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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
- or -
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition period from __________ to__________
Commission File Number 000-4491
FIRST TENNESSEE NATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
TENNESSEE 62-0803242
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
165 MADISON AVENUE, MEMPHIS, TENNESSEE 38103
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including Area Code: 901-523-5630
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
$0.625 PAR VALUE COMMON CAPITAL STOCK (INCLUDING RIGHTS ATTACHED THERETO)
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
X YES NO
____ ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. _____
At February 26, 1999, the aggregate market value of the voting stock of the
registrant held by non-affiliates of the registrant was approximately $4.84
billion.
At February 26, 1999, the registrant had 129,809,484 shares of common stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
1. Portions of Proxy Statement furnished to shareholders in connection
with Annual Meeting of Shareholders scheduled for 4/20/99 - Parts I,
II, III and IV.
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PART I
ITEM 1
BUSINESS
General.
First Tennessee National Corporation (the "Corporation") is a Tennessee
corporation incorporated in 1968 and registered as a bank holding company under
the Bank Holding Company Act of 1956, as amended. At December 31, 1998, the
Corporation had total assets of $18.7 billion and ranked third in terms of total
assets among Tennessee-headquartered bank holding companies and ranked 39th
nationally.
Through its principal subsidiary, First Tennessee Bank National
Association (the "Bank"), and its other banking and banking-related
subsidiaries, the Corporation provides a broad range of financial services. The
Corporation is engaged in the commercial banking business. Significant
operations are also conducted in the mortgage banking, capital markets, and
transaction processing divisions, which are described in more detail in the
response to Item 7 of Part II hereof and Note 21 to the Consolidated Financial
Statements. During 1998 approximately 65% of revenues were provided by fee
income and approximately 35% of revenues were provided by net interest income.
As a bank holding company, the Corporation 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.
The Bank is a national banking association with principal offices in
Memphis, Tennessee. It received its charter in 1864 and operates primarily on a
regional basis. During 1998 it generated gross revenue (net interest income plus
noninterest income) of approximately $1.5 billion and contributed 90% of
consolidated net income from continuing operations. At December 31, 1998, the
Bank had $17.8 billion in total assets, $11.0 billion in total deposits, and
$12.3 billion in net loans. Within the State of Tennessee at December 31, 1998,
the Bank led the state in deposit market share and lending, ranking first in
deposit market share in four of the state's five metropolitan regions.
Nationally, it ranked 51st among banks in terms of total assets as of September
30, 1998. On December 31, 1998, the Corporation's subsidiary banks had 302
banking locations (including 126 free-standing ATM machines) in 19 Tennessee
counties, including all of the major metropolitan areas of the state, 14 banking
locations (including 7 free-standing ATMs) in Mississippi and 7 banking
locations (including 3 free-standing ATMs) in Arkansas. FT Mortgage Companies, a
subsidiary of the Bank, and its affiliates, at December 31, 1998, provided
mortgage banking services through approximately 151 offices in 31 states and
ranked in the top 10 nationally in retail mortgage loan originations and in the
top 20 nationally in mortgage loan servicing. First Tennessee Capital Markets, a
division of the Bank, had at December 31, 1998, offices in 6 states and ranked
as one of the leading underwriters of U.S. agency debt.
An element of the Corporation's business strategy is to seek
acquisitions that would enhance long-term shareholder value. The Corporation has
an acquisitions department charged with this responsibility which is constantly
reviewing and developing opportunities to achieve this element of the
Corporation's strategy. Acquisitions which closed during the past three years
are described in Note 2 to the Consolidated Financial Statements contained in an
Appendix to the Corporation's Proxy Statement furnished to shareholders in
connection with the Annual Meeting of Shareholders scheduled for April 20, 1999
(herein referred to, including such Appendix, as the "1999 Proxy Statement"),
which note is incorporated herein by reference.
The Corporation provides the following services through its
subsidiaries:
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- general banking services for consumers, businesses, financial
institutions, and governments
- mortgage banking services
- capital markets--primarily sales and underwriting of
bank-eligible securities and mortgage loans and advisory
services
- transaction processing - merchant credit card and automated
teller machine transaction processing, nationwide check
clearing services, and transaction-oriented cash management
products
- trust, fiduciary, and agency services
- credit card products
- discount brokerage, brokerage, venture capital and equipment
finance
- investment and financial advisory services, including
investment advisor to First Funds, a family of mutual funds
- mutual fund sales as agent
- insurance sales as agent
- check processing software and systems
- private mortgage reinsurance
- consumer finance lending.
All of the Corporation's subsidiaries are listed in Exhibit 21. The
Bank has filed notice with the Comptroller of the Currency ("Comptroller") as a
government securities broker/dealer. The Capital Markets division of the Bank is
registered with the Securities and Exchange Commission ("SEC") as a municipal
securities dealer with offices in Memphis and Knoxville, Tennessee; Mobile,
Alabama; Chicago, Illinois; Overland Park, Kansas; Dallas, Texas; and New York,
New York. The subsidiary banks are supervised and regulated as described below.
Highland Capital Management Corp, Martin and Company, Inc., and First Tennessee
Brokerage, Inc., are registered with the SEC as investment advisers. Hickory
Venture Capital Corporation is licensed as a Small Business Investment Company.
First Tennessee Brokerage, Inc. is registered with the SEC and all states as a
broker-dealer. FT Mortgage Companies is licensed as a mortgage lender (or exempt
from licensing) in all states where it does business and is regulated by the
Comptroller as well as various state regulators. First Tennessee Insurance
Services ("FTIS"), a department of the Bank with offices in Dandridge,
Tennessee, is licensed in several states as a non-resident insurance agency.
Certain employees of FTIS are licensed as insurance agents in Tennessee and
other states. FT Reinsurance Company is licensed by the state of Vermont as a
monoline insurance company.
Expenditures for research and development activities were not material
for the years 1996, 1997 or 1998.
Neither the Corporation nor any of its significant subsidiaries is
dependent upon a single customer or very few customers.
At December 31, 1998, the Corporation and its subsidiaries had
10,214 full-time-equivalent employees, not including contract labor for
certain services, such as guard and house-keeping.
For additional information on the business of the Corporation, refer to
the Management's Discussion and Analysis and Glossary sections contained in the
1999 Proxy Statement, which sections are incorporated herein by reference.
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Supervision and Regulation.
The Corporation is a bank holding company within the meaning of the
Bank Holding Company Act of 1956, as amended (the "BHCA"), and is registered
with the Board of Governors of the Federal Reserve System (the "Federal
Reserve"). The Corporation is required to file with the Board annual reports and
such additional information as the Board may require pursuant to the BHCA. The
Board may also make examinations of the Corporation and its subsidiaries. The
following summary of the BHCA and of the other acts described herein is
qualified in its entirety by express reference to each of the particular acts.
General
As a bank holding company, the Corporation is subject to the regulation
and supervision of the Federal Reserve under 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 to
be so closely related to banking as to be a proper incident thereto.
In addition, the BHCA permits the Federal Reserve to approve an
application by a bank holding company to acquire a bank located outside the
acquiror's principal state of operations without regard to whether the
transaction is prohibited under state law. See " --Interstate Banking and
Branching Legislation." Effective September 29, 1995, the Tennessee Bank
Structure Act of 1974 was amended to, among other things, prohibit (subject to
certain exceptions) a bank holding company from acquiring a bank for which the
home state is Tennessee (a "Tennessee bank") if, upon consummation, the company
would directly or indirectly control 30% or more of the total deposits in
insured depository institutions in Tennessee. As of June 30, 1998, the
Corporation estimates that it held approximately 15% of such deposits. Subject
to certain exceptions, the Tennessee Bank Structure Act prohibits a bank holding
company from acquiring a bank in Tennessee which has been in operation for less
than five years. Tennessee law permits a Tennessee Bank to establish branches in
any county in Tennessee. Management cannot predict the extent to which the
business of the Corporation and its subsidiaries may be affected by recent
federal and Tennessee legislation relating to interstate and intrastate
acquisitions and branching activities.
The Corporation's subsidiary banks (the "Subsidiary Banks") are subject
to supervision and examination by applicable federal and state banking agencies.
The Bank and First National Bank of Springdale, Springdale, Arkansas, are
national banking associations subject to regulation and supervision by the
Comptroller as their primary federal regulator. First Tennessee Bank National
Association Mississippi, Southaven, Mississippi, merged with and into the Bank
in December of 1998. The remaining Subsidiary Banks are Cleveland Bank and Trust
Company, Cleveland, Tennessee, and Peoples and Union Bank, Lewisburg, Tennessee,
which are Tennessee state-chartered banks, and Peoples Bank, Senatobia,
Mississippi, and Planters Bank, Tunica, Mississippi, which are Mississippi
state-chartered banks, none of which are 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.
In addition, all of the Subsidiary Banks are insured by, and subject to
regulation by, the FDIC. 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, activities
that may be engaged in, and 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 as it attempts to control
the money supply and credit availability in order to influence the economy.
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Payment of Dividends
The Corporation is a legal entity separate and distinct from its
banking and other subsidiaries. The principal source of cash flow of the
Corporation, 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 the Corporation, as well as by the
Corporation 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).
State-chartered banks are subject to varying restrictions on the
payment of dividends under applicable state laws. Tennessee law imposes dividend
restrictions on Tennessee state banks substantially similar to those imposed
under federal law on national banks, as described above. Mississippi law
prohibits Mississippi state banks from declaring a dividend without the prior
written approval of the Mississippi Banking Commissioner.
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, 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 Act ("FDIA"), an
FDIC-insured depository institution may not make any capital distributions
(including the payment of dividends) or pay any management fees to its holding
company or pay any dividend if it is undercapitalized or if such payment would
cause it to become undercapitalized.
At December 31, 1998, under dividend restrictions imposed under
applicable federal and state laws, the Subsidiary Banks, without obtaining
regulatory approval, could legally declare aggregate dividends of approximately
$246 million. Under Tennessee law, the Corporation is not permitted to pay
dividends if, after giving effect to such payment, it would not be able to pay
its debts as they become due in the usual course of business or the
Corporation's total assets would be less than the sum of its total liabilities
plus any amounts needed to satisfy any preferential rights if the Corporation
was dissolving.
The payment of dividends by the Corporation and the Subsidiary Banks
may also be affected or limited by other factors, such as the requirement to
maintain adequate capital above regulatory guidelines and debt covenants.
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Transactions with Affiliates
There are various legal restrictions on the extent to which the
Corporation and its nonbank subsidiaries (including, in certain situations,
subsidiaries of the Subsidiary Banks) 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
the Corporation and its nonbank subsidiaries, a Subsidiary Bank's loans or
extensions of credit to third parties collateralized by the securities or
obligations of the Corporation and its nonbank subsidiaries, the issuance of
guaranties, acceptances and letters of credit on behalf of the Corporation and
its nonbank subsidiaries, and certain bank transactions with the Corporation and
its nonbank subsidiaries, or with respect to which the Corporation and its
nonbank subsidiaries act as agent, participate or have 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 the Corporation or to any other affiliate (other than another
Subsidiary Bank and certain exempted affiliates) in an amount which exceeds 10%
of the Subsidiary Bank's capital stock and surplus and may not extend credit in
the aggregate to all 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
the Subsidiary Banks to the Corporation or to such other affiliates. Also,
extensions of credit and other transactions between a Subsidiary Bank and the
Corporation 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, the Corporation 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.
Capital Adequacy
The Federal Reserve 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 1
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
qualifying subordinated debt, certain types of mandatory convertible securities
and perpetual debt, other preferred stock and a limited amount of loan loss
reserves. At December 31, 1998, the Corporation's consolidated Tier 1 Capital
and Total Capital ratios were 7.85% and 11.91%, respectively.
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio of Tier 1 Capital to quarterly 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. The Corporation's Leverage Ratio at December 31, 1998 was 5.54%. 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 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.
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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. The Corporation believes that each of the
Subsidiary Banks was in compliance with applicable minimum capital requirements
as of December 31, 1998. Neither the Corporation 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 and in certain circumstances
to the appointment of a conservator or receiver. See "--Prompt Corrective
Action."
The Federal Deposit Insurance Corporation Improvement Act of 1991
required each federal banking agency to revise its risk-based capital standards
within 18 months of enactment of the statute to ensure that those standards take
adequate account of interest rate risk, concentration of credit risk and the
risk of non-traditional activities, as well as reflect the actual performance
and expected risk of loss on multifamily mortgages. On December 15, 1994, the
federal banking agencies adopted amendments to their respective risk- based
capital requirements that explicitly identify concentration of credit risk and
certain risks arising from non-traditional activities, and the management of
such risks, as important factors to consider in assessing an institution's
overall capital adequacy. The amendments do not, however, mandate any specific
adjustments to the risk-based capital calculations as a result of such factors.
On August 2, 1995, the federal banking agencies published amendments to
their risk-based capital rules that, effective September 1, 1995, include
interest-rate risk as a qualitative factor to be considered in assessing capital
adequacy. Concurrent with the publication of the amendments, the federal banking
agencies proposed a system for measuring interest-rate risk and announced their
intention, after a trial period, to evaluate the reliability and accuracy of the
proposed system and to initiate a rulemaking process for the purpose of amending
the risk-based capital rules to include an explicit capital charge for
interest-rate risk that will be based upon the level of a bank's measured
interest-rate risk exposure.
In August 1996, the federal banking regulators adopted amendments to
their risk-based capital rules to incorporate a measure for market risk in
foreign exchange and commodity activities and in the trading of debt and equity
instruments. These amendments, which became effective at year end 1997, require
banks with relatively large trading activities to calculate a capital charge for
market risk using their own internal value-at-risk models (subject to
parameters set by the regulators) or, alternatively, risk management techniques
developed by the regulators. As a result, in addition to existing capital
requirements for credit risk, certain institutions are required to hold capital
based on the measure of their market risk exposure. These institutions will be
able to satisfy this additional requirement, in part, by issuing short-term
subordinated debt that qualifies as Tier 3 capital.
On November 5, 1997, the federal banking regulators proposed for
comment regulations establishing new risk-based capital requirements for
recourse arrangements and direct credit substitutes. "Recourse" for this purpose
means any retained risk of loss associated with any transferred asset that
exceeds a pro rata share of the bank's or bank holding company's remaining claim
on the asset, if any. Under existing regulations, banks and bank holding
companies have to maintain capital against the full amount of any assets for
which risk of loss is retained, unless the resulting capital amount would exceed
the maximum contractual liability or exposure retained, in which case the
capital required would equal, dollar-for-dollar, such maximum contractual
liability or exposure. The proposal would extend this treatment to direct credit
substitutes. "Direct credit substitute" means any assumed risk of loss
associated with any asset or other claim that exceeds the bank's or bank holding
company's pro rata share of the asset or claim, if any. The proposal also
included a multi-level
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approach to assessing capital charges based upon the relative credit risk of the
bank's or bank holding company's position in a securitization (i.e., recourse
arrangements, direct credit substitute or asset-backed security) and the rating
assigned to such position by a nationally recognized statistical rating agency.
The Corporation does not believe the adoption of this proposal will have a
material adverse effect on its operations or financial position.
Holding Company Structure and Support of Subsidiary Banks
Because the Corporation 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 the Subsidiary Banks) except to the extent that the
Corporation may itself be a creditor with recognized claims against the
subsidiary. In addition, depositors of a bank, and the FDIC as their subrogee,
would be entitled to priority over the creditors in the event of liquidation of
a bank subsidiary.
Under Federal Reserve policy, the Corporation is expected to act as a
source of financial strength to, and to commit resources to support, each of the
Subsidiary Banks. This support may be required at times when, absent such
Federal Reserve policy, the Corporation 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.
Cross-Guarantee Liability
Under 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 the
Corporation's other Subsidiary Banks and a potential loss of the Corporation's
investment in such Subsidiary Banks.
Prompt Corrective Action
The FDIA requires, among other things, the federal banking regulators
to take "prompt corrective action" in respect of FDIC-insured depository
institutions that do not meet minimum capital requirements. Under the FDIA,
insured depository institutions are divided into five capital tiers: "well
capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized" and "critically undercapitalized." Under applicable
regulations, an institution is defined to be well capitalized if it maintains a
Leverage Ratio of at least 5%, a 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 institution
is defined to be adequately capitalized if it meets all of its minimum capital
requirements as described above. An institution will be considered
undercapitalized if it fails to meet any minimum required measure, significantly
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undercapitalized if it has a Total Risk-Based Capital ratio of less than 6%, a
Tier 1 Risk-Based Capital ratio of less than 3% or a Leverage Ratio of less than
3% and critically undercapitalized if it fails to maintain a level of tangible
equity equal to at least 2% of total assets. An 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 FDIA 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. An insured
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, for the plan to be accepted
by the applicable federal regulatory authority. 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, generally within 90 days of the date on which they
become critically undercapitalized.
The Corporation believes that at December 31, 1998 all of the
Subsidiary Banks had sufficient capital to qualify as "well capitalized" under
the regulatory capital requirements discussed above.
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.
Interstate Banking and Branching Legislation
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
(the "IBBEA") authorizes interstate acquisitions of banks and bank holding
companies without geographic limitation beginning one year after enactment. In
addition, since June 1, 1997, a bank may merge with a bank in another state as
long as neither of the states has opted out of interstate branching between the
date of enactment of the IBBEA and May 31, 1997. Tennessee did not opt out of
interstate branching. The IBBEA further provides that states may enact laws
permitting interstate merger transactions prior to June 1, 1997. Tennessee did
not enact such a law. A bank may establish and operate a de novo branch in a
state in which the bank does not maintain a branch if that state explicitly
permits de novo branching. Once a bank has established branches in a state
through an interstate merger transaction, the bank may establish and acquire
additional branches at any location in the state where any bank involved in the
interstate merger transaction could have established or acquired branches under
applicable federal or state law. A bank that has established a branch in a state
through de novo branching may establish and acquire additional branches in such
state in the same manner and to the same extent as a bank having a branch in
such state as a result of an interstate merger. If a state opts out of
interstate branching within the specified time period, no bank in any other
state may establish a branch in the opting out of state,
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whether through an acquisition or de novo.
FDIC Insurance Assessments; DIFA
The FDIC reduced the insurance premiums it charges on bank deposits
insured by the Bank Insurance Fund ("BIF") to the statutory minimum of $2,000.00
for "well capitalized" banks, effective January 1, 1996. Premiums related to
deposits assessed by the Savings Association Insurance Fund ("SAIF"), including
savings association deposits acquired by banks, continued to be assessed at a
rate of between 23 cents and 31 cents per $100.00 of deposits. On September 30,
1996, the Deposit Insurance Funds Act of 1996 ("DIFA") was enacted and signed
into law. DIFA provided for a special assessment to recapitalize the SAIF to
bring the SAIF up to statutory required levels. The assessment imposed a
one-time fee to banks that own previously acquired thrift deposits of $ .526 per
$100 of thrift deposits they held at March 31, 1995. The pre-tax cost to the
Corporation of the one-time assessment in the third quarter of 1996 was $3.8
million. DIFA further provides for assessments to be imposed on insured
depository institutions with respect to deposits insured by the BIF (in addition
to assessments currently imposed on depository institutions with respect to
SAIF-insured deposits) to pay for the cost of Financing Corporation ("FICO")
bonds. All banks are being assessed to pay the interest due on FICO bonds since
January 1, 1997. The Corporation expects the cost to the Corporation to be
immaterial.
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
Federal law provides that deposits and certain claims for
administrative expenses and employee compensation against an insured depository
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.
Competition.
The Corporation and its subsidiaries face substantial competition in
all aspects of the businesses in which they engage from national and state banks
located in Tennessee and large out-of-state banks as well as from savings and
loan associations, credit unions, other financial institutions, consumer finance
companies, trust companies, investment counseling firms, money market mutual
funds, insurance companies, securities firms, mortgage banking companies and
others. For certain information on the competitive position of the Corporation
and the Bank, refer to page 1. Also, refer to the subsections entitled
"Supervision and Regulation" and "Effect of Governmental Policies," both of
which are relevant to an analysis of the Corporation's competitors. Due to the
intense competition in the financial industry, the Corporation makes no
representation that its competitive position has remained constant, nor can it
predict whether its position will change in the future.
Sources and Availability of Funds.
Specific reference is made to the Management's Discussion and Analysis
and Glossary sections, including the subsection entitled "Deposits, Other
Sources of Funds, and Liquidity Management," contained
9
<PAGE> 11
in the 1999 Proxy Statement, which sections are incorporated herein by
reference.
Effect of Governmental Policies.
The Bank is affected by the policies of regulatory authorities,
including the Federal Reserve System and the Comptroller. An important function
of the Federal Reserve System is to regulate the national money supply.
Among the instruments of monetary policy used by the Federal Reserve
are: purchases and sales of U.S. Government securities in the marketplace;
changes in the discount rate, which is the rate any depository institution must
pay to borrow from the Federal Reserve; and changes in the reserve requirements
of depository institutions. These instruments are effective in influencing
economic and monetary growth, interest rate levels and inflation.
