553
========== ==========
</TABLE>
continued
F-20
<PAGE> 86
NOTES TO FINANCIAL STATEMENTS
Planters Bank
December 31, 1992 and 1991
(Unaudited)
- --------------------------------------------------------------------------------
The book value and estimated market value of investment debt
securities at December 31, 1992, by contractual maturity, are shown
below. Expected maturities may differ from contractual maturities
because borrowers may have the right to call or prepay obligations
with or without call or prepayment penalties.
Estimated
Book Market
Value Value
---------- ----------
Due in one year or less $ 9,602,839 $ 9,641,320
Due after one year through five years 3,352,380 3,471,065
Due after five years through ten years 2,530,444 2,671,453
Due after ten years 1,049,102 1,089,586
Mortgage-backed securities 5,960,749 6,057,879
---------- ----------
$22,495,514 $22,931,303
========== ==========
Proceeds from sales of investment securities were $3,487,478
and $5,808,790 in 1992 and 1991, respectively. Gross gains of
$115,078 and $59,219 were realized in 1992 and 1991, respectively.
Losses on sales of investment securities were $19,812 in 1992
and $176,972 in 1991.
Investment securities with aggregate carrying amounts of
approximately $7,700,000 at December 31, 1992 were pledged to secure
certain deposits and for other purposes.
3. LOANS
The Bank grants commercial, installment and real estate loans
to customers principally in the Tunica County, Mississippi area.
Primarily all installment and real estate loans are secured by
specific items of collateral including consumer assets, land and
residences. The majority of agricultural and commercial loans are
secured by real estate, crops, and other business assets. Although
the loan portfolio is diversified, a substantial portion of the
borrowers' ability to repay their loans is dependent upon the
agricultural economic sector.
Continued
F-21
<PAGE> 87
NOTES TO FINANCIAL STATEMENTS
Planters Bank
December 31, 1992 and 1991
(Unaudited)
- --------------------------------------------------------------------------------
Major categories of loans at December 31, 1992 are as follows:
Real estate $ 9,366,006
Agricultural 5,766,416
Commercial 2,634,844
Consumer 4,511,507
----------
22,278,773
Less: Unearned interest 228,460
Allowance for loan losses 750,000
----------
$21,300,313
==========
Loans on which the accrual of interest has been discontinued
totaled $60,833 at December 31, 1992. The amount of income
that would have been earned had these loans been accruing
interest was insignificant for 1992 and 1991. Loans past due
90 days or more and still accruing interest were $380,000 at
December 31, 1992.
The Bank grants loans to officers and directors and their
related interests. In management's opinion, these loans are
made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable
transactions with unrelated borrowers and do not involve more
than the normal risk of collectibility. The aggregate amount
of these loans at December 31, 1992 was approximately $2,020,000.
Changes in the allowance for loan losses for the years ended
December 31, 1992 and 1991 were as follows:
1992 1991
--------- ----------
Balance at beginning of year $ 700,000 $ 600,000
Provision for loan losses 171,180 215,486
Loans charged-off (141,522) (154,139)
Recoveries 20,342 38,653
-------- --------
Balance at end of year $ 750,000 $ 700,000
======== ========
Continued
F-22
<PAGE> 88
NOTES TO FINANCIAL STATEMENTS
Planters Bank
December 31, 1992 and 1991
(Unaudited)
- --------------------------------------------------------------------------------
4. PREMISES AND EQUIPMENT
A summary of premises and equipment at December 31, 1992 follows:
Useful Life
in Years
-----------
Land N/A $ 34,578
Building and improvments 10-27 254,880
Equipment, furniture and fixtures 3-10 539,451
-------
828,909
Less accumulated depreciation 568,366
-------
$260,543
=======
5. EMPLOYEE STOCK OWNERSHIP PLAN
The Bank has an Employee Stock Ownership Plan (ESOP)
for the benefit of eligible employees meeting certain
minimum age and length of service requirements. The
Bank makes contributions to the ESOP in amounts
determined by the Board of Directors. Contributions to
the ESOP were $37,859 in 1992 and $60,154 in 1991.
6. SUPPLEMENTARY INCOME STATEMENT INFORMATION
Components of other expenses for the years ended December 31, 1992
and 1991 are as follows:
1992 1991
-------- -------
Advertising $ 16,985 $ 30,230
Professional fees 39,425 42,036
Supplies and printing 48,541 49,865
Data Processing 62,405 57,104
FDIC insurance 81,735 76,788
Other 206,141 226,268
------- -------
$455,232 $482,291
======= =======
continued
F-23
<PAGE> 89
NOTES TO FINANCIAL STATEMENTS
Planters Bank
December 31, 1992 and 1991
(Unaudited)
- ------------------------------------------------------------------------
7. INCOME TAXES
Income taxes consist of the following:
1992 1991
------- -------
Current $182,540 $ 6,537
Deferred (18,359) 31,483
------- ------
$164,181 $ 38,020
======= ======
Income tax expense, as a percent of income before income
taxes, varies from the statutory federal income tax rate of
34%. The differences are as follows:
Income taxes at statutory federal rate $260,095 $ 91,796
Add (deduct):
Tax-exempt income (91,937) (97,564)
Alternative minimum tax - 43,000
Other, net (3,977) 788
------- ------
Total $164,181 $ 38,020
======= ======
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes."
Statement 109 requires use of the liability method for computing
deferred income taxes for fiscal years beginning after December 15,
1992. Management believes that adoption of Statement 109 will not
have a material effect on the Bank's financial statements.
8. COMMITMENTS AND CONTINGENCIES
The Bank is a party to financial instruments with off-balance
sheet risk in the normal course of business to meet the financing
needs of its customers. These financial instruments include
commitments to extend credit and standby letters of credit.
Continued
F-24
<PAGE> 90
NOTES TO FINANCIAL STATEMENTS
Planters Bank
December 31, 1992 and 1991
(Unaudited)
- -------------------------------------------------------------------------------
The Bank's exposure to credit loss in the event of nonperformance by
the other party to the financial instrument for commitments to extend
credit and standby letters of credit is represented by the contractual
amount of those instruments. The Bank uses the same credit policies
to make such commitments as it does for on-balance sheet items.
Contract amounts for these financial instruments at December 31, 1992
are as follows:
Commitments to extend credit $2,347,000
Standby letters of credit 363,000
Since many commitments to extend credit expire without being
used, the commitment amount does not necessarily represent future
cash requirements. Collateral obtained upon exercise of the
commitment is determined using management's credit evaluation of the
borrower, and may include property, land, business assets, and other
items. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending credit to
customers.
9. UNDIVIDED PROFITS
Banking regulations limit the amount of dividends that may be paid
without prior approval of the agencies which regulate the Bank.
10. REGULATORY CAPITAL
The Bank is subject to regulatory capital requirements administered by
the Federal Deposit Insurance Corporation. Failure to meet capital
requirements can initiate certain mandatory (and possibly additional
discretionary) actions by regulators that could, in that event, have
a direct material effect on the Bank's financial statements. The
relevant regulations require the Bank to meet specific capital
adequacy guidelines that involve quantitative measures of the Bank's
assets and liabilities as calculated under regulatory accounting
principles. The regulations also require the regulators to make
qualitative judgements about the Bank. Those qualitative judgements
could also affect the Bank's capital status. At December 31, 1992,
management believes that the Bank meets all such capital requirements
to which it is subject.
Continued
F-25
<PAGE> 91
NOTES TO FINANCIAL STATEMENTS
Planters Bank
December 31, 1992 and 1991
(Unaudited)
- --------------------------------------------------------------------------------
11. SUPPLEMENTAL CASH FLOW INFORMATION
1992 1991
---------- ----------
Interest paid $1,626,318 $2,178,974
Income taxes paid 6,263 90,087
Noncash investing activity
Change in unrealized loss on
marketable equity securities 193,500 22,500
F-26
<PAGE> 92
APPENDIX "A"
AGREEMENT AND PLAN OF MERGER
DATED AS OF THE 29TH DAY OF MARCH, 1994
BY AND BETWEEN
FIRST TENNESSEE NATIONAL CORPORATION
AND
PLANTERS BANK
<PAGE> 93
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A - 1
ARTICLE I. THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A - 2
(A) The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A - 2
(B) Conversion of Planters Bank Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . A - 2
(C) No Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A - 3
(D) Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A - 3
ARTICLE II. PLANTERS BANK ACTIONS PENDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A - 5
ARTICLE III. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A - 6
ARTICLE IV. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A - 11
ARTICLE V. CONDITIONS TO CONSUMMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A - 15
ARTICLE VI. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A - 18
ARTICLE VII. EFFECTIVE DATE AND EFFECTIVE TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A - 20
ARTICLE VIII. OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A - 20
</TABLE>
i
<PAGE> 94
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of the 29th day of March, 1994,
by and between FIRST TENNESSEE NATIONAL CORPORATION ("FTNC"), a Tennessee
corporation, and PLANTERS BANK ("Planters Bank"), a Mississippi banking
corporation.
RECITALS
(A) FTNC. FTNC has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Tennessee, with its
principal executive offices located in Memphis, Tennessee. As of the date
hereof, FTNC has 50,000,000 authorized shares of common stock, par value $2.50
per share ("FTNC Common Stock"), of which 30,175,456 shares are outstanding as
of February 23, 1994, and 5,000,000 authorized shares of preferred stock, no
par value, none of which are outstanding (no other class of capital stock being
authorized).
(B) INTERIM BANK. Prior to consummation of the Merger (herein
defined), FTNC shall cause First Tennessee Interim Bank ("Interim Bank") to be
formed as a wholly owned subsidiary of FTNC. Interim Bank shall be duly
organized and on the Effective Date (as hereafter defined in Article VII) will
be a bank in good standing under the laws of the State of Mississippi.
(C) PLANTERS BANK. Planters Bank has been duly incorporated and is
an existing corporation in good standing under the laws of the State of
Mississippi, with its principal executive offices located in Tunica,
Mississippi. As of the date hereof, Planters Bank has 60,000 authorized shares
of common stock, par value $10.00 per share ("Planters Bank Common Stock"), of
which 60,000 shares are outstanding as of the date hereof (no other class of
capital stock being authorized).
(D) RIGHTS, ETC. Neither FTNC, Interim Bank nor Planters Bank has
any shares of its capital stock reserved for issuance, any outstanding option,
call or commitment relating to shares of its capital stock or any outstanding
securities, obligations or agreements convertible into or exchangeable for, or
giving any person any right (including, without limitation, preemptive rights)
to subscribe for or acquire from it, any shares of its capital stock
(collectively, "Rights"), except (i) in the case of FTNC, pursuant to a
Shareholder Protection Rights Agreement, dated as of September 7, 1989, between
FTNC and First Tennessee Bank National Association, as Rights Agent (the "FTNC
Rights Agreement"), (ii) for securities issued as permitted under Section (I)
of Article IV, and (iii) as set forth on EXHIBIT "A" hereto (as to FTNC) and
EXHIBIT "B" hereto (as to Planters Bank).
(E) INTENTION OF THE PARTIES. It is the intention of the parties to
this Agreement that the Merger for federal income tax purposes shall qualify as
a "reorganization" within the meaning of Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code").
(F) MATERIALITY. Unless the context otherwise requires, any
reference in this Agreement to materiality with respect to either party shall,
as to Planters Bank, be deemed to be with respect to Planters Bank and its
subsidiaries (taken as a whole) and as to FTNC shall be deemed to be with
respect to FTNC and its subsidiaries, taken as a whole.
A - 1
<PAGE> 95
In consideration of their mutual promises and obligations hereunder,
and intending to be legally bound hereby, FTNC and Planters Bank adopt and make
this Agreement and prescribe the terms and conditions hereof and the manner and
basis of carrying it into effect, which shall be as follows:
ARTICLE I. THE MERGER
(A) THE MERGER. On the Effective Date (as defined in Article VII),
Interim Bank will merge (the "Merger") with and into Planters Bank, with
Planters Bank being the surviving corporation (the "Surviving Corporation"),
pursuant to the provisions of, and with the effects provided in, the
Mississippi Code. At the Effective Time, the charter and bylaws of Planters
Bank (as the Surviving Corporation) shall be the charter and bylaws of Planters
Bank in effect immediately prior to the Effective Time. At the Effective Time,
the directors and officers of Planters Bank shall be the directors and officers
of the Surviving Corporation without any prejudice to the rights of FTNC as the
sole shareholder of the Surviving Corporation. At the Effective Time, the name
of Planters Bank as the Surviving Corporation following the Merger shall
continue to be "Planters Bank."
(B) CONVERSION OF PLANTERS BANK COMMON STOCK. By virtue of the
Merger, automatically and without any action on the part of the holder thereof,
at the Effective Date, all of the Planters Bank Common Stock issued and
outstanding immediately prior to the Effective Date (other than shares held
directly or indirectly by FTNC or any subsidiary of FTNC, except in a fiduciary
capacity or in satisfaction of a debt previously contracted and shares held in
the treasury of Planters Bank, which shares shall be canceled, retired and
cease to exist by virtue of the Merger and without any payment made in respect
thereof) shall be converted into the right to receive shares of FTNC Common
Stock, as described below:
(1) Each share of Planters Bank Common Stock issued and
outstanding at the Effective Time shall become and be converted into
the right to receive the number of shares of FTNC Common Stock equal
to the Conversion Number. The "Conversion Number" shall be equal to
the quotient of $234.00 divided by the FTNC Common Stock Average Price
(as hereinafter defined); provided, however, if the FTNC Common Stock
Average Price is greater than $42 per share or less than $34 per
share, then the following shall occur:
(a) if the FTNC Common Stock Average Price is greater than
$42 per share, then $42 per share shall be used as the FTNC
Common Stock Average Price,
(b) if the FTNC Common Stock Average Price is less than $34
per share, then $34 per share shall be used as the FTNC Common
Stock Average Price; provided that either FTNC or Planters
Bank shall have the right to terminate this Agreement as
provided in Paragraph (D) of Article VI but subject to
Paragraph (B)(1)(c) of this Article I,
(c) if the FTNC Common Stock Average Price is less than $34
per share, FTNC shall have the right to require Planters Bank
to consummate the Merger using the actual FTNC Common Stock
Average Price, and
(d) if FTNC fails to exercise its rights as set forth in
Paragraph (B)(1)(c) of Article I and Paragraph D of Article
VI, then FTNC or Planters Bank shall have the right to
terminate this Agreement as provided in Paragraph (D) of
Article VI.
A - 2
<PAGE> 96
The Calculation Period shall consist of the twenty (20) business days
immediately prior to the tenth (10th) calendar day preceding the Effective Date
(not including the Effective Date). The FTNC Common Stock Average Price shall
be equal to the average of the closing prices of the FTNC Common Stock as
reported on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") on the twenty (20) business days included in the Calculation
Period. For purposes of this Section I.B, a business day shall be a day on
which the New York Stock Exchange is generally open for trading;
(2) Each share of FTNC Common Stock issued and outstanding at
the Effective Time [other than (x) shares, if any, held directly or
indirectly by Planters Bank (or any Planters Bank subsidiary) except
in a fiduciary capacity or in satisfaction of a debt previously
contracted, and (y) shares, if any, held as treasury stock by FTNC]
shall remain outstanding and unchanged after the Merger and, together
with the shares of FTNC Common Stock issuable in the Merger, shall
constitute all of the issued and outstanding shares of the common
capital stock of FTNC.
(3) Subsequent to the date of this Agreement but prior to the
Effective Date, if the outstanding shares of FTNC Common Stock shall
be increased, decreased, changed into or exchanged for a different
number or class of shares by reason of any reclassification,
recapitalization, split-up, combination or exchange of shares, or if a
stock dividend thereon shall be declared with a record date within
such period, or other like changes in FTNC's capitalization shall have
occurred, the terms and provisions of subsection (1) of this Section
(B) and of Section (D) of Article VI shall be adjusted accordingly.
(4) Each share of Interim Bank common stock, par value $10.00 per
share, ("Interim Bank Common Stock"), issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger
and without any action on the part of the holder thereof, be converted
into and exchanged for one fully paid and non-assessable share of
common stock, without par value, of the Surviving Corporation
("Surviving Corporation Common Stock"). From and after the Effective
Time, each outstanding certificate theretofore representing shares of
Interim Bank Common Stock shall be deemed for all purposes to evidence
ownership of and to represent the number of shares of Surviving
Corporation Common Stock into which such shares of Interim Bank Common
Stock shall have been converted. Promptly after the Effective Time,
the Surviving Corporation shall issue to FTNC a stock certificate or
certificates representing such shares of Surviving Corporation Common
Stock in exchange for the certificate or certificates which formerly
represented shares of Interim Bank Common Stock, which shall be
cancelled.
(C) NO FRACTIONAL SHARES. Notwithstanding any other provision
hereof, no fractional shares of FTNC Common Stock and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in the Merger;
instead, FTNC shall pay to each holder of Planters Bank Common Stock exchanged
pursuant to this Agreement who would otherwise be entitled to a fractional
share an amount in cash determined by multiplying such holder's fractional
interest by the FTNC Common Stock Average Price (as defined in paragraph (B)(1)
of Article I) as used to calculate the Conversation Number (rounded up to the
nearest cent).
(D) PROCEDURES. Certificates which represent shares of Planters Bank
Common Stock that are outstanding at the Effective Time (each, a "Certificate")
and are converted into the right to receive shares of FTNC Common Stock
pursuant to the Merger shall, after the Effective Time, be exchangeable by the
holders thereof in the manner provided in the transmittal materials described
below for new certificates representing the shares of FTNC Common Stock into
which such shares have been converted.
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As promptly as practicable after the Effective Date, FTNC shall send
to each holder of record of shares of Planters Bank Common Stock outstanding at
the Effective Time transmittal materials for use in exchanging the Certificates
for such shares for certificates for shares of the FTNC Common Stock into which
such shares of the Planters Bank Common Stock have been converted pursuant to
the Merger. Upon surrender of a Certificate, together with a duly executed
letter of transmittal and any other required documents, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate for
the number of shares of FTNC Common Stock to which such holder is entitled, and
such Certificate shall forthwith be cancelled. If any such delivery is to be
made in whole or in part to a person other than the person in whose name a
surrendered Certificate is registered, it shall be a condition to such delivery
or exchange that the Certificate surrendered shall be properly endorsed or
shall be otherwise in proper form for transfer and that the person requesting
such delivery or exchange shall have paid any transfer and other taxes required
by reason of such delivery or exchange in a name other than that of the
registered holder of the Certificate surrendered or shall have established to
the reasonable satisfaction of FTNC or its agent that such tax either has been
paid or is not payable.