The monetary policies of the Federal Reserve System and other
governmental policies have had a significant effect on the operating results of
commercial banks in the past and are expected to continue to do so in the
future. Because of changing conditions in the national economy and in the money
market, as well as the result of actions by monetary and fiscal authorities, it
is not possible to predict with certainty future changes in interest rates,
deposit levels, loan demand or the business and earnings of the Corporation and
the Bank or whether the changing economic conditions will have a positive or
negative effect on operations and earnings.
Bills are pending before the United States Congress and the Tennessee
General Assembly and other state legislatures and regulations have been proposed
by the bank regulatory agencies which could affect the business of the
Corporation and its subsidiaries, and there are indications that other bills may
be introduced in the future. It cannot be predicted whether or in what form any
of these proposals will be adopted or the extent to which the business of the
Corporation and its subsidiaries may be affected thereby.
Statistical Information Required by Guide 3.
The statistical information required to be displayed under Item I
pursuant to Guide 3, "Statistical Disclosure by Bank Holding Companies," of the
Exchange Act Industry Guides is incorporated herein by reference to the
Consolidated Financial Statements and the notes thereto and the Management's
Discussion and Analysis and Glossary sections in the 1999 Proxy Statement;
certain information not contained in the 1999 Proxy Statement, but required by
Guide 3, is contained in the tables immediately following:
10
<PAGE> 12
<TABLE>
FIRST TENNESSEE NATIONAL CORPORATION
ADDITIONAL GUIDE 3 STATISTICAL INFORMATION
BALANCES AT DECEMBER 31
(Thousands)
(Unaudited)
<CAPTION>
INVESTMENT PORTFOLIO 1998 1997 1996
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Mortgage-backed securities &
collateralized mortgage
obligations $2,068,529 $1,641,918 $1,585,512
U.S. Treasury and other
U.S. government agencies 151,215 366,012 472,106
States and political
subdivisions 60,807 76,620 92,031
Other 145,738 101,983 89,885
- ----------------------------------------------------------------------------
Total $2,426,289 $2,186,533 $2,239,534
============================================================================
</TABLE>
<TABLE>
<CAPTION>
LOAN PORTFOLIO 1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial $4,116,918 $3,768,554 $3,521,473 $3,330,929 $2,991,231
Consumer 3,018,782 2,855,240 2,683,959 2,525,889 2,263,007
Credit card receivables 594,467 581,451 564,803 529,104 475,489
Real estate construction 375,890 404,196 297,797 238,863 160,368
Permanent mortgage 423,200 663,494 641,245 689,458 591,094
Nonaccrual 27,807 38,415 18,926 19,040 16,853
- -------------------------------------------------------------------------------------------------------
Total $8,557,064 $8,311,350 $7,728,203 $7,333,283 $6,498,042
=======================================================================================================
</TABLE>
11
<PAGE> 13
<TABLE>
<CAPTION>
SHORT-TERM BORROWINGS AT DECEMBER 31 1998 1997 1996
(Dollars in thousands)
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal funds purchased
and securities sold under
agreements to repurchase $2,912,018 $2,085,679 $1,881,187
Commercial paper 23,203 23,176 22,648
Other short-term
borrowings 1,404,071 679,212 354,721
- ----------------------------------------------------------------------------------
Total $4,339,292 $2,788,067 $2,258,556
==================================================================================
</TABLE>
<TABLE>
<CAPTION>
FOREIGN OUTSTANDINGS AT DECEMBER 31 1998 1997 1996
----------------- ------------------ ------------------
% Total % Total % Total
(Dollars in thousands) Amount Assets Amount Assets Amount Assets
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BY COUNTRY:
Denmark $6,000 .03% $ 6,000 .04% $6,000 .05%
Israel 1,313 .01 1,020 .01 999 .01
Saudi Arabia 570 -- 86 -- 640 --
Canada 433 -- 985 .01 741 .01
Switzerland 14 -- 4,523 .03 4 --
Indonesia -- -- 1,318 .01 -- --
All other 863 .01 1,229 .01 359 --
- -------------------------------------------------------------------------------------------------------
Total $9,193 .05% $15,161 .11% $8,743 .07%
=======================================================================================================
BY TYPE:
Loans:
Banks and other financial
institutions $7,971 .04% $13,942 .10% $7,341 .06%
Governments and other institutions 1,000 .01% 1,000 .01 999 .01
- -------------------------------------------------------------------------------------------------------
Total Loans 8,971 .05% 14,942 .11 8,340 .07
Cash 129 -- 199 -- 286 --
Customers' acceptances 93 -- 20 -- 117 --
Accrued interest receivable -- -- -- -- -- --
- -------------------------------------------------------------------------------------------------------
Total $9,193 .05% $15,161 .11% $8,743 .07%
=======================================================================================================
</TABLE>
12
<PAGE> 14
<TABLE>
MATURITIES OF SHORT-TERM PURCHASED FUNDS AT DECEMBER 31, 1998
<CAPTION>
0-3 3-6 6-12 Over 12
(Dollars in thousands) Months Months Months Months Total
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Certificates of deposit $100,000 and more $1,807,875 $193,594 $ 99,577 $89,757 $2,190,803
Federal funds purchased and securities
sold under agreements to repurchase 2,912,018 -- -- -- 2,912,018
Commercial paper and other short-term
borrowings 952,073 403,863 66,000 5,338 1,427,274
- ------------------------------------------------------------------------------------------------------------------
Total $5,671,966 $597,457 $165,577 $95,095 $6,530,095
==================================================================================================================
</TABLE>
<TABLE>
CONTRACTUAL MATURITIES OF COMMERCIAL AND NONACCRUAL LOANS AT DECEMBER 31, 1998
<CAPTION>
Within After 1 Year After
(Dollars in thousands) 1 Year Within 5 Years 5 Years Total
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial $2,262,296 $1,478,304 $ 376,318 $4,116,918
Real estate construction 264,322 83,587 27,981 375,890
Nonaccrual 12,138 2,262 13,407 27,807
- -----------------------------------------------------------------------------------------------
Total commercial and nonaccrual $2,538,756 $1,564,153 $ 417,706 $4,520,615
===============================================================================================
For maturities over one year:
Interest rates - floating $1,075,449 $ 282,943 $1,358,392
Interest rates - fixed 488,704 134,763 623,467
- -----------------------------------------------------------------------------------------------
Total $1,564,153 $ 417,706 $1,981,859
===============================================================================================
</TABLE>
13
<PAGE> 15
ITEM 2
PROPERTIES
The Corporation has no properties that it considers materially
important to its financial statements.
ITEM 3
LEGAL PROCEEDINGS
The Corporation is a party to no material pending legal proceedings the
nature of which are required to be disclosed pursuant to the Instructions
contained in the Form of this Report.
ITEM 4
SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS
There were no matters submitted during the fourth quarter of 1998 to a
vote of security holders, through the solicitation of proxies or otherwise.
ITEM 4A
EXECUTIVE OFFICERS OF REGISTRANT
The following is a list of executive officers of the Corporation as of
March 1, 1999. The executive officers are elected at the April meeting of the
Corporation's Board of Directors following the annual meeting of shareholders
for a term of one year and until their successors are elected and qualified.
<TABLE>
<CAPTION>
Name and Age Offices and Positions - Year First Elected to Office
- ------------ ----------------------------------------------------
<S> <C>
Susan Schmidt Bies Executive Vice President (1985) and Auditor (1998)
Age: 51 of the Corporation and the Bank
and Risk Management Manager (1995)
J. Kenneth Glass President - Tennessee Banking Group
Age: 52 of the Bank (1993) and Executive Vice President
of the Corporation (1995)
Ralph Horn Chairman of the Board (1996) and Chief Executive
Age: 57 Officer (1994) of the Corporation and the Bank
and President of the Corporation (1991) and the
Bank (1993)
Harry A. Johnson, III Executive Vice President (1990) and
Age: 50 General Counsel (1988) of the
Corporation and the Bank
James F. Keen Senior Vice President
Age: 48 and Corporate Controller of the Corporation (1988)
and principal accounting officer
</TABLE>
14
<PAGE> 16
<TABLE>
<CAPTION>
Name and Age Offices and Positions - Year First Elected to Office
- ------------ ----------------------------------------------------
<S> <C>
John C. Kelley. Jr. President - Memphis Banking Group of
Age: 55 the Bank (1993) and Executive Vice President of the
Corporation (1995)
George Perry Lewis Executive Vice President of the
Age: 60 Bank (1976) and Money Management
Group Manager (1984)
Sarah L. Meyerrose Executive Vice President of the
Age: 43 Corporation and the Bank and
Personnel Division Manager (1998)
John P. O'Connor, Jr. Executive Vice President of the Corporation (1990)
Age: 55 and the Bank (1987) and Chief Credit
Officer (1988)
Elbert L. Thomas, Jr. Executive Vice President (1995) and
Age: 50 Chief Financial Officer (1995)
of the Corporation and the Bank
</TABLE>
Each of the executive officers has been employed by the Corporation or
its subsidiaries during each of the last five years. Prior to February of 1995,
Ms. Bies was Chief Financial Officer of the Corporation and Bank. Mr. Thomas was
a Senior Vice President of the Corporation and the Bank prior to December 1995.
From January of 1993 to February of 1995, Mr. Thomas was Manager of Corporate
Development. From July of 1995 to June of 1998, Ms. Meyerrose was President,
Kingsport/Bristol of the Bank, and prior to July of 1995 she was Executive Vice
President - Retail, Johnson City of the Bank.
PART II
ITEM 5
MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
(a) Market for the Corporation's Common Stock:
The Corporation's common stock, $0.625 par value, trades
over-the-counter on the Nasdaq Stock Market's National Market System under the
symbol FTEN. As of December 31, 1998, there were 9,973 shareholders of record of
the Corporation's common stock. Additional information called for by this Item
is incorporated herein by reference to the Summary of Quarterly Financial
Information Table, the Selected Financial and Operating Data Table, Note 17 to
the Consolidated Financial Statements, and the "Deposits, Other Sources of
Funds, and Liquidity Management" subsection of the Management's Discussion and
Analysis section contained in the 1999 Proxy Statement and to the "Payment of
Dividends" and "Transactions with Affiliates" subsections contained in Item 1 of
Part I of this Form 10-K, which is incorporated herein by reference.
(b) Sale of Unregistered Securities:
During 1998 all sales of shares of the Corporation's common stock
without registration under the Securities Act of 1933, as amended, were
previously disclosed in Form 10-Q's filed during 1998 except for the shares
issued in connection with the acquisition by the Corporation of McGuire Mortgage
Company
15
<PAGE> 17
("McGuire"), Prairie Village, Kansas, on December 31, 1998. McGuire was merged
with and into FT Mortgage Companies, an indirect, wholly-owned subsidiary of the
Corporation. At closing, the Corporation acquired from the two shareholders of
McGuire all 6,000 shares of McGuire's common stock, $10.00 par value, in
exchange for an initial closing payment of 351,000 shares of the Corporation's
common stock, $0.625 par value. No underwriter was involved in this transaction.
The shares were sold in a private offering pursuant to an exemption from
registration under Section 4(2) of the Securities Act of 1933, based on the
limited number of shareholders receiving the Corporation's common stock.
In the Corporation's Form 10-Q filed for the third quarter of 1998 it
was estimated that approximately 47,000 shares of the Corporation's common stock
would be issued to the shareholders of Keystone Mortgage, Inc. during the fourth
quarter of 1998 in addition to the 144,531 shares issued during the third
quarter of 1998. The actual number of additional shares issued to the
shareholders of Keystone Mortgage, Inc. on December 11, 1998 was 45,300 shares.
(c) Description of the Corporation's Capital Stock:
Authorized Capital Stock. The authorized capital stock of the
Corporation 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 Corporation's Board of Directors (the "Board") and 400,000,000
shares of common stock, $0.625 par value (the "common stock"). As of December
31, 1998 and adjusted for the February 20, 1998 2-for-1 stock split, there were
128,974,362 shares of common stock and no shares of preferred stock outstanding.
As of that date, approximately 23 million shares of common stock were reserved
for issuance under various employee stock plans and the Corporation's divided
reinvestment plan, and 1,289,743 shares of preferred stock were reserved for
issuance under the Rights Plan (as defined below). Although shares have been
reserved for issuance under the employee stock plans, the plans generally permit
the Corporation to repurchase shares on the open market or privately for
issuance under such plans. The Board has authorized management to repurchase
shares from time to time for the plans. A total of 1.9 million shares were
repurchased and 2.1 million shares were issued for the plans in 1998. Pursuant
to Board authority, the Corporation plans to continue to purchase shares from
time to time for the plans and will evaluate the level of capital and take
action designed to generate or use capital as appropriate for the interest of
the shareholders. Also, the Corporation has on file with the SEC one 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 common stock at an aggregate initial offering price not
to exceed $225 million (net of prior issuances) and another effective shelf
registration pursuant to which up to $200 million of capital securities
(guaranteed preferred beneficial interests in the Corporation's subordinated
debentures) is available for issuance.
Preferred Stock. The Board is authorized, without further action by the
shareholders, to provide for the issuance of up to 5,000,000 shares of preferred
stock, 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.
Common Stock. The Board is authorized to issue a maximum of 400,000,000
shares of common stock. The holders of the common stock are entitled to receive,
ratably, such dividends as may be declared by the Board from funds legally
available therefor, provided that if any shares of preferred stock are at the
time outstanding, the payment of dividends on common stock or other
distributions (including purchases of common stock) may be subject to the
declaration and payment of full cumulative dividends, and the absence
16
<PAGE> 18
of arrearages in any mandatory sinking fund, on outstanding shares of preferred
stock. The holders of the outstanding shares of 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 the Corporation resulting in a distribution of
assets to the shareholders, the holders of 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 common
stock have no preemptive, redemption, subscription or conversion rights. Under
the Corporation's Charter, the Board is authorized to issue authorized shares of
common stock without further action by the shareholders. However, the common
stock is traded in the over-the-counter market and is quoted on the Nasdaq Stock
Market's National Market, which requires shareholder approval of the issuance of
additional shares of common stock in certain situations. The Transfer Agent for
the common stock is Norwest Bank Minnesota, National Association.
The 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 Board the authority to fix the
number of directors on the Board and to remove directors from and fill vacancies
on the 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 the Corporation. To change these
provisions of the Bylaws, other than by action of the 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% of the voting power of all outstanding voting stock. Such classification of
the Board and such other provisions of the Charter and the Bylaws may have a
significant effect on the ability of the shareholders of the Corporation to
change the composition of an incumbent Board or to benefit from certain
transactions which are opposed by the Board.
Shareholder Protection Rights Plan. On October 20, 1998, the Board
adopted a Shareholder Protection Rights Agreement (the "1998 Plan") and declared
a dividend of one right on each share of common stock outstanding on November 2,
1998, or generally issued thereafter and prior to the time the rights separate.
This plan is substantially identical to the Corporation's existing Rights Plan
(defined below) and will not become operative until the expiration on September
18, 1999 (or an earlier redemption) of the existing Rights (defined below).
Under the 1998 Plan, the exercise price is $150.00 per right, the redemption
price is a fixed $0.001 per right, and the expiration date of the plan is
December 31, 2009.
Each share of common stock that is currently outstanding has, and each
share of common stock that is issued prior to the expiration date described in
the next paragraph will have, attached to it one right (a "Right") issued
pursuant to a Shareholder Protection Rights Agreement dated as of September 7,
1989, as amended and restated as of January 21, 1997 (the "Rights Plan"). Until
the earlier of (i) the 10th business day (subject to certain adjustments by the
Board) after commencement of a tender or exchange offer which, if consummated,
would result in a person or group owning 10% or more of the outstanding shares
of common stock (an "Acquiring Person") and (ii) the tenth business day (the
"Flip-in Date") after the first date of public announcement by the Corporation
that a person has become an Acquiring Person, the Rights will be evidenced by
the common stock certificates, will automatically trade with the common stock,
and will not be exercisable. Thereafter, separate rights certificates will be
distributed, and each right will entitle its holder to purchase one
one-hundredth of a share of Participating Preferred Stock having economic and
voting terms similar to those of one share of common stock for $75.00, subject
to adjustment (the "Exercise Price").
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 Board may amend the
17
<PAGE> 19
Rights Plan in any respect other than to change the Redemption Price or
expiration date (and may amend the 1998 Plan in any respect) prior to the
Flip-in Date. The Board may, at its option, at any time prior to the close of
business on the Flip-in Date, redeem all the Rights at a price of $0.0017 per
Right, as adjusted from time to time pursuant to the Rights Plan.
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) will entitle its holder to purchase a number of
shares of common stock or Participating Preferred Stock having a market value of
twice the Exercise Price for an amount in cash equal to the then-current
Exercise Price. In addition, the Board may, at its option, at any time after a
Flip-in Date, elect to exchange the Rights (other than Rights beneficially owned
by the Acquiring Person or its affiliates, associates or transferees) for shares
of common stock or a Participating Preferred Stock at an exchange ratio of one
share of common stock or 1/100th of a share of Participating Preferred Stock per
Right (the "Exchange Time").
Also, if after an Acquiring Person controls the Corporation's Board of
Directors, the Corporation is involved in a merger or sells more than 50% of its
assets or earning power or is involved with an Acquiring Person in certain
self-dealing transactions (or has entered into an agreement to do any of the
foregoing) and, in the case of a merger, the Acquiring Person will receive
different treatment than all other shareholders, each Right will entitle its
holder to purchase a number of shares of common stock of the Acquiring Person
having a market value of twice the Exercise Price for an amount in cash equal to
the then-current Exercise Price.
The Rights will not prevent a takeover of the Corporation. 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 common stock unless the Rights are first redeemed by the
Corporation's Board.
Subordinated Capital Notes due 1999. On June 10, 1987, the Corporation
issued $75,000,000 principal amount of 10 3/8% Subordinated Capital Notes Due
1999 (the "Capital Notes"). Pursuant to the Indenture, dated as of June 1, 1987
(the "Indenture"), between the Corporation and U.S. Bank Trust National
Association (as successor to Security Pacific National Trust Company (New
York)), Trustee, at maturity the Capital Notes are required to be exchanged for
common stock, preferred stock or certain other eligible capital securities to
be issued by the Corporation ("Capital Securities") having a market value equal
to the principal amount of the Capital Notes, except to the extent that the
Corporation, 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.
ITEM 6
SELECTED FINANCIAL DATA
The information called for by this Item is incorporated herein by
reference to the Selected Financial and Operating Data Table in the 1999 Proxy
Statement.
18
<PAGE> 20
ITEM 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
The information called for by this Item is incorporated herein by
reference to the Management's Discussion and Analysis section, Glossary section,
and the Consolidated Historical Performance Statements of Income and
Consolidated Average Balance Sheets and Related Yields and Rates tables in the
1999 Proxy Statement.
ITEM 7A
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information called for by this Item is incorporated herein by
reference to Note 1 to the Consolidated Financial Statements and the "Risk
Management-Interest Rate Risk Management" subsection of the Management's
Discussion and Analysis section contained in the 1999 Proxy Statement.
ITEM 8
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information called for by this Item is incorporated herein by
reference to the Consolidated Financial Statements and the notes thereto and to
the Summary of Quarterly Financial Information Table in the 1999 Proxy
Statement.
ITEM 9
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
The information called for by this Item is inapplicable.
PART III
ITEM 10
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information called for by this Item as it relates to directors and
nominees for director of the Corporation is incorporated herein by reference to
the "Election of Directors" section of the Corporation's 1999 Proxy Statement.
The information required by this Item as it relates to executive officers of the
Corporation is incorporated herein by reference to Item 4A in Part I of this
Report. The information required by this Item as it relates to compliance with
Section 16(a) of the Securities Exchange Act of 1934 is incorporated herein by
reference to the "Section 16(a) Beneficial Ownership Reporting Compliance"
section of the 1999 Proxy Statement.
ITEM 11
EXECUTIVE COMPENSATION
The information called for by this Item is incorporated herein by
reference to the "Executive Compensation" section of the 1999 Proxy Statement
(excluding the Board Compensation Committee Report and the Total Shareholder
Return Performance Graph).
19
<PAGE> 21
ITEM 12
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The information called for by this Item is incorporated herein by
reference to the "Stock Ownership and Information Table" section of the 1999
Proxy Statement.
The Corporation is unaware of any arrangements which may result in a
change in control of the Corporation.
ITEM 13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information called for by this Item is incorporated herein by
reference to the "Certain Relationships and Related Transactions" section of the
1999 Proxy Statement.
PART IV
ITEM 14
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this Report:
Financial Statements:
- Consolidated Statements of Condition as of December 31, 1998
and 1997
- Consolidated Statements of Income for the years ended December
31, 1998, 1997 and 1996
- Consolidated Statements of Shareholders' Equity for the years
ended December 31, 1998, 1997 and 1996
- Consolidated Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996
- Notes to the Consolidated Financial Statements
- Report of Independent Public Accountants
The consolidated financial statements of the Corporation, the
notes thereto, and the report of independent public
accountants, in the 1999 Proxy Statement, as listed above, are
incorporated herein by reference.