No holder of Planters Bank Common Stock shall be entitled to exercise
any rights as a shareholder of FTNC until such holder shall have properly
surrendered its Certificate(s) (together with all required documents) as set
forth above. No dividend or other distribution payable after the Effective
Time with respect to the FTNC Common Stock shall be paid to the holder of any
unsurrendered Certificate until the holder thereof properly surrenders such
Certificate (together with all required documents), at which time such holder
shall receive all dividends and distributions, without interest thereon,
previously withheld from such holder pursuant hereto. After the Effective
Time, there shall be no transfers on the stock transfer books of Planters Bank
of shares of Planters Bank Common Stock which were issued and outstanding at
the Effective Time and converted pursuant to the provisions of the Merger into
the right to receive FTNC Common Stock. If after the Effective Time,
Certificates are presented for transfer to Planters Bank, they shall be
cancelled and exchanged for the shares of FTNC Common Stock deliverable in
respect thereof as determined in accordance with the provisions of Article I,
Paragraph (B) and in accordance with the procedures set forth in this
Paragraph.
After the Effective Time, holders of Planters Bank Common Stock shall
cease to be, and shall have no rights as, stockholders of Planters Bank, other
than to receive shares of FTNC Common Stock into which such shares have been
converted or fractional share payments pursuant to this Agreement.
Notwithstanding the foregoing, neither FTNC nor Planters Bank nor any
other person shall be liable to any former holder of shares of Planters Bank
Common Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
In the event any Certificate shall have been lost, stolen or
destroyed, upon receipt of appropriate evidence as to such loss, theft or
destruction and to the ownership of such Certificate by the person claiming
such Certificate to be lost, stolen or destroyed and the receipt by FTNC of
appropriate and customary indemnification including, when appropriate, the
posting of bond, FTNC will issue in exchange for such lost, stolen or destroyed
certificate shares of FTNC Stock, the fractional share payment, if any,
deliverable in respect thereof as determined in accordance with this Article I.
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ARTICLE II. PLANTERS BANK ACTIONS PENDING MERGER
(A) Without the prior written consent of FTNC, Planters Bank will not:
(1) make, declare or pay any dividend on Planters Bank Common Stock
for a quarter in 1994 greater than the amount paid for the
corresponding quarter in 1993 or declare or make any distribution on,
or directly or indirectly combine, redeem, reclassify, purchase or
otherwise acquire, any shares of its capital stock (other than in a
fiduciary capacity or in respect of a debt previously contracted in
good faith) or authorize the creation or issuance of or issue or sell
any additional shares of Planters Bank's capital stock, or any
options, calls or commitments relating to its capital stock, or any
securities, obligations or agreements convertible into or exchangeable
for, or giving any person any right to subscribe for or acquire,
shares of its capital stock, except pursuant to plans or agreements as
existing on the date hereof and set forth in EXHIBIT "II(A)(1)"
attached hereto;
(2) merge or consolidate or permit any Significant Subsidiary to
merge or consolidate with any other entity or engage in any similar
transaction.
(B) Without the prior written consent of FTNC, which consent will not
be unreasonably withheld, Planters Bank will not:
(1) pay any bonus to, or increase the rate of compensation of, any of
its directors, officers or employees, except in the ordinary course of
business consistent with past practice, or enter into or permit any
subsidiary to enter into any employment contracts with any persons;
(2) enter into or modify or permit any subsidiary to enter into or
modify (except as may be required by applicable law and except for the
renewal of any existing plan or arrangement in the ordinary course of
business consistent with past practice) any pension, retirement, stock
option, stock purchase, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee
benefit, incentive or welfare contract, plan or arrangement, or any
trust agreement related thereto, in respect of any of its directors,
officers or other employees;
(3) except as contemplated by Paragraph (M) of Article IV,
substantially modify the manner in which it and its subsidiaries have
heretofore conducted their business, taken as a whole, or amend its
articles of incorporation or by-laws;
(4) except for the disposition of loans and cash equivalent assets in
the ordinary course of banking business, sell, dispose of or
discontinue or permit any subsidiary to sell, dispose or discontinue
any of its business, assets (including investment securities) or
property,
(5) except for the acquisition of loans, investment securities and
cash equivalent assets in the ordinary course of banking business,
acquire any assets or business or permit any subsidiary to acquire any
assets or business that is material to such party;
(6) take any other action or permit any subsidiary to take any action
not in the ordinary course of business of it and its subsidiaries,
taken as a whole; or
(7) directly or indirectly agree to take any of the foregoing actions.
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ARTICLE III. REPRESENTATIONS AND WARRANTIES
FTNC represents and warrants to Planters Bank, and Planters Bank
represents and warrants to FTNC, that, except as previously disclosed in a
letter of FTNC or Planters Bank, respectively, of even date herewith delivered
to the other party:
(A) The facts set forth in the Recitals of this Agreement with
respect to it are true and correct;
(B) The outstanding shares of capital stock of it and its Significant
Subsidiaries (as defined in Rule 1-02 of Regulation S-X), if any, are duly
authorized, validly issued and outstanding, fully paid and (subject to 12
U.S.C. Section 55 in the case of a national bank subsidiary and comparable
state statutes, in the case of a state bank subsidiary) non-assessable, and
subject to no preemptive rights;
(C) Each of it and its Significant Subsidiaries (EXHIBIT "III(C)(1)"
hereto in the case of FTNC sets forth a list of its Significant Subsidiaries
and EXHIBIT "III(C)(2)" hereto in the case of Planters Bank sets forth a list
of its Significant Subsidiaries) has the power and authority, and is duly
qualified in all jurisdictions (except for such qualifications the absence of
which either individually or in the aggregate will not have a Material Adverse
Effect (as hereinafter defined)) where such qualification is required, to carry
on its business as it is now being conducted and to own all its material
properties and assets, and it has all federal, state, local, and foreign
governmental authorizations necessary for it to own or lease its properties and
assets and to carry on its business as it is now being conducted, except for
such powers and authorizations the absence of which, either individually or in
the aggregate, would not have a Material Adverse Effect;
(D) The shares of capital stock of each of its Significant
Subsidiaries are, and in the case of FTNC, all of the shares of capital stock
of Interim Bank will be, owned by it (except for director's qualifying shares)
free and clear of all liens, claims, encumbrances and restrictions on transfer
and there are no rights with respect to such capital stock;
(E) Subject in the case of Interim Bank to the receipt of approval of
its board of directors and subject in the case of Planters Bank and Interim
Bank to any required shareholder approvals of this Agreement, and, subject to
receipt of required regulatory approvals, this Agreement is a valid and binding
agreement of it enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles;
(F) The execution, delivery and performance of this Agreement by it
does not, and the consummation of the transactions contemplated hereby by it
will not, constitute (l) a breach or violation of, or a default under, any law,
rule or regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture or instrument of it or its subsidiaries or to
which it or its subsidiaries (or any of their respective properties) is
subject, which breach, violation or default, individually or collectively, is
reasonably likely to have a Material Adverse Effect, or enable any person to
enjoin any of the transactions contemplated hereby or (2) a breach or violation
of, or a default under, the certificate or articles of incorporation or bylaws
of it or any of its Significant Subsidiaries; and the consummation of the
transactions contemplated hereby will not require any consent or approval under
any such law, rule, regulation, judgment, decree, order, governmental permit or
license or the consent or approval of any other party to any such agreement,
indenture or instrument, other than the required approvals of applicable
regulatory authorities referred to in Paragraphs (A)(3) and (A)(4)of Article V
and the approval of the board of directors, and shareholders of Interim Bank
and the shareholders of Planters
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<PAGE> 100
Bank referred to in Paragraph (E) of Article III and any consents and approvals
the absence of which will not have a Material Adverse Effect;
(G) In the case of FTNC, as of their respective dates, neither its
Annual Report on Form 10-K for the fiscal year ended December 31, 1993, nor any
other document filed subsequent to December 31, 1993 under Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Securities Exchange Act"), each in the form (including exhibits) filed with
the Securities and Exchange Commission (the "SEC") contained and in the case of
Planters Bank, its unaudited financial statements for the fiscal year ended
December 31, 1993 (collectively the "Reports") contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading. Each of the balance
sheets in or incorporated by reference into the Reports (including the related
notes and schedules) fairly presents the financial position of the entity or
entities to which it relates as of its date and each of the statements of
operations and retained earnings and of cash flow and changes in financial
position or equivalent statements in or incorporated by reference into its
Reports (including any related notes and schedules) fairly presents the results
of operations, retained earnings and cash flows and changes in financial
position, as the case may be, of the entity or entities to which it relates for
the periods set forth therein (subject, in the case of unaudited interim
statements or reports, to normal year- end audit adjustments that are not
material in amount or effect), in each case in accordance with generally
accepted accounting principles applicable, as to FTNC, to bank holding
companies, and as to Planters Bank, to banks, consistently applied during the
periods involved, except as may be noted therein. It has no material
obligations or liabilities (contingent or otherwise) except as disclosed in the
Reports ;
(H) There has been no material adverse change in the financial
condition of it and its subsidiaries, taken as a whole, since December 31,
1993;
(I) All material federal, state, local, and foreign tax returns
required to be filed by or on behalf of it or any of its subsidiaries have been
timely filed or requests for extensions have been timely filed and any such
extension shall have been granted and not have expired, and all such returns
filed are complete and accurate in all material respects. All taxes shown on
returns filed by it have been paid in full or adequate provision has been made
for any such taxes on its balance sheet (in accordance with generally accepted
accounting principles). As of the date of this Agreement, there is no audit
examination, deficiency, or refund litigation with respect to any taxes of it
and it is not aware of any basis for the assertion of any claim for any tax
deficiency for which adequate provision has not been made on its balance sheet
that would result in a determination that would have a Material Adverse Effect.
All taxes, interest, additions, and penalties due with respect to completed and
settled examinations or concluded litigation relating to it have been paid in
full or adequate provision has been made for any such taxes on its balance
sheet (in accordance with generally accepted accounting principles). It has
not executed an extension or waiver of any statute of limitations on the
assessment or collection of any material tax due that is currently in effect;
(J) (1) Except as disclosed in EXHIBIT "III J(1)(1)" as to FTNC or
EXHIBIT "III J(1)(2) as to Planters Bank hereto, no material litigation,
proceeding or controversy before any court or governmental agency is pending,
and there is no pending claim, action or proceeding against it or any of its
subsidiaries, which in the reasonable judgment of its President is likely to
have a Material Adverse Effect or to prevent consummation of the transactions
contemplated hereby, and, to the best of its knowledge, no such litigation,
proceeding, controversy, claim or action has been threatened or is
contemplated, and to its actual knowledge there are no facts or circumstances
which could form the reasonable basis for any claim, action or proceeding
(including, but not limited to, a claim for violation of any state or federal
fair lending laws or regulations) which is likely to have a Material Adverse
Effect, and (2) neither it nor any of its subsidiaries is subject to any cease
and desist
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order, written agreement or memorandum of understanding with, or a party to any
commitment letter or similar undertaking to, or is subject to any order or
directive by, or is a recipient of any extraordinary supervisory letter from,
or is subject to any board resolutions at the request of, federal or state
governmental authorities charged with the supervision or regulation of banks or
bank holding companies or engaged in the insurance of bank deposits ("Bank
Regulators"), nor has it been advised by any Bank Regulator that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, directive, written agreement, memorandum
of understanding, extraordinary supervisory letter, commitment letter, board
resolutions or similar undertaking;
(K) Except as disclosed in EXHIBIT "III(K)(1)" hereto in the case of
FTNC and EXHIBIT "III(K)(2)" hereto in the case of Planters Bank and except for
this Agreement and arrangements made in the ordinary course of business, it and
its subsidiaries are not bound by any material contract (as defined in Item
601(b)(10)(i) and (ii) of Regulation S-K) to be performed after the date hereof
that has not been filed with or incorporated by reference in the Reports;
(L) All "employee benefit plans", as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974 ("ERISA"), that cover any of
its or its Significant Subsidiaries' employees, comply in all material respects
with all applicable requirements of ERISA, the Code and other applicable laws
and no event has occurred and no fact or circumstance exists with respect to
any employee benefit plan now or previously existing which could result in a
Material Adverse Effect on Planters Bank; neither it nor any of its Significant
Subsidiaries has engaged in a "prohibited transaction" (as defined in Section
406 of ERISA or Section 4975 of the Code) with respect to any such plan which
is likely to result in any material penalties or taxes under Section 502(i) of
ERISA or Section 4975 of the Code; no material liability to the Pension Benefit
Guaranty Corporation has been or is expected by it or them to be incurred with
respect to any such plan which is subject to Title IV of ERISA ("Pension
Plan"), or with respect to any "single-employer plan" (as defined in Section
4001(a)(15) of ERISA) currently or formerly maintained by it, them or any
entity which is considered one employer with it under Section 4001 of ERISA or
Section 414 of the Code; no Pension Plan had an "accumulated funding
deficiency" [as defined in Section 302 of ERISA (whether or not waived)] as of
the last day of the end of the most recent plan year ending prior to the date
hereof; the fair market value of the assets of each Pension Plan exceeds the
present value of the "benefit liabilities" (as defined in Section 4001(a)(16)
of ERISA) under such Pension Plan as of the end of the most recent plan year
with respect to the respective Plan ending prior to the date hereof, calculated
on the basis of the actuarial assumptions used in the most recent actuarial
valuation for such Pension Plan as of the date hereof; no notice of a
"reportable event" (as defined in Section 4043 of ERISA) for which the 30-day
reporting requirement has not been waived has been required to be filed for any
Pension Plan within the 12-month period ending on the date hereof; neither it
nor any of its Significant Subsidiaries has provided, or is required to
provide, security to any Pension Plan pursuant to Section 401(a)(29) of the
Code; it and its Significant Subsidiaries have not contributed to a
"multiemployer plan" as defined in Section 3(37) of ERISA, on or after
September 26, 1980; and it and its Significant Subsidiaries do not have any
obligations for retiree health and life benefits under any benefit plan,
contract or arrangement;
(M) Each of it and its subsidiaries has good title to its properties
and assets (other than property as to which it is lessee) except for such
defects in title which would not, in the aggregate, have a Material Adverse
Effect;
(N) It knows of no reason why the regulatory approvals referred to in
Paragraphs (A)(3) and (A)(4) of Article V should not be obtained without the
imposition of any condition of the type referred to in the proviso following
such Paragraphs (A)(3) and (A)(4);
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(O) Its reserve for possible loan losses as shown in its financial
statements and reports for the fiscal year ended December 31, 1993 was adequate
in all material respects under generally accepted accounting principles
applicable to banks and safe and sound banking practices;
(P) It and each of its subsidiaries have all permits, licenses,
certificates of authority, orders, and approvals of, and have made all filings,
applications, and registrations with, federal, state, local, and foreign
governmental or regulatory bodies that are required in order to permit it to
carry on its business as it is presently conducted and the absence of which
would have a Material Adverse Effect; all such permits, licenses, certificates
of authority, orders, and approvals are in full force and effect, and to the
best knowledge of it no suspension or cancellation of any of them is
threatened;
(Q) In the case of FTNC, the shares of capital stock to be issued
pursuant to this Agreement, when issued in accordance with the terms of this
Agreement, will be duly authorized, validly issued, fully paid and
nonassessable and subject to no preemptive rights;
(R) Neither it nor any of its subsidiaries is a party to, or is bound
by, any collective bargaining agreement, contract, or other agreement or
understanding with a labor union or labor organization, nor is it or any of its
subsidiaries the subject of a proceeding asserting that it or any such
subsidiary has committed an unfair labor practice or seeking to compel it or
such subsidiary to bargain with any labor organization as to wages and
conditions of employment, nor is there any strike or other labor dispute
involving it or any of its subsidiaries pending or threatened;
(S) Except services performed for Planters Bank by Southard Financial
and Gerrish & McCreary, P.C., neither it nor any of its subsidiaries, nor any
of their respective officers, directors, or employees, has employed any broker
or finder or incurred any liability for any financial advisory fees, brokerage
fees, commissions, or finder's fees, and no broker or finder has acted directly
or indirectly for it or any of its subsidiaries, in connection with this
Agreement or the transactions contemplated hereby;
(T) The information to be supplied by it for inclusion in (1) the
Registration Statement on Form S-4 and/or such other form(s) as may be
appropriate to be filed under the Securities Act of 1933, as amended (the
"Securities Act"), with the SEC by FTNC for the purpose of, among other things,
registering the FTNC Common Stock to be issued to the shareholders of Planters
Bank in the Merger (the "Registration Statement"), or (2) the proxy statement
to be distributed in connection with Planters Bank's meeting of its
shareholders to vote upon this Agreement (as amended or supplemented from time
to time, the "Proxy Statement", and together with the prospectus included in
the Registration Statement, as amended or supplemented from time to time, the
"Proxy Statement/Prospectus") will not at the time such Registration Statement
becomes effective, and in the case of the Proxy Statement/Prospectus at the
time it is mailed and at the time of the meeting of stockholders contemplated
under this Agreement, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading;
(U) For purposes of this section, the following terms shall have the
indicated meaning:
"Environmental Law" means any federal, state or local law,
statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, order, judgment, decree, injunction
or agreement with any governmental entity relating to (1) the
protection, preservation or restoration of the environment (including,
without limitation, air, water vapor, surface water, groundwater,
drinking water supply, surface soil, subsurface soil, plant and animal
life or any other natural resource), and/or
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(2) the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or
disposal of Hazardous Substances. The term Environmental Law includes
without limitation (1) the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. Section 9601,
et seq., the Resource Conservation and Recovery Act, as amended, 42
U.S.C. Section 6901, et seq., the Clean Air Act, as amended, 42
U.S.C. Section 7401, et seq., the Federal Water Pollution Control
Act, as amended, 33 U.S.C. Section 1251, et seq., the Toxic
Substances Control Act, as amended, 15 U.S.C. Section 9601, et seq.,
the Emergency Planning and Community Right to Know Act, 42 U.S.C.
Section 11001, et seq., the Safe Drinking Water Act, 42 U.S.C.
Section 300f, et seq., all comparable state and local laws, and (2)
any common law (including without limitation common law that may
impose strict liability) that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence
of or exposure to any Hazardous Substance.
"Hazardous Substance" means any substance presently listed,
defined, designated or classified as hazardous, toxic, radioactive or
dangerous, or otherwise regulated, under any Environmental Law,
whether by type or by quantity, including any material containing any
such substance as a component. Hazardous Substances include without
limitation petroleum or any derivative or by-product thereof,
asbestos, radioactive material, and polychlorinated biphenyls.
"Loan Portfolio Properties and Other Properties Owned" means
those properties owned or operated by FTNC or Planters Bank or any of
their subsidiaries including properties owned or operated in a
fiduciary capacity.
(1) To the best knowledge of it and its subsidiaries, neither it nor
any of its subsidiaries has been or is in violation of or liable under
any Environmental Law, except any such violations or liabilities which
would not reasonably be expected to singly or in the aggregate have a
Material Adverse Effect;
(2) To the best knowledge of it and its subsidiaries, none of the
Loan Portfolio Properties and Other Properties Owned by it or its
subsidiaries has been or is in violation of or liable under any
Environmental Law, except any such violations or liabilities which
singly or in the aggregate will not have a Material Adverse Effect;
and
(3) To the best knowledge of it and its subsidiaries, there are no
actions, suits, demands, notices, claims, investigations or
proceedings pending or threatened relating to the liability of the
Loan Portfolio Properties and Other Properties Owned by it or its
subsidiaries under any Environmental Law, including without limitation
any notices, demand letters or requests for information from any
federal or state environmental agency relating to any such liabilities
under or violations of Environmental Law, except such which will not
have, result in or relate to a Material Adverse Effect.