Financial Statement Schedules: Not applicable.
Exhibits:
(3)(i) Restated Charter of the Corporation, as amended, attached as
Exhibit 3(i) to the Corporation's 1997 Annual Report on Form
10-K and incorporated herein by reference.
(3)(ii) Bylaws of the Corporation, as amended and restated.
(4)(a) Amended and Restated Shareholder Protection Rights Agreement,
dated as of 9-7-89, as amended as of 1-21-97, between the
Corporation and First Tennessee Bank National Association,
20
<PAGE> 22
as Rights Agent, including as Exhibit A the forms of Rights
Certificate and of Election to Exercise and as Exhibit B the
form of Charter Amendment designating a series of
Participating Preferred Stock of the Corporation with terms as
specified, attached as Exhibit 1 to the Corporation's
Registration Statement on Form 8-A/A filed 1-21-97, and
incorporated herein by reference.
(4)(b) Shareholder Protection Rights Agreement, dated as of October
20, 1998, between the Corporation and First Tennessee Bank
National Association, as Rights Agent, including as Exhibit A
the forms of Rights Certificate and Election to Exercise and
as Exhibit B the form of Articles of Amendment designating
Participating Preferred Stock, attached as Exhibits 1, 2, and
3 to the Corporation's Registration Statement on Form 8-A
filed 10-23-98, and incorporated herein by reference.
(4)(c) Indenture, dated as of 6-1-87, between the Corporation and
U.S.Bank Trust National Association (as successor to Security
Pacific National Trust Company (New York)), Trustee, attached
as Exhibit 4(b) to the Corporation's Annual Report on Form
10-K for the year ended 12-31-91, and incorporated herein by
reference.
(4)(d) The Corporation and certain of its consolidated subsidiaries
have outstanding certain long-term debt. See Note 10 in the
Corporation's 1999 Proxy Statement. None of such debt exceeds
10% of the total assets of the Corporation 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. The Corporation
agrees to furnish copies of such instruments to the Securities
and Exchange Commission upon request.
*(10)(a) Management Incentive Plan, as amended and restated. (5)
*(10)(b) 1997 Employee Stock Option Plan, as amended and restated.
*(10)(c) 1989 Restricted Stock Incentive Plan, as amended (1), and
1-21-97 amendment. (4)
*(10)(d) 1992 Restricted Stock Incentive Plan, as amended and restated.
*(10)(e) 1984 Stock Option Plan, as amended (1), 1-21-97 amendment (4)
and 10-22-97 amendment.(5)
*(10)(f) 1990 Stock Option Plan, as amended (1), 1-21-97 amendment (4),
10-22-97 amendment.(5)
*(10)(g) Survivor Benefits Plan, as amended and restated. (5)
*(10)(h) Amendment and Restated Directors and Executives Deferred
Compensation Plan ad form of individual agreement. (4)
*(10)(i) Amended and Restated Pension Restoration Plan, as amended and
restated.
*(10)(j) Director Deferral Agreements (2) with schedule. (3)
*(10)(k) Form of Severance Agreements dated 1-28-97. (4)
*(10)(l) 1995 Employee Stock Option Plan, as amended and restated.
*(10)(m) Non-Employee Directors' Deferred Compensation Stock Option
Plan, as amended and restated. (5)
(21) Subsidiaries of the Corporation.
(23) Accountants' Consents
(24) Powers of Attorney
(27) Financial Data Schedule
(99)(a) The Corporation's Proxy Statement furnished to shareholders in
connection with Annual Meeting of Shareholders scheduled for
April 20, 1999, including Financial Information Appendix and
excluding the Board Compensation Committee Report and the
Total Shareholder Return Performance Graph, filed March 17,
1999, and incorporated herein by reference.
(99)(b) Annual Report on Form ll-K for the Corporation's Savings Plan
and Trust, for fiscal year
21
<PAGE> 23
ended 12-31-98, as authorized by SEC Rule 15d-21 (to be filed
as an Amendment to Form lO-K).
* Exhibits marked with an "*" represent a management contract or
compensatory plan or arrangement required to be filed as an
exhibit.
(1) These documents are incorporated herein by reference
to the exhibit with the corresponding number
contained in the Corporation's 1992 Annual Report on
Form 10-K.
(2) This document is incorporated herein by reference to
exhibits 10(k) contained in the Corporation's 1992
Annual Report on Form 10-K.
(3) These documents are incorporated herein by reference
to the exhibit with the corresponding number
contained in the Corporation's 1995 Annual Report on
Form 10-K.
(4) These documents are incorporated herein by reference
to the exhibit with the corresponding number
contained in the Corporation's 1996 Annual Report on
Form 10-K.
(5) These documents are incorporated herein by reference
to the exhibit with the corresponding number
contained in the Corporation's 1997 Annual Report on
Form 10-K.
(b) A report on Form 8-K was filed on October 23, 1998 (with a
Date of Report of October 20, 1998) disclosing under Item 5, Other Events, the
declaration of a dividend of one right to be issued pursuant to a new
Shareholder Protection Rights Agreement (the "plan") for each outstanding share
of the Corporation's common stock held of record on November 2, 1998 or
generally issued thereafter and prior to the expiration date of the plan.
22
<PAGE> 24
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
FIRST TENNESSEE NATIONAL CORPORATION
Date: March 23, 1999 By: Elbert L. Thomas, Jr.
----------------------------------------
Elbert L. Thomas, Jr., Executive Vice
President and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Ralph Horn* Chairman of the Board, President and March 23, 1999
- -------------------------------- Chief Executive Officer (principal executive
Ralph Horn officer) and a Director
Elbert L. Thomas, Jr.* Executive Vice President March 23, 1999
- -------------------------------- and Chief Financial Officer
Elbert L. Thomas, Jr. (principal financial officer)
James F. Keen* Senior Vice President March 23, 1999
- -------------------------------- and Controller (principal
James F. Keen accounting officer)
Robert C. Blattberg* Director March 23, 1999
- --------------------------------
Robert C. Blattberg
Carlos H. Cantu* Director March 23,1999
- --------------------------------
Carlos H. Cantu
George E. Cates* Director March 23, 1999
- --------------------------------
George E. Cates
J. Kenneth Glass* Director March 23, 1999
- --------------------------------
J. Kenneth Glass
James A. Haslam, III* Director March 23, 1999
- -----------------------
James A. Haslam, III
John C. Kelley, Jr.* Director March 23, 1999
- --------------------------
John C. Kelley, Jr.
R. Brad Martin* Director March 23, 1999
- --------------------------------
R. Brad Martin
</TABLE>
23
<PAGE> 25
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Joseph Orgill, III* Director March 23, 1999
- --------------------------------
Joseph Orgill, III
Vicki R. Palmer * Director March 23, 1999
- -------------------------
Vicki R. Palmer
Michael D. Rose* Director March 23, 1999
- --------------------------------
Michael D. Rose
William B. Sansom* Director March 23, 1999
- --------------------------------
William B. Sansom
*By: Clyde A. Billings, Jr. March 23, 1999
-----------------------------------------------
Clyde A. Billings, Jr.
As Attorney-in-Fact
</TABLE>
24
<PAGE> 26
<TABLE>
EXHIBIT INDEX
<CAPTION>
Item No. Description
- -------- -----------
<S> <C>
(3)(i) Restated Charter of the Corporation, as amended, attached as Exhibit
3(i) to the Corporation's 1997 Annual Report on Form 10-K and
incorporated herein by reference.
(3)(ii) Bylaws of the Corporation, as amended and restated.
(4)(a) Amended and Restated Shareholder Protection Rights Agreement dated as
of 9-7-89, as amended as of 1- 21-97, between the Corporation and First
Tennessee Bank National Association, as Rights Agent, including as
Exhibit A the forms of Rights Certificate and of Election to Exercise
and as Exhibit B the form of Charter Amendment designating a series of
Participating Preferred Stock of the Corporation with terms as
specified, attached as Exhibit 1 to the Corporation's Registration
Statement on Form 8-A/A filed 1-21-97, and incorporated herein by
reference.
(4)(b) Shareholder Protection Rights Agreement, dated as of October 20, 1998,
between the Corporation and First Tennessee Bank National Association,
as Rights Agent, including as Exhibit A the forms of Rights Certificate
and Election to Exercise and as Exhibit B the form of Articles of
Amendment designating Participating Preferred Stock, attached as
Exhibits 1, 2, and 3 to the Corporation's Registration Statement on
Form 8-A filed 10-23-98, and incorporated herein by reference.
(4)(c) Indenture, dated as of June 1, 1987, between the Corporation and U.S.
Bank Trust National Association (as successor to Security Pacific
National Trust Company (New York)), Trustee, attached as Exhibit 4(b)
to the Corporation's Annual Report on Form 10-K for the year ended
December 31, 1991, and incorporated herein by reference.
(4)(d) The Corporation and certain of its consolidated subsidiaries have
outstanding certain long-term debt. See Note 10 in the Corporation's
1999 Proxy Statement. None of such debt exceeds 10% of the total assets
of the Corporation 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. The Corporation agrees to
furnish copies of such instruments to the Securities and Exchange
Commission upon request.
*(10)(a) Management Incentive Plan, as amended and restated. (5)
*(10)(b) 1997 Employee Stock Option Plan, as amended and restated.
*(10)(c) 1989 Restricted Stock Incentive Plan, as amended (1), and 1-21-97
amendment. (4)
*(10)(d) 1992 Restricted Stock Incentive Plan, as amended and restated.
*(10)(e) 1984 Stock Option Plan, as amended (1), 1-21-97 amendment (4), and
10-22-97 amendment. (5)
*(10)(f) 1990 Stock Option Plan, as amended (1), 1-21-97 amendment (4), and
10-22-97 amendment. (5)
*(10)(g) Survivor Benefits Plan, as amended and restated. (5)
*(10)(h) Amended and Restated Directors and Executives Deferred Compensation
Plan and form of individual agreement. (4)
*(10)(i) Amended and Restated Pension Restoration Plan, as amended and restated.
*(10)(j) Director Deferral Agreements (2) with schedule. (3)
*(10)(k) Form of Severance Agreements dated 1-28-97. (4)
*(10)(l) 1995 Employee Stock Option Plan, as amended and restated.
*(10)(m) Non-Employee Directors Deferred Compensation Stock Option Plan, as
amended and restated. (5)
(21) Subsidiaries of the Corporation.
(23) Accountants' Consents
(24) Powers of Attorney
(27) Financial Data Schedule (for SEC use only)
(99)(a) The Corporation's Proxy Statement furnished to shareholders in
connection with Annual Meeting of Shareholders scheduled for April 20,
1999, including Financial Information Appendix and excluding the Board
Compensation Committee Report and the Total Shareholder Return
Performance Graph, filed March 17, 1999, and incorporated herein by
reference.
(99)(b) Annual Report on Form ll-K for the Corporation's Savings Plan and
Trust, for fiscal year ended December 31, 1998, as authorized by SEC
Rule 15d-21 (to be filed as an amendment to Form 10-K).
<FN>
* Exhibits marked with an "*" represent a management contract or
compensatory plan or arrangement required to be filed as an
exhibit.
</FN>
</TABLE>
<PAGE> 27
[FN]
(1) These documents are incorporated herein by reference to the
exhibit with the corresponding number contained in the
Corporation's 1992 Annual Report on Form 10-K.
(2) This document is incorporated herein by reference to exhibits
10(k) contained in the Corporation's 1992 Annual Report on
Form 10-K.
(3) These documents are incorporated herein by reference to the
exhibit with the corresponding number contained in the
Corporation's 1995 Annual Report on Form 10-K.
(4) These documents are incorporated herein by reference to the
exhibit with the corresponding number contained in the
Corporation's 1996 Annual Report on Form 10-K.
(5) These documents are incorporated herein by reference to the
exhibit with the corresponding number contained in the
Corporation's 1997 Annual Report on Form 10-K.
</FN>
<PAGE> 1
Exhibit 3(ii)
BYLAWS OF
FIRST TENNESSEE NATIONAL CORPORATION
(AS AMENDED AND RESTATED JANUARY 19, 1999)
ARTICLE ONE
OFFICES
1.1 PRINCIPAL OFFICE. The principal office of First Tennessee
National Corporation (the "Corporation") shall be 165 Madison Avenue, Memphis,
Tennessee.
1.2 OTHER OFFICES. The Corporation may have offices at such other
places, either within or without the State of Tennessee, as the Board of
Directors may from time to time designate or as the business of the Corporation
may from time to time require.
1.3 REGISTERED OFFICE. The registered office of the Corporation
required to be maintained in the State of Tennessee shall be the same as its
principal office and may be changed from time to time as provided by law.
ARTICLE TWO
SHAREHOLDERS
2.1 PLACE OF MEETINGS. Meetings of the shareholders of the
Corporation may be held either in the State of Tennessee or elsewhere; but in
the absence of notice to the contrary, shareholders' meetings shall be held at
the principal office of the Corporation in Memphis, Tennessee.
2.2 QUORUM AND ADJOURNMENTS. The holders of a majority of the
shares issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall be requisite, and shall constitute a quorum at all
meetings of the shareholders, for the transaction of business, except as
otherwise provided by law, the Restated Charter of the Corporation, as amended
from time to time (the "Charter), or these Bylaws. In the event a quorum is not
obtained at the meeting, the holders of a majority of the shares entitled to
vote thereat, present in person or by proxy, shall have power to adjourn the
meeting from time to time and, whether or not a quorum is obtained at the
meeting, the Chairman of the meeting shall have the power to adjourn the meeting
from time to time, in either case without notice, except as otherwise provided
by law, other than announcement at the meeting. At such adjourned meeting at
which the requisite amount of voting shares shall be represented, any business
may be transacted which might have been transacted at the meeting as originally
notified.
2.3 NOTICE OF MEETINGS. Unless otherwise required by applicable
law, written notice of the annual and each special meeting stating the date,
time and place of the meeting shall be mailed, postage prepaid, or otherwise
delivered to each shareholder entitled to vote thereat at such address as
appears on the records of shareholders of the Corporation, at least ten (10)
days, but not more than two (2) months, prior to the meeting date. In addition,
notice of any special meeting shall state the purpose or purposes for which the
meeting is called and the person or persons calling the meeting. In the event of
an adjournment of a meeting to a date more than four months after the date fixed
for the original meeting or the Board of Directors fixes a new record date for
the adjourned meeting, a new notice of the adjourned meeting must be given to
shareholders as of the new record date. Any previously scheduled meeting may be
postponed, and any special meeting may be canceled, by resolution of the Board
of Directors upon public notice given prior to the date scheduled for such
meeting.
2.4 ANNUAL MEETINGS. The annual meeting of shareholders for the
election of directors and for the transaction of such other business as may
properly come before the meeting shall be held each year on the third Tuesday in
April, or if that day is a legal holiday, on the next succeeding business day
not a legal holiday, at 10:00 a.m. Memphis time or on such other date and/or at
such other time as the Board of Directors may fix by resolution by vote of a
majority of the entire Board of Directors. At the meeting, the shareholders
shall elect by ballot, by plurality vote, directors to
1
<PAGE> 2
succeed directors in the class of directors whose term expires at the meeting
and directors elected by the Board of Directors to fill vacancies in other
classes of directors and may transact such other business as may properly come
before the meeting.
2.5 SPECIAL MEETINGS. Special meetings of the shareholders for any
purpose or purposes, unless otherwise prescribed by statute, may be called by
Chairman of the Board and shall be called by the Chairman of the Board or the
Secretary at the request in writing of a majority of the Board of Directors.
Only such business within the purpose or purposes described in the notice of the
meeting may be conducted at the meeting.
2.6 WAIVER OF NOTICE. Any shareholder may waive in writing notice
of any meeting either before, at or after the meeting. Attendance by a
shareholder in person or by proxy at a meeting shall constitute a waiver of
objection to lack of notice or defective notice and a waiver of objection to
consideration of a matter that was not described in the meeting notice unless
the shareholder objects in the manner required by law.
2.7 VOTING. Unless otherwise required by the Charter, at each
meeting of shareholders, each shareholder shall have one vote for each share of
stock having voting power registered in the shareholder's name on the records of
the Corporation on the record date for that meeting, and every shareholder
having the right to vote shall be entitled to vote in person or by proxy
appointed by instrument in writing or any other method permitted by law.
2.8 PROCEDURES FOR BRINGING BUSINESS BEFORE SHAREHOLDER MEETING.
At an annual or special meeting of shareholders, only such business shall be
conducted, and only such proposals shall be acted upon, as shall have been
properly brought before an annual or special meeting of shareholders. To be
properly brought before an annual or special meeting of shareholders, business
must be (i) in the case of a special meeting called by the Chairman of the Board
or at the request of the Board of Directors, specified in the notice of the
special meeting (or any supplement thereto), or (ii) in the case of an annual
meeting properly brought before the meeting by or at the direction of the Board
of Directors or (iii) otherwise properly brought before the annual or special
meeting by a shareholder. For business to be properly brought before such a
meeting of shareholders by a shareholder, the shareholder must have given timely
notice thereof in writing to the Secretary of the Corporation. To be timely, a
shareholder's notice must be delivered to or mailed and received at the
principal executive offices of the Corporation not less than 90 days nor more
than 120 days prior to the date of the meeting; provided, however, that if fewer
than 100 days' notice or prior public disclosure of the date of the meeting is
given or made to shareholders, notice by the shareholders to be timely must be
so delivered or received not later than the close of business on the 10th day
following the earlier of (i) the day on which such notice of the date of such
meeting was mailed or (ii) the day on which such public disclosure was made. A
shareholder's notice to the Secretary shall set forth as to each matter the
shareholder proposes to bring before a meeting of shareholders (i) a brief
description of the business desired to be brought before the meeting and the
reasons for conducting such business at the meeting, (ii) the name and address,
as they appear on the Corporation's books, of the shareholder proposing such
business and any other shareholders known by such shareholder to be supporting
such proposal, (iii) the class and number of shares of the Corporation which are
beneficially owned by such shareholder on the date of such shareholder's notice
and by any other shareholders known by such shareholder to be supporting such
proposal on the date of such shareholder's notice, and (iv) any material
interest of the shareholder in such proposal. Notwithstanding anything in these
Bylaws to the contrary, no business shall be conducted at a meeting of
shareholders except in accordance with the procedures set forth in this Section
2.8. The Chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that the business was not properly brought before the
meeting in accordance with the procedures prescribed by these Bylaws, and if the
Chairman should so determine, the Chairman shall so declare to the meeting and
any such business not properly brought before the meeting shall not be
transacted.
2.9 SEC PROXY RULES. In addition to complying with the provisions
of Section 2.8, a shareholder shall also comply with all applicable requirements
of the Securities Exchange Act of 1934 and the rules and regulations thereunder
with respect to the matters set forth in Section 2.8. Nothing in Section 2.8
shall be deemed to affect any rights of shareholders to request inclusion of
proposals in the Corporation's proxy statement pursuant to rules of the
Securities and Exchange Commission. For such proposals to be acted upon at a
meeting, however, compliance with the notice provisions of Section 2.8 is also
required.
2
<PAGE> 3
ARTICLE THREE
DIRECTORS
3.1 POWERS OF DIRECTORS. The business and affairs of the
Corporation shall be managed under the direction of and all corporate powers
shall be exercised by or under the authority of the Board of Directors.
3.2 NUMBER AND QUALIFICATIONS. The Board of Directors shall
consist of 12 members. The Board of Directors has the power to change from time
to time the number of directors specified in the preceding sentence. Any such
change in the number of directors constituting the Corporation's Board Directors
must be made exclusively by means of an amendment to these Bylaws adopted by a
majority of the entire Board of Directors then in office. Directors need not be
shareholders of the Corporation nor residents of the State of Tennessee.
3.3 TERM OF OFFICE. Except as otherwise provided by law or by the
Charter, the term of each director hereafter elected shall be from the time of
his or her election and qualification until the third annual meeting next
following such election and until a successor shall have been duly elected and
qualified; subject, however, to the right of the removal of any director as
provided by law, by the Charter or by these Bylaws.
3.4 COMPENSATION. The directors shall be paid for their services
on the Board of Directors and on any Committee thereof such compensation (which
may include cash, shares of stock of the Corporation and options thereon) and
benefits together with reasonable expenses, if any, at such times as may, from
time to time, be determined by resolution adopted by a majority of the entire
Board of Directors; provided that nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity and
being compensated therefor.
3.5 COMMITTEES. The directors, by resolution adopted by a majority
of the entire Board of Directors, may designate an executive committee and other
committees, consisting of two or more directors, and may delegate to such
committee or committees all such authority of the Board of Directors that it
deems desirable, including, without limitation, authority to appoint corporate
officers, fix their salaries, and, to the extent such is not provided by law,
the Charter or these Bylaws, to establish their authority and responsibility,
except that no such committee or committees shall have and exercise the
authority of the Board of Directors to:
(a) authorize distributions (which include dividend declarations),
except according to a formula or method prescribed by the
Board of Directors,
(b) fill vacancies on the Board of Directors or on any of its
committees,
(c) adopt, amend or repeal bylaws,
(d) authorize or approve the reacquisition of shares, except
according to a formula or method prescribed by the Board of
Directors, or
(e) authorize or approve the issuance or sale or contract for sale
of shares, or determine the designation and relative rights,
preferences and limitations of a class or series of shares,
except that the Board of Directors may authorize a committee
to do so within limits specifically prescribed by the Board of
Directors.
3.6 PROCEDURES FOR DIRECTOR NOMINATIONS. Except as provided in
Section 3.7 with respect to vacancies on the Board of Directors, only persons
nominated in accordance with the procedures set forth in this Section 3.6 shall
be eligible for election as directors. Nominations of persons for election to
the Board of Directors may be made at a meeting of shareholders (i) by or at the
direction of the Board of Directors, or (ii) by any shareholder of the
Corporation entitled to vote for the election of directors at such meeting who
complies with the notice procedures set forth in this Section 3.6. Such
nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation. To be timely, a shareholder's notice must be delivered to or
mailed and received at the principal executive offices of the Corporation not
less than 90 days nor more than 120 days prior to the date of a meeting;
provided, however, that if fewer than 100 days' notice or prior public
3
<PAGE> 4
disclosure of the date of the meeting is given or made to shareholders, notice
by the shareholder to be timely must be so delivered or received not later than
the close of business on the 10th day following the earlier of (i) the day on
which such notice of the date of such meeting was mailed or (ii) the day on
which such public disclosure was made. A shareholder's notice to the Secretary
shall set forth (i) as to each person whom the shareholder proposes to nominate
for election or reelection as a director (a) the name, age, business address and
residence address of such person, (b) the principal occupation or employment of
such person, (c) the class and number of shares of the Corporation which are
beneficially owned by such person on the date of such shareholder's notice and
(d) any other information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors or, is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (including, without limitation, such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected); and (ii) as to the shareholder giving the notice (a) the
name and address, as they appear on the Corporation's books, of such shareholder
and any other shareholders known by such shareholder to be supporting such
nominees and (b) the class and number of shares of the Corporation which are
beneficially owned by such shareholder on the date of such shareholder's notice
and by any other shareholders known by such shareholder to be supporting such
nominees on the date of such shareholder's notice. No person shall be eligible
for election as a director of the Corporation unless nominated in accordance
with the procedures set forth in this Section 3.6. The Chairman of the meeting
shall, if the facts warrant, determine and declare to the meeting that a
nomination was not made in accordance with the procedures prescribed by these
Bylaws, and if the Chairman should so determine, the Chairman shall so declare
to the meeting and the defective nomination shall be disregarded.
3.7 VACANCIES; REMOVAL FROM OFFICE. Except as otherwise provided
by law or by the Charter, 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 a term expiring at
the next shareholders' meeting at which directors are elected 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.
3.8 PLACE OF MEETINGS. The directors may hold meetings of the
Board of Directors or of a committee thereof at the principal office of the
Corporation in Memphis, Tennessee, or at such other place or places, either in
the State of Tennessee or elsewhere, as the Board of Directors or the members of
the committee, as applicable, may from time to time determine by resolution or
by written consent or as may be specified in the notice of the meeting.
3.9 QUORUM. A majority of the directors shall constitute a quorum
for the transaction of business, but a smaller number may adjourn from time to
time, without further notice, if the time and place to which the meeting is
adjourned are fixed at the meeting at which the adjournment is taken and if the
period of adjournment does not exceed thirty (30) days in any one (1)
adjournment. The vote of a majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors, unless the
vote of a greater number is required by law, the Charter, or these Bylaws.
3.10 REGULAR MEETINGS. Following each annual meeting of
shareholders, the newly elected directors, together with the incumbent directors
whose terms do not expire at such meeting, shall meet for the purpose of
organization, the appointment of officers and the transaction of other business,
and, if a majority of the directors be present at such place, day and hour, no
prior notice of such meeting shall be required to be given to the directors. The
place, day and hour of such meeting may also be fixed by resolution or by
written consent of the directors. In addition, the Board of Directors may
approve an annual schedule for additional regular meetings of the Board of
Directors and of committees thereof.
3.11 SPECIAL MEETINGS. Special meetings of the directors may be
called by the Chairman of the Board, the
4
<PAGE> 5
Chief Executive Officer, or the President (or as to any committee of the Board
of Directors, by the person or persons specified in the resolution of the Board
of Directors establishing the committee) on two days' notice by mail or on one
day's notice by telegram or cablegram, or on two hours' notice given personally
or by telephone or facsimile transmission to each director (or member of the
committee, as appropriate), and shall be called by the Chairman of the Board or
Secretary in like manner on the written request of a majority of directors then
in office. The notice shall state the day and hour of the meeting and the place
where the meeting is to be held. Special meetings of the directors may be held
at any time on written waiver of notice or by consent of all the directors,
either of which may be given either before, at or after the meeting.
3.12 ACTION WITHOUT A MEETING. The directors may (whether acting in
lieu of a meeting of the Board of Directors or of a committee thereof) take
action which they are required or permitted to take, without a meeting, on
written consent setting forth the action so taken, signed by all of the
directors entitled to vote thereon. If all the directors entitled to vote
consent to taking such action without a meeting, the affirmative vote of the
number of directors necessary to authorize or take such action at a meeting is
the act of the Board of Directors or committee, as appropriate.
3.13 TELEPHONE MEETINGS. Directors may participate in a meeting of
the Board of Directors or of a committee thereof by, or conduct a meeting
through the use of, any means of communication by which all directors
participating may simultaneously hear each other during the meeting. A director
so participating is deemed to be present in person at such meeting.
ARTICLE FOUR
OFFICERS
4.1 DESIGNATED OFFICERS. The officers of the Corporation shall
consist of a Chairman of the Board, a Chief Executive Officer, a President, such
number of Vice Chairmen as the Board may from time to time determine and
appoint, an Auditor, a Chief Credit Officer, a Chief Financial Officer, a
Controller, a General Counsel, a Manager of Risk Management, a Personnel
Division Manager, a Secretary, and a Treasurer, and such number of Executive
Vice Presidents, Senior Vice Presidents and Vice Presidents and such other
Officers and assistant Officers as may be from time to time determined and
appointed in accordance with the provisions of this Article Four. The title of
any officer may include any additional descriptive designation determined to be
appropriate. Any person may hold two or more offices, except that the President
shall not also be the Secretary or an Assistant Secretary. The officers, other
than the Chairman of the Board, need not be directors, and officers need not be
shareholders.
4.2 APPOINTMENT OF OFFICERS. Except as otherwise provided in this
Section 4.2, the officers of the Corporation shall be appointed by the Board of
Directors at the annual organizational meeting of the Board of Directors
following the annual meeting of shareholders. The Board of Directors may
delegate to a committee of the Board of Directors the power to create corporate
offices, define the authority and responsibility of such offices, except to the
extent such authority or responsibility would not be consistent with the law or
the Charter, and to appoint persons to any office of the Corporation except the
offices of the Chairman of the Board, Chief Executive Officer, and President,
any office the incumbent in which is designated by the Board as an Executive
Officer (as defined in Section 4.5 hereof), and, upon the recommendation of the
Audit Committee, the Auditor. In addition, the Board of Directors may delegate
to the officers appointed to the Corporation's personnel committee, acting as a
committee, the authority to appoint persons to any offices of the Corporation of
the level of Vice President and below annually at the personnel committee
meeting following the annual meeting of shareholders and to appoint persons to
any office of the Corporation of the level of Senior Vice President and below
during the period of time between the annual appointment of officers by the
Board of Directors or pursuant to this section 4.2 of the Bylaws.
Notwithstanding the delegation of authority pursuant to this section 4.2 of the
Bylaws, the Board of Directors retains the authority to appoint all officers and
such other officers and agents as it shall deem necessary, who shall exercise
such powers and perform such duties as shall be determined from time to time by
the Board of Directors.
4.3 TERM. The officers of the Corporation shall be appointed for a
term of one (1) year and until their successors are appointed and qualified,
subject to the right of removal specified in Section 4.4 of these Bylaws. The
designation of a specified term does not grant to any officer any contract
rights.
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4.4 VACANCIES, RESIGNATIONS AND REMOVAL. If the office of any
officer or officers becomes vacant for any reason, the vacancy may be filled by
the Board of Directors or, if such officer was appointed by a committee, by the
committee appointing such officer. Any officer may resign at any time by
delivering a written notice to the Chairman of the Board, Chief Executive
Officer, President, Secretary, or Personnel Division Manager of the Corporation,
or the designee of any of them, which shall be effective upon delivery unless it
specifies a later date acceptable to the Corporation. Any officer designated by
the Board as an Executive Officer shall be subject to removal at any time with
or without cause only by the affirmative vote of a majority of the Board of
Directors. The Auditor shall be subject to removal at any time with or without
cause only by the affirmative vote of a majority of the Board of Directors, upon
the recommendation of the Audit Committee. Any other officer shall be subject to
removal at any time with or without cause by the affirmative vote of a majority
of the Board of Directors, and in the event the officer was, or could have been,
appointed by a committee, then by the affirmative vote of a majority of either
such committee or the Board of Directors.
4.5 COMPENSATION. The Board of Directors, or a committee thereof,
shall fix the compensation of Executive Officers (as defined herein) of the
Corporation. "Executive Officers" shall be those officers of the Corporation
identified as such from time to time in a resolution or resolutions of the Board
of Directors. The compensation of officers who are not Executive Officers shall
be fixed by the Board of Directors, by a committee thereof, or by management
under such policies and procedures as shall be established by the Board of
Directors or a committee thereof.
4.6 DELEGATION OF OFFICER DUTIES. In case of the absence of any
officer of the Corporation, or for any reason that the Board of Directors (or,
in addition, in the case of any officer appointed by a committee, such committee
or any other committee which could appoint such officer pursuant to Section 4.2
of these Bylaws) may deem sufficient, the Board of Directors (or committee, as
applicable) may delegate, for the time being, the powers or duties, or any of
them, of such officer to any other officer, or to any director.
4.7 CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside
at all meetings of the shareholders and of the Board of Directors and shall have
such powers and perform such duties as may be provided for herein and as are
normally incident to the office and as may be assigned by the Board of
Directors. If and at such times as the Board of Directors so determines, the
Chairman of the Board may also serve as the Chief Executive Officer of the
Corporation.
4.8 CHIEF EXECUTIVE OFFICER. The Chief Executive Officer, in the
absence of the Chairman of the Board, shall preside at all meetings of the
shareholders and of the Board of Directors. The Chief Executive Officer shall be
responsible for carrying out the orders of and the resolutions and policies
adopted by the Board of Directors and shall have general management of the
business of the Corporation and shall exercise general supervision over all of
its affairs. In addition, the Chief Executive Officer shall have such powers and
perform such duties as may be provided for herein and as are normally incident
to the office and as may be prescribed by the Board of Directors. If and at such
time as the Board of Directors so determines, the Chief Executive Officer may
also serve as the President of the Corporation.
4.9 PRESIDENT. The President, in the absence of the Chairman of
the Board and the Chief Executive Officer, shall preside at all meetings of the
shareholders and of the Board of Directors. The President shall be the Chief
Executive Officer of the Corporation unless the Board of Directors has appointed
another person to such office, in which case the President shall be the Chief
Operating Officer of the Corporation and shall have such powers and perform such
duties as may be provided for herein and as are normally incident to the office
and as may be prescribed by the Board of Directors, the Chairman of the Board,
or the Chief Executive Officer.
4.10 VICE CHAIRMEN. Vice Chairmen shall perform such duties and
exercise such powers as may be prescribed by the Board of Directors, the
Chairman of the Board, or the Chief Executive Officer.
4.11 CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall be
the principal financial officer of the Corporation. The Chief Financial Officer
is authorized to sign any document filed with the Securities and Exchange
Commission or any state securities commission on behalf of the Corporation and
shall perform such duties and exercise such powers as are normally incident to
the office and as may be prescribed by the Board of Directors, the Chairman of
the Board, or the Chief Executive Officer.
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4.12 CHIEF CREDIT OFFICER. The Chief Credit Officer shall perform
such duties and exercise such powers as are normally incident to the office and
as may be prescribed by the Board of Directors, the Chairman of the Board, or
the Chief Executive Officer.
4.13 GENERAL COUNSEL. The General Counsel shall perform such duties
and exercise such powers as are normally incident to the office and as may be
prescribed by the Board of Directors, the Chairman of the Board, or the Chief
Executive Officer.
4.14 PERSONNEL DIVISION MANAGER. The Personnel Division Manager
shall perform such duties and exercise such powers as are normally incident to
the office and as may be prescribed by the Board of Directors, the Chairman of
the Board, or the Chief Executive Officer.
4.15 MANAGER OF RISK MANAGEMENT. The Manager of Risk Management
shall perform such duties and exercise such powers as are normally incident to
the office and as may be prescribed by the Board of Directors, the Chairman of
the Board, or the Chief Executive Officer.
4.16 EXECUTIVE VICE PRESIDENTS, SENIOR VICE PRESIDENTS AND VICE
PRESIDENTS. Executive Vice Presidents, Senior Vice Presidents and Vice
Presidents shall perform such duties and exercise such powers as may be
prescribed by the Board of Directors, a committee thereof, the personnel
committee, the Chairman of the Board, or the Chief Executive Officer.
4.17 SECRETARY. The Secretary shall attend all sessions of the
Board of Directors and of the shareholders and record all votes and the minutes
of all proceedings in books to be kept for that purpose. The Secretary shall
give or cause to be given notice of all meetings of the shareholders and of the
Board of Directors, shall authenticate records of the Corporation, and shall
perform such other duties as are incident to the office or as may be prescribed
by the Board of Directors, the Chairman of the Board or the Chief Executive
Officer. In the absence or disability of the Secretary, the Assistant Secretary
or such other officer or officers as may be authorized by the Board of Directors
or Executive Committee thereof shall perform all the duties and exercise all of
the powers of the Secretary and shall perform such other duties as the Board of
Directors, Chairman of the Board or the Chief Executive Officer shall prescribe.
4.18 TREASURER. The Treasurer shall have the custody of the funds
and securities of the Corporation and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all monies and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, the Chairman of the Board, the Chief
Executive Officer, the Chief Financial Officer, or the President, taking proper
vouchers for such disbursements, and shall render to the Board of Directors, the
Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer,
or the President, whenever they may require it, an account of all of his or her
transactions as Treasurer and of the financial condition of the Corporation, and
at a regular meeting of the Board of Directors preceding the annual
shareholders' meeting, a like report for the preceding year. The Treasurer shall
keep or cause to be kept an account of stock registered and transferred in such
manner and subject to such regulations as the Board of Directors may prescribe.
The Treasurer shall give the Corporation a bond, if required by the Board of
Directors, in such a sum and in form and with security satisfactory to the Board
of Directors for the faithful performance of the duties of the office and the
restoration to the Corporation, in case of his or her death, resignation or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his or her possession, belonging to the Corporation. The
Treasurer shall perform such other duties as the Board of Directors may from
time to time prescribe or require. In the absence or disability of the
Treasurer, the Assistant Treasurer shall perform all the duties and exercise all
of the powers of the Treasurer and shall perform such other duties as the Board
of Directors, the Chairman of the Board, or the Chief Executive Officer shall
prescribe.
4.19 AUDITOR. The Auditor shall perform such duties and exercise
such powers as are normally incident to the office and as may be prescribed by
the Board of Directors or the Chairman of the Audit Committee.
4.20 CONTROLLER. The Controller shall be the principal accounting
officer of the Corporation. The Controller is authorized to sign any document
filed with the Securities and Exchange Commission or any state securities
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commission on behalf of the Corporation and shall assist the management of the
Corporation in setting the financial goals and policies of the Corporation,
shall provide financial and statistical information to the shareholders and to
the management of the Corporation and shall perform such other duties and
exercise such other powers as may be prescribed by the Board of Directors, the
Chairman of the Board, the Chief Executive Officer or the President. In the
absence or disability of the Controller, the Assistant Controller shall perform
all the duties and exercise all powers of the Controller and shall perform such
duties as the Board of Directors or the Chairman of the Board or the Chief
Executive Officer shall prescribe.
4.21 OTHER OFFICERS. Officers holding such other offices as may be
created pursuant to Sections 4.1 and 4.2 of these Bylaws shall have such
authority and perform such duties and exercise such powers as may be prescribed
by the Board of Directors, a committee thereof, the personnel committee, the
Chairman of the Board or the Chief Executive Officer.
4.22 OFFICER COMMITTEES. The directors, by resolution adopted by a
majority of the entire Board of Directors, may designate one or more committees,
consisting of two or more officers, and may delegate to such committee or
committees all such authority that the Board of Directors deems desirable that
is permitted by law. Members of such committees may take action without a
meeting and may participate in meetings to the same extent and in the same
manner that directors may take action and may participate pursuant to Sections
3.12 and 3.13 of these Bylaws.
ARTICLE FIVE
SHARES OF STOCK
5.1 CERTIFICATES. The certificates representing shares of stock of
the Corporation shall be numbered, shall be entered in the books or records of
the Corporation as they are issued, and shall be signed by the Chairman of the
Board or the Chief Executive Officer and any one of the following: the
President, the Treasurer, or the Secretary. Either or both of the signatures
upon a certificate may be facsimiles if the certificate is countersigned by a
transfer agent, or registered by a registrar other than an officer or employee
of the Corporation. Each certificate shall include the following upon the face
thereof:
(a) A statement that the Corporation is organized under the laws
of the State of Tennessee;
(b) The name of the Corporation;
(c) The name of the person to whom issued;
(d) The number and class of shares, and the designation of the
series, if any, which such certificate represents;
(e) The par value of each share represented by such certificate;
or a statement that the shares are without par value; and
(f) Such other provisions as the Board of Directors may from time
to time require.
5.2 SHARES NOT REPRESENTED BY CERTIFICATES. Notwithstanding the
provisions of Section 5.1 of these Bylaws, the Board of Directors may authorize
the issuance of some or all of the shares of any class without certificates. The
Corporation shall send to each shareholder to whom such shares have been issued
or transferred at the appropriate time any written statement providing
information about such shares, which is required by law.
5.3 STOCK TRANSFERS AND RECORD DATES. Transfers of shares of stock
shall be made upon the books of the Corporation by the record owner or by an
attorney, lawfully constituted in writing, and upon surrender of any certificate
therefor. The Board of Directors may appoint suitable agents in Memphis,
Tennessee, and elsewhere to facilitate transfers by shareholders under such
regulations as the Board of Directors may from time to time prescribe. The
transfer books may be closed by the Board of Directors for such period, not to
exceed 40 days, as may be deemed
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advisable for dividend or other purposes, or in lieu of closing the books, the
Board of Directors may fix in advance a date as the record date for determining
shareholders entitled notice of and to vote at a meeting of shareholders, or
entitled to payment of any dividend or other distribution. The record date for
voting or taking other action as shareholders shall not be less than 10 days nor
more than 70 days prior to the meeting date or action requiring such
determination of shareholders. The record date for dividends and other
distributions shall not be less than 10 days prior to the payment date of the
dividend or other distribution. All certificates surrendered to the Corporation
for transfer shall be canceled, and no new certificate shall be issued until the
former certificate for like number of shares shall have been surrendered and
canceled, except that in case of a lost or destroyed certificate a new one may
be issued on the terms prescribed by Section 5.5 of these Bylaws.
5.4 RECORD OWNERS. The Corporation shall be entitled to treat the
holder of record of any share or shares of stock as the holder in fact thereof;
and, accordingly, shall not be bound to recognize any equitable or other claim
to or interest in such share on the part of any other person, whether or not it
shall have express or other notice thereof, except as required by applicable
law.
5.5 LOST, DESTROYED, STOLEN OR MUTILATED CERTIFICATES. The agent
for transfer of the Corporation's stock may issue new share certificates in
place of certificates represented to have been lost, destroyed, stolen or
mutilated upon receiving an indemnity satisfactory to the agent and the
Secretary or Treasurer of the Corporation, without further action of the Board
of Directors.
ARTICLE SIX
INDEMNIFICATION
6.1 INDEMNIFICATION OF OFFICERS WHEN WHOLLY SUCCESSFUL. If any
current or former officer of the Corporation [including for purposes of this
Article an individual who, while an officer, is or was serving another
corporation or other enterprise (including an employee benefit plan and a
political action committee, which serves the interests of the employees of the
Corporation or any of its subsidiaries) in any capacity at the request of the
Corporation and unless the context requires otherwise the estate or personal
representative of such officer] is wholly successful, on the merits or
otherwise, in the defense of any threatened, pending or completed action, suit,
or proceeding, whether civil, criminal, administrative, or investigative and
whether formal or informal ("Proceeding"), to which the officer was a party
because he or she is or was an officer of the Corporation, the officer shall be
indemnified by the Corporation against all reasonable expenses, including
attorney fees, incurred in connection with such Proceeding, or any appeal
therein.