(V) Planters Bank does not and is not required to file reports
pursuant to the Securities Exchange Act.
(W) Its credit approval and administration and documentation
procedures and practices are consistent with acceptable standards as
normally applied by the Office of the Comptroller of the Currency and
the Federal Deposit Insurance Corporation, and to its actual knowledge
it is in compliance with applicable state and federal laws, statutes,
regulations, rules, orders and requirements regarding bank holding
companies and banks, as applicable, except where the failure to comply
is not reasonably likely to have a Material Adverse Effect.
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ARTICLE IV. COVENANTS
FTNC hereby covenants to Planters Bank, and Planters Bank hereby
covenants to FTNC, that:
(A) It shall use its best efforts in good faith to take or cause to
be taken all action necessary or desirable under this Agreement on its
part or, as to FTNC, on the part of Interim Bank as promptly as
practicable so as to permit the consummation of the transactions
contemplated by this Agreement at the earliest possible date and
cooperate fully with the other party hereto to that end;
(B) In the case of Planters Bank, it shall (1) take all steps
necessary to duly call, give notice of, convene and hold a meeting of
its shareholders for the purpose of approving this Agreement as soon
as is reasonably practicable; (2) recommend to its shareholders that
they approve this Agreement and use its best efforts to obtain such
approval; (3) distribute to its shareholders the Proxy
Statement/Prospectus in accordance with applicable federal and state
law (except, in the case of FTNC, for state securities laws and "Blue
Sky" permits which are covered by paragraph (E) of this Article IV)
and with its certificates of incorporation or charter, as the case may
be, and bylaws; and (4) cooperate and consult with FTNC with respect
to each of the foregoing matters;
(C) It will cooperate in the preparation and filing of the Proxy
Statement/Prospectus and Registration Statement in order to consummate
the transactions contemplated by this Agreement as soon as is
reasonably practicable;
(D) In the case of FTNC, it will advise Planters Bank, promptly after
FTNC receives notice thereof, of the time when the Registration
Statement has become effective or any supplement or amendment has been
filed, of the issuance of any stop order or the suspension of the
qualification of the shares of FTNC Common Stock issuable pursuant to
this Agreement for offering or sale in any jurisdiction, of the
initiation or threat of any proceeding for any such purpose or of any
request by the SEC for the amendment or supplement of the Registration
Statement or for additional information;
(E) In the case of FTNC, it shall use its best efforts to obtain,
prior to the effective date of the Registration Statement, all
necessary state securities law or "Blue Sky" permits and approvals
required to carry out the transactions contemplated by this Agreement;
(F) Subject to its disclosure obligations imposed by law, unless
approved by the other party hereto in advance, it will not issue any
press release or written statement for general circulation relating to
the transactions contemplated hereby;
(G) It shall promptly furnish the other party with copies of written
communications received by it, or any of its respective subsidiaries,
Affiliates or Associates (as such terms are defined in Rule 12b-2
under the Securities Exchange Act as in effect on the date hereof),
from, or delivered by any of the foregoing to, any governmental body
or agency in connection with or material to the transactions
contemplated hereby;
(H) (1) Upon reasonable notice, it shall (and shall cause each of its
subsidiaries to) afford the other party hereto, and its officers,
employees, counsel, accountants and other authorized representatives
(collectively, such party's "Representatives") access, during normal
business hours, to all of its and its subsidiaries' properties, books,
contracts, tax returns, commitments and records; it shall enable the
other party's Representatives to discuss its business affairs,
condition (financial and otherwise), assets
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and liabilities with such third persons, including, without
limitation, its directors, officers, employees, accountants, counsel
and creditors, as the other party considers necessary or appropriate;
and it shall (and it shall cause each of its Significant Subsidiaries
to) furnish promptly to the other party hereto (a) a copy of each
report, schedule and other document filed by it pursuant to the
requirements of federal or state securities or banking laws since
December 31, 1991, and (b) all other information concerning its
business, properties and personnel as the other party hereto may
reasonably request, provided that no investigation pursuant to this
Paragraph (H) shall affect or be deemed to modify any representation
or warranty made by, or the conditions to the obligations to
consummate this Agreement of, the other party hereto; (2) it will,
upon request, furnish the other party with all information concerning
it, its subsidiaries, directors, officers, partners and stockholders
and such other matters as may be reasonably necessary or advisable in
connection with the Proxy Statement/Prospectus, the Registration
Statement or any other statement or application made by or on behalf
of FTNC, Interim Bank, Planters Bank or any of their respective
subsidiaries to any governmental body or agency in connection with or
material to the Merger and the other transactions contemplated by this
Agreement; and (3) it will not use any information obtained pursuant
to this Paragraph (H) for any purpose unrelated to the consummation of
the transactions contemplated by this Agreement and, if the
transaction contemplated by this Agreement is not consummated, it will
hold all information and documents obtained pursuant to this Paragraph
(H) in confidence unless and until such time as such information or
documents otherwise become publicly available or as it is advised by
counsel that any such information or document is required by law to be
disclosed, and in the event of the termination of this Agreement, it
will deliver to the other party hereto all documents so obtained by it
and any copies thereof;
(I) Neither it nor any of its subsidiaries shall solicit or encourage
inquiries or proposals with respect to, or, subject to the fiduciary
duties of its directors, furnish any information relating to or
participate in any negotiations or discussions concerning, any
acquisition or purchase of all or a material portion of its assets
(whether owned by it directly or owned by any of its subsidiaries), or
of a substantial equity interest in it or any business combination
with it or any of its subsidiaries other than as contemplated by this
Agreement and other than in the case of FTNC, a business combination
in which it or a company which is its subsidiary following the
transaction is as a practical matter the surviving corporation; and,
in the case of Planters Bank, it shall notify FTNC immediately if any
such inquiries or proposals are received by, any such information is
requested from, or any such negotiations or discussions are sought to
be initiated with, it or any of its subsidiaries; and it shall
instruct its officers, directors, agents, advisors and affiliates to
comply with the above;
(J) It shall notify the other party hereto as promptly as practicable
of (1) any material breach of any of its representations, warranties
or agreements contained herein and (2) any change in its condition
(financial or otherwise), properties, business, results of operations
or prospects that could have a Material Adverse Effect;
(K) It shall cooperate and use its best efforts to promptly prepare
and file all necessary documentation, to effect all necessary
applications, notices, petitions, filings and other documents, and to
obtain all necessary permits, consents, approvals and authorizations
of all third parties and governmental bodies or agencies, including,
in the case of FTNC, submission of applications for approval of this
Agreement and the transactions contemplated hereby to the Board of
Governors in accordance with the provisions of the Bank Holding
Company Act of 1956, as amended (the "BHC Act"), and to such other
regulatory agencies as required by law;
(L) It shall (1) permit the other to review in advance and, to the
extent practicable, will consult with the other party on all
characterizations of the information relating to the other party and
any of its
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respective subsidiaries, which appear in any filing made with, or
written materials submitted to, any third party or any governmental
body or agency in connection with the transactions contemplated by
this Agreement; and (2) consult with the other with respect to
obtaining all necessary permits, consents, approvals and
authorizations of all third parties and governmental bodies or
agencies necessary or advisable to consummate the transactions
contemplated by this Agreement and will keep the other party apprised
of the status of matters relating to completion of the transactions
contemplated herein;
(M) Prior to the Closing, Planters Bank shall, consistent with
generally accepted accounting principles, modify and change its and
each of its subsidiaries' loan, litigation and real estate valuation
policies and practices (including loan classifications and levels of
reserves) so as to be applied consistently on a mutually satisfactory
basis with those of FTNC; provided, however, that Planters Bank shall
not be obligated to take any such action pursuant to this Paragraph
(M) unless and until FTNC acknowledges that all conditions to its
obligation to consummate the Merger have been satisfied;
(N) (1) In the event of any threatened or actual claim, action,
suit, proceeding or investigation, whether civil or administrative,
including, without limitation, any such claim, action, suit,
proceeding or investigation in which any person who is now, or has
been at any time prior to the date hereof, or who becomes prior to the
Effective Time, a director, officer, employee, fiduciary or agent of
Planters Bank or any of its subsidiaries (the "Indemnified Parties")
is, or is threatened to be, made a party based in whole or in part on,
or arising in whole or in part out of, or pertaining to, this
Agreement, or any of the transactions contemplated hereby or thereby,
whether in any case asserted or arising before or after the Effective
Time, the parties hereto agree to cooperate and use their best efforts
to defend against and respond thereto. It is understood and agreed
that FTNC shall indemnify and hold harmless, as and to the fullest
extent permitted by applicable law, each such Indemnified Party
against any losses, claims, damages, liabilities, costs, expenses
(including reasonable attorneys' fees and expenses), judgments, fines
and amounts paid in settlement in connection with any such threatened
or actual claim, action, suit, proceeding or investigation, and in the
event of any such threatened or actual claim, action, suit, proceeding
or investigation (whether asserted or arising before or after the
Effective Time), (i) FTNC shall pay expenses in advance of the final
disposition of any claim, suit, proceeding or investigation to each
Indemnified Party to the fullest extent permitted by law upon receipt
of any undertaking required by applicable law, (ii) the Indemnified
Parties may retain one firm of counsel satisfactory to them, and FTNC
shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are
received;provided, however, that in the event that the defendants in,
or targets of, any such threatened or actual claim, action, suit,
proceeding or investigation include more than one Indemnified Party,
and any Indemnified Party shall have reasonably concluded based on the
opinion of its own counsel, that there may be one or more legal
defenses available to it or to another Indemnified Party which are in
conflict with those available to FTNC, Planters Bank or any other
Indemnified Party, then such Indemnified Party may employ separate
counsel to represent or defend it or any other person entitled to
indemnification and reimbursement hereunder with respect to any such
claim, action, suit, proceeding or investigation in which it or such
other person may become involved or is named as defendant and FTNC
shall pay the reasonable fees and expenses of such counsel and (iii)
FTNC will use its best efforts to assist in the vigorous defense of
any such matter, provided that FTNC shall not be liable for any
settlement effected without its prior written consent (which consent
shall not be unreasonably withheld), and provided further that FTNC
shall have no obligation hereunder to any Indemnified Party when and
if a court of competent jurisdiction shall ultimately determine, and
such determination shall have become final and non-appealable, that
indemnification of such Indemnified Party in the manner contemplated
hereby is prohibited by applicable law. Any Indemnified Party wishing
to claim indemnification under this Paragraph (N) of Article IV hereof
upon learning of any such claim, action, suit, proceeding or
investigation, shall notify FTNC thereof,provided that the
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failure to so notify shall not affect the obligations of FTNC
under this Paragraph (N) of Article IV hereof except to the extent
such failure to notify materially prejudices FTNC. Notwithstanding
the foregoing, no indemnification shall be provided the Indemnified
Parties hereunder if the claim, action, suit, proceeding or
investigation arises, in whole or in part, out of any material
misrepresentation contained in this Agreement or material breach of
covenants, representations, warranties or agreements contained in this
Agreement by Planters Bank or any Indemnified Party;
(2) FTNC and Planters Bank agree that all rights to indemnification
and all limitations of liability existing in favor of the Indemnified
Parties as provided in Planters Bank's articles of incorporation or
by-laws, or similar governing documents of any of its subsidiaries as
in effect as of the date hereof with respect to matters occurring
prior to the Effective Time shall survive the Merger and shall
continue in full force and effect, without any amendment thereto, for
a period of not less than three (3) years from the Effective Time,
provided, however, that all rights to indemnification in respect of
any claim (a "claim") asserted or made within such period shall
continue until the final disposition of such Claim;
(3) This Paragraph (N) of Article IV is intended to benefit the
Indemnified Parties and shall be binding on all successors and assigns
of FTNC;
(4) In the event FTNC or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case,
proper provision shall be made so that the successors and assigns of
FTNC assume the obligations set forth in this Paragraph (N) of Article
IV.
(O) Planters Bank and FTNC will each use its best efforts to cause
the Merger to qualify for pooling-of-interests accounting treatment;
(P) In the case of Planters Bank, it shall use its best efforts to
cause each person who is on the date hereof an "affiliate" of Planters
Bank (as that term is defined in Section (B)(8) of Article V hereof)
to execute and deliver to FTNC the written undertakings on the form
attached hereto as EXHIBIT "IV(P)" on the date this Agreement is
executed and shall use its best efforts to cause any other person who
subsequently becomes an "affiliate" to execute and deliver such
written undertakings not later than forty (40) days prior to the
Effective Date.
(Q) In the case of Planters Bank, it shall cause to be delivered to
FTNC as soon as reasonably practicable but not later than May 7, 1994,
it audited financial statements for the fiscal year ended December 31,
1993.
(R) As to any loan or series of loans to a single borrower or loan
transactions in excess of One Million Dollars ($1,000,000.00) in the
aggregate, FTNC shall notify Planters Bank within ten (10) business
days from the date of this Agreement as to any additional or different
loan documentation which FTNC requests be obtained (a "Documentation
Request").
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ARTICLE V. CONDITIONS TO CONSUMMATION
(A) The respective obligations of FTNC and Planters Bank to
effect the Merger shall be subject to the satisfaction prior to the
Effective Time of the following conditions:
(1) This Agreement and the transactions contemplated hereby shall
have been approved by the requisite votes of the shareholders of
Planters Bank and by FTNC as the sole shareholder of Interim Bank in
accordance with applicable law;
(2) Prior to the date of approval of this Agreement by its Board of
Directors, Planters Bank shall have received a letter from Southard
Financial to the effect that in the opinion of such firm, the terms of
the transaction are fair to the shareholders of Planters Bank from a
financial point of view;
(3) The procurement of approval of this Agreement and the
transactions contemplated hereby by the Board of Governors of the
Federal Reserve System and by the Federal Deposit Insurance
Corporation, and the expiration of any statutory waiting periods;
(4) Procurement of all other regulatory consents and approvals
(including, without limitation, any required consents or approvals
from state banking authorities) which are necessary to the
consummation of the transactions contemplated by this Agreement;
provided, however, that no approval or consent in Paragraphs (A)(3)
and (A)(4) of this Article V shall be deemed to have been received if
it shall include any conditions or requirements which would reduce the
benefits of the transactions contemplated hereby to such a degree that
FTNC or Planters Bank would not have entered into this Agreement had
such conditions or requirements been known at the date hereof;
(5) The satisfaction of all other requirements prescribed by law
which are necessary to the consummation of the transactions
contemplated by this Agreement;
(6) No party hereto shall be subject to any order, decree or
injunction of a court or agency of competent jurisdiction which
enjoins or prohibits the consummation of the Merger;
(7) No statute, rule, regulation, order, injunction or decree shall
have been enacted, entered, promulgated or enforced by any
governmental authority which prohibits, restricts or makes illegal
consummation of the Merger;
(8) The Registration Statement shall have become effective and no
stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have
been initiated or threatened by the SEC; and
(9) Heiskell, Donelson, Bearman, Adams, Williams and Caldwell shall
have delivered its opinion dated as of the Effective Date,
substantially to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at the Effective Time, the
Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code and
that, accordingly: (i) no gain or loss will be recognized by FTNC or
Planters Bank as a result of the Merger, (ii) no gain or loss will be
recognized by the shareholders of Planters Bank who exchange their
shares of Planters Bank Common Stock solely for shares of FTNC Common
Stock pursuant to the Merger (except with respect to cash received in
lieu of a fractional share interest in FTNC Common Stock); (iii) the
tax basis of the shares of FTNC Common
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Stock received by shareholders who exchange all of their shares of
Planters Bank Common Stock solely for shares of FTNC Common Stock in
the Merger will be the same as the tax basis of the shares of Planters
Bank Common Stock surrendered in exchange therefor (reduced by any
amount allocable to a fractional share interest for which cash is
received); and (iv) the holding period of the shares of FTNC Common
Stock received in the Merger will include the period during which the
shares of Planters Bank Common Stock surrendered in exchange therefor
were held, provided such shares of Planters Bank Common Stock were
held as capital assets at the Effective Time. In rendering such
opinion, counsel may require and rely upon representations contained
in certificates of officers of Planters Bank, FTNC, Interim Bank and
others.
(B) The obligation of FTNC to effect the Merger shall be
subject to the satisfaction prior to the Effective Time of the
following additional conditions:
(1) FTNC and its directors and officers who sign the Registration
Statement shall have received from Planters Bank's independent
certified public accountants "cold comfort" letters, dated (i) the
date of the mailing of the Proxy Statement/Prospectus to Planters
Bank's shareholders and (ii) shortly prior to the Effective Date, with
respect to certain financial information regarding Planters Bank in
the form customarily issued by such accountants at such time in
transactions of this type;
(2) FTNC shall have received an opinion, dated the Effective Date, of
Planters Bank's counsel in the form and to the effect customarily
received in transactions of this type;
(3) Each of the representations, warranties and covenants contained
herein of Planters Bank, subject to the disclosure letter of Planters
Bank except for disclosures as to representations and covenants made
in Paragraph (L) of Article III, shall, in all material respects, be
true on, or complied with by, the Effective Date as if made on such
date (or on the date when made in the case of any representation or
warranty which specifically relates to an earlier date) and FTNC shall
have received a certificate signed by the President of Planters Bank,
dated the Effective Date, to such effect. Any effect on Planters Bank
as a result of action taken by Planters Bank pursuant to Paragraph (M)
of Article IV shall be disregarded for purposes of determining the
truth or correctness of any representation or warranty of Planters
Bank and for purposes of determining whether any conditions are
satisfied. Determination as to whether the representations and
covenants of Planters Bank contained in Paragraph (L) of Article III
are true and correct in all material respects on the date hereof or on
the Effective Date, or both, or as to whether any event shall have
occurred or any fact or circumstance exists with respect to any
employee benefit plan which could result in a Material Adverse Effect,
shall be made without regard to and without giving effect to any
disclosures, written or oral, made in any Exhibit hereto or in the
letter from Planters Bank provided for in the first unlettered
paragraph of Article III hereof;
(4) FTNC shall have received all state securities laws and "Blue Sky"
permits and other authorizations necessary to consummate the
transactions contemplated hereby;
(5) FTNC shall have received a letter dated as of the Effective Date
from its independent certified public accountants to the effect that
the Merger will qualify for pooling-of-interests accounting treatment
if closed and consummated in accordance with this Agreement;
(6) No litigation or proceeding is pending which (i) has been brought
against FTNC or Planters Bank or any of their subsidiaries by any
governmental agency seeking to prevent consummation of the
transactions contemplated hereby or (ii) in the reasonable judgement
of the Chief Executive Officer of Planters Bank is likely to have a
Material Adverse Effect on Planters Bank;
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(7) The audited financial statements prepared by Reynolds, Bone &
Griesbeck confirm that Planters Bank's unaudited financial statements
for the fiscal year ended December 31, 1993, fairly present the
financial position of Planters Bank and the statements of operations
and retained earnings and of cash flow and changes in financial
position or equivalent statement fairly presents the results of
operation, retained earnings and cash flows and changes in financial
position; and
(8) Each director, executive officer and other person who is an
"affiliate" (for purposes of Rule 145 under the Securities Act and for
purposes of qualifying for "pooling-of-interests" treatment as
described below) of Planters Bank shall have delivered to FTNC a
written agreement satisfactory to FTNC providing, among other matters,
that such person will not sell, pledge, transfer or otherwise dispose
of or take any action to reduce his risk with respect to any shares of
Planters Bank Common Stock held by such "affiliate" or the shares of
FTNC Common Stock to be received by such "affiliate" in the Merger (1)
in the case of shares of FTNC Common Stock only, except in compliance
with the applicable provisions of the Securities Act and the rules and
regulations thereunder, and (2) during the periods during which any
such sale, pledge, transfer or other disposition or action would,
under generally accepted accounting principles or the rules,
regulations or interpretations of the SEC, disqualify the Merger for
pooling-of-interests accounting treatment. The parties understand
that such periods in general encompass the period commencing 30 days
prior to the Merger and ending at the time of the publication of
financial results covering at least 30 days of combined operations of
FTNC and Planters Bank within the meaning of Section 201-01 of the
SEC's Codification of Financial Reporting Policies.
(C) The obligation of Planters Bank to effect the Merger shall
be subject to the satisfaction prior to the Effective Time of the
following additional conditions:
(1) Planters Bank shall have received from FTNC's independent
certified public accountants "cold comfort" letters, dated (i) the
date of the mailing of the Proxy Statement/ Prospectus to Planters
Bank's shareholders, and (ii) shortly prior to the Effective Date,
with respect to certain financial information regarding FTNC in the
form customarily issued by such accountants at such time in
transactions of this type;
(2) Planters Bank shall have received an opinion, dated the Effective
Date, of FTNC's counsel in the form and to the effect customarily
received in transactions of this type;
(3) Each of the representations, warranties and covenants contained
herein of FTNC, subject to the disclosure letter of FTNC shall, in all
material respects, be true on, or complied with by, the Effective Date
as if made on such date (or on the date when made in the case of any
representation or warranty which specifically relates to an earlier
date) and Planters Bank shall have received a certificate signed by
the President or Chief Financial Officer of FTNC, dated the Effective
Date, to such effect; and
(4) No litigation or proceeding is pending which (i) has been brought
against FTNC or Planters Bank or any of their subsidiaries by any
governmental agency, seeking to prevent consummation of the
transactions contemplated hereby or (ii) in the reasonable judgment of
the President and Chief Financial Officer of FTNC is likely to have a
Material Adverse Effect on FTNC.
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ARTICLE VI. TERMINATION
This Agreement may be terminated prior to the Effective Date, either
before or after its approval by the stockholders of Planters Bank:
(A) By the mutual consent of FTNC and Planters Bank, if the Board of
Directors of each so determines by vote of a majority of the members of its
entire Board;
(B) By FTNC or Planters Bank, if its Board of Directors so determines
by vote of a majority of the members of its entire Board, in the event of the
failure of the shareholders of Planters Bank to approve this Agreement by the
requisite vote at its meeting called to consider such approval, or a material
breach by the other party hereto of any representation, warranty or agreement
contained herein which is not cured or not curable within 60 days after written
notice of such breach is given to the party committing such breach by the other
party hereto;
(C) By FTNC or Planters Bank, if its Board of Directors so determines
by vote of a majority of the members of its entire Board, in the event that
the Merger is not consummated by one year from date of Agreement unless the
failure to so consummate by such time is due to the breach of this Agreement by
the party seeking to terminate; or
(D) By FTNC or Planters Bank, if its Board of Directors so determines
by vote of a majority of the members of its entire Board, if the FTNC Common
Stock Average Price is less than $34 per share by written notice (a
"Termination Notice") to the other party delivered within three (3) business
days after the last day of the Calculation Period. If Planters Bank exercises
its right to terminate the Merger under this Paragraph (D), and FTNC elects to
exercise its right to require Planters Bank to consummate the Merger as
provided in Paragraph (B)(1) of Article I, FTNC must give written notice of its
election to require consummation to Planters Bank not later than the close of
business on the third business day following receipt of the Planters Bank
Termination Notice. If between the Calculation Date and the Effective Date,
the outstanding shares of FTNC Common Stock shall be increased, decreased,
changed into or exchanged for a different number or class of shares by reason
of any reclassification, recapitalization, split-up, combination or exchange of
shares, or if a stock dividend thereon shall be declared with a record date
within such period, or other like changes in FTNC's capitalization shall have
occurred, the FTNC Common Stock Average Price shall be adjusted accordingly.
(E) Subject to the provisions of Paragraph (F) of this Article VI, in
the event of the termination of this Agreement by either FTNC or Planters Bank,
as provided above, this Agreement shall thereafter become void and there shall
be no liability on the part of any party hereto or their respective officers or
directors, except that any such termination shall be without prejudice to the
rights of any party hereto arising out of the willful breach by any other party
of any covenant or willful misrepresentation contained in this Agreement.
(F) Upon the occurrence of a Subsequent Triggering Event that occurs
prior to a Termination Event as described in this paragraph and notwithstanding
any other provision of this Agreement to the contrary, Planters Bank will pay
to FTNC liquidated damages in the amount of $950,000.
For purposes of this Paragraph (F), the following terms shall have the
indicated meaning: The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(1) Planters Bank shall have entered into an agreement to
engage in an Acquisition Transaction (as hereinafter defined) with any
person (other than FTNC or a subsidiary of FTNC), or
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the board of directors of Planters Bank shall have recommended that
the stockholders of Planters Bank approve or accept any Acquisition
Transaction (other than that contemplated by this Agreement). The
term "Acquisition Transaction" shall mean (x) a merger or
consolidation, or any similar transaction, involving Planters Bank,
(y) a purchase, lease or other acquisition of all or any substantial
part of the assets of Planters Bank or (z) a purchase or other
acquisition (including by way of merger, consolidation, share exchange
or otherwise) of securities representing 10% or more of the voting
power of Planters Bank. The term "person" for purposes of this
Paragraph shall have the meaning assigned thereto in Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and the rules and regulations thereunder;
(2) Any person (other than FTNC, a subsidiary of FTNC or any
subsidiary acting under any employee benefit plan for FTNC or any of
its subsidiaries) shall have acquired beneficial ownership or the
right to acquire beneficial ownership of 10% or more of the
outstanding shares of the Planters Bank Common Stock (the term
"beneficial ownership" for purposes of this Agreement having the
meaning assigned thereto in Section 13(d) of the Exchange Act, and the
rules and regulations thereunder);
(3) Any person (other than FTNC or a subsidiary of FTNC)
shall have made a proposal (in writing or orally) to Planters Bank or
any one or more of its shareholders owning ten percent (10%) or more
(singly or in the aggregate) of the outstanding shares of Planters
Bank Common Stock that results in or is a part of an Acquisition
Transaction;
(4) After a proposal is made by any person (other than FTNC
or a subsidiary of FTNC) to Planters Bank or its stockholders to
engage in an Acquisition Transaction, Planters Bank shall have
breached any covenant or obligation contained in this Agreement and
such breach would entitle FTNC to terminate the Merger Agreement
(without regard to the cure periods provided for therein) and such
breach shall not have been cured within seven (7) days; or
(5) Any person (other than FTNC or a subsidiary of FTNC),
shall have filed an application or notice with the Board of Governors
of the Federal Reserve System (the "Federal Reserve Board"), or other
federal or state bank regulatory authority, which application or
notice has been accepted for processing, for approval to engage in an
Acquisition Transaction.
"Subsequent Triggering Event" shall mean either of the following
events or transactions occurring after the date hereof:
(1) The acquisition by any person of beneficial ownership of
25% or more of the then outstanding Planters Bank Common Stock; or
(2) The occurrence of the Initial Triggering Event described
in clause (1) of the definition of "Initial Triggering Event" of this
Paragraph (F), except that the percentage referenced in clause (z)
shall be 25%.
"Termination Event" shall mean each of the following: (i) the
Effective Date of the Merger, (ii) termination of this Agreement in accordance
with the provisions thereof if such termination occurs prior to the occurrence
of an Initial Triggering Event or (iii) the passage of 12 months after
termination of this Agreement if such termination follows the occurrence of an
Initial Triggering Event.
Planters Bank shall notify FTNC promptly in writing of the occurrence
of any Initial Triggering Event and of any Subsequent Triggering Event.
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(G) By FTNC within thirty (30) days from the date of a Documentation
Request if FTNC determines that adequate documentation has not been provided.
(H) By FTNC within fifteen (15) days from the date of this Agreement
if FTNC determines that, as to the specific matters referred to in paragraph
"L" of Planters Bank's disclosure letter, Planters Bank's representations and
covenants in Paragraph (L) of Article III are not true in all material respects
or that facts or circumstances exist with respect to any employee benefit plan,
now or previously existing, which could result in a Material Adverse Effect,
such determination to be made by FTNC without regard to and without giving
effect to the disclosure of the matters addressed in Paragraph "L" of Planters
Bank's disclosure letter. This Paragraph (H) shall not otherwise limit or
affect FTNC's rights or Planters Bank's obligations hereunder.
ARTICLE VII. EFFECTIVE DATE AND EFFECTIVE TIME
On the last business day of the month during which the expiration of
all applicable waiting periods in connection with governmental approvals occurs
and all conditions to the consummation of this Agreement are satisfied or
waived, or on such earlier or later date as may be agreed by the parties, a
certificate of merger or articles of merger, as appropriate, shall be executed
in accordance with all appropriate legal requirements and shall be filed as
required by law, and the Merger provided for herein shall become effective upon
such filing or on such date as may be specified in such certificate of merger.
The date of such filing or such later effective date is herein called the
"Effective Date". The "Effective Time" of the Merger shall be 4:01 P.M. in the
State of Mississippi on the Effective Date (or such other time on the Effective
Date as may be agreed by the parties).
ARTICLE VIII. OTHER MATTERS
(A) Certain Definitions. As used in this Agreement, the following
terms shall have the meanings indicated except where otherwise specifically
defined:
(1) "Material Adverse Effect," with respect to a person, means any
condition, event, change or occurrence that, individually or
collectively, is reasonably likely to have a material adverse effect
upon (x) the condition, financial or otherwise, properties, business,
results of operations or prospects of such person and its
subsidiaries, taken as a whole, or (y) the ability of such person to
perform its obligations under, and to consummate the transactions
contemplated by, this Agreement; provided, however, that as to the
representations and warranties made by Planters Bank in Article III,
Section (U)(1), (2) and (3), a Material Adverse Effect shall have
occurred if the reasonably projected costs of remediation and/or the
cost of all fines, penalties, costs or expenses to which Planters Bank
is or may be subject under Environmental Laws as a result of any one
or more breaches of such representations and warranties exceed
$500,000 in the aggregate and as to all other representations,
warranties and covenants of Planters Bank, a Material Adverse Effect
shall have occurred if the actual or reasonably projected costs of all
losses, fines, penalties, costs or expenses (including costs of
remediation) as a result of any one or more breaches of such
representations, warranties and covenants exceed $250,000 in the
aggregate.
(2) "Person" includes an individual, corporation, partnership,
association, trust or unincorporated organization.
(B) Survival. The agreements and covenants of the parties which by
their terms apply in whole or in part after the Effective Time shall survive
the Effective Date. All other representations, warranties, agreements and
covenants shall be deemed to be conditions of this Agreement and shall not
survive the Effective Date. If
A - 20
<PAGE> 114
this Agreement shall be terminated, the agreements of the parties in Paragraph
(H)(3) of Article IV, in Paragraphs (E) and (F) of Article VI and Paragraphs
(F) and (G) of this Article shall survive such termination.
(C) Amendment; Modification; Waiver. Prior to the Effective Date,
any provision of this Agreement may be (i) waived by the party benefitted by
the provision or by both parties or (ii) amended or modified at any time
(including the structure of the transaction) by an agreement in writing between
the parties hereto approved by their respective Boards of Directors (to the
extent allowed by law), except that, after the vote by the shareholders of
Planters Bank, Paragraph (B) of Article I shall not be amended or revised.
(D) Counterparts. This Agreement may be executed in counterparts
each of which shall be deemed to constitute an original, but all of which
together shall constitute one and the same instrument.
(E) Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Tennessee.
(F) Expenses. Each party hereto will bear all expenses incurred by
it in connection with this Agreement and the transactions contemplated hereby
including fees and expenses of its own brokers, finders, financial consultants,
accountants and counsel ("Transaction Expenses"), except printing expenses
which shall be shared equally. Planters Bank agrees that its Transaction
Expenses will not exceed $125,000.
(G) Disclosure. Each of the parties and its respective agents,
attorneys and accountants will maintain the confidentiality of all information
provided in connection herewith which has not been publicly disclosed unless it
is advised by counsel that any such information is required by law to be
disclosed.
(H) Notices. All notices, requests, acknowledgements and other
communications hereunder to a party shall be in writing and shall be deemed to
have been duly given when delivered by hand, telecopy, telegram or telex
(confirmed in writing) to such party at its address set forth below or such
other address as such party may specify by notice to the other party hereto.
IF TO
PLANTERS BANK, TO: PLANTERS BANK
Post Office Box 127
Tunica, Mississippi 38676
ATTN: William C. Wood
FEDERAL EXPRESS ADDRESS:
1202 Edwards Avenue
Tunica, Mississippi 38676
With Copies to: Gerrish & McCreary, P.C.
700 Colonial Road, Suite 200
Memphis, Tennessee 38117
P. O. Box 242120
Memphis, Tennessee 38124-2120
ATTN: Jeffrey C. Gerrish
A - 21
<PAGE> 115
IF TO FTNC, TO: FIRST TENNESSEE NATIONAL
CORPORATION
165 Madison Avenue
Memphis, Tennessee 38103
ATTN: Elbert L. Thomas, Jr.
With Copies to: HEISKELL, DONELSON, BEARMAN,
ADAMS, WILLIAMS & CALDWELL
165 Madison Avenue, 20th Floor
Memphis, Tennessee 38103
ATTN: Charles T. Tuggle, Jr.
FIRST TENNESSEE NATIONAL
CORPORATION
165 Madison Avenue
Memphis, Tennessee 38103
ATTN: Harry A. Johnson, III
(I) No Third Party Beneficiaries. All terms and provisions of this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Except as expressly
provided for herein, nothing in this Agreement is intended to confer upon any
other person any rights or remedies of any nature whatsoever under or by reason
of this Agreement.
(J) Entire Agreement. This Agreement represents the entire
understanding of the parties hereto with reference to the transactions
contemplated hereby and supersedes any and all other oral or written agreements
heretofore made.
(K) Assignment. This Agreement may not be assigned by any party
hereto without the written consent of the other parties.
A - 22
<PAGE> 116
(L) Directors' Shares. To the extent that directors' qualifying
shares shall exist with respect to Planters Bank, Planters Bank shall take such
action with respect to such shares as FTNC shall reasonably request.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed in counterparts by their duly authorized officers as of the day and
year first above written.
FIRST TENNESSEE NATIONAL CORPORATION
By:/s/ Elbert L. Thomas, Jr.
-------------------------
Title: Senior Vice President
FTNC
PLANTERS BANK
By:/s/ William C. Wood
-------------------
Title: President and
Chief Executive Officer
PLANTERS BANK
A - 23
<PAGE> 117
APPENDIX B
SOUTHARD
FINANCIAL
FAIRNESS OPINION
MERGER BY AND BETWEEN
FIRST TENNESSEE NATIONAL CORPORATION
AND
PLANTERS BANK
As of March 28, 1994
Dated
March 28, 1994
<PAGE> 118
SOUTHARD
FINANCIAL
March 28, 1994
Board of Directors
Planters Bank
Tunica, Mississippi
RE: FAIRNESS OPINION RELATIVE TO PENDING AGREEMENT OF PLANTERS BANK,
TUNICA, MISSISSIPPI, TO MERGE WITH AND INTO FIRST TENNESSEE NATIONAL
CORPORATION, MEMPHIS, TENNESSEE
Gentlemen:
The Board of Directors of Planters Bank ("Planters") retained Southard
Financial, in its capacity as a financial valuation and consulting firm, to
render its opinion of the fairness, from a financial viewpoint, of the
acquisition of Planters by First Tennessee National Corporation ("FTNC").
Southard Financial and its principals have no past, present, or future
contemplated financial, equity, or other interest in either Planters or FTNC.
APPROACH TO ASSIGNMENT
The approach to this assignment was to consider the following factors:
[ ] A review of the financial performance and position of Planters and the
value of its common stock;
[ ] A review of the financial performance and position of FTNC and the
value of its common stock;
[ ] A review of recent Bank merger transactions;
[ ] A review of the current and historical market prices of bank holding
companies in Mississippi, Tennessee, and surrounding states;
[ ] A review of the investment characteristics of the common stock of
Planters and FTNC;
[ ] A review of the Agreement and Plan of Merger by and between First
Tennessee National Corporation and Planters Bank, dated March 29,
1994;
[ ] An evaluation of the impact of the merger on the expected return to
the current shareholders of Planters; and,
[ ] An evaluation of other factors as were considered necessary to render
this opinion.
It is Southard Financial's understanding that the merger and resulting exchange
of the stock of First Tennessee National Corporation for the outstanding common
stock of Planters Bank constitutes a non-taxable exchange for federal income
tax purposes.
<PAGE> 119
Board of Directors
Planters Bank
Page 2
DUE DILIGENCE REVIEW PROCESS
In performing this assignment, Southard Financial reviewed the documents
specifically outlined in Exhibit 1 pertaining to Planters Bank and in Exhibit 2
pertaining to First Tennessee National Corporation.
REVIEW OF PLANTERS BANK
Southard Financial visited with the management of Planters in Tunica,
Mississippi. Discussions included questions regarding the current and
historical financial position and performance of Planters, its outlook for the
future, and other pertinent factors.
REVIEW OF FIRST TENNESSEE NATIONAL CORPORATION
Southard Financial visited with the management of FTNC in Memphis, Tennessee.
Discussions included questions regarding the current and historical financial
position and performance of FTNC and its primary operating subsidiary, First
Tennessee Bank National Association, its outlook for the future, and other
pertinent factors.
MERGER DOCUMENTATION
Southard Financial reviewed the Agreement and Plan of Merger By and Between
First Tennessee National Corporation and Planters Bank, dated March 29, 1994.
Appropriate aspects of this agreement were discussed with management and with
legal counsel for Planters. (See Exhibit 3, Terms of the Agreement and Plan of
Merger.)
Southard Financial did not independently verify the information reviewed, but
relied on such information as being complete and accurate in all material
respects. Southard Financial did not make any independent evaluation of the
assets of FTNC or Planters, but reviewed data supplied by the management of
both institutions.
<PAGE> 120
Board of Directors
Planters Bank
Page 3
MAJOR CONSIDERATIONS
Numerous factors were considered in the overall review of the proposed merger.