6.2 INDEMNIFICATION OF OFFICERS WHEN NOT WHOLLY SUCCESSFUL. If any
current or former officer of the Corporation has not been wholly successful on
the merits or otherwise, in the defense of a Proceeding, to which the officer
was or was threatened to be made a party because he or she was or is an officer,
the officer shall be indemnified by the Corporation against any judgment,
settlement, penalty, fine (including any excise tax assessed with respect to an
employee benefit plan), or other liability and any reasonable expenses,
including attorney fees, incurred as a result of such Proceeding, or any appeal
therein, if authorized in the specific case after a determination has been made
that indemnification is permissible because the following standard of conduct
has been met:
(a) The officer conducted himself or herself in good faith, and
(b) The officer reasonably believed: (i) in the case of conduct in
the officer's official capacity as an officer of the
Corporation that the officer's conduct was in the
Corporation's best interest; and (ii) in all other cases that
the officer's conduct was at least not opposed to its best
interests; and
(c) In the case of any criminal proceeding, the officer had no
reasonable cause to believe his or her conduct was unlawful;
provided, however, the Corporation may not indemnify an officer in connection
with a Proceeding by or in the right of the Corporation in which the officer was
adjudged liable to the Corporation or in connection with any other proceeding
charging improper benefit to the officer, whether or not involving action in his
or her official capacity, in which the officer was adjudged liable on the basis
that personal benefit was improperly received by the officer.
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6.3 PROCEDURES FOR INDEMNIFICATION DETERMINATIONS. The
determination required by Section 6.2 herein shall be made as follows:
(a) By the Board of Directors by a majority vote of a quorum
consisting of directors not at the time parties to the
Proceeding;
(b) If a quorum cannot be obtained, by majority vote of a
committee duly designated by the Board of Directors (in which
designation directors who are parties may participate)
consisting solely of two or more directors not at the time
parties to the Proceeding;
(c) By independent special legal counsel: (i) selected by the
Board of Directors or its committee in the manner prescribed
in subsection (a) or (b); or (ii) if a quorum of the Board of
Directors cannot be obtained under subsection (a) and a
committee cannot be designated under subsection (b), selected
by majority vote of the full Board of Directors (in which
selection directors who are parties may participate); or, if a
determination pursuant to subsections (a), (b), or (c) of this
Section 6.3 cannot be obtained, then
(d) By the shareholders, but shares owned by or voted under the
control of directors who are at the time parties to the
Proceeding may not be voted on the determination.
6.4 SERVING AT THE REQUEST OF THE CORPORATION. An officer of the
Corporation shall be deemed to be serving another corporation or other
enterprise or employee benefit plan or political action committee at the request
of the Corporation only if such request is reflected in the records of the Board
of Directors or a committee appointed by the Board of Directors for the purpose
of making such requests. Approval by the Board of Directors, or a committee
thereof, may occur before or after commencement of such service by the officer.
6.5 ADVANCEMENT OF EXPENSES. The Corporation shall pay for or
reimburse reasonable expenses, including attorney fees, incurred by an officer
who is a party to a Proceeding in advance of the final disposition of the
Proceeding if:
(a) The officer furnishes to the Corporation a written affirmation
of the officer's good faith belief that the officer has met
the standard of conduct described in Section 6.2 herein;
(b) The officer furnishes to the Corporation a written
undertaking, executed personally or on behalf of the officer,
to repay the advance if it is ultimately determined that the
officer is not entitled to indemnification; and
(c) A determination is made that the facts then known to those
making the determination would not preclude indemnification
under this bylaw.
6.6 UNDERTAKING REQUIRED FOR EXPENSES. The undertaking required by
Section 6.5 herein must be an unlimited general obligation of the officer but
need not be secured and may be accepted without reference to financial ability
to make repayment.
6.7 PROCEDURES FOR EXPENSE DETERMINATIONS. Determinations and
authorizations of payments under Section 6.5 herein shall be made in the same
manner as is specified in Section 6.3 herein.
6.8 INDEMNIFICATION OF EMPLOYEES AND FORMER DIRECTORS. Every
employee and every former director of the Corporation shall be indemnified by
the Corporation to the same extent as officers of the Corporation.
6.9 NONEXCLUSIVITY OF RIGHT OF INDEMNIFICATION. The right of
indemnification set forth above shall not be deemed exclusive of any other
rights, including, but not limited to, rights created pursuant to Section 6.11
of these Bylaws, to which an officer, employee, or former director seeking
indemnification may be entitled. No combination of rights shall permit any
officer, employee or former director of the Corporation to receive a double or
greater recovery.
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6.10 MANDATORY INDEMNIFICATION OF DIRECTORS AND DESIGNATED
OFFICERS. The Corporation shall indemnify each of its directors and such of the
non-director officers of the Corporation or any of its subsidiaries as the Board
of Directors may designate, and shall advance expenses, including attorney's
fees, to each director and such designated officers, to the maximum extent
permitted (or not prohibited) by law, and in accordance with the foregoing, the
Board of Directors is expressly authorized to enter into individual indemnity
agreements on behalf of the Corporation with each director and such designated
officers which provide for such indemnification and expense advancement and to
adopt resolutions which provide for such indemnification and expense
advancement.
6.11 INSURANCE. Notwithstanding anything in this Article Six to the
contrary, the Corporation shall have the additional power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee, or agent of the Corporation, or who, while a director, officer,
employee or agent of the Corporation, is or was serving at the request of the
Corporation as a director, officer, partner, trustee, employee, or agent of
another foreign or domestic corporation, partnership, joint venture, trust,
employee benefit plan, political action committee, or other enterprise, against
liability asserted against or incurred by the person in that capacity or arising
from the person's status as a director, officer, employee, or agent, whether or
not the Corporation would have the power to indemnify the person against the
same liability.
ARTICLE SEVEN
RETIREMENT
7.1 NON-EMPLOYEE DIRECTORS. Directors who are not also officers of
the Corporation or its affiliates shall be retired from the Board of Directors
as follows:
(a) Any director who shall attain the age of sixty-five (65) on or
before the last day of the term for which he or she was
elected shall not be nominated for re-election and shall be
retired from the Board of Directors at the expiration of such
term; provided, however, any director first elected to the
Board of Directors prior to April 17, 1996, may serve a
minimum of two three-year terms.
(b) For the purpose of maintaining boards of active business and
professional persons, directors leaving the occupation or the
position held at their last election (by retirement or
otherwise) will be expected to tender their resignation from
the Board of Directors upon such occasion. A resignation will
ordinarily be accepted unless (i) the director assumes another
management position deemed appropriate by the Board of
Directors for continuation, or (ii) the director is so engaged
in some specific project for the Board of Directors as to make
his or her resignation detrimental to the Corporation. Under
this circumstance, the Board of Directors may elect to set a
subsequent date for his or her retirement to coincide with the
completion of the project.
Directors who are also officers of the Corporation or any of its affiliates will
be retired from the Board of Directors on the date of the annual meeting
coincident with or next following the date of the director's retirement from or
other discontinuation of active service with the Corporation and its affiliates.
7.2 OFFICERS AND EMPLOYEES. Except as provided in the following
sentence, the Corporation has no compulsory retirement age for its officers or
employees. Each officer or employee who has attained 65 years of age and who,
for the two-year period immediately before attaining such age, has been employed
in a "bona fide executive" or a "high policy-making" position as those terms are
used and defined in the Age Discrimination in Employment Act, Section 12(c), and
the regulations relating to that section prescribed by the Equal Employment
Opportunity Commission, all as amended from time to time (collectively, the
"ADEA"), shall automatically be terminated by way of compulsory retirement and
his or her salary discontinued on the first day of the month coincident with or
immediately following the 65th birthday, provided such employee is entitled to
an immediate nonforfeitable annual retirement benefit, as specified in the ADEA,
in the aggregate amount of at least $44,000. Notwithstanding the prior sentence,
the Board of Directors, in its discretion, may continue any such officer or
employee in service and designate the capacity in which he or she shall serve,
and shall fix the remuneration he or she shall receive. The Board of Directors
may also re-employ any former officer who had theretofore been retired.
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ARTICLE EIGHT
EXECUTION OF DOCUMENTS
8.1 DEFINITION OF "DOCUMENT." For purposes of this Article Eight
of the Bylaws, the term "document" shall mean a document of any type, including,
but not limited to, an agreement, contract, instrument, power of attorney,
endorsement, assignment, transfer, stock or bond power, deed, mortgage, deed of
trust, lease, indenture, conveyance, proxy, waiver, consent, certificate,
declaration, receipt, discharge, release, satisfaction, settlement, schedule,
account, affidavit, security, bill, acceptance, bond, undertaking, check, note
or other evidence of indebtedness, draft, guaranty, letter of credit, and order.
8.2 EXECUTION OF DOCUMENTS. Except as expressly provided in
Section 5.1 of these Bylaws (with respect to signatures on certificates
representing shares of stock of the Corporation), the Chairman of the Board, the
Chief Executive Officer, the President, any Vice Chairman, any Executive Vice
President, any Senior Vice President, any Vice President, the Chief Financial
Officer, the Chief Credit Officer, the General Counsel, the Personnel Division
Manager, the Manager of Risk Management, the Controller, the Treasurer, the
Secretary, and any other officer, or any of them acting individually, may (i)
execute and deliver in the name and on behalf of the Corporation or in the name
and on behalf of any division or department of the Corporation any document
pertaining to the business, affairs, or property of the Corporation or any
division or department of the Corporation, and (ii) delegate to any other
officer, employee or agent of the Corporation the power to execute and deliver
any such document. In addition, the President - Tennessee Banking, the President
- - Memphis Banking, and the Group Manager - Money Management of First Tennessee
Bank National Association (the "Bank"), the principal subsidiary of the
Corporation, or any of them acting individually, may, as agent of the
Corporation, execute and deliver in the name and on behalf of the Corporation
any such document.
8.3 METHOD OF EXECUTION BY SECRETARY. Unless otherwise required by
law, the signature of the Secretary on any document may be a facsimile.
ARTICLE NINE
EMERGENCY BYLAWS
9.1 DEFINITION OF EMERGENCY. The provisions of this Article Nine
shall be effective only during an "emergency." An "emergency" shall be deemed to
exist whenever any two of the officers identified in Section 9.2 of these Bylaws
in good faith determine that a quorum of the directors cannot readily be
assembled because of a catastrophic event.
9.2 NOTICE OF MEETING. A meeting of the Board of Directors may be
called by any one director or by any one of the following officers: Chairman of
the Board, Chief Executive Officer, President, any Vice Chairman, any Executive
Vice President, Chief Credit Officer, Chief Financial Officer, Controller,
General Counsel, Manager of Risk Management, Personnel Division Manager, or
Secretary. Notice of such meeting need be given only to those directors whom it
is practical to reach by any means the person calling the meeting deems
feasible, including, but not limited to, by publication and radio. Such notice
shall be given at least two hours prior to commencement of the meeting.
9.3 QUORUM AND SUBSTITUTE DIRECTORS. If a quorum has not been
obtained, then one or more officers of the Corporation or the Bank present at
the emergency meeting of the Board of Directors, as are necessary to achieve a
quorum, shall be considered to be substitute directors for purposes of the
meeting, and shall serve in order of rank, and within the same rank in order of
seniority determined by hire date by the Corporation, the Bank or any of their
subsidiaries. In the event that less than a quorum of the directors (including
any officers who serve as substitute directors for the meeting) are present,
those directors present (including such officers serving as substitute
directors) shall constitute a quorum.
9.4 ACTION AT MEETING. The Board as constituted pursuant to
Section 9.3 and after notice has been provided pursuant to Section 9.2 may take
any of the following actions: (i) prescribe emergency powers of the Corporation,
(ii) delegate to any officer or director any of the powers of the Board of
Directors, (iii) designate lines of succession of officers and agents in the
event that any of them are unable to discharge their duties, (iv) relocate the
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principal office or designate alternative or multiple principal offices, and (v)
take any other action that is convenient, helpful, or necessary to carry on the
business of the Corporation.
9.5 EFFECTIVENESS OF NON-EMERGENCY BYLAWS. All provisions of these
Bylaws not contained in this Article Nine, which are consistent with the
emergency bylaws contained in Article Nine, shall remain effective during the
emergency.
9.6 TERMINATION OF EMERGENCY. Any emergency causing this Article
Nine to become operative shall be deemed to be terminated whenever either of the
following conditions is met: (i) the directors and any substitute directors
determine by a majority vote at a meeting that the emergency is over or (ii) a
majority of the directors elected pursuant to the provisions of these Bylaws
other than this Article Nine hold a meeting and determine that the emergency is
over.
9.7 ACTION TAKEN IN GOOD FAITH. Any corporate action taken in good
faith in accordance with the provisions of this Article Nine binds the
Corporation and may not be used to impose liability on any director, substitute
director, officer, employee or agent of the Corporation.
ARTICLE TEN
MISCELLANEOUS PROVISIONS
10.1 FISCAL YEAR. The Board of Directors of the Corporation shall
have authority from time to time to determine whether the Corporation shall
operate upon a calendar year basis or upon a fiscal year basis, and if the
latter, said Board of Directors shall have power to determine when the said
fiscal year shall begin and end.
10.2 DIVIDENDS. Dividends on the capital stock of the Corporation
may be declared by the Board of Directors at any regular or special meeting
pursuant to law. Before payment of any dividend, there may be set aside out of
any funds of the Corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends or for repairing
or maintaining any property of the Corporation, or for such other purposes as
the directors shall think conducive to the interest of the Corporation.
10.3 SEAL. This Corporation shall have a Corporate Seal which shall
consist of an imprint of the name of the Corporation, the state of its
incorporation, the year of incorporation and the words "Corporate Seal." The
Corporate Seal shall not be required to establish the validity or authenticity
of any document executed in the name and on behalf of the Corporation.
10.4 NOTICES. Whenever notice is required to be given to any
director, officer or shareholder under any of the provisions of the law, the
Charter, or these Bylaws (except for notice required by Sections 2.8 and 3.6 of
these Bylaws), it shall not be construed to require personal notice, but such
notice may be given in writing by depositing the same in the United States mail,
postage prepaid, or by telegram, teletype, facsimile transmission or other form
of wire, wireless, or other electronic communication or by private carrier
addressed to such shareholder at such address as appears on the Corporation's
current record of shareholders, and addressed to such director or officer at
such address as appears on the records of the Corporation. If mailed as provided
above, notice to a shareholder shall be deemed to be effective at the time when
it is deposited in the mail.
10.5 BYLAW AMENDMENTS. The Board of Directors shall have power to
make, amend and repeal the Bylaws or any Bylaw of the Corporation by vote of not
less than a majority of the directors then in office, at any regular or special
meeting of the Board of Directors. The shareholders may make, amend and repeal
the Bylaws or any Bylaw of this Corporation at any annual meeting or at a
special meeting called for that purpose only by the affirmative vote of the
holders of at least eighty percent (80%) of the voting power of all outstanding
voting stock, and all Bylaws made by the directors may be amended or repealed by
the shareholders only by the vote of the holders of at least eighty percent
(80%) of the voting power of all outstanding voting stock. Without further
authorization, at any time the Bylaws are amended, the Secretary is authorized
to restate the Bylaws to reflect such amendment, and the Bylaws, as so restated,
shall be the Bylaws of the Corporation.
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Exhibit 10(b)
FIRST TENNESSEE NATIONAL CORPORATION
1997 EMPLOYEE STOCK OPTION PLAN
(Adopted 10-22-96, Amended and Restated 12-15-98)
1. PURPOSE. The 1997 Employee Stock Option Plan (the "Plan") of First
Tennessee National Corporation and any successor thereto, (the "Company") is
designed to enable employees of the Company and its subsidiaries to obtain a
proprietary interest in the Company, and thus to share in the future success of
the Company's business. Accordingly, the Plan is intended as a further means not
only of attracting and retaining outstanding personnel, but also of promoting a
closer identity of interest between employees and shareholders.
2. DEFINITIONS. As used in the Plan, the following terms shall have the
respective meanings set forth below:
(a) "Change in Control" means the occurrence of any one of the
following events:
(i) individuals who, on January 21, 1997, constitute
the Board (the "Incumbent Directors") cease for any reason to
constitute at least a majority of the Board, provided that any
person becoming a director subsequent to January 21, 1997,
whose election or nomination for election was approved by a
vote of at least three-fourths (3/4) of the Incumbent
Directors then on the Board (either by a specific vote or by
approval of the proxy statement of the Company in which such
person is named as a nominee for director, without written
objection to such nomination) shall be an Incumbent Director;
provided, however, that no individual elected or nominated as
a director of the Company initially as a result of an actual
or threatened election contest with respect to directors or as
a result of any other actual or threatened solicitation of
proxies or consents by or on behalf of any person other than
the Board shall be deemed to be an Incumbent Director;
(ii) any "Person" (as defined under Section 3(a)(9)
of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and as used in Section 13(d) or Section 14(d)
of the Exchange Act) is or becomes a "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 20% or
more of the combined voting power of the Company's then
outstanding securities eligible to vote for the election of
the Board (the "Company Voting Securities"); provided,
however, that the event described in this paragraph (ii) shall
not be deemed to be a change in control by virtue of any of
the following acquisitions: (A) by the Company or any entity
in which the Company directly or indirectly beneficially owns
more than 50% of the voting securities or interests (a
"Subsidiary"), (B) by an employee stock ownership or employee
benefit plan or trust sponsored or maintained by the Company
or any Subsidiary, (C) by any underwriter temporarily holding
securities pursuant to an offering of such securities, or (D)
pursuant to a Non-Qualifying Transaction (as defined in
paragraph (iii));
(iii) the shareholders of the Company approve a
merger, consolidation, share exchange or similar form of
corporate transaction involving the Company or any of its
Subsidiaries that requires the approval of the Company's
shareholders, whether for such transaction or the issuance of
securities in the transaction (a "Business Combination"),
unless immediately following such Business Combination: (A)
more than 50% of the total voting power of (x) the corporation
resulting from such Business Combination (the "Surviving
Corporation"), or (y) if applicable, the ultimate parent
corporation that directly or indirectly has beneficial
ownership of 100% of the voting securities eligible to elect
directors of the Surviving Corporation (the "Parent
Corporation"), is represented by Company Voting Securities
that were outstanding immediately prior to the consummation of
such Business Combination (or, if applicable, is represented
by shares into which such Company Voting Securities were
converted pursuant to such Business Combination), and such
voting power among the holders thereof is in substantially the
same proportion as the voting power of such Company Voting
Securities among the holders thereof immediately prior to the
Business Combination, (B) no person
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(other than any employee benefit plan sponsored or maintained
by the Surviving Corporation or the Parent Corporation), is or
becomes the beneficial owner, directly or indirectly, of 20%
or more of the total voting power of the outstanding voting
securities eligible to elect directors of the Parent
Corporation (or, if there is no Parent Corporation, the
Surviving Corporation) and (C) at least a majority of the
members of the board of directors of the Parent Corporation
(or, if there is no Parent Corporation, the Surviving
Corporation) were Incumbent Directors at the time of the
Board's approval of the execution of the initial agreement
providing for such Business Combination (any Business
Combination which satisfies all of the criteria specified in
(A), (B) and (C) above shall be deemed to be a "Non-Qualifying
Transaction"); or
(iv) the shareholders of the Company approve a plan
of complete liquidation or dissolution of the Company or a
sale of all or substantially all of the Company's assets.
Computations required by paragraph (iii) shall be made on and as of the
date of shareholder approval and shall be based on reasonable assumptions that
will result in the lowest percentage obtainable.
Notwithstanding the foregoing, a change in control of the Company shall
not be deemed to occur solely because any person acquires beneficial ownership
of more than 20% of the Company Voting Securities as a result of the acquisition
of Company Voting Securities by the Company which reduces the number of Company
Voting Securities outstanding; provided, that if after such acquisition by the
Company such person becomes the beneficial owner of additional Company Voting
Securities that increases the percentage of outstanding Company Voting
Securities beneficially owned by such person, a change in control of the Company
shall then occur.
(b) "Committee" means the Stock Option Committee or any successor
committee designated by the Board of Directors to administer
the Stock Option Plan, as provided in Section 5(a) hereof.
(c) "Early Retirement" means termination of employment after an
employee has fulfilled all service requirements for an early
pension, and before his or her Normal Retirement Date, under
the terms of the First Tennessee National Corporation Pension
Plan, as amended from time to time.
(d) "Quota" means the portion of the total number of shares
subject to an option which the grantee of the option may
purchase during the several periods of the term of the option
(if the option is subject to quotas), as provided in Section
8(b) hereof.
(e) "Retirement" means termination of employment after an employee
has fulfilled all service requirements for a pension under the
terms of the First Tennessee National Corporation Pension
Plan, as amended from time to time.
(f) "Subsidiary" means a subsidiary corporation as defined in
Section 425 of the Internal Revenue Code.
(g) "Successor" means the legal representative of the estate of a
deceased grantee or the person or persons who shall acquire
the right to exercise an option or related SAR by bequest or
inheritance or by reason of the death of the grantee, as
provided in Section 10 hereof.
(h) "Term of the Option" means the period during which a
particular option may be exercised, as provided in Section
8(a) hereof.
(i) "Three months after cessation of employment" means a period of
time beginning at 12:01 A.M. on the day following the date
notice of termination of employment was given and ending at
11:59 P.M. on the date in the third following month
corresponding numerically with the date notice of termination
of employment was given ( or in the event that the third
following month does not have a date so corresponding, then
the last day of the third following month).
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(j) "Five years after (an event occurring on day x)" and "five
years from (an event occurring on day x)" means a period of
time beginning at 12:01 A.M. on the day following day x and
ending at 11:59 P.M. on the date in the fifth following year
corresponding numerically with day x (or in the event that the
fifth following year does not have a date so corresponding,
then the last day of the sixtieth following month).
(k) "Voluntary Resignation" means any termination of employment
that is not involuntary and that is not the result of the
employee's death, disability, early retirement or retirement.
3. EFFECTIVE DATE OF PLAN. The Plan shall become effective upon approval
by the Board of Director of the Company. No options may be granted under the
Plan after the month and day in the year 2006 corresponding to the day before
the month and day on which the Plan becomes effective. The term of options
granted on or before such date may, however, extend beyond that date.
4. SHARES SUBJECT TO THE PLAN.
(a) The Company may grant options under the Plan authorizing the
issuance of no more than 6,200,000 [10,200,000, effective
1-1-99] shares of its $0.625 par value (adjusted for any stock
splits) common stock, which will be provided from shares
purchased in the open market or privately (that became
authorized but unissued shares under state corporation law) or
by the issuance of previously authorized but unissued shares.
(b) Shares as to which options previously granted under this Plan
shall for any reason lapse shall be restored to the total
number available for grant of options.
5. PLAN ADMINISTRATION.
(a) The Plan shall be administered by a Stock Option Committee
(the "Committee") whose members shall be appointed from time
to time by, and shall serve at the pleasure of, the Board of
Directors of the Company. In addition, all members shall be
directors and shall meet the definitional requirements for
"non-employee director" (with any exceptions therein
permitted) contained in the then current SEC Rule 16b-3 or any
successor provision.
(b) The Committee shall adopt such rules of procedure as it may
deem proper.
(c) The powers of the Committee shall include plenary authority to
interpret the Plan, and subject to the provisions hereof, to
determine the persons to whom options shall be granted, the
number of shares subject to each option, the term of the
option, and the date on which options shall be granted.
6. ELIGIBILITY.
(a) Options may be granted under the Plan to employees of the
Company or any subsidiary selected by the Committee.
Determination by the Committee of the employees to whom
options shall be granted shall be conclusive.
(b) An individual may receive more than one option.
7. OPTION PRICE. The option price per share to be paid by the grantee to
the Company upon exercise of the option shall be determined by the Committee,
but shall not be less than 100% of the fair market value of the share at the
time the option is granted, nor shall the price per share be less than the par
value of the share. Notwithstanding the prior sentence, the option price per
share may be less than 100% of the fair market value of the share at the time
the option is granted if:
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(a) The grantee of the option has entered into an agreement with
the Company pursuant to which the grant of the option is in
lieu of the payment of compensation; and
(b) The amount of such compensation when added to the cash
exercise price of the option equals at least 100% of the fair
market value (at the time the option is granted) of the shares
subject to option.
"Fair market value" for purposes of the Plan shall be the mean between the high
and low sales prices at which shares of the Company were sold on the valuation
day as quoted by the Nasdaq Stock Market or, if there were no sales on that day,
then on the last day prior to the valuation day during which there were sales.
In the event that this method of valuation is not practicable, then the
Committee, in its discretion, shall establish the method by which fair market
value shall be determined.
8. TERMS OR QUOTAS OF OPTIONS:
(a) TERM. Each option granted under the Plan shall be exercisable
only during a term (the "Term of the Option") commencing one
year, or such other period of time (which may be less than or
more than one year) as is determined to be appropriate by the
Committee, after the date when the option was granted and
ending (unless the option shall have terminated earlier under
other provisions of the Plan) on a date to be fixed by the
Committee. Notwithstanding the foregoing, each option granted
under the Plan shall become exercisable in full immediately
upon a Change in Control.
(b) QUOTAS. The Committee shall have authority to grant options
exercisable in full at any time during their term, or
exercisable in quotas. Quotas or portions thereof not
purchased in earlier periods shall be cumulated and be
available for purchase in later periods. In exercising his or
her option, the grantee may purchase less than the full quota
available to him or her.
(c) EXERCISE OF STOCK OPTIONS. Stock options shall be exercised by
delivering, mailing, or transmitting to the Committee or its
designee (for all purposes under the Plan, in the absence of
an express designation by the Committee, the Company's
Personnel Division Manager is deemed to be the Committee's
designee) the following items:
(i) A notice, in the form, by the method, and at times
prescribed by the Committee, specifying the number of shares
to be purchased; and
(ii) A check or money order payable to the Company for the
full option price.
In addition, the Committee in its sole discretion may
determine that it is an appropriate method of payment for
grantees to pay, or make partial payment of, the option price
with shares of Company common stock in lieu of cash. In
addition, in its sole discretion the Committee may determine
that it is an appropriate method of payment for grantees to
pay for any shares subject to an option by delivering a
properly executed exercise notice together with a copy of
irrevocable instructions to a broker to deliver promptly to
the Company the amount of sale or loan proceeds to pay the
purchase price (a "cashless exercise"). To facilitate the
foregoing, the Company may enter into agreements for
coordinated procedures with one or more brokerage firms. The
value of Company common stock surrendered in payment of the
exercise price shall be its fair market value, determined
pursuant to Section 7, on the date of exercise. Upon receipt
of such notice of exercise of a stock option and upon payment
of the option price by a method other than a cashless
exercise, the Company shall promptly deliver to the grantee
(or, in the event the grantee has executed a deferral
agreement, the Company shall deliver to the grantee at the
time specified in such deferral agreement) a certificate or
certificates for the shares purchased, without charge to him
or her for issue or transfer tax.
(d) POSTPONEMENTS. The Committee may postpone any exercise of an
option for such period of time as the Committee in its
discretion reasonably believes necessary to prevent any acts
or omissions that the
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Committee reasonably believes will be or will result in the
violation of any state or federal law; and the Company shall
not be obligated by virtue of any provision of the Plan or the
terms of any prior grant of an option to recognize the
exercise of an option or to sell or issue shares during the
period of such postponement. Any such postponement shall
automatically extend the time within which the option may be
exercised, as follows: The exercise period shall be extended
for a period of time equal to the number of days of the
postponement, but in no event shall the exercise period be
extended beyond the last day of the postponement for more days
than there were remaining in the option exercise period on the
first day of the postponement. Neither the Company nor any
subsidiary of the Company, nor any of their respective
directors or officers shall have any obligation or liability
to the grantee of an option or to a successor with respect to
any shares as to which the option shall lapse because of such
postponement.
(e) NON-TRANSFERABILITY. All options granted under the Plan shall
be non-transferable other than by will or by the laws of
descent and distribution, subject to Section 10 hereof, and an
option may be exercised during the lifetime of the grantee
only by him or her or by his/her guardian or legal
representative.
(f) CERTIFICATES. The stock certificate or certificates to be
delivered under this Plan may, at the request of the grantee,
be issued in his or her name or, with the consent of the
Company, the name of another person as specified by the
grantee.
(g) RESTRICTIONS. This subsection (g) shall be void and of no
legal effect in the event of a Change of Control.
Notwithstanding anything in any other section or subsection
herein to the contrary, the following provisions shall apply
to all options (except options designated by the Committee as
FirstShare options), exercises and grantees. An amount equal
to the spread realized in connection with the exercise of an
option within six months prior to a grantee's voluntary
resignation shall be paid to the Company by the grantee in the
event that the grantee, within six months following voluntary
resignation, engages, directly or indirectly, in any activity
determined by the Committee to be competitive with any
activity of the Company or any of its subsidiaries.
(h) TAXES. The Company shall be entitled to withhold the amount of
any tax attributable to amounts payable or shares deliverable
under the Plan, and the Company may defer making payment or
delivery of any benefits under the Plan if any tax is payable
until indemnified to its satisfaction. The Committee may, in
its discretion and subject to such rules which it may adopt,
permit a grantee to satisfy, in whole or in part, any federal,
state and local withholding tax obligation which may arise in
connection with the exercise of a stock option, by electing
either:
(i) to have the Company withhold shares of Company common
stock from the shares to be issued upon the exercise of the
option;
(ii) to permit a grantee to tender back shares of Company
common stock issued upon the exercise of an option; or
(iii) to deliver to the Company previously owned shares of
Company common stock, having, in the case of (i), (ii), or
(iii), a fair market value equal to the amount of the federal,
state, and local withholding tax associated with the exercise
of the option.
(i) ADDITIONAL PROVISIONS APPLICABLE TO OPTION AGREEMENTS IN LIEU
OF COMPENSATION. If the Committee, in its discretion permits
participants to enter into agreements as contemplated by
Section 7 herein, then such agreements must be irrevocable and
cannot be changed by the participant once made, and such
agreements must be made at least prior to the performance of
any services with respect to which an option may be granted.
If any participant who enters into such an agreement
terminates employment prior to the grant of the option, then
the option will not be granted and all compensation
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which would have been covered by the option will be paid to
the participant in cash.
9. EXERCISE OF OPTION BY GRANTEE ON CESSATION OF EMPLOYMENT. If a person
to whom an option has been granted shall cease, for a reason other than his or
her death, disability, early retirement, retirement, or voluntary resignation,
to be employed by the Company or a subsidiary, the option shall terminate three
months after the cessation of employment, unless it terminates earlier under
other provisions of the Plan. Until the option terminates, it may be exercised
by the grantee for all or a portion of the shares as to which the right to
purchase had accrued under the Plan at the time of cessation of employment,
subject to all applicable conditions and restrictions provided in Section 8
hereof. If a person to whom an option has been granted shall retire or become
disabled, the option shall terminate five years after the date of early
retirement, retirement or disability, unless it terminates earlier under other
provisions of the Plan. Although such exercise by a retiree or disabled grantee
is not limited to the exercise rights which had accrued at the date of early
retirement, retirement or disability, such exercise shall be subject to all
applicable conditions and restrictions prescribed in Section 8 hereof. If a
person shall voluntarily resign, his option to the extent not previously
exercised shall terminate at once.
10. EXERCISE OF OPTION AFTER DEATH OF GRANTEE. If the grantee of an option
shall die while in the employ of the Company or within three months after
ceasing to be an employee, and if the option was in effect at the time of his or
her death (whether or not its term had then commenced), the option may, until
the expiration of five years from the date of death of the grantee or until the
earlier expiration of the term of the option, be exercised by the successor of
the deceased grantee. Although such exercise is not limited to the exercise
rights which had accrued at the date of death of the grantee, such exercise
shall be subject to all applicable conditions and restrictions prescribed in
Section 8 hereof.
11. PYRAMIDING OF OPTIONS. The Committee in its sole discretion may from
time to time permit the method of exercising options known as pyramiding (the
automatic application of shares received upon the exercise of a portion of a
stock option to satisfy the exercise price for additional portions of the
option).
12. SHAREHOLDER RIGHTS. No person shall have any rights of a shareholder by
virtue of a stock option except with respect to shares actually issued to him or
her, and issuance of shares shall confer no retroactive right to dividends.
13. ADJUSTMENT FOR CHANGES IN CAPITALIZATION. Any increase in the number of
outstanding shares of common stock of the Company occurring through stock splits
or stock dividends after the adoption of the Plan shall be reflected
proportionately:
(a) in an increase in the aggregate number of shares then
available for the grant of options under the Plan, or becoming
available through the termination or forfeiture of options
previously granted but unexercised;
(b) in the number subject to options then outstanding; and
(c) in the quotas remaining available for exercise under
outstanding options,
and a proportionate reduction shall be made in the per-share option price as to
any outstanding options or portions thereof not yet exercised. Any fractional
shares resulting from such adjustments shall be eliminated. If changes in
capitalization other than those considered above shall occur, the Board of
Directors shall make such adjustments in the number and class of shares for
which options may thereafter be granted, and in the number and class of shares
remaining subject to options previously granted and in the per-share option
price as the Board in its discretion may consider appropriate, and all such
adjustments shall be conclusive.
14. TERMINATION, SUSPENSION, OR MODIFICATION OF PLAN. The Board of
Directors may at any time terminate, suspend, or modify the Plan, except that
the Board of Directors shall not amend the Plan in violation of law. No
termination, suspension, or modification of the Plan shall adversely affect any
right acquired by any grantee, or by any successor of a grantee (as provided in
Section 10 hereof), under the terms of an option granted before the date of such
termination, suspension, or modification, unless such grantee or successor shall
consent, but it shall be conclusively
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presumed that any adjustment for changes in capitalization as provided in
Section 13 does not adversely affect any such right.
15. APPLICATION OF PROCEEDS. The proceeds received by the Company from the
sale of its shares under the Plan will be used for general corporate purposes.
16. NO RIGHT TO EMPLOYMENT. Neither the adoption of the Plan nor the
granting of any stock option shall confer upon the grantee any right to continue
in the employ of the Company or any of its subsidiaries or interfere in any way
with the right of the Company or the subsidiary to terminate such employment at
any time.
17. GOVERNING LAW. The Plan and all determinations thereunder shall be
governed by and construed in accordance with the laws of the State of Tennessee.
18. SUCCESSORS. This Plan shall bind any successor of the Company, its
assets or its businesses (whether direct or indirect, by purchase, merger,
consolidation or otherwise), in the same manner and to the same extent that the
Company would be obligated under this Plan if no succession had taken place. In
the case of any transaction in which a successor would not by the foregoing
provision or by operation of law be bound by this Plan, the Company shall
require such successor expressly and unconditionally to assume and agree to
perform the Company's obligations under this Plan, in the same manner and to the
same extent that the Company would be required to perform if no such succession
had taken place. The term "Company," as used in the Plan, shall mean the Company
as hereinbefore defined and any successor or assignee to the business or assets
which by reason hereof becomes bound by this Plan.
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Exhibit 10(d)
FIRST TENNESSEE NATIONAL CORPORATION
1992 RESTRICTED STOCK INCENTIVE PLAN
(As Amended and Restated 12-15-98)
1. Purpose. The purpose of the First Tennessee National Corporation
1992 Restricted Stock Incentive Plan (the "Plan") is to advance the interests of
First Tennessee National Corporation and any successor thereto (the "Company")
by awarding restricted shares of the common capital stock of First Tennessee
National Corporation, par value $0.625 per share ("Common Stock"), to certain
officers and other key executives of the Company and its subsidiaries who make
exceptional contributions to the Company by their ability, loyalty, industry,
and innovativeness and by making automatic, nondiscretionary grants of
restricted shares to non-employee Directors. The Company intends that the Plan
will closely associate the interests of officers and key executives and
Directors with those of the Company's shareholders and will facilitate securing,
retaining, and motivating officers and key executives and Directors of high
caliber and potential.
2. Administration. The Plan shall be administered by the Human
Resources Committee (the "Committee") of the Board of Directors (the "Board") of
the Company. No person shall be appointed to the Committee (a) who is (or has
been during the one year period prior to such appointment) eligible to receive
an award under the Plan (except as specifically provided under Section 4(b) for
non-employee Directors) or any other similar plan of the Company; or (b) who has
received an award under the Plan (except for an award under section 4(b)) if, at
the time of such appointment, any restriction on the transferability of the
shares so awarded remains in effect or remained in effect at any time during the
one-year period immediately prior to such appointment. The Committee shall have
full and final authority in its discretion to interpret conclusively the
provisions of the Plan; to decide all questions of fact arising in its
application; to determine the employees to whom awards shall be made under the
Plan; to determine the award to be made and the amount, size, terms and
restrictions of each such award; to determine the time when awards will be
granted; and to make all other determinations necessary or advisable for the
administration of the Plan other than determinations required in connection with
awards granted under Section 4(b), except to the extent permitted under Rule
16b-3 of the Securities and Exchange Commission ("SEC").
3. Shares Subject to Plan. The shares issued under the Plan shall not
exceed in the aggregate 1,320,000 shares of Common Stock. Such shares shall be
authorized and unissued shares. Any shares which are awarded hereunder and
subsequently forfeited shall again be available under the Plan.
4. Participants.
(a) Persons eligible to participate in the Plan and receive awards
under Section 5 shall be limited to those officers and other key
executives of the Company or any of its subsidiaries who, in the
judgment of the Committee, make a significant impact upon the
profitability of the Company through their decisions, actions and
counsel. Members of the Board who are
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<PAGE> 2
not also officers or employees of the Company or its subsidiaries shall
not be eligible for selection or awards, except as specifically
provided in Section 4(b).
(b) Each current Director of the Company on the effective date of the
Plan who is not a salaried officer or employee of the Company or any of
its subsidiaries ("non-employee Director") shall receive an award of
6,000 shares of restricted Common Stock ("restricted shares") on May 1,
1992 or the date required by Section 14 of the Plan, if later. Each new
non-employee Director who becomes a Director after the effective date
of the Plan shall receive an award of 6,000 restricted shares on the
later of the date specified in the prior sentence or the first business
day of the month following the date such person becomes a Director.
Restricted shares granted under this Section 4(b) shall be evidenced by
a written agreement in such form as the Committee shall from time to
time approve, which agreement shall comply with and be subject to the
following terms and conditions:
(1) Restrictions. Share awarded, and the right to vote such shares and
to receive dividends thereon, may not be sold, assigned, transferred,
exchanged, pledged, hypothecated, or otherwise encumbered during the
restriction period specified herein. During the restriction period the
non-employee Director shall have all other rights of a shareholder,
including, but not limited to, the right to vote and receive dividends
on such shares.
(2) Certificates. Each certificate evidencing restricted shares shall
be deposited with the Company Treasurer, accompanied by a stock power
in blank executed by the non-employee Director, and shall bear an
appropriate restrictive legend.
(3) Forfeiture. In the event that the non-employee Director's
directorship terminates for any reason other than death, disability
(defined as a total and permanent disability), retirement (which is
defined as any termination not caused by death or disability, after the
attainment of age 65 or ten years of service as a director of the
Company), or a Change in Control (defined below) of the Company, all
shares which at the time are restricted shares shall be forfeited to
the Company. If a non-employee Director's directorship ends as a result
of death, disability, retirement, or a Change in Control, all
restrictions shall lapse. A "Change in Control" of the Company shall
have occurred when a person (other than the Company, a subsidiary of
the Company, or an employee benefit or stock plan of the Company) or
other entity, alone or together with its Affiliates and Associates (as
those terms are used in the regulations under the Securities Exchange
Act of 1934), becomes the beneficial owner of 20% or more of the
general voting power of the Company.
(4) Lapse of Restrictions. Subject to the provisions of Section
4(b)(3), all restrictions shall lapse at the rate of ten percent (10%)
per year on the month and day in each year following the year of grant
corresponding to the day before the month and day on which the grant
was made.
(5) Fair market value. Fair market value as of any date shall be the
mean between the high
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<PAGE> 3
and low sales prices at which shares of Company Common Stock were sold
on the valuation day as quoted by NASDAQ or, if there were no sales on
that date, then on the last day prior to the valuation day during which
there were sales.
(6) Tax Election. The non-employee Director will enter into an
agreement with the Company not to make an election under Section 83(b)
of the Internal Revenue Code of 1986, as amended.
(7) Nontransferability. If required by the then current SEC Rule 16b-3
or any successor provision, then notwithstanding anything herein to the
contrary, restricted shares acquired under this Section 4(b) of the
Plan may not be sold for at least six months after acquisition, except
in the case of the non-employee Director's death or disability.
5. Awards. The Committee shall make awards of shares of Common Stock to
persons eligible under Section 4(a) in accordance with terms and conditions set
forth in restricted stock agreements (the "Agreements") executed by participants
in such form and containing such terms and conditions (including those set forth
below) consistent with the Plan as the Committee shall determine.
(a) Restriction Period. At the time of each award, the Committee shall
determine the period during which the shares awarded shall be subject
to the risks of forfeiture and other terms and conditions in the
Agreements. The Committee may at any time accelerate the date of lapse
of restrictions with respect to all or any part of the shares awarded
to a participant.