The review process included considerations regarding Planters, FTNC, and the
proposed merger. The major considerations are as follows:
PLANTERS BANK
o Historical earnings;
o Historical dividend payments;
o Outlook for future performance, earnings, and dividends;
o Economic conditions and outlook in Planters's market;
o The competitive environment in Planters's market;
o Comparisons with peer banks;
o Potential risks in the loan and securities portfolios;
o Recent minority stock transactions in Planters's common stock; and,
o Other such factors as were deemed appropriate in rendering this
opinion.
FIRST TENNESSEE NATIONAL CORPORATION
o Historical earnings;
o Historical dividend payments;
o Outlook for future performance, earnings, and dividends;
o Economic conditions and outlook in FTNC's market;
o The competitive environment in FTNC's market;
o Comparisons with peer banks;
o Potential risks in the loan and securities portfolios;
o Recent minority stock transactions in FTNC's common stock; and,
o Other such factors as were deemed appropriate in rendering this
opinion.
COMMON FACTORS
o Historical and current bank merger pricing;
o Current market prices for minority blocks of common stocks of regional
bank holding companies in Mississippi, Tennessee, and surrounding
states;
<PAGE> 121
Board of Directors
Planters Bank
Page 4
THE PROPOSED MERGER
o The merger agreement and its terms;
o The specific pricing of the merger;
o Adequacy of the consideration paid to the shareholders of Planters;
o The assumption that the tax opinion regarding the tax-free nature of
the exchange will be upheld;
o The amount of debt and goodwill on the balance sheet of FTNC and the
impact of the merger of Planters on FTNC's capital and liquidity
positions;
o The historical dividend payments of FTNC and the likely impact on the
dividend income of the current shareholders of Planters (equivalency
of cash dividends);
o Pro-forma combined income statements for FTNC post merger and the
expected returns to Planters shareholders (equivalency of earnings
yield);
o The market for minority blocks of FTNC common stock during the past
three years; and,
o Other such factors as deemed appropriate.
OVERVIEW OF FAIRNESS ANALYSIS
In connection with rendering its opinion, Southard Financial performed a
variety of financial analyses, which are summarized below. Southard Financial
believes that its analyses must be considered as a whole and that considering
only selected factors could create an incomplete view of the analyses and the
process underlying the opinion. The preparation of a fairness opinion is a
complex process involving subjective judgments and is not susceptible to
partial analyses or summary description. In its analyses, Southard Financial
made numerous assumptions, many of which are beyond the control of Planters and
FTNC. Any estimates contained in the analyses prepared by Southard Financial
are not necessarily indicative of future results or values, which may vary
significantly from such estimates. Estimates of value of companies do not
purport to be appraisals or necessarily reflect the prices at which companies
or their securities may actually be sold. None of the analyses performed by
Southard Financial was assigned a greater significance than any other. (More
details on the analyses prepared by Southard Financial are contained in
Exhibits 4-8.)
DIVIDEND YIELD ANALYSIS
In evaluating the impact of the proposed merger on the shareholders of
Planters, Southard Financial reviewed the dividend paying histories of Planters
and FTNC. Based upon this review, it is reasonable to expect that the
shareholders of Planters, in total, will receive dividends at or above the
level currently paid by Planters, after the merger is completed (defined as
post merger combined dividends per share times the exchange ratio). This is
predicated on the assumption that FTNC will continue per share dividends at
current levels (see Exhibit 4).
<PAGE> 122
Board of Directors
Planters Bank
Page 5
EARNINGS YIELD ANALYSIS
In evaluating the impact of the proposed merger on the shareholders of
Planters, Southard Financial determined that, based upon the proposed exchange
ratio, the shareholders of Planters would have seen an increase in their share
of earnings (defined as post merger combined earnings per share times the
exchange ratio), had the merger been consummated by year-end 1993. The
analysis also suggests expected higher earnings yields for Planters
shareholders in subsequent years if the merger is consummated (see Exhibit 4).
BOOK VALUE ANALYSIS
In evaluating the impact of the proposed merger on the shareholders of
Planters, Southard Financial determined that the shareholders of Planters would
have seen a substantial increase in the book value of their investment had the
merger been consummated prior to year-end 1993.
ANALYSIS OF ALTERNATIVES
In evaluating the fairness of the proposed merger on the shareholders of
Planters, Southard Financial reviewed with management other offers received for
the purchase/merger of Planters. Further, Southard Financial considered recent
public market merger pricing information (see Exhibit 5).
ANALYSIS OF MARKET TRANSACTIONS
Based upon the merger terms, Planters shareholders will receive 240% of
year-end 1993 book value per share, and 20.62x reported 1993 earnings. Based
upon the review conducted by Southard Financial, the pricing for Planters in
the merger is above the multiples seen in recent bank acquisitions (see Exhibit
5).
FUNDAMENTAL ANALYSIS
Southard Financial reviewed the financial characteristics of Planters and FTNC
with respect to profitability, capital ratios, liquidity, asset quality, and
other factors. Southard Financial compared Planters and FTNC to a universe of
publicly traded banks and bank holding companies and to peer groups prepared by
the Federal Financial Institutions Examination Council (FFIEC). Southard
Financial found that the post-merger combined entity will have capital ratios
and profitability ratios near those of the public peer group and the FFIEC peer
group (predominantly non-publicly traded banks). (See Exhibits 6-7.)
<PAGE> 123
Board of Directors
Planters Bank
Page 6
LIQUIDITY
Unlike Planters stock, FTNC shares are registered with the SEC, and are
actively traded on the NASDAQ market. Further, except in the case of officers
and directors of Planters, FTNC shares received will be freely tradeable with
no restrictions.
SUMMARY OF ANALYSES
The summary set forth does not purport to be a complete description of the
analyses performed by Southard Financial. The analyses performed by Southard
Financial are not necessarily indicative of actual values, which may differ
significantly from those suggested by such analyses. Southard Financial did
not appraise any individual assets or liabilities of Planters or FTNC.
Throughout the due diligence process, all information provided by Planters,
FTNC, and third party sources, was relied upon by Southard Financial without
independent verification.
FAIRNESS OPINION
Based upon the analyses of the foregoing and such matters as were considered
relevant, it is the opinion of Southard Financial that the terms of the offer
for the acquisition of Planters Bank by First Tennessee National Corporation
are fair, from a financial viewpoint, to the shareholders of Planters Bank.
Thank you for this opportunity to be of service to the shareholders of Planters
Bank.
Sincerely yours,
SOUTHARD FINANCIAL
Douglas K. Southard
----------------------------------
Douglas K. Southard, DBA, CFA, ASA
Attachments:
Exhibit 1: Planters Bank, Document Review List
Exhibit 2: First Tennessee National Corporation, Document Review List
Exhibit 3: Terms of the Agreement and Plan of Merger
Exhibit 4: Expected Impact of the Merger on the Shareholders of Planters Bank
Exhibit 5: Comparison of The Merger Pricing to Public Market Transactions
Exhibit 6: Overview of Planters Bank
Exhibit 7: Overview of First Tennessee National Corporation
Exhibit 8: Qualifications of Southard Financial
<PAGE> 124
EXHIBIT 1
PLANTERS BANK
DOCUMENT REVIEW LIST
1. Consolidated Reports of Condition and Income ("Call Report") for the
period ended December 31, 1993.
2. Uniform Bank Performance Report ("UBPR") for the periods ended
December 31, 1992-93.
3. Portfolio Accounting Report as of February 28, 1994.
4. Summary analysis of loan loss reserve calculation and determination of
adequacy.
5. Report on Special Examination, dated June 11, 1993, prepared by
Reynolds, Bone & Griesbeck, certified public accountants.
6. Offer letters from other institutions.
7. Additional pertinent information deemed necessary to render this
opinion.
<PAGE> 125
EXHIBIT 2
FIRST TENNESSEE NATIONAL CORPORATION
DOCUMENT REVIEW LIST
1. Annual Reports (including auditor's reports) for the years ended
December 31, 1990-93.
2. Securities and Exchange Commission Annual Report (Form 10-K) for the
year ended December 31, 1993.
3. Securities and Exchange Commission Quarterly Report (Form 10-Q) for
the quarters ended March 31, 1993, June 30, 1993, and September 30,
1993.
4. Supplemental Quarterly Report for the year ended December 31, 1993.
5. Research reports by The Robinson-Humphrey Company, Inc.; The First
Boston Corporation; First Manhattan Co.; Morgan Keegan & Company,
Inc.; Keefe, Bruyette & Woods, Inc.; and J.C. Bradford & Co.
6. Budget for 1994.
7. Asset Quality Activity report covering the 1989-93 period, and detail
of all classified assets, non-accrual loans, and other real estate
owned in excess of $1.0 million as of December 31, 1993.
8. Due diligence file regarding Planters Bank.
9. Minutes of all regular and special meetings of the Shareholders and
Board of Directors during 1993.
10. Additional pertinent information deemed necessary to render this
opinion.
<PAGE> 126
EXHIBIT 3
TERMS OF THE
AGREEMENT AND PLAN OF MERGER
The Agreement and Plan of Merger, dated as of March 29, 1994, by and between
First Tennessee National Corporation and Planters Bank (the "Agreement")
contains several provisions. The following are key provisions of the
Agreement:
In exchange for the 60,000 shares of Planters common stock outstanding,
Planters shareholders will receive newly issued shares of FTNC common stock.
The parties intend for the merger to qualify as a "reorganization" under the
Internal Revenue Code. Thus, the exchange of Planters stock for FTNC stock
is expected to qualify as a tax-free exchange for Federal income tax
purposes. The exchange of cash for fractional shares may have tax
consequences.
The exchange ratio will be based upon the result of $234.00 divided by the
average of the closing prices of FTNC common stock on the twenty trading
days immediately prior to the tenth calendar day preceding the effective
date of the transaction (the "average price").
If the average price is greater than $42.00 per share, the exchange ratio
will be calculated based upon an average price of $42.00 per share. If the
average price is less than $34.00 per share, FTNC may require Planters to
consummate the transaction using the average price. If FTNC does not
exercise this option, then either party may terminate the Agreement.
No fractional shares will be issued by FTNC. Planters shareholders who
would otherwise have been entitled to fractional shares will be paid in cash
based upon the average price of FTNC stock.
The Agreement may be terminated by mutual consent of the Board of Directors
of each institution or by either party's Board of Directors if the merger is
not approved by its shareholders.
The exchange ratio will be adjusted to reflect any reclassification,
recapitalization, split-up, combination or exchange of shares, or stock
dividend which might occur at FTNC subsequent to the date of the Agreement
but prior to the consummation of the merger.
Based upon the terms of the Agreement, Planters shareholders would receive:
- 6.882 shares of FTNC stock (fractional shares paid in cash) if the
average price of FTNC stock (as defined above) is $34.00 per share;
- 5.571 shares of FTNC stock (fractional shares paid in cash) if the
average price of FTNC stock is $42.00 per share or above;
- something more than 6.882 shares of FTNC stock if the average price of
FTNC stock is below $34.00 per share; or,
- something in between 5.571 shares and 6.882 shares of FTNC stock if
the average price is between $34.00 per share and $42.00 per share.
<PAGE> 127
EXHIBIT 4
EXPECTED IMPACT OF THE MERGER
ON THE SHAREHOLDERS OF PLANTERS BANK
The following is a summary of the various analyses undertaken in conjunction
with this fairness opinion. This summary is not intended to represent all
analyses performed by Southard Financial, but is presented here for the
convenience of Planters Bank and its shareholders.
The average price of FTNC common stock for the twenty trading days prior to the
date of this fairness opinion, as calculated by Southard Financial, was $38.756
per share. Assuming this price as the average price to be used in the merger,
Planters shareholders would receive six (6) shares of FTNC stock, plus $1.46 in
cash for each share of Planters stock exchanged under the Agreement.
EARNINGS Planters earned $11.35 per share in 1993. FTNC earned $4.26
per share in 1993. Had the merger been consummated prior to
January 1, 1993, each former Planters share would have earned
$25.56 in 1993 (FTNC 1993 earnings of $4.26 per share times
six shares). This represents an increase of 125.2% over what
Planters earned in 1993, not including interest earned on the
$1.46 cash payment.
Based upon the average of the analysts surveyed, FTNC is
expected to earn $4.65 per share in 1994. On an ongoing
basis, Southard Financial estimates that Planters should earn
$12-$13 per share in 1994. Given these estimates, and
assuming that the merger was consummated prior to January 1,
1994, Planters shareholders would see an increase of about
115%-130% over what Planters would be expected to earn in
1994, absent the merger.
DIVIDENDS Each share of Planters stock received $4.00 per share in
dividends in 1993. Had the merger been consummated prior to
January 1, 1993, each former share of Planters stock would
have received dividends of $9.00 in 1993 (FTNC 1993 dividends
of $1.50 per share times six shares). This represents an
increase of 125.0% over the dividends paid to Planters
shareholders in 1993.
BOOK VALUE Reported book value of Planters at December 31, 1993 was
$97.50 per share. Reported book value of FTNC at December 31,
1993 was $23.97 per share. Had the merger been consummated
prior to December 31, 1993, each former Planters share would
have book value of $143.82 (FTNC year-end 1993 book value of
$23.97 per share times six shares). This represents 147.5% of
Planters book value at year-end.
LIQUIDITY Unlike Planters stock, FTNC shares are registered with the
SEC, and are actively traded on the NASDAQ market. Average
daily trading volume was about 73,000 shares from January 1 to
March 25, 1994. Further, except in the case of officers and
directors of Planters, FTNC shares received will be freely
tradeable with no restrictions.
Based upon the analyses discussed above, and other analyses performed by
Southard Financial, the impact of the merger on the shareholders of Planters
Bank is expected to be highly favorable.
<PAGE> 128
EXHIBIT 5
COMPARISON OF THE MERGER PRICING
TO PUBLIC MARKET TRANSACTIONS
Southard Financial compared the pricing terms of the Agreement to the pricing
of recent acquisitions of banks and bank holding companies across the United
States, and to the minority interest prices of publicly traded banks and bank
holding companies in the Southeast.
Pricing data for recent acquisitions of banks and bank holding companies
(nationwide) is summarized as follows:
<TABLE>
<CAPTION>
Price/ Price/
Earnings Book Val
-------- --------
<S> <C> <C>
All Transactions 17.59x 171%
All Cash Transactions 13.41x 141%
All Stock Transactions 18.28x 183%
Mixtures - Cash & Stock & Other 18.75x 175%
Mississippi & Contiguous States 13.84x 185%
</TABLE>
The merger of Planters into FTNC will take place at 20.62x 1993 earnings and
240% of year-end 1993 book value, or well above recent market multiples.
In determining the attractiveness of owning FTNC stock, it is important to
examine FTNC's recent pricing in comparison with recent pricing multiples for
publicly traded banks and bank holding companies. This pricing data is
presented below as of December 31, 1993.
<TABLE>
<CAPTION>
Price/ Price/ Current Current
Earnings Book Val ROAE Yield
-------- -------- ------ -------
<S> <C> <C> <C> <C>
MS, TN, AR, AL, and LA Banks 10.55x 165% 15.7% 2.76%
Mississippi Banks (5) 10.08x 160% 16.1% 3.07%
Tennessee Banks (5) 11.35x 180% 15.8% 2.70%
Arkansas (4) 9.81x 153% 15.6% 2.04%
Alabama (4) 10.88x 166% 15.3% 3.16%
Louisiana (none) --- -- --- ---
FTNC 10.64x 181% 17.0% 4.36%
</TABLE>
Based upon an analysis of the data provided above, FTNC's price/earnings
multiple is near that of other publicly traded banks in its region, while the
price/book value ratio, return on average equity, and current dividend yield
are all above the range.
<PAGE> 129
EXHIBIT 6
OVERVIEW OF PLANTERS BANK
Planters Bank is one of two banks located in Tunica, Mississippi. Planters had
assets of $65.9 million at year-end 1993, and equity of 8.88% of assets.
Planters earned $681 thousand in 1993 (1.20% of average assets) and $601
thousand in 1992 (1.37%). The Tunica market is currently being impacted by the
development of gambling casinos on the nearby Mississippi River. More details
on Planters are documented in Southard Financial's file.
EXHIBIT 7
OVERVIEW OF FIRST TENNESSEE NATIONAL CORPORATION
First Tennessee National Corporation is one of the nation's 65 largest banking
companies with assets of $9.6 billion. FTNC's principal subsidiary, First
Tennessee National Bank National Association (FTBNA), provides general banking
products and services through 211 locations across Tennessee; mortgage banking
services through 96 offices in 20 states; consumer lending through ten offices
in five states; and ATM access at over 100,000 locations. FTNC also offers
related financial services including bond broker/agency services, mortgage
banking, merchant credit card processing, nationwide check clearing, integrated
check processing, trust services, brokerage, venture capital, and credit life
insurance.
Recent acquisitions were as follows: (1) FTNC acquired HFC, a Tennessee savings
and loan holding company, on December 14, 1992; (2) FTBNA acquired Maryland
National Mortgage Corporation, a mortgage banking operation in Baltimore,
Maryland, on October 1, 1993; (3) FTNC acquired New South Bancorp, a
Mississippi bank holding company, on December 31, 1993; (4) FTNC acquired SNMC
Management Corporation, a mortgage banking operation in Dallas, Texas, on
January 4, 1994; and, (5) FTNC acquired Cleveland Bank and Trust, a Tennessee
bank, on March 23, 1994.
FTNC earned $4.26 per share in 1993, up 33.5% from $3.19 per share in 1992.
The consensus earnings estimate for 1994 is $4.65, or 9.2% above 1993 earnings.
Earnings per share increased in each year since 1989. Dividends of $1.50 per
share in 1993 were 19.0% above 1992 dividends of $1.26 per share. Per share
dividends increased each year since 1988.
FTNC had Tier I capital to risk-adjusted assets of 9.60% in 1993, well above
the regulatory minimum of 6.00%, and total capital to risk-adjusted assets of
12.14% versus the minimum of 10.00%. The quality of the loan portfolio
improved in recent years, as net charge-offs decreased from a high of $59.9
million in 1991 to $28.4 million in 1993. Also, FTNC's efforts reduced
non-performing assets to total loans from 2.35% at year-end 1990 to 0.97% at
year-end 1993.
In all, FTNC is in good financial condition. The recent addition of mortgage
banking operations is expected to add diversification and synergies to FTNC's
ongoing activities. Management is interested in acquiring another mortgage
banking operation, as well as other banks with good market share and/or
earnings potential. More details on FTNC are contained in Southard Financial's
file.
<PAGE> 130
EXHIBIT 8
QUALIFICATIONS OF SOUTHARD FINANCIAL
<PAGE> 131
PRINCIPAL EXPERIENCE
<TABLE>
<S> <C> <C>
BACKGROUND - Founded in 1987.
- Principals have combined business valuation experience of approximately 20 years.
- Serve clients throughout the United States, with concentration in the Southeast.
- Broad industry experience.
- Services provided for public and closely-held companies.
- Provide valuation services for over 100 ESOP's, making Southard Financial one of
the largest ESOP appraisers in the United States.
PROFESSIONAL - Southard Financial's principals, Douglas K. Southard and David A. Harris, are senior
CREDENTIALS members of the American Society of Appraisers (ASA).
- Both principals of Southard Financial are Chartered Financial Analysts (CFA).
- Both principals are former officers of the West Tennessee Chapter of the ASA.
EDUCATIONAL - Douglas K. Southard holds Doctor of Business Administration and Master of Business
CREDENTIALS Administration degrees from Indiana University, with concentrations in finance,
economics, and quantitative analysis.
- David A. Harris holds the Master of Business Administration degree from Memphis State
University, with concentrations in finance and business investments.
BUSINESS - Southard Financial and its principals adhere to the ethical standards of the Institute
ETHICS of Chartered Financial Analysts and the American Society of Appraisers.
- All reports conform to the Uniform Standards of Professional Appraisal Practice.
- Southard Financial is committed to providing making.
- Fees for valuation services are not contingent upon the conclusion of value or the
completion of a transaction.
</TABLE>
<PAGE> 132
BIOSKETCH
DOUGLAS K. SOUTHARD, DBA, CFA, ASA
EDUCATIONAL AND PROFESSIONAL CREDENTIALS
Doctor of Business Administration, 1981, Indiana University
Master of Business Administration, 1976, Indiana University
Bachelor of Arts, 1975, Rhodes College (formerly Southwestern at Memphis)
Chartered Financial Analyst, 1987, Institute of Chartered Financial Analysts
(now part of the Association for Investment Management and Research)
Senior Member, 1987, American Society of Appraisers, Business Valuation
PROFESSIONAL BACKGROUND
Founder and Principal, Southard Financial, Memphis, TN
Partner, Mercer Capital Management, Inc., Memphis, TN (1984-87)
Consulting Associate, Mercer Capital Management, Inc., Memphis, TN (1983-84)
Principal, Douglas K. Southard, Financial Consultant, Memphis, TN (1982-83)
ACADEMIC POSITIONS HELD
Assistant Professor of Finance, Rhodes College, Memphis, TN
Assistant Professor of Finance, Virginia Polytechnic Institute and State
University, Blacksburg, VA
Lecture in Finance, Indiana University, Bloomington, IN
RELATED EXPERIENCE
Frequent Speaker, professional organizations, business valuation topics
Expert Witness, business valuation, local, state and federal courts
Board of Directors, Management Computing Solutions, Inc., Memphis, TN
Board of Directors, Columbian Rope Company, Auburn, NY
Advisory Board, MicroAge, Memphis, TN
Former Officer, West Tennessee Chapter, American Society of Appraisers
PUBLICATIONS
"Using the Capital Asset Pricing Model to Determine Capitalization Rates:
Adjusting for Differences in Financial Structure," with Severin C. Carlson,
Business Valuation Review, June 1991
"Business Valuation Can Serve in Lifetime Planning," with Z.C. Mercer,
Memphis Business Journal, April 1-5, 1985
"Valuation Process Holds Keys to Executive Wealth," with Z.C. Mercer,
Memphis Business Journal, March 25-29, 1985
"What IRA's Are Worth," with Z.C. Mercer, The Southern Banker, June 1984
<PAGE> 133
BIOSKETCH
DAVID A. HARRIS, CFA, ASA
PROFESSIONAL BACKGROUND
Principal, Southard Financial, Memphis, TN
Principal and Founder, David A. Harris, Business Appraiser, Memphis, TN
Associate, Mercer Capital Management, Inc., Memphis, TN (1985-90)
Financial Analyst, Methodist Hospitals of Memphis, Inc. (1983-85)
Cost Analyst, Schering-Plough, Inc., Memphis, TN (1982-83)
EDUCATIONAL CREDENTIALS
Master of Business Administration, 1982, Memphis State University
Bachelor of Arts, 1979, Colorado State University
PROFESSIONAL DESIGNATIONS
Chartered Financial Analyst, 1989, Institute of Chartered Financial Analysts
(now part of the Association for Investment Management and Research)
Senior Member, 1990, American Society of Appraisers, Business Valuation
PROFESSIONAL/COMMUNITY SERVICE
President, 1990-91, West Tennessee Chapter, American Society of Appraisers
Vice President, 1992-94, Sea Isle Park Neighborhood Association, Memphis, TN
Board of Directors, 1990-92, Sea Isle Park Neighborhood Association, Memphis, TN
Business Liaison, 1984-85, Junior Achievement of Memphis, TN
Project Leader, 1984-85, Memphis in May International Festival
Volunteer, 1984-85, Adopt-A-School program, Memphis, TN
PUBLICATIONS
"The Perils of Excess, "with Z. Christopher Mercer, ABA Banking Journal,
October, 1987
<PAGE> 134
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Tennessee Code Annotated Sections 48-18-501 through 48-18-509
authorize a corporation to provide for the indemnification of officers,
directors, employees and agents in terms sufficiently broad to permit
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended. FTNC has adopted the provisions of the Tennessee statute pursuant
to Article XXVIII of its Bylaws. Also, FTNC has a "Directors' and Officers'
Liability Insurance Policy" which provides coverage sufficiently broad to
permit indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended.
Tennessee Code Annotated, Section 48-12-102, permits the inclusion in
the charter of a Tennessee corporation of a provision, with certain exceptions,
eliminating the personal monetary liability of directors to the corporation or
its shareholders for breach of the duty of care. FTNC has adopted the
provisions of the statute in Article 13 of its charter.
The shareholders of FTNC have approved an amendment to Article XXVIII
of the Bylaws pursuant to which FTNC is required to indemnify each director and
any officers designated by the FTNC Board, and advance expenses, to the maximum
extent not prohibited by law. In accordance with the foregoing, the FTNC Board
is authorized to enter into individual indemnity agreements with the directors
and such officers. Such indemnity agreements have been approved for all of the
directors and certain officers.
Item 21. Exhibits and Financial Statement Schedules
<TABLE>
<CAPTION>
(a) Exhibits
Number Description
------ -----------
<S> <C>
2 Agreement and Plan of Merger (included as Appendix "A" to the Proxy Statement-Prospectus)
3(i) Restated Charter of FTNC, as amended.
3(ii) Bylaws of FTNC, as amended, attached as Exhibit 3(ii) to FTNC's 1993 Annual Report on Form 10-K and incorporated
herein by reference.
4(a) Form of Common Stock Certificate, incorporated herein by reference to exhibit 4(a) to FTNC's registration statement
on Form S-4 (No. 33-51223) filed November 30, 1993.
4(b) Shareholder Protection Rights Agreement, dated as of September 7, 1989, between FTNC and FTB as Rights Agent,
incorporated by reference to FTNC's Registration Statement on Form 8-A, filed September 8, 1989
4(c) Indenture, dated as of June 1, 1987, between FTNC and Security Pacific National Trust Company (New York), Trustee
incorporated by reference to FTNC's Annual Report on Form 10-K for the fiscal year ended December 31, 1991
4(d) FTNC and certain of its consolidated subsidiaries have outstanding certain long-term debt. See Note 13 in FTNC's
1993 Annual Report to Shareholders. None of such debt exceeds 10% of the total assets of FTNC and its consolidated
subsidiaries. Thus, copies of constituent instruments defining the rights of holders of such debt are not required
to be included as exhibits. FTNC agrees to furnish copies of such instruments to the SEC upon request.
5 Opinion Regarding Legality
</TABLE>
II-1
<PAGE> 135
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
8 Opinion Regarding Tax Matters
23(a) Consent of Arthur Andersen & Co.
23(b) Consent of Reynolds, Bone and Griesbeck
23(c) Consent of Baylor and Backus
23(d) Consent of Ernst & Young
23(e) Consent of Southard Financial
23(f) Consents of Heiskell, Donelson, Bearman, Adams, Williams & Caldwell included in Exhibit 8
23(g) Consent of Clyde A. Billings, Jr. included in Exhibit 5.
24 Powers of Attorney
99(a) Opinion of Southard Financial (included as Appendix "B" to the Proxy Statement-Prospectus)
99(b) Form of Proxy for Special Meeting of Shareholders of Planters Bank
(b) Financial Statement Schedules--Not applicable
(c) Not Applicable
</TABLE>
Item 22. Undertakings
(a) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(b) The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales of the
securities are being made, a post-effective amendment to this Registration
Statement:
(i) to include any Prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect any facts or events arising after the effective
date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
II-2
<PAGE> 136
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3 or Form S-8, and
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(c) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to section 13(a) or section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(d) The undersigned Registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder through
use of a prospectus which is a part of this Registration Statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other Items of the applicable form.
(e) The Registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (d) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the Registration Statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(f) The undersigned Registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the Proxy
Statement-Prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within
one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of
the Registration Statement through the date of responding to the request.
(g) The undersigned Registrant hereby undertakes to supply by means
of a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-3
<PAGE> 137
SIGNATURES
Pursuant to the requirement of the Securities Act of 1933, the Registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Memphis, State of
Tennessee, on April 28, 1994.
FIRST TENNESSEE NATIONAL CORPORATION
By: James F. Keen
------------------------------------
James F. Keen, Senior Vice President
and Controller
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Ralph Horn* Chief Executive Officer (principal April 28, 1994
- ---------------------------------- executive officer) and a Director
Ralph Horn
Susan Schmidt Bies* Executive Vice President and April 28, 1994
- ---------------------------------- Chief Financial Officer (principal
Susan Schmidt Bies financial officer)
James F. Keen* Senior Vice President and April 28, 1994
- ---------------------------------- Controller (principal
James F. Keen accounting officer)
Jack A. Belz* Director April 28, 1994
- ----------------------------------
Jack A. Belz
Robert C. Blattberg* Director April 28, 1994
- ----------------------------------
Robert C. Blattberg
J. R. Hyde, III* Director April 28, 1994
- ----------------------------------
J. R. Hyde, III
Joseph Orgill* Director April 28, 1994
- ----------------------------------
Joseph Orgill, III
Richared E. Ray* Director April 28, 1994
- ----------------------------------
Richard E. Ray
Vicki G. Roman* Director April 28, 1994
- ----------------------------------
Vicki G. Roman
Michael D. Rose* Director April 28, 1994
- ----------------------------------
Michael D. Rose
</TABLE>
II-4
<PAGE> 138
<TABLE>
<S> <C> <C>
William B. Sansom* Director April 28, 1994
- ----------------------------------
William B. Sansom
Gordon P. Street, Jr.* Director April 28, 1994
- ----------------------------------
Gordon P. Street
Ronald Terry* Director April 28, 1994
- ----------------------------------
Ronald Terry
*By: Clyde A. Billings, Jr. April 28, 1994
-----------------------------
Clyde A. Billings, Jr.
As Attorney-in-Fact
</TABLE>
[The Power of Attorney is included herein as Exhibit 24.]
II-5
<PAGE> 139
<TABLE>
<CAPTION>
Exhibit Index
-------------
Exhibits Page
Number Description Number
------ ----------- ------
<S> <C> <C>
2 Agreement and Plan of Merger (included as Appendix "A"
to the Proxy Statement-Prospectus)
3(i) Restated Charter of FTNC, as amended.
3(ii) Bylaws of FTNC, as amended, attached as Exhibit 3(ii) to
FTNC's 1993 Annual Report on Form 10-K and incorporated
herein by reference.
4(a) Form of Common Stock Certificate, incorporated herein by
reference to exhibit 4(a) to FTNC's registration statement
on Form S-4 (No. 33-51223) filed November 30, 1993.
4(b) Shareholder Protection Rights Agreement, dated as of
September 7, 1989, between FTNC and FTB as Rights Agent,
incorporated by reference to FTNC's Registration Statement
on Form 8-A, filed September 8, 1989
4(c) Indenture, dated as of June 1, 1987, between FTNC and
Security Pacific National Trust Company (New York), Trustee
incorporated by reference to FTNC's Annual Report on Form 10-K
for the fiscal year ended December 31, 1991
4(d) FTNC and certain of its consolidated subsidiaries have
outstanding certain long-term debt. See Note 13 in FTNC's
1993 Annual Report to Shareholders. None of such debt
exceeds 10% of the total assets of FTNC and its consolidated
subsidiaries. Thus, copies of constituent instruments defining
the rights of holders of such debt are not required to be
included as exhibits. FTNC agrees to furnish copies of such
instruments to the SEC upon request.
5 Opinion Regarding Legality
8 Opinion Regarding Tax Matters
23(a) Consent of Arthur Andersen & Co.
23(b) Consent of Reynolds, Bone and Griesbeck
23(c) Consent of Baylor and Backus
23(d) Consent of Ernst & Young
23(e) Consent of Southard Financial
23(f) Consents of Heiskell, Donelson, Bearman, Adams, Williams &
Caldwell included in Exhibit 8
23(g) Consent of Clyde A. Billings, Jr. included in Exhibit 5.
24 Powers of Attorney
99(a) Opinion of Southard Financial (included as Appendix "B" to
the Proxy Statement-Prospectus)
99(b) Form of Proxy for Special Meeting of Shareholders of
Planters Bank
</TABLE>
<PAGE> 1
EXHIBIT 2
AGREEEMENT AND PLAN OF MERGER
(INCLUDED AS APPENDIX "A" TO THE PROXY STATEMENT-PROSPECTUS)
Omitted Schedules and Annexes
Pursuant to Item 601(b)(2) of Regulation S-K, the schedules, annexes
and exhibits to Exhibit 2 of this Registration Statement have been omitted.
Set forth below is a list of such omitted documents.
<TABLE>
<S> <C> <C>
Exhibit A - Schedule of FTNC stock reserved for issuance or with respect to which commitments exist
Exhibit B - Schedule of Planters Bank stock reserved for issuance or with respect to which commitments
exist
Exhibit II(A)(1) - Same as Exhibit B
Exhibit III(C)(1) - Significant subsidiaries of FTNC
Exhibit III(C)(2) - Significant subsidiaries of Planters Bank
Exhibit III(J)(1) - Undisclosed material litigation of FTNC
Exhibit III(J)(2) - Undisclosed material litigation of Planters Bank
Exhibit III(K)(1) - Unfiled material contracts of FTNC
Exhibit III(K)(2) - Unfiled material contracts of Planters Bank
Exhibit IV(P) - Form of Rule 145 Affiliate Letter
</TABLE>
<PAGE> 1
EXHIBIT 3(i)
RESTATED CHARTER
OF
FIRST NATIONAL HOLDING CORPORATION
Under Section 48-304 of the General Corporation Act
Pursuant to the provisions of Section 48-304 of the Tennessee
General Corporation Act, the undersigned Corporation adopts the follow-
ing Restated Charter:
PART I.
1. NAME.
The name of the Corporation shall be: FIRST TENNESSEE NATIONAL
CORPORATION.
2. DURATION.
The duration of the Corporation is perpetual.
3. ADDRESS.
The address of the principal office of the Corporation in the
State of Tennessee shall be: 165 Madison Avenue, Memphis, Tennessee
38103.
4. PROFIT.
The Corporation is for profit.
5. PURPOSES.
The purpose or purposes for which the Corporation is organized
are, to the extent permitted by law:
(a) To subscribe for, purchase, lease or otherwise
acquire and to receive, own, hold, sell, exchange, lease,
mortgage, pledge, assign or otherwise dispose of, and
otherwise deal in and with "securities" (as such term is
herein defined) issued or created by, or other property
(real or personal) of any person, corporation, associa-
tion, firm, trust, organization or other entity whatso-
ever, including but not limited to this corporation and
any national banking association, state-chartered bank,
savings bank and trust company, wherever located or
organized and whether public, private or municipal, of
this state, or any district territory, subdivision,
municipality or department thereof, or any other state or
any district, territory, subdivision, municipality or
department thereof, or any country, nation or government,
or any district, territory, subdivision, municipality or
<PAGE> 2
department thereof; to possess and exercise any and all
rights, powers and privileges of ownership of such securi-
ties or other property, including without limitation the
right to vote on such securities; and to issue or deliver
in payment or exchange, in whole or in part, for any such
securities or other property, its own stock, bonds, notes
or other obligations, or to make payment for any such
securities or other property by any other lawful means;
and to do any and all acts and things necessary or advisable
for the preservation, protection, improvement or enhance-
ment in value of any such securities or other property.
The term "securities" as used in this Article 5 shall
mean any and all shares, stocks, bonds, debentures, notes,
mortgages, acceptances, evidences of indebtedness or
obligations, certificates of interest or participation
in any property or venture, scrip, interim receipts,
voting trust certificates, instruments or interests
commonly known as securities, and any and all certificates
of interest or participation in, or of deposit of, any
of the foregoing, or receipts for, guaranties of, or
warrants or rights to subscribe for or purchase any of the
foregoing.
(b) To promote, finance and assist, financially or
otherwise, whether by loan, guaranty, subsidy or otherwise,
any person, corporation, partnership, association, firm,
trust, organization or other entity in which the Corpora-
tion shall have any interest; to guarantee the payment of
dividends on any stock or the payment of the obligations
issued or incurred by any such person, corporation,
partnership, association, firm, trust, organization or
other entity, to issue its own stock, bonds or other
obligations in payment or exchange for any securities or
other property acquired (pursuant to a merger, consolida-
tion or otherwise) by any such person, corporation,
partnership, association, firm, trust, organization or
other entity; and to do any and all other acts and things
for the enhancement, protection or preservation of any
securities which are in any manner, directly or indirectly,
owned, held or guaranteed by the Corporation.
(c) To render assistance, service, counsel and advice
to, and to act as representative in any capacity (whether
managing, operating, financial, purchasing, selling,
advertising or otherwise) of any person, corporation,
partnership, association, firm, trust, organization or
other entity, including without limitation those in which
the Corporation shall have any interest.
(d) To acquire by purchase, lease, exchange or
otherwise, to own, hold, use, manage, develop, improve
and to sell, lease, mortgage, exchange and otherwise deal
in, real estate and any interest or right therein and
personal property of every class and description, either
for its own account on for the account of others, to erect,
construct, rebuild, repair, manage and control, lease,
buy and sell, any and all kinds of and interest in real
estate and personal property; and to engage generally in
the business of operating and leasing real estate and
personal property of every character and description.
(e) To buy, sell, produce, manufacture and dispose
of all kinds of goods, documents, instruments, general
intangibles, chattel paper, accounts, contract rights,
-2-
<PAGE> 3
wares, foods, potables, merchandise, manufactures,
commodities, furniture, machinery, tools, supplies and
products of any kind, character or description whatsoever,
and generally to engage in any mercantile, manufacturing
or commercial business of any kind or character whatsoever
throughout the world, and to do all things incidental to
any such business or businesses.
(f) To enter into any lawful arrangements for sharing
profits, union of interest, reciprocal concession or
cooperation, with any corporation, association, partner-
ship, syndicate, entity, person or governmental, municipal
or public authority, domestic or foreign in the carrying
on of any business which the Corporation is authorized to
carry on or any business or transaction deemed necessary,
convenient or incidental to carrying out any of the purposes
of the Corporation.
(g) To issue bonds, debentures, convertible deben-
tures, notes, commercial paper, or other obligations of
this Corporation, from time to time for any of the
objects or purposes of the Corporation and to secure
the same by mortgage, pledge, deed of trust or otherwise.