(b) Certificates. Each certificate issued in respect of shares awarded
to a participant shall be deposited with the Company, or its designee,
together with a stock power executed in blank by the participant, and
shall bear an appropriate legend disclosing the restrictions on
transferability imposed on such shares by the Plan and the Agreements.
(c) Restrictions Upon Transfer. Shares awarded, and the right to vote
such shares and to receive dividends thereon, may not be sold,
assigned, transferred, exchanged, pledged, hypothecated, or otherwise
encumbered during the restriction period applicable to such shares.
During the restriction period the participant shall have all other
rights of a stockholder, including, but not limited to, the right to
vote and receive dividends on such shares. If as a result of a stock
dividend, stock split, recapitalization, or other adjustment in the
stated capital of First Tennessee National Corporation, or as the
result of a merger, consolidation, or other reorganization, the Common
Stock is increased, reduced, or otherwise changed and by virtue thereof
the recipient shall be entitled to new or additional or different
shares, such shares shall be subject to the same terms, conditions, and
restrictions as the original shares.
(d) Lapse of Restrictions. The Agreements shall specify the terms and
conditions upon which any restrictions upon any shares awarded under
the Plan shall lapse. Upon the lapse of such
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<PAGE> 4
restrictions, certificates evidencing such shares of common stock
without the foregoing restrictive legend shall be issued to the
participant or his legal representative unless a valid deferral
election has been made pursuant to Section 16 hereof, in which case
certificates shall be issued as provided in Section 16. Each such new
certificate shall bear such alternative legend as the Committee shall
specify.
(e) Termination Prior to Lapse of Restrictions. In the event of the
termination of a participant's employment for any reason (except (i)
death or (ii), if the Committee approves, retirement or total and
permanent disability) prior to the lapse of Plan or Agreement
restrictions, all shares subject to unlapsed restrictions shall be
forfeited by such participant to the Company without payment of any
consideration by the Company, and neither the participant nor any
successors, heirs, assigns or personal representatives of such
participant shall thereafter have any further rights or interest in
such shares or certificates.
(f) Death, Disability or Retirement of Participant. Unless the
Agreements provided otherwise, all restrictions imposed by this Plan
and the Agreement shall lapse upon the death of the participant, or, if
such lapsing is approved by the Committee. upon the total and permanent
disability or retirement of the participant.
(g) Change in Control. Notwithstanding anything herein to the contrary
(except for Section 4(b)(3), which is applicable solely to non-employee
directors), all restrictions imposed by this Plan or any Agreement
shall lapse immediately upon a Change in Control (as such term is
defined in the following sentence). A "Change in Control" means the
occurrence of any one of the following events:
(i) individuals who, on January 21, 1997, constitute the Board
(the "Incumbent Directors") cease for any reason to constitute at least
a majority of the Board, provided that any person becoming a director
subsequent to January 21, 1997, whose election or nomination for
election was approved by a vote of at least three-fourths (3/4) of the
Incumbent Directors then on the Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person is
named as a nominee for director, without written objection to such
nomination) shall be an Incumbent Director; provided, however, that no
individual elected or nominated as a director of the Company initially
as a result of an actual or threatened election contest with respect to
directors or as a result of any other actual or threatened solicitation
of proxies or consents by or on behalf of any person other than the
Board shall be deemed to be an Incumbent Director;
(ii) any "Person" (as defined under Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and as
used in Section 13(d) or Section 14(d) of the Exchange Act) is or
becomes a "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's
then outstanding securities eligible to vote for the election of the
Board (the "Company Voting Securities"); provided, however, that the
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<PAGE> 5
event described in this paragraph (ii) shall not be deemed to be a
change in control by virtue of any of the following acquisitions: (A)
by the Company or any entity in which the Company directly or
indirectly beneficially owns more than 50% of the voting securities or
interests (a "Subsidiary"), (B) by an employee stock ownership or
employee benefit plan or trust sponsored or maintained by the Company
or any Subsidiary, (C) by any underwriter temporarily holding
securities pursuant to an offering of such securities, or (D) pursuant
to a Non-Qualifying Transaction (as defined in paragraph (iii));
(iii) the shareholders of the Company approve a merger,
consolidation, share exchange or similar form of corporate transaction
involving the Company or any of its Subsidiaries that requires the
approval of the Company's shareholders, whether for such transaction or
the issuance of securities in the transaction (a "Business
Combination"), unless immediately following such Business Combination:
(A) more than 50% of the total voting power of (x) the corporation
resulting from such Business Combination (the "Surviving Corporation"),
or (y) if applicable, the ultimate parent corporation that directly or
indirectly has beneficial ownership of 100% of the voting securities
eligible to elect directors of the Surviving Corporation (the "Parent
Corporation"), is represented by Company Voting Securities that were
outstanding immediately prior to the consummation of such Business
Combination (or, if applicable, is represented by shares into which
such Company Voting Securities were converted pursuant to such Business
Combination), and such voting power among the holders thereof is in
substantially the same proportion as the voting power of such Company
Voting Securities among the holders thereof immediately prior to the
Business Combination, (B) no person (other than any employee benefit
plan sponsored or maintained by the Surviving Corporation or the Parent
Corporation), is or becomes the beneficial owner, directly or
indirectly, of 20% or more of the total voting power of the outstanding
voting securities eligible to elect directors of the Parent Corporation
(or, if there is no Parent Corporation, the Surviving Corporation) and
(C) at least a majority of the members of the board of directors of the
Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation) were Incumbent Directors at the time of the
Board's approval of the execution of the initial agreement providing
for such Business Combination (any Business Combination which satisfies
all of the criteria specified in (A), (B) and (C) above shall be deemed
to be a "Non-Qualifying Transaction"); or
(iv) the shareholders of the Company approve a plan of
complete liquidation or dissolution of the Company or a sale of all or
substantially all of the Company's assets.
Computations required by paragraph (iii) shall be made on and as of the
date of shareholder approval and shall be based on reasonable assumptions that
will result in the lowest percentage obtainable.
Notwithstanding the foregoing, a Change in Control of the Company shall
not be deemed to occur solely because any person acquires beneficial ownership
of more than 20% of the Company Voting Securities as a result of the acquisition
of Company Voting Securities by the Company which
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<PAGE> 6
reduces the number of Company Voting Securities outstanding; provided, that if
after such acquisition by the Company such person becomes the beneficial owner
of additional Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such person, a
change in control of the Company shall then occur.
6. Supplemental Cash Payments. Agreements entered into in connection
with awards under Section 5 may provide for the payment by the Company of
supplemental cash payments to a participant at the end of the restriction period
or periods relating to such restricted stock award. Supplemental cash payments
shall be in such amounts and subject to such terms and conditions as shall be
provided by the Committee at the time of grant; provided, however, in no event
shall the amount of each payment exceed the fair market value of the shares with
respect to which restrictions lapse at the time of such payment.
7. Loans. The Committee may, in its discretion to further the purposes
of the Plan, provide for cash loans to participants who receive awards under
Section 5 in connection with all or part of any restricted stock award under the
Plan. Any such loan shall be evidenced by loan agreements or other instruments
in such form and containing such terms and conditions (including, without
limitation, provisions for the forgiveness or acceleration of such loans or
parts thereof) as the Committee shall prescribe from time to time.
8. Rights to Terminate Employment. Nothing in the Plan or in any
Agreement entered into pursuant to the Plan shall confer upon any participant
the right to continue in the employment or to continue as a Director of the
Company or affect any right which the Company may have to terminate the
employment or directorship of such participant.
9. Withholding. Whenever the Company proposes or is required to issue
or transfer shares of Common Stock under the Plan, the Company shall have the
right to withhold from sums due the recipient, or to require the recipient to
remit to the Company, any amount sufficient to satisfy any federal, state and/or
local withholding tax requirements prior to the delivery of any certificate for
such shares. Whenever payments are to be made in cash, such payments shall be
net of an amount sufficient to satisfy any federal, state and/or local
withholding tax requirements imposed with respect to such payments.
10. Non-Uniform Determinations. The Committee's determinations under
Sections 4(a) and 5 of the Plan (including, without limitation, determinations
of the persons to receive awards, the form, amount and the timing of such
awards, and the terms and provisions of such awards and the Agreements) need not
be uniform and may be made by it selectively among persons who receive, or are
eligible to receive, awards under the Plan, regardless of whether such persons
are similarly situated.
11. Adjustments. In the event of any change in the outstanding Common
Stock by reason of a stock dividend or distribution, recapitalization, merger,
consolidation, split-up, combination, exchange of shares or the like, the
Committee shall appropriately adjust the number and class of
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<PAGE> 7
shares which may be issued under the Plan and shall provide for corresponding
equitable adjustments in shares previously awarded and still subject to
restrictions hereunder. Notwithstanding anything herein to the contrary, if
Committee action under this Section 11 with respect to awards under Section 4(b)
of the Plan to non-employee Directors would affect the status of a Director as a
"disinterested person" under Rule 16b-3, then the first sentence of this Section
11 shall not apply to awards to non-Employee Directors under Section 4(b). For
such awards under Section 4(b), any increase in the number of outstanding shares
of common stock of the Company occurring through stock splits or stock dividends
after the adoption of the Plan shall automatically be reflected proportionately
(1) in the number and class of shares which may be issued under the Plan and (2)
in shares previously awarded and still subject to restrictions hereunder. Any
fractional shares resulting from such adjustments shall be eliminated.
12. Amendment. The Committee may discontinue, suspend or amend the Plan
at any time, except that without shareholder approval, the Committee may not
materially (a) increase the maximum number of shares which may be issued under
the Plan (other than increases pursuant to paragraph 11 hereof); (b) increase
the benefits accruing to participants under the Plan; or (c) modify the
requirements as to eligibility for participation in the Plan. Also, if required
by the then current Rule 16b-3 or any successor provision, the Plan provisions
contained in Section 4(b) regarding the automatic, non-discretionary grants to
non-employee Directors shall not be amended more than once every six months,
other than to comport with changes in the Internal Revenue Code, ERISA, or the
rules thereunder. The termination, suspension or any modification or amendment
of the Plan shall not, without the consent of a participant, affect a
participant's rights under an award granted prior thereto.
13. Effect on Other Plans. Participation in the Plan shall not affect
an employee's eligibility to participate in any other benefit or incentive plan
of the Company, and any awards made pursuant to the Plan shall not be used in
determining the benefits provided under any other plan of the Company, unless
specifically provided in such other plan.
14. Duration of the Plan. The Plan shall become effective when it is
approved by the shareholders of the Company. The Plan shall remain in effect
until all shares awarded under the Plan are free of all restrictions imposed by
the Plan and Agreements, but no award shall be made more than ten years after
the date the Plan is approved by the shareholders of the Company.
Notwithstanding anything herein to the contrary, Section 4(b) of the Plan shall
not become effective until the first business day of the month following receipt
by the Company of a no-action or interpretive letter from the staff of the SEC
confirming that participation and an award under Section 4(b) will no affect the
status of a director as a "disinterested person" under Rule 16b-3 or an opinion
of counsel, which may be in-house counsel, to that effect.
15. Successors. This Plan shall bind any successor of the Company, its
assets or its businesses (whether direct or indirect, by purchase, merger,
consolidation or otherwise), in the same manner and to the same extent that the
Company would be obligated under this Plan if no succession had taken place. In
the case of any transaction in which a successor would not by the foregoing
provision or by operation of law be bound by this Plan, the Company shall
require such successor
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<PAGE> 8
expressly and unconditionally to assume and agree to perform the Company's
obligations under this Plan, in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place. The
term "Company," as used in the Plan, shall mean the Company as hereinbefore
defined and any successor or assignee to the business or assets which by reason
hereof becomes bound by this Plan.
16. Deferrals. Notwithstanding anything in this Plan to the contrary,
the provisions of this Section 16 shall apply to all deferral elections made in
compliance with this section. All participants who have received awards under
Section 5 of the Plan, some or all of the restrictions on which have not lapsed
as of December 15, 1998, and all persons who receive an award under Section 5 of
the Plan after December 15, 1998 whose Agreement provides that the participant
may elect to defer under the Plan with respect to such award are permitted to
make deferral elections with respect to such awards of restricted stock by
following the provisions of this Section 16.
(a) Participants who elect to defer must enter into an irrevocable
deferral agreement, in the form approved by the Committee, which
provides for the exchange of shares of restricted stock for restricted
stock units ("RSU's"), and the effective date (as defined below) of
such deferral election must occur before restrictions are scheduled to
lapse with respect to such shares of restricted stock, assuming
accelerated performance criteria are met, and must be at least any
minimum number of days before restrictions are scheduled to lapse that
is required by the Committee.
(b) Participants must tender certificates for the shares of restricted
stock with respect to which the deferral agreement is being entered
into at the time the deferral agreement is tendered, if the shares are
not held in book-entry format by the Corporation's transfer agent.
Participants agree to execute any form that may be required by the
transfer agent with respect to book-entry or certificated shares.
(c) The effective date of the deferral election is the close of
business on the business day on which the Manager of the Personnel
Division, or her designee, receives the deferral election and, if the
shares of restricted stock are not held in book-entry format,
certificates for the shares of restricted stock with any properly
completed and executed stock powers that may be requested by the
Personnel Division.
(d) The participant must select a deferral period, which is a period of
time that ends on any future date, not in any event to exceed actual
retirement (whether normal or early) plus five years.
(e) Until the accelerated lapse date approved by the Committee, or if
accelerated performance criteria are not met, until the date specified
in the participant's Agreement as the date on which restrictions on the
Restricted Shares will lapse, RSU's will remain subject to forfeiture
in the same manner as Restricted Shares would have remained subject to
forfeiture under the provisions of the Plan and related Agreement,
except as is provided below in the event of
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<PAGE> 9
death, disability, retirement, or other termination of employment, or
Change in Control. In other words, RSU's will be subject to
restrictions identical to the restrictions on Restricted Shares, and
restrictions on RSU's will lapse, if at all, at the same time that
restrictions on Restricted Shares would have lapsed had the participant
not made a deferral election. If accelerated performance criteria have
been met, then RSU's will be fully vested and not subject to
forfeiture.
(f) A participant's deferral election must be for 100% percent of the
shares of restricted stock with respect to which restrictions are
scheduled to lapse if performance criteria are met for a performance
period (generally 1/3 of the shares originally awarded). A participant
may make a separate election for each of the three different
accelerated performance criteria performance periods applicable to an
award under the Plan, but any election must be for 100 percent of the
shares with respect to which restrictions may lapse if performance
criteria are met.
(g) For each participant electing to defer, upon the effective date of
the deferral a deferral account will be established by the Corporation,
consisting of a subaccount reflecting RSU's and a subaccount
representing cash equal to the earnings credited to the account with
respect to the dividend equivalents and interest thereon. The
participant's RSU subaccount will be credited with RSU's, based on the
number of shares of restricted stock exchanged by the participant
pursuant to the participant's deferral election, with each RSU being
equivalent to one share of the Corporation's common stock. Additional
RSU's will be credited to the participant's RSU subaccount at the time
of the payment of any stock split or stock dividend on the
Corporation's common stock in accordance with subsection (h) herein.
(h) Any stock split and stock dividend that is declared with respect to
the Corporation's common stock having a payment date that occurs on or
after the Effective Date and before the deferral period has terminated
will result in a corresponding stock split or stock dividend being made
with respect to the RSU's in Participant's deferral account with the
result that Participant will be issued that number of shares of the
Corporation's common stock at the termination of the deferral period
that Participant would have owned had he or she received shares of
restricted stock, without restriction, at the time of the lapsing of
restrictions on the restricted stock had Participant not entered into
this Agreement and had Participant then maintained ownership of such
common stock through the payment date of the stock dividend or stock
split.
(i) Earnings will be credited to the participant's cash subaccount and
accrued on the RSU's as follows: on each date on which the Corporation
pays a dividend on its shares of common stock, an amount equal to such
dividend will be credited to the participant's account with respect to
each RSU. Then, as of January 1st of each year, an additional amount
will be credited to the participant's account to reflect earnings on
the dividend equivalents from the time they were credited to the
account for the prior plan year. The rate of earnings credited for the
year will be the rate disclosed under the caption "Annualized Ten Year
Treasury
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<PAGE> 10
Rate" in the Federal Reserve Statistical Release in January of the year
following the year with respect to which earnings are to be credited,
and the amount will be computed by multiplying the dividend equivalent
by the rate by a factor representing the fraction of the year (e.g.,
100% for a January 1st dividend equivalent, 75% for an April 1st
dividend equivalent, 50% for a July 1st dividend equivalent, and 25%
for a October 1 dividend equivalent) remaining after the dividend
equivalent was credited to the participant's account. Interest will
compound as follows: for any cash credited to the account that existed
on the first day of the prior plan year (excluding any dividend
equivalent that is credited to the account on such day), earnings will
be credited in an amount equal to the amount of such cash multiplied by
the applicable ten year treasury rate factor. For the portion of the
year in which a distribution from the deferral account is made to the
participant, earnings will be credited on any cash credited to the
account during such year from the time such cash is credited through
the date of distribution at the rate employed for the previous year.
(j) Payment from the participant's deferral account will be made in a
single lump sum, computed as follows: with respect to the participant's
RSU subaccount, one share of the Corporation's common stock will be
paid to the participant for each RSU credited to such subaccount, and
with respect to the participant's cash subaccount, cash in the amount
credited to such subaccount will be paid to the participant.
(k) Payment from the participant's deferral account will be made to the
participant (or, in the event of the participant's death, his or her
beneficiary) only at the following times: (1) if restrictions on the
RSU's have already lapsed at the time payment is scheduled to be made,
then on the earliest to occur of the following dates: the date selected
by the participant, the date of a Change in Control as defined in the
Plan, or a date selected by the Corporation following the participant's
death, disability, or termination of employment for any reason other
than normal or early retirement that is no later than the last day of
the month following the month in which there occurs the death,
disability, or termination of employment of the participant for any
reason other than normal or early retirement, or (2) if restrictions on
the RSU's have not lapsed at the time payment is otherwise scheduled to
be made and subject to the last two sentences of this subsection 16(k),
then on the earliest to occur of the following dates: (i) the later of
the date selected by the participant or the date restrictions on the
RSU's lapse, if the shares have not been forfeited before such lapse
date, (ii) the date of a Change in Control as defined in the Plan, or
(iii) a date selected by the Corporation following the participant's
death, or if the Committee approves, the participant's retirement or
disability that is no later than the last day of the month following
the month in which there occurs the death or, if the Committee has
approved, the disability or retirement of the participant. The RSU's
and any right to receive Restricted Shares without restrictions will be
forfeited by the participant if there occurs a termination of the
participant's employment prior to the lapsing of restrictions on RSU's
or if the participant becomes disabled or retires prior to a lapsing of
restrictions on RSU's and the Committee has not acted to approve
payment to the participant in the event of disability or retirement.
Notwithstanding a forfeiture of RSU's, the balance in participant's
cash subaccount within participant's deferral account will be paid to
participant immediately following the occurrence of such a forfeiture.
Page 10 of 10
<PAGE> 1
Exhibit 10(i)
FIRST TENNESSEE NATIONAL CORPORATION
AMENDED AND RESTATED PENSION RESTORATION PLAN
ADOPTED OCTOBER 25, 1995
(As Amended and Restated 1-19-99)
I. PURPOSE
This Plan is established by First Tennessee National Corporation and
any successor thereto and its subsidiaries (herein collectively
referred to as "the Company") for the purpose of encouraging and
enabling the Company to attract, motivate and retain key executives and
for the purpose of providing benefits for certain members of the First
Tennessee National Corporation Pension Plan (hereinafter called "the
Program") in excess of the limitations of benefits and contributions
imposed in respect to such Program by Section 415 and any excess that
may result from any limitation on compensation that may be considered
by the Program pursuant to Section 401(a)(17), of the Internal Revenue
Code of 1986 ("IRC"), as amended.
II. EFFECTIVE DATE
The original effective date of the Pension Restoration Plan
(hereinafter referred to as the "Plan") was January 1, 1984. The
effective date of this Amended and Restated Pension Restoration Plan
shall be October 25, 1995.
III. ADMINISTRATION AND ELIGIBILITY
A. The Plan will be administered by the Administration Committee
(hereinafter referred to as the "Committee") consisting of the
Executive Vice President, Division Manager-Personnel and the
Vice- President, Division Manager-Personnel and the
Vice-President, Manager Compensation. The executives of the
Company who will participate will be a select group of
management or highly compensated employees and occupy a
position in salary grades 1 through 6, as determined by the
Human Resources Committee of the Board of Directors, and will
receive benefits in accordance with the provisions of the
Plan.
B. The Committee will have the discretion, authority and
responsibility (1) of interpreting the Plan and any agreement
evidencing benefits granted hereunder, and (2) making all
other determinations in connection with the administration of
the Plan, all of which shall be final and conclusive.
IV. PAYMENT OF BENEFITS
A. In order to qualify to receive the benefits set forth in
Paragraph VI, below, a participant must remain employed until
age 65, unless an early retirement date is approved by the
Human Resources Committee of the Board of Directors.