(h) To guarantee obligations of any other entity
and to secure such guaranties by mortgage, pledge or
otherwise by vote of a majority of the entire Board of
Directors.
(i) To indemnify the officers and directors during
their term of office or thereafter for actions arising
during their term of office, either directly or through
the purchase of insurance, for expenditures as parties
to suits by or in the right of the Corporation or other
than by or in the right of the Corporation to the extent
permitted by the statutes of Tennessee.
(j) Without in any way limiting any of the objects
or purposes or powers, whether primary or secondary of
the Corporation, it is hereby expressly declared and
provided that the Corporation shall have power to do all
acts or things necessary, incidental or convenient to
do, or calculated, directly or indirectly, to promote
the interest of the Corporation, or enhance the value or
render profitable any of its property or rights; and in
carrying on its business or businesses, or for the
purpose of obtaining or furthering any of its objects,
to do any and all things and exercise any and all powers,
rights and privileges which a corporation for profit may
now or hereafter be permitted to do or to exercise under
the laws of the State of Tennessee; and to do any and
all of the acts and things herein set forth to the sane
extent as natural persons could do, and in any part of
the world, as principal, factor, agent, contractor,
trustee or otherwise, either alone or in syndicates, or
otherwise in conjunction with any person, entity, syndi-
cate, partnership, association or corporation, governmen-
tal or public bodies or authorities of any kind, domestic
or foreign; to establish and maintain offices and agencies
and to exercise all or any of its corporate powers and
rights throughout the world.
(k) To engage, in addition to the foregoing, in
any lawful act or activity for which corporations may be
-3-
<PAGE> 4
organized under the Tennessee General Corporation Act.
(1) It is the intention that the objects, purposes
and powers specified in the fifth paragraph hereof shall,
except where otherwise specified in said paragraph, be no-
wise limited or restricted by reference to or inference from
the terms of any other clause or paragraph in this Charter,
but that the objects, purposes and powers specified in the
fifth paragraph and in each of the clauses or paragraphs of
this Charter shall be regarded as independent objects,
purposes and powers.
The foregoing clauses shall be construed both as purposes and
powers, and it is hereby expressly provided that the foregoing enumera-
tion of specific powers shall not be held to limit or restrict in any
manner the powers of this Corporation.
6. SHARES.
The maximum number of shares which the Corporation shall have
authority to issue is as follows:
(a) Five Million (5,000,000) shares of common stock of a par
value of $5.00 each;
(b) Five Hundred Thousand (500,000) shares of preferred stock,
having no par value.
7. COMMENCEMENT OF BUSINESS.
The Corporation will not commence business until consideration
of One Thousand Dollars ($1,000.00) has been received for the issuance
of shares.
8. PREEMPTIVE RIGHTS.
No shareholder of the Corporation shall because of his
ownership of stock have a preemptive or other right to purchase, subscribe for
or take any part of any stock or any part of the notes, debentures, bonds
or other securities convertible into or carrying options or warrants
to purchase stock of the Corporation issued, optioned or sold by it
after its incorporation. Any part of the capital stock and any part
of the notes, debentures, bonds or other securities convertible into
or carrying options or warrants to purchase stock of the Corporation
authorized by this Restated Charter or by any amendment duly filed,
may at any time be issued, optioned for sale and sold or disposed of
by the Corporation pursuant to a resolution of its Board of Directors
-4-
<PAGE> 5
to such persons and upon such terms as may to such Board seem proper
without first offering such stock or securities or any part thereof
to existing shareholders.
9. COMMON STOCK.
The entire voting power of the Corporation shall be vested
in the common stock, provided, however, that the Board of Directors
is authorized by this Charter to issue, from time to time, serial
preferred stock of the Corporation in one or more series each of which
constitutes a separate class, and prior to issuance to fix and determine
the distinguishing characteristics and rights, privileges and immunities
of each such series. Such characteristics and rights, privileges and
immunities may include, but are not limited to, the voting rights of
such serial preferred stock and such voting rights of such serial
preferred stock may, if so determined by the Board of Directors prior
to the issuance of such serial preferred stock, give to the holders
of such serial preferred stock voting rights equal to those of the
holders of the common stock.
10. SERIAL PREFERRED STOCK.
The shares of any preferred class may be divided into and issued
in series. If the shares of any such class are to be issued in series,
then each series shall be so designated to distinguish the series
thereof from all the shares of all other series and classes. All
shares of the same series shall be identical. Any or all of the
series of any class may vary in the relative rights and preferences
as between the different series to the extent permitted by the statutes
of Tennessee. The Board of Directors shall have the authority to
divide any or all such classes into series and, within the limitation
of the statutes of the State of Tennessee and particularly Sections
48-502 and 48-503, fix and determine the relative rights and preferences
of the shares of any series so established.
The Board of Directors is authorized to issue the preferred
stock, without par value, in one or more series, from time to time
with such voting powers, full or limited, but not to exceed one vote
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<PAGE> 6
per share or without voting powers, and with such designations,
preferences and relative participating, optional or other special
rights and qualifications, limitations and restrictions thereof, as
may be provided in a resolution or resolutions adopted by the Board of
Directors. The authority of the Board of Directors shall include,
but not be limited to, the determination or fixing of the following
with respect to shares of such class or any series thereof: (1)
the number of shares and designation; (2) the dividend rate and
whether dividends are to be cumulative; (3) whether shares are to be
redeemable and, if so, the terms and amount of any sinking fund for
the purchase or redemption of such shares; (4) whether shares shall
be convertible and, if so, the terms and provisions applying; (5)
what voting rights are to apply, if any, not to exceed one vote per
share; and (6) what restrictions are to apply, if any, on the issue
or re-issue of any additional preferred stock.
11. ADDITIONAL POWERS.
(a) The Corporation shall have the right to purchase, take,
receive or otherwise acquire, hold, own, pledge, transfer or otherwise
dispose of its own shares; but purchases of its own shares, whether
direct or indirect, shall be made only to the extent of unreserved
and unrestricted earned or capital surplus available therefor.
(b) Other provisions: Management. The Corporation shall be
managed by the Board of Directors, which shall exercise all powers
conferred under the laws of the State of Tennessee including without
limitation the power:
(1) To hold meetings, to have one or more offices,
and to keep the books of the corporation, except as other-
wise expressly provided by law, at such places, whether
within or without the State of Tennessee, as may from
time to time be designated by the Board.
(2) To make, alter and repeal bylaws of the cor-
poration, subject to the reserved power of the share-
holders to make, alter and repeal bylaws.
(3) To approve the issuance or sale of any of its
authorized but unissued shares of any class, bonds or
other securities and rights or options entitling the
holders thereof to purchase from the corporation shares
-6-
<PAGE> 7
of any class or classes to approve the purchase or other
acquisition of or the reissuance, sale or other disposi-
tion of treasury shares; to fix the consideration to be
received for such shares of any class, bonds or other
securities, rights or options and to cause to be issued
any such shares of any class, bonds or other securities,
rights or options.
(4) To use or apply any funds of the corporation
lawfully available therefor for the purchase or acquisi-
tion of shares of the capital stock or bonds or other
securities of the corporation, in the market or otherwise,
at such price as may be fixed by the Board, and to such
extent and in such manner and for such purposes and upon
such terms as the Board may deem expedient and as may be
permitted by law, and to sell, exchange, transfer, re-
issue or cancel such shares of the capital stock of the
corporation upon such terms and for such consideration
as it may deem proper.
(5) To determine whether and to what extent and at
what times and places and under what conditions and regu-
lations the accounts and books of the corporation, or
any of them, shall be open to the inspection of the share-
holders, and no shareholder shall have any right to
inspect any account, record, book or document of the
corporation, except as conferred by the laws of the State
of Tennessee or as authorized by the Board.
(6) To remove any director for cause as defined
by the laws of the State of Tennessee by a vote of a
majority of the entire Board of Directors.
(7) To fill any newly created directorships.
resulting from an increase in the number of directors
and any vacancies occurring in the Board for any reason,
(including removal of directors without cause by the
shareholders or for cause by the Board of Directors or the
shareholders.)
(8) To designate an executive committee consisting
of three or more directors and such other committees
consisting of three or more directors and to delegate to
such executive committee or other committees all such
authority of the Board that it deems desirable within the
limits prescribed by the statutes of the State of Tennessee.
(9) To designate the officer or officers of the
corporation who shall vote the shares of capital stock
held by the corporation in other corporations and to
authorize the execution of any proxy that may be necessary
in connection therewith.
PART II.
1. The date of filing of the original Charter by the Secretary
of State was September 23, 1968.
2. The Restated Charter restates the text of the Charter, as
previously amended and restated, and further amends or changes the
-7-
<PAGE> 8
Charter as specified below. The Restated Charter was duly authorized
at a meeting of the shareholders on October 26, 1971:
PART I:
(a) Paragraph 1 hereby deleted in its entirety and
Article 1 of Part I is substituted therefor;
(b) Paragraph 3 is hereby deleted in its entirety
and Article 3 of Part I is substituted therefor;
(c) Paragraph 5 is hereby deleted in its entirety and
Article 5 of Part I is substituted therefor;
(d) Paragraph 6 is hereby deleted in its entirety
and Article 6 of Part I is substituted therefor;
(e) Paragraph 8 is hereby deleted in its entirety
and there are added to the Charter the following Articles
of Part 1:
Article 8, which restates but does not change
the provisions on preemptive rights;
Article 9;
Article 10;
Article 11.
DATED October 26, 1971.
FIRST NATIONAL HOLDING CORPORATION
By: /s/ Lee Welch
Secretary
<PAGE> 9
ARTICLES OF AMENDMENT TO THE
CHARTER OF
FIRST TENNESSEE NATIONAL CORPORATION
Pursuant to the provisions of Section 48-303 of the
Tennessee General Corporation Act, the undersigned Corporation
adopts the following articles of amendment to its Charter:
1. The name of the corporation is First Tennessee
National Corporation.
2. The amendment adopted is:
Article VI is hereby amended to read as
follows:
6. SHARES.
The maximum number of shares which
the Corporation shall have authority
to issue is as follows:
(a) Fifteen million (15,000,000) shares
of common stock of a par value of
$2.50 each;
(b) Five hundred thousand (500,000)
shares of preferred stock, having
no par value.
3. The amendment was duly adopted at a meeting of
the shareholders on April 17, 1973.
4. The increase in authorized shares provides
sufficient shares for issuance in connection
with a two for one stock split approved by
the shareholders on April 17, 1973.
The authorized common shares with a par value
of $5.00 a share are hereby changed to common
shares with a par value of $2.50 a share. The
aggregate amount of the stated capital of the
Corporation which shall be represented by the
common shares of the par value of $2.50 a share
that shall be issued and outstanding upon the
taking effect of the stock split, shall be the
same as the aggregate amount of the stated
capital of the Corporation which shall be
represented by the common shares of the
par value of $5.00 a share that shall be
issued as outstanding immediately prior
to the taking effect of the stock split.
5. The amendment is to be effective April 27, 1973.
DATE: April 17, 1973 FIRST TENNESSEE NATIONAL CORPORATION
BY: /s/ Lee Welch
Lee Welch, Secretary
<PAGE> 10
ARTICLES OF AMENDMENT TO
THE CHARTER OF
FIRST TENNESSEE NATIONAL CORPORATION
Pursuant to the provisions of Section 48-303 of the Tennessee
General Corporation Act, the undersigned Corporation adopts the follow-
ing Articles of Amendment to its Charter:
1. The name of the Corporation is First Tennessee National
Corporation.
2. The Amendment is that Section 11(b) (8) be amended to read as
follows and Section 11(b) (10) be adopted to read as follows:
"(8) To designate an Executive Committee consisting of two
or more directors and such other committees consisting of
two or more persons, who may or may not be directors, and
to delegate to such Executive Committee and other committees
all such authority of the Board that it deems desirable within
the limits prescribed by the statutes of the State of Tennessee."
"(10) To take any action required or permitted of the Board
without a meeting on written consent, setting forth the action
so taken, signed by all directors entitled to vote thereon."
3. The Amendment was duly adopted at a meeting of the shareholders
on April 15, 1980.
4. The Amendment shall be effective when filed by the Secretary of
State.
Date: April 15, 1980 First Tennessee National Corporation
By: /s/ Harry A. Johnson, III
Harry A. Johnson, III,
Assistant Secretary
<PAGE> 11
ARTICLES OF AMENDMENT
TO CHARTER OF
FIRST TENNESSEE NATIONAL CORPORATION
Pursuant to the provisions of Section 48-1-303 of the Tennessee
General Corporation Act, the undersigned corporation adopts the
following Articles of Amendment to its Charter:
1. The name of the corporation is First Tennessee National
Corporation.
2. The amendment adopted is as follows:
Delete Article 6 of the Charter in its entirety and
substitute therefor the following:
6. SHARES.
The maximum number of shares which the Corporation
shall have authority to issue is as follows:
(a) Twenty-five million (25,000,000)
shares of common stock of a par
value of $2.50 each; and
(b) Five hundred thousand (500,000)
shares of preferred stock having no
par value.
3. The amendment was duly adopted at a meeting of the shareholders
on April 16, 1985.
4. The amendment is to be effective when filed by the Secretary of
State.
FIRST TENNESSEE NATIONAL CORPORATION
/s/ Lenore S. Halle
By: Lenore S. Halle, Secretary
Date: April 16, 1985
<PAGE> 12
ARTICLES OF AMENDMENT
TO CHARTER OF
FIRST TENNESSEE NATIONAL CORPORATION
Pursuant to the provisions of Section 48-1-303 of the
Tennessee General Corporation Act, the undersigned corporation
adopts the following Articles of Amendment to its Charter:
1. The name of the corporation is First Tennessee National
Corporation.
2. The amendments adopted are as follows:
(1) Section (a) of Article 6 of the Company's Charter is
amended to read as follows:
"(a) Fifty million (50,000,000) shares of common
stock of a par value of $2.50 each; and".
(2) Section (b) of Article 6 of the Company's Charter is
amended to read as follows:
"(b) Five million (5,000,000) shares of preferred
stock, having no par value."
(3) Article 9 of the Company's Charter is amended to read
in its entirety as follows:
"9. COMMON STOCK.
The entire voting power of the Corporation shall be
vested in the common stock; provided, however, that
the Board of Directors is authorized by this Charter
to issue, from time to time, serial preferred stock of
the Corporation in one or more series each of which
constitutes a separate class, and prior to issuance to
fix and determine the distinguishing characteristics
and rights, privileges and immunities of each such
series. Such characteristics and rights, privileges
and immunities may include, but are not limited to,
the voting rights of such serial preferred stock, and
such voting rights of such serial preferred stock may,
if so determined by the Board of Directors prior to
the issuance of such serial preferred stock, give to
the holders of such serial preferred stock voting
rights equal to, greater than or less than those of
the holders of common stock."
(4) The second paragraph of Article 10 of the Company's
Charter is amended to read as follows:
"The Board of Directors is authorized to issue the
preferred stock, without par value, in one or more
series, from time to time, with such voting powers,
full or limited, or without voting powers, and with
such designations, preferences and relative partici-
pating, optional or other special rights and quali-
fications, limitations and restrictions thereof, as
may be provided in a resolution or resolutions adopted
by the Board of Directors. The authority of the Board
of Directors shall include, but not be limited to, the
determination or fixing of the following with respect
to shares of such class or any series thereof: (1)
the number of shares and designation; (2) the dividend
rate and whether dividends are to be cumulative; (3)
whether shares are to be redeemable and, if so, the
<PAGE> 13
terms and amount of any sinking fund for the purchase
or redemption of such shares; (4) whether shares shall
be convertible and, if so, the terms and provisions
applying; (5) what voting rights are to apply, if any;
and (6) what restrictions are to apply, if any, on the
issue or re-issue of any additional preferred stock."
(5) A new Article 12 of the Company's Charter is hereby
adopted as follows:
"12. NUMBER, ELECTION AND TERMS OF DIRECTORS.
(a) The number of directors of the Corporation which
shall constitute the entire Board of Directors shall
be fixed from time to time in the Bylaws of the Corpo-
ration. Any such determination shall continue in
effect unless and until changed, but no such changes
shall affect the term of any director then in office.
Upon the adoption of this Article 12, the directors
shall be divided into three classes (I, II and III),
as nearly equal in number as possible. The initial
term of office for members of Class I shall expire at
the annual meeting of stockholders in 1988; the
initial term of office for members of Class II shall
expire at the annual meeting of shareholders in 1989;
and the initial term of office for members of Class
III shall expire at the annual meeting of shareholders
in 1990. At each annual meeting of shareholders
following such initial classification and election,
directors elected to succeed those directors whose
terms expire shall be elected for a term of office to
expire at the third succeeding annual meeting of
shareholders after their election, and shall continue
to hold office until their respective successors are
duly elected and qualified. In the event of any
increase in the number of directors of the Corpora-
tion, the additional directors shall be so classified
that all classes of directors have as nearly equal
numbers of directors as may be possible. In the event
of any decrease in the number of directors of the
Corporation, all classes of directors shall be
decreased equally as nearly as may be possible.
(b) Newly created directorships resulting from any
increase in the authorized number of directors or any
vacancies on the Board of Directors resulting from
death, resignation, retirement, disqualification or
any other cause (except removal from office) shall be
filled only by the Board of Directors, provided that a
quorum is then in office and present, or only by a
majority of the directors then in office, if less than
a quorum is then in office, or by the sole remaining
director. Any vacancies on the Board of Directors
resulting from removal from office may be filled by
the affirmative vote of the holders of at least a
majority of the voting power of all outstanding voting
stock or, if the shareholders do not so fill such a
vacancy, by a majority of the directors then in office.
Directors elected to fill a newly created directorship
or other vacancy shall hold office for the remainder
of the full term of the class of directors in which
the new directorship was created or the vacancy
occurred and until such director's successor has been
duly elected and qualified. The directors of any
class of directors of the Corporation may be removed
by the shareholders only for cause by the affirmative
vote of the holders of at least a majority of the
voting power of all outstanding voting stock.
-2-
<PAGE> 14
(c) The Bylaws or any Bylaw of the Corporation may be adopted,
amended or repealed only by the affirmative vote of not less
than a majority of the directors then in office at any regular or
special meeting of directors or by the affirmative vote of the holders
of at least eighty percent (80%) of the voting power of all
outstanding voting stock at any annual meeting or any special meeting
called for that purpose. Any provision of the Charter which is
inconsistent with any provision of the Bylaws of the Corporation may
be adopted only by the affirmative vote of the holders of at least
eighty percent (80%) of the voting power of all outstanding voting
stock at any annual meeting or any special meeting called for that
purpose.
(d) Notwithstanding any other provisions of this
Charter or the Bylaws of the Corporation (and notwithstanding
the fact that a lesser percentage or separate class vote may be
specified by law, this Charter, the Bylaws of the Corporation or
otherwise), the affirmative vote of the holders of at least eighty
percent (80%) of the voting power of all outstanding voting stock
shall be required to adopt any provisions inconsistent with, or to
amend or repeal, this Article 12.
(e) Notwithstanding the foregoing, whenever the
holders of any one or more classes or series of preferred stock
issued by the Corporation shall have the right, voting separately by
class or by series, to elect directors at an annual or special meeting
of shareholders, the election, term of office, filling of vacancies
and other features of such directorships shall be governed by the
terms of this Charter applicable thereto, and such directors so
elected shall not be divided into classes pursuant to this Article 12
unless expressly provided by such terms."
3. The amendments were duly adopted at a meeting of the shareholders on April
21, 1987.
4. The amendments are to be effective when filed by the Secretary of State.
FIRST TENNESSEE NATIONAL CORPORATION
By: /s/ Lenore S. Halle
Lenore S. Halle, Secretary
Date: April 21, 1987
2480p
<PAGE> 15
ARTICLES OF AMENDMENT TO
CHARTER OF
FIRST TENNESSEE NATIONAL CORPORATION
Pursuant to the provisions of Section 48-20-106 of the
Tennessee Business Corporation Act, the undersigned corporation
adopts the following Articles of Amendment to its Charter:
1. The name of the corporation is First Tennessee National
Corporation.
2. The amendment adopted is as follows:
A new Article 13 of the Company's Charter is hereby
adopted as follows:
"13. DIRECTOR LIABILITY.
No director shall be personally liable to the
Corporation or its shareholders for monetary damages
for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of
loyalty to the Corporation or its shareholders, (ii)
for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation
of law, or (iii) under Section 48-18-304, or any
successor provision thereto, of the Tennessee Business
Corporation Act."
3. The amendment was duly adopted at a meeting of the
shareholders on April 19, 1988.
4. The amendment shall be effective when filed by the
Secretary of State.
First Tennessee National Corporation
By: /s/ Lenore S. Halle, Secretary
Lenore S. Halle, Secretary
DATE: April 19, 1988
2995p2
<PAGE> 16
EXHIBIT 3(i)
ARTICLES OF AMENDMENT TO
CHARTER OF
FIRST TENNESSEE NATIONAL CORPORATION
Pursuant to the provisions of Section 48-20-106 of the Tennessee
Business Corporation Act, the undersigned corporation adopts the following
Articles of Amendment to its Charter:
1. The name of the corporation is First Tennessee National
Corporation.
2. The amendment adopted is as follows:
Section (a) of Article 6 of the Company's Charter is amended
to read as follows:
"(a) One Hundred Million (100,000,000) shares of common
stock of a par value of $2.50 each; and".
3. The amendment was duly adopted at a meeting of the
shareholders on April 19, 1994.
4. The amendment shall be effective when filed by the Secretary
of State.
First Tennessee National Corporation
By: Lenore S. Creson
---------------------------
Lenore S. Creson, Secretary
DATE: April 19, 1994.
<PAGE> 1
EXHIBIT 5
Clyde A. Billings, Jr.
Vice President and Counsel
FIRST TENNESSEE NATIONAL CORPORATION
P. O. Box 84
Memphis, TN 38101
(901) 523-5679
Cable FIRBANK
April 27, 1994
Board of Directors
First Tennessee National Corporation
165 Madison Avenue
Memphis, TN 38103
Gentlemen:
I have acted as counsel to First Tennessee National Corporation, a
Tennessee corporation (the "Company"), in connection with the registration on
Form S-4, Registration Statement (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Act"), of 468,000 shares (the
"Securities") of Common Stock, par value $2.50 per share, of the Company, and
associated stock purchase rights (the "Rights") to be issued pursuant to the
Shareholder Protection Rights Agreement dated as of September 7, 1989 (the
"Rights Agreement") between the Company and First Tennessee Bank National
Association, as Rights Agent (the "Rights Agent"). The Securities are to be
issued to shareholders of the common stock of Planters Bank, Tunica,
Mississippi ("Planters") pursuant to the terms of the Agreement and Plan of
Merger dated as of March 29, 1994, by and between the Company and Planters (the
"Agreement"), in exchange for shares of Planters' common stock owned by such
shareholders. I have examined the originals or copies, certified or otherwise
identified to my satisfaction, of such corporate records, certificates and
other documents, and such questions of law, as I have considered necessary or
appropriate the purposes of this opinion.
Upon the basis of such examination, it is my opinion that:
1. When the Securities have been duly issued pursuant to the
terms of the Agreement, the Securities will be validly issued,
fully paid and non-assessable.
<PAGE> 2
Board of Directors
Page 2
April 27, 1994
2. When the Securities have been validly issued, the rights
attributable to the Securities will be validly issued.
In connection with my opinion set forth in paragraph (2) above, I note
that the question whether the Board of Directors of the Company might be
required to redeem the Rights at some future time will depend upon the facts
and circumstances existing at that time and, accordingly, is beyond the scope
of such opinion.
The foregoing opinion is limited to the federal laws of the United
States and the laws of the State of Tennessee, and I am expressing no opinion
as to the effect of the laws of any other jurisdiction.
In rendering the foregoing opinion, I have relied to the extent I deem
such reliance appropriate as to certain matters on statements, representations
and other information obtained from public officials, officers of the Company
and other sources believed by me to be responsible.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the reference to me in the Prospectus that is a
part of the Registration Statement. In giving such consent, I do not thereby
admit that I am in the category of persons whose consent is required under
Section 7 of the Act.
Very truly yours,
Clyde A. Billings, Jr.
Clyde A. Billings, Jr.
<PAGE> 1
EXHIBIT 8
Law Offices
Heiskell, Donelson, Bearman, Adams, Williams & Caldwell
A Professional Corporation
Twentieth Floor - First Tennessee Building
165 Madison Avenue
Memphis, Tennessee 38103
(901) 526-2000
Facsimile
(901) 577-2303
April 26, 1994
First Tennessee National Corporation
165 Madison Avenue
Memphis, Tennessee 38103
Re: MERGER WITH PLANTERS BANK - FEDERAL INCOME TAX CONSEQUENCES
Gentlemen:
We have acted as counsel for First Tennessee National Corporation
("FTNC") in connection with the Agreement and Plan of Merger dated as of March
29, 1994 (the "Agreement"), by and between FTNC and Planters Bank. The
Agreement provides that FTNC will form a new wholly-owned banking subsidiary
("Interim Bank") under the Mississippi banking statutes and that Interim Bank
will be merged with and into Planters Bank (the "Merger") under the applicable
provisions of the Mississippi banking statutes, Section 81-5-85 of Mississippi
Code Annotated. The corporate existence of Interim Bank will cease, and
Planters Bank will become the surviving corporation. Pursuant to the
Agreement, each share of Planters Bank common stock issued and outstanding as
of the Effective Time will be converted into shares of FTNC common stock based
on a Conversion Number set by reference to the average price of the FTNC common
stock during a twenty (20) business-day period prior to the date of the Merger.
No fractional shares of FTNC common stock will be issued in connection with the
Merger. In lieu of fractional shares, FTNC will make a cash payment equal to
the fractional interest which an Planters Bank shareholder would otherwise
receive multiplied by the Average Price of FTNC common stock as defined in
Section I(C) of the Agreement. This opinion is provided pursuant to the
requirements of Item 4 of Form S-4 and Section V(A)(9) of the Agreement.
Capitalized terms not defined herein shall have the meaning ascribed to them in
the Agreement.
We have been provided with an Officer's Certificate dated
April 18, 1994, in which officers of FTNC make certain representations
on behalf of FTNC regarding the Merger, and we have been provided with a
Certificate dated April 15, 1994, in which an officer of Planters Bank
makes certain representations on behalf of Planters Bank regarding the Merger
(the "Certificates"). We assume those representations to be not only
statements in the signers' best information but also currently true statements
of fact, and we rely thereon in rendering this opinion.
<PAGE> 2
First Tennessee National Corporation
April 26, 1994
Page 2
In rendering the following opinion, we have considered the Agreement,
the Certificates, applicable case law and applicable provisions of the Internal
Revenue Code of 1986, as amended and as presently in effect (the "Code"), and
regulations adopted thereunder, and Revenue Rulings and Revenue Procedures
published thereunder.
Based on the foregoing, and assuming that the representations made in
the Certificates also will be true as of the Effective Time of the Merger as
defined in the Agreement, we are of the opinion that, upon consummation of the
Merger in accordance with the terms and conditions of the Agreement, for
federal income tax purposes:
(a) Provided that the Merger qualifies as a statutory merger under
Section 81-5-85 of the Mississippi Code Annotated, the Merger
will be a reorganization within the meaning of Section 368(a)
of the Code, and FTNC and Planters Bank will each be a party
to the reorganization within the meaning of Section 368(b) of
the Code.
(b) No gain or loss will be recognized by Planters Bank or FTNC by
reason of the Merger.
(c) No gain or loss will be recognized by the shareholders of
Planters Bank upon receipt of FTNC common stock in exchange
for their Planters Bank common stock, except as described
below with respect to stockholders who receive cash in lieu of
fractional share interests in FTNC common stock.
(d) The basis of the FTNC common stock received by Planters Bank
shareholders who exchange Planters Bank common stock for FTNC
common stock will be the same as the basis of the Planters
Bank common stock surrendered in exchange therefor (reduced by
any amount allocable to a fractional share interest for which
cash is received).
(e) The holding period of the FTNC common stock received by a
Planters Bank stockholder will include the period during which
the Planters Bank common stock surrendered in exchange
therefor was held, provided that such Planters Bank common
stock was held by such Planters Bank stockholder as a capital
asset as of the Effective Time.
<PAGE> 3
First Tennessee National Corporation
April 26, 1994
Page 3
(f) A stockholder of Planters Bank common stock who receives cash
in the Merger in lieu of a fractional share interest in FTNC
common stock will be treated as having received cash in
redemption of such fractional share interest. Provided that
such Planters Bank common stock was held by such Planters Bank
stockholder as a capital asset as of the Effective Time, the
receipt of such cash should generally result in capital gain
or loss equal to the difference between the amount of cash
received and the portion of such Planters Bank stockholder's
adjusted basis in the shares of Planters Bank common stock
allocable to the fractional share interest. Such capital gain
or loss will be long-term capital gain or loss if the holding
period for the shares of Planters Bank common stock for which
cash is received is more than one (1) year.
The shares of Planters Bank common stock referred to herein do not
include any stock rights, rights or options to acquire Planters Bank common
stock.
Based on the foregoing assumptions, we are further of the opinion that
under the corporate income or excise tax laws of the State of Mississippi, no
gain or loss will be recognized by Planters Bank or FTNC by reason of the
merger.
This opinion is limited to the effect of the income tax laws of the
United States of America and the State of Mississippi, and we have expressed
no opinion as to the laws of any jurisdiction other than the United States of
America and these states. We have not considered the effects of the
transaction on the stockholders of Planters Bank under the income tax laws of
the states in which they reside, and we have not considered the effects on the
transaction, if any, of sales and use taxes or any other state and local taxes
except for corporate income or excise taxes. We express no opinion as to the
federal income tax consequences of the exchange of Planters Bank shares by
any individual who receives such shares as compensation and holds them at the
Effective Time subject to any restriction related to employment.
Changes to the Code, regulations, rulings thereunder, and changes by
the courts and the interpretation of the authorities relied upon, may be
applied retroactively and may affect the opinion expressed herein.
The foregoing opinion is furnished to you solely in connection with
the above-described transaction and may not be relied upon by any other person
or entity, or used for any other purpose. Unless a prior written consent of
our firm is obtained, this opinion is not to be quoted or otherwise referred to
in any report, proxy statement, or registration statement, and is not to be
filed with or furnished to any governmental agency or other entity or person,
except as otherwise required by law.
<PAGE> 4
First Tennessee National Corporation
April 26, 1994
Page 4
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement on Form S-4, relating to the issuance of shares of FTNC
common stock in the Merger, to be filed by FTNC with the Securities and
Exchange Commission, and to all references to this firm in the Prospectus that
is a part of the Registration Statement.
Very truly yours,
HEISKELL, DONELSON, BEARMAN,
ADAMS, WILLIAMS & CALDWELL, P.C.
By: William H.D. Fones, Jr.
-----------------------
A Member Thereof
WHDF,Jr:brw
<PAGE> 1
EXHIBIT 23(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report dated January 18, 1994, included in First Tennessee National
Corporation's 1993 Annual Report on Form 10-K, into the Company's Registration
Statement on Form S-4 and to all references to our firm included therein.
Arthur Andersen & Co.
Memphis, Tennessee
April 22, 1994
<PAGE> 1
EXHIBIT 23(b)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the inclusion
in this registration statement on Form S-4 of our report dated April 8, 1994
and to all references to our firm included in this registration statement.
Reynolds, Bone & Griesbeck
Reynolds, Bone & Griesbeck
Memphis, Tennessee
April 27, 1994
<PAGE> 1
EXHIBIT 23(c)
BAYLOR AND BACKUS
CERTIFIED PUBLIC ACCOUNTANTS
2112 NORTH ROAN STREET
FIRST TENNESSEE BUILDING, SUITE 801
P. O. BOX 1736
JOHNSON CITY, TN 37605
TELEPHONE 615-282-9000
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-4 of our report for the
years ended December 31, 1991 and 1990 dated February 21, 1992, except with
respect to the information discussed in Note 27, as to which the date is
October 21, 1992, incorporated by reference in First Tennessee National
Corporation's Form 10-K for the year ended December 31, 1993, and to all
references to our firm included in the registration statement.
Baylor and Backus
Baylor and Backus
Certified Public Accountants
Johnson City, Tennessee
April 27, 1994
<PAGE> 1
EXHIBIT 23(d)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of First Tennessee
National Corporation for the registration of 468,000 shares of its common stock
and associated rights and to the incorporation by reference therein of our
report dated March 19, 1993, with respect to the consolidated financial
statements of Maryland National Mortgage Corporation for the year ended
December 31, 1992, included in Form 8-K, dated October 1, 1993, of First
Tennessee National Corporation, filed with the Securities and Exchange
Commission.
Ernst & Young
Baltimore, Maryland
April 27, 1994
<PAGE> 1
SOUTHARD FINANCIAL
EXHIBIT 23(e)
CONSENT OF SOUTHARD FINANCIAL
We hereby consent to the inclusion in this registration statement on Form S-4
of our opinion dated March 28, 1994 and to all references to our firm in the
registration statement.
SOUTHARD FINANCIAL
April 26, 1994 Douglas K. Southard
-------------------
Douglas K. Southard
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below does hereby constitute and appoint SUSAN SCHMIDT BIES, JAMES F.
KEEN, CLYDE A. BILLINGS, JR., and TERESA A. FEHRMAN jointly and each of them
severally, his or her true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to execute and sign the
Registration Statement on Form S-4 to be filed with the Securities and Exchange
Commission, pursuant to the provisions of the Securities Act of 1933, by First
Tennessee National Corporation ("Corporation") relating to the issuance of its
Common Stock, par value $2.50 per share, pursuant to the Agreement and Plan of
Merger dated as of March 29, 1994, by and between the Corporation and Planters
Bank, Tunica, Mississippi, and, further, to execute and sign any and all
pre-effective and post-effective amendments thereto and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, or their or his or her substitute or substitutes,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all the acts that said attorneys-in-fact and agents,
or any of them, or their or his or her substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
<TABLE>
<S> <C> <C>
Signature Title Date
--------- ----- ----
Ralph Horn Chief Executive Officer April 27, 1994
- ------------------------------ (principal executive officer)
Ralph Horn and a director
Susan Schmidt Bies Executive Vice President April 27, 1994
- ------------------------------ and Chief Financial Officer
Susan Schmidt Bies (principal financial officer)
James F. Keen Senior Vice President and April 27, 1994
- ------------------------------ Controller (principal
James F. Keen accounting officer)
Jack a. Belz Director April 27, 1994
- ------------------------------
Jack A. Belz
Robert C. Blattberg Director April 27, 1994
- ------------------------------
Robert C. Blattberg
J. R. Hyde, III Director April 27, 1994
- ------------------------------
J. R. Hyde, III
Joseph Orgill, III Director April 27, 1994
- ------------------------------
Joseph Orgill, III
Richard E. Ray Director April 27, 1994
- ------------------------------
Richard E. Ray
</TABLE>
Page 1 of 2
<PAGE> 2
<TABLE>
<S> <C> <C>
Vicki G. Roman Director April 27, 1994
- ------------------------------
Vicki G. Roman
Michael D. Rose Director April 27, 1994
- ------------------------------
Michael D. Rose
William B. Sansom Director April 27, 1994
- ------------------------------
William B. Sansom
Gordon P. Street, Jr. Director April 27, 1994
- ------------------------------
Gordon P. Street, Jr.
Ronald Terry Director April 27, 1994
- ------------------------------
Ronald Terry
</TABLE>
Page 2 of 2
<PAGE> 1
EXHIBIT 99(b)
PROXY
Planters Bank
Revocable Proxy
---------------
(SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF PLANTERS BANK FOR A SPECIAL
MEETING OF SHAREHOLDERS TO BE HELD ON ______________________ , 1994)
The undersigned hereby appoints ____________________ and ______________,
and proxies for the undersigned, to represent and vote all shares of Common
Stock of Planters Bank standing in my name on the books and records of Planters
Bank at the close of business on _____________, 1994 which the undersigned is
entitled to cast at the Special Meeting of Shareholders to be held at the main
office of Planters Bank, 1202 E. Edwards Avenue, Tunica, Mississippi, on
___________, 1994 at 10:00 a.m., local time, and at any and all adjournement as
follows:
For Against Abstain
--------- --------- ---------
1. Approval of the Agreement and Plan of
Merger dated as of March 29, 1994, (the
"Merger Agreement") by and between First
Tennessee National Corporation ("FTNC") and
Planters Bank which provides that First
Tennessee Interim Bank, a newly chartered
and wholly-owned subsidiary of FTNC will
merge with and into Planters Bank, as a
result of which Planters Bank will become a
wholly-owned subsidiary of FTNC
--------- --------- ---------
2. At their discretion, on such other
business as may properly come before the
Special Meeting or any adjournments or
postponements thereof.
--------- --------- ---------
NOTE: The Board of Directors is not aware of any other business that may come
before the meeting.
<PAGE> 2
THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS
STATED IF NO CHOICE IS MADE HEREON
Should the undersigned be present and elect to vote at the Special
Meeting or at any adjournment thereof and, after notification to the Secretary
of Planters Bank at the Special Meeting of the shareholder's decision to
terminate this Proxy, then the power of said attorneys and proxies shall be
deemed terminated and of no further force and effect.
The undersigned acknowledges receipt of a Notice of Special Meeting
called for the __________rd day of __________, 1994; and the Proxy
Statement-Prospectus dated the __________th day of _______________, 1994 prior
to the execution of this Proxy.
----------------------------------------
Print Name of Shareholder
Date:
------------------ ----------------------------------------
Signature of Shareholder
----------------------------------------
Print Name of Shareholder
Date:
------------------- ----------------------------------------
Signature of Shareholder
(Please sign exactly as your name appears
on the envelope in which this card was
mailed. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title.
If more than one trustee, all should
sign. If shares are held jointly, each
holder should sign.)