B. Benefits payable pursuant to the terms of the Plan shall be
paid directly from the general assets of the Company. Should
the Company establish any advance reserve, such reserve or
fund shall not under any circumstances be deemed to be an
asset of the Plan nor a source of payment of any claims under
the Plan but, at all times, shall remain a part of the general
assets of the Company.
V. RETIREMENT DATE
A participant shall be retired under this Plan on the same Retirement
Date applicable for him/her under the Program.
Page 1 of 5
<PAGE> 2
VI. CALCULATION OF BENEFITS
Commencing with the first month immediately following retirement, each
Participant shall receive a monthly payment equal to the difference
between (A) and (B) below, in each case determined without regard to
Section 11.3(b) of the Program:
A. The monthly pension that would have been payable from the
Program; determined under its rules on the Participant's
Retirement Date, but as if the limitations imposed by IRC
Section 415 and Section 401(a)(17) did not apply.
B. The actual monthly pension payable to the Participant from the
Program.
Any monthly payment under the Plan shall be payable in the same manner
and under the same terms and conditions as payments due from the
Program.
VII. CLAIMS PROCEDURES
All claims for benefits under the Plan shall be submitted in writing to
the Committee. A Participant whose claim for benefits is denied shall
have the right to a written explanation of the specific reasons for
such denial and may request the Committee to reconsider such denial.
Upon such a request for reconsideration the Committee shall review its
decision with the Participant who may submit in writing such facts and
issues, and may review such documents as may be pertinent. The
Committee shall render its decision in writing within sixty days. The
Committee's decision shall then be final and conclusive.
VIII. MISCELLANEOUS
A. Nonalienability. No benefit payable at any time hereunder
shall be subject in any manner to alienation, sale, transfer,
assignment, pledge, attachment or other legal process, or
encumbrances of any kind. Any attempt to alienate, sell,
transfer, assign, pledge or otherwise encumber any such
benefit, whether currently or hereafter payable, shall be
void. Except as otherwise specifically provided by law, no
such benefit shall, in any manner, be liable for or subject to
the debts or liabilities of any participant or any other
person entitled to such benefit.
B. No Rights to Employment. The Plan shall not be construed as
providing any participant with the right to be retained in the
Company's employ or to receive any benefit not specifically
provided hereunder.
C. Amendment and Termination. The Company shall have the right,
at any time and from time to time, to amend in whole or in
part, or to terminate any of the provisions of the Plan, and
such amendment or termination shall be binding upon all
participants and parties interest. Notwithstanding the
foregoing, the benefits payable hereunder may not be reduced
or terminated for those participants who have attained age 65,
or for whom an early retirement date has been approved by the
Human Resources Committee of the Board of Directors, acting
pursuant to Section IV(A) hereof.
D. Governing Law. The Plan shall be governed by and construed in
accordance with the Employee Retirement Income Security Act of
1974 (P.L. 93-406) and to the extent not pre-empted thereby,
by the laws of the State of Tennessee.
E. Successors. This Plan shall bind any successor of the Company,
its assets or its businesses (whether direct or indirect, by
purchase, merger, consolidation or otherwise), in the same
manner and to the same extent that the Company would be
obligated under this Plan if no succession had taken place.
In the case of any transaction in which a successor would not
by the foregoing provision or by operation of law be bound by
this Plan, the Company shall require such successor expressly
and unconditionally to assume and agree to perform the
Company's obligations under this Plan, in the same manner and
to the same extent that the Company would be required to
perform if no such succession
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<PAGE> 3
had taken place. The term "Company," as used in the Plan,
shall mean the Company as hereinbefore defined and any
successor or assignee to the business or assets which by
reason hereof becomes bound by this Plan.
IX. CHANGE IN CONTROL
A. "Change in Control" means the occurrence of any one of the
following events:
(i) individuals who, on January 21, 1997, constitute the Board
(the "Incumbent Directors") cease for any reason to constitute
at least a majority of the Board, provided that any person
becoming a director subsequent to January 21, 1997, whose
election or nomination for election was approved by a vote of
at least three-fourths (3/4) of the Incumbent Directors then
on the Board (either by a specific vote or by approval of the
proxy statement of the Company in which such person is named
as a nominee for director, without written objection to such
nomination) shall be an Incumbent Director; provided, however,
that no individual elected or nominated as a director of the
Company initially as a result of an actual or threatened
election contest with respect to directors or as a result of
any other actual or threatened solicitation of proxies or
consents by or on behalf of any person other than the Board
shall be deemed to be an Incumbent Director;
(ii) any "Person" (as defined under Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act") and as used in Section 13(d) or Section 14(d) of the
Exchange Act) is or becomes a "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing 20% or more of the
combined voting power of the Company's then outstanding
securities eligible to vote for the election of the Board (the
"Company Voting Securities"); provided, however, that the
event described in this paragraph (ii) shall not be deemed to
be a change in control by virtue of any of the following
acquisitions: (A) by the Company or any entity in which the
Company directly or indirectly beneficially owns more than 50%
of the voting securities or interests (a "Subsidiary"), (B) by
an employee stock ownership or employee benefit plan or trust
sponsored or maintained by the Company or any Subsidiary, (C)
by any underwriter temporarily holding securities pursuant to
an offering of such securities, or (D) pursuant to a
Non-Qualifying Transaction (as defined in paragraph (iii));
(iii) consummation of a merger, consolidation, share exchange
or similar form of corporate transaction involving the Company
or any of its Subsidiaries that requires the approval of the
Company's shareholders, whether for such transaction or the
issuance of securities in the transaction (a "Business
Combination"), unless immediately following such Business
Combination: (A) more than 50% of the total voting power of
(x) the corporation resulting from such Business Combination
(the "Surviving Corporation"), or (y) if applicable, the
ultimate parent corporation that directly or indirectly has
beneficial ownership of 100% of the voting securities eligible
to elect directors of the Surviving Corporation (the "Parent
Corporation"), is represented by Company Voting Securities
that were outstanding immediately prior to the consummation of
such Business Combination (or, if applicable, is represented
by shares into which such Company Voting Securities were
converted pursuant to such Business Combination), and such
voting power among the holders thereof is in substantially the
same proportion as the voting power of such Company Voting
Securities among the holders thereof immediately prior to the
Business Combination, (B) no person (other than any employee
benefit plan sponsored or maintained by the Surviving
Corporation or the Parent Corporation), is or becomes the
beneficial owner, directly or indirectly, of 20% or more of
the total voting power of the outstanding voting securities
eligible to elect directors of the Parent Corporation (or, if
there is no Parent Corporation, the Surviving Corporation) and
(C) at least a majority of the members of the board of
directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) were Incumbent
Directors at the time of the Board's approval of the execution
of the initial agreement providing for such Business
Combination (any Business Combination which satisfies all of
the criteria specified in (A), (B) and (C) above shall be
deemed to be a "Non-Qualifying Transaction"); or
Page 3 of 5
<PAGE> 4
(iv) the shareholders of the Company approve a plan of
complete liquidation or dissolution of the Company or a sale
of all or substantially all of the Company's assets.
Notwithstanding the foregoing, a Change in Control of the Company shall
not be deemed to occur solely because any person acquires beneficial
ownership of more than 20% of the Company Voting Securities as a result
of the acquisition of Company Voting Securities by the Company which
reduces the number of Company Voting Securities outstanding; provided,
that if after such acquisition by the Company such person becomes the
beneficial owner of additional Company Voting Securities that increases
the percentage of outstanding Company Voting Securities beneficially
owned by such person, a change in control of the Company shall then
occur.
B. Notwithstanding anything herein to the contrary, the benefits
payable under the Plan (both benefits that have accrued at the
time of a Change in Control and those that accrue thereafter)
may not be reduced or terminated after a Change in Control for
any individual who was a participant in the Plan at the time
of the Change in Control.
C. (1) Notwithstanding anything in the Plan to the contrary, in
the event a Change in Control or the "Pre-Change in Control
Date" (as defined below) occurs, the Company shall make a lump
sum payment ("Payment") to each Participant (including any
Participant currently receiving benefits under the Plan) on a
date (the "Distribution Date") no later than 2 business days
after the Change in Control has occurred (or, if an agreement
to effectuate a Change in Control pursuant to a Business
Combination has been executed, on the date (the "Pre-Change in
Control Date") that is the third business day prior to the
date the Chief Executive Officer of the Company believes in
good faith will be the effective date of such Change in
Control, but in any event prior to the effective date of such
Change in Control).
(2) The Payment shall be in an amount equal to the accrued
benefit (the "Accrued Benefit") under the Plan as of the
Distribution Date converted into an Actuarially Equivalent
lump sum (in accordance with the provisions of paragraphs (3)
through (6) below). For purposes of determining the
Actuarially Equivalent lump sum of an Accrued Benefit, the
mortality table specified under the Program for actuarial
equivalence and an interest rate of 4.2% shall be used.
(3) If a Participant is age 65 or older as of the Distribution
Date, the Accrued Benefit shall be converted to an Actuarially
Equivalent lump sum assuming that such Participant (a) retired
on the Distribution Date and (b) immediately commenced receipt
of the Accrued Benefit in the normal form of benefit under the
Program.
(4) If a Participant has not attained age 65 as of the
Distribution Date, but is at least age 55, the Accrued Benefit
shall be converted to an Actuarially Equivalent lump sum
assuming that (a) such Participant retired on the Distribution
Date, (b) the Accrued Benefit was reduced for early
commencement using the reduction factors specified in the
Program determined without regard to Section 11.3(b) of the
Program and (c) such Participant immediately commenced receipt
of such reduced Accrued Benefit in the normal form of benefit
under the Program.
(5) If a Participant has not attained age 55 as of the
Distribution Date, the Accrued Benefit shall first be
converted to an Actuarially Equivalent lump sum assuming that
(a) such Participant was age 55 on the Distribution Date, (b)
the Accrued Benefit was reduced for early commencement using
the reduction factors specified in the Program determined
without regard to Section 11.3(b) of the Program for a
Participant retiring at age 55 and (c) such Participant
commenced receipt at age 55 of such reduced Accrued Benefit in
the normal form of benefit under the Program. Such Actuarially
Equivalent lump sum shall then be further reduced from age 55
to such Participant's actual age as of the Distribution Date,
using an interest rate of 4.2% but without any reduction for
mortality.
Page 4 of 5
<PAGE> 5
(6) Notwithstanding anything to the contrary in this Section
IX.C, in the event any Participant (or any Participant's
beneficiary) is receiving benefit payments under the Plan as
of the Distribution Date (such Participant or beneficiary, a
"Retiree"), the amount of the Payment payable to such Retiree
shall be the Actuarially Equivalent lump sum value of such
remaining benefit payments that would otherwise be payable to
such Retiree.
(7) With respect to any Retiree, the Payment payable under
this Section IX.C shall be in lieu of, and in full settlement
of, any other remaining amounts that would have been payable
to such Retiree had a Change in Control (or the Pre-Change in
Control Date) not occurred, and the Company shall have no
further obligations to such Retiree after such Payment is
made. With respect to any Participant other than a Retiree, in
the event the Plan is continued and not terminated following a
Change in Control, any amount finally determined under Section
VI of the Plan upon such Participant's actual retirement shall
be offset by the amount of the Accrued Benefit (as converted
to the applicable form of benefit) determined under this
Section IX.C."
Page 5 of 5
<PAGE> 1
Exhibit 10 (l)
FIRST TENNESSEE NATIONAL CORPORATION
1995 EMPLOYEE STOCK OPTION PLAN
(As Amended and Restated December 15, 1998)
1. Purpose. The 1995 Employee Stock Option Plan (the "Plan") of First
Tennessee National Corporation and any successor thereto (the "Company") is
designed to enable employees of the Company and its subsidiaries to obtain a
proprietary interest in the Company, and thus to share in the future success of
the Company's business. Accordingly, the Plan is intended as a further means not
only of attracting and retaining outstanding personnel, but also of promoting a
closer identity of interest between employees and shareholders.
2. DEFINITIONS. As used in the Plan, the following terms shall have the
respective meanings set forth below:
(a) "Change in Control" means the occurrence of any one of the
following events:
(i) individuals who, on January 21, 1997, constitute the Board (the
"Incumbent Directors") cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director
subsequent to January 21, 1997, whose election or nomination for
election was approved by a vote of at least three-fourths (3/4) of the
Incumbent Directors then on the Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person is
named as a nominee for director, without written objection to such
nomination) shall be an Incumbent Director; provided, however, that no
individual elected or nominated as a director of the Company initially
as a result of an actual or threatened election contest with respect to
directors or as a result of any other actual or threatened solicitation
of proxies or consents by or on behalf of any person other than the
Board shall be deemed to be an Incumbent Director;
(ii) any "Person" (as defined under Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and as used in
Section 13(d) or Section 14(d) of the Exchange Act) is or becomes a
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 20%
or more of the combined voting power of the Company's then outstanding
securities eligible to vote for the election of the Board (the "Company
Voting Securities"); provided, however, that the event described in
this paragraph (ii) shall not be deemed to be a change in control by
virtue of any of the following acquisitions: (A) by the Company or any
entity in which the Company directly or indirectly beneficially owns
more than 50% of the voting securities or interests (a "Subsidiary"),
(B) by an employee stock ownership or employee benefit plan or trust
sponsored or maintained by the Company or any Subsidiary, (C) by any
underwriter temporarily holding securities pursuant to an offering of
such securities, or (D) pursuant to a Non-Qualifying Transaction (as
defined in paragraph (iii));
(iii) the shareholders of the Company approve a merger, consolidation,
share exchange or similar form of corporate transaction involving the
Company or any of its Subsidiaries that requires the approval of the
Company's shareholders, whether for such transaction or the issuance of
securities in the transaction (a "Business Combination"), unless
immediately following such Business Combination: (A) more than 50% of
the total voting power of (x) the corporation resulting from such
Business Combination (the "Surviving Corporation"), or (y) if
applicable, the ultimate parent corporation that directly or indirectly
has beneficial ownership of 100% of the voting securities eligible to
elect directors of the Surviving Corporation (the "Parent
Corporation"), is represented by Company Voting Securities that were
outstanding immediately prior to the consummation of such Business
Combination (or, if applicable, is represented by shares into which
such Company
1
<PAGE> 2
Voting Securities were converted pursuant to such Business Combination), and
such voting power among the holders thereof is in substantially the same
proportion as the voting power of such Company Voting Securities among the
holders thereof immediately prior to the Business Combination, (B) no person
(other than any employee benefit plan sponsored or maintained by the Surviving
Corporation or the Parent Corporation), is or becomes the beneficial owner,
directly or indirectly, of 20% or more of the total voting power of the
outstanding voting securities eligible to elect directors of the Parent
Corporation (or, if there is no Parent Corporation, the Surviving Corporation)
and (C) at least a majority of the members of the board of directors of the
Parent Corporation (or, if there is no Parent Corporation, the Surviving
Corporation) were Incumbent Directors at the time of the Board's approval of the
execution of the initial agreement providing for such Business Combination (any
Business Combination which satisfies all of the criteria specified in (A), (B)
and (C) above shall be deemed to be a "Non-Qualifying Transaction"); or
(iv) the shareholders of the Company approve a plan of complete
liquidation or dissolution of the Company or a sale of all or
substantially all of the Company's assets.
Computations required by paragraph (iii) shall be made on and as of the
date of shareholder approval and shall be based on reasonable assumptions that
will result in the lowest percentage obtainable.
Notwithstanding the foregoing, a change in control of the Company shall
not be deemed to occur solely because any person acquires beneficial ownership
of more than 20% of the Company Voting Securities as a result of the acquisition
of Company Voting Securities by the Company which reduces the number of Company
Voting Securities outstanding; provided, that if after such acquisition by the
Company such person becomes the beneficial owner of additional Company Voting
Securities that increases the percentage of outstanding Company Voting
Securities beneficially owned by such person, a change in control of the Company
shall then occur.
(b) "Committee" means the Stock Option Committee or any successor
committee designate by the Board of Directors to administer
the Stock Option Plan, as provided in Section 5(a) hereof.
(c) "Early Retirement" means termination of employment after an
employee has fulfilled all service requirements for an early
pension, and before his or her Normal Retirement Date, under
the terms of the First Tennessee National Corporation Pension
Plan, as amended from time to time.
(d) "Quota" means the portion of the total number of shares
subject to an option which the grantee of the option may
purchase during several periods of the term of the option (if
the option is subject to quotas), as provided in Section 8(b)
hereof. SAR's are granted, if at all, at the time of granting
a stock option. If a stock option is subject to quotas, the
related SAR is subject to the same quotas.
(e) "Retirement" means termination of employment after an employee
has fulfilled all service requirements for a pension under the
terms of the First Tennessee National Corporation Pension
Plan, as amended from time to time.
(f) "Subsidiary" means a subsidiary corporation as defined in
Section 425 of the Internal Revenue Code.
(g) "Successor" means the legal representative of the estate of a
deceased grantee or the person or persons who shall acquire
the right to exercise an option or related SAR by bequest or
inheritance or by reason of the death of the grantee, as
provided in Section 10 hereof.
(h) "Term of the Option" means the period during which a
particular option or related SAR may be exercised in Section
8(a) hereof.
(i) "Three months after cessation of employment" means a period of
time beginning at 12:01 A.M. on the day following the date
notice of termination of employment was given and ending at
11:59 P.M. on the date in the third following month
corresponding numerically with the date notice of termination
of employment was given ( or in the event that the third
following month does not have a date so
2
<PAGE> 3
corresponding, then the last day of the third following
month).
(j) "Five years after (an event occurring on day x)" and "five
years from (an event occurring on day x)" means a period of
time beginning at 12:01 A.M. on the day following day x and
ending at 11:59 P.M. on the date in the fifth following year
corresponding numerically with day x (or in the event that the
fifth following year does not have a date so corresponding,
then the last day of the sixtieth following month).
(k) "Voluntary Resignation" means any termination of employment
that is not involuntary and that is not the result of the
employee's death, disability, early retirement or retirement.
3. EFFECTIVE DATE OF PLAN. The Plan shall become effective when approved
at a shareholder's meeting by the holders of a majority of the shares of Company
common stock present or represented at the meeting and entitled to vote on the
Plan. No options or related SAR's may be granted under the Plan after the month
and day in the year 2005 corresponding to the day before the month and day on
which the Plan becomes effective. The term of option granted on or before such
date may, however, extend beyond that date, but no incentive stock options may
be granted which are exercisable after the expiration of ten (10) years after
the date of the grant.
4. SHARES SUBJECT TO THE PLAN.
(a) The Company may grant options and related SAR's under the Plan
authorizing the issuance of no more than 6,000,000 shares of
its $0.625 par value common stock, which will be provided from
shares purchased in the open market or privately (that became
authorized but unissued shares under state corporation law) or
by the issuance of previously authorized but unissued shares.
(b) When an option is granted under the Plan, the Committee in its
sole discretion may include the grant of a SAR permitting the
grantee to elect to receive stock or cash or a combination
thereof in exchange for the surrender the unexercised related
option or portion thereof. Solely with respect to grantees
subject to the reporting and short-swing profits provisions of
Section 16 of the Securities Exchange Act of 1934 ("Section 16
grantees"), the Committee shall have the sole discretion to
consent to or disapprove the election of the grantee to
receive cash in full or partial settlement of the SAR. With
respect to all other grantees, the election is final without
any action by the Committee.
(c) Shares as to which options and related SAR's previously
granted under this Plan shall for any reason lapse shall be
restored to the total number available for grant of options.
Shares subject to options surrendered in exchange for the
exercise of a SAR shall not be restored to the total number
available for the grant of options or related SAR's.
5. PLAN ADMINISTRATION.
(a) The Plan shall be administered by a Stock Option Committee
(the "Committee") whose members shall be appointed from time
to time by, and shall serve at the pleasure of, the Board of
Directors of the Company. In addition, all members shall be
directors and shall meet the definitional requirements for
"disinterested person" (with any exceptions therein permitted)
contained in the then current SEC Rule 16b-3 or any successor
provision.
(b) The Committee shall adopt such rules of procedure as it may
deem proper.
(c) The powers of the Committee shall include plenary authority to
interpret the Plan, and subject to the provisions hereof, to
determine the persons to whom options and related SAR's shall
be granted, the number of shares subject to each option and
related SAR, the term of option and related SAR, and the date
on which options and related SAR's shall be granted.
3
<PAGE> 4
6. ELIGIBILITY.
(a) Options and related SAR's may be granted under the Plan to
employees of the Company or any subsidiary selected by the
Committee. Determination by the Committee of the employees to
whom options and related SAR's shall be granted shall be
conclusive.
(b) An individual may receive more than one option and related
SAR, subject, however, to the following limitations: (i) in
the case of an incentive stock option (as described in Section
422A of the Internal Revenue Code of 1986), the aggregate fair
market value (determined at the time the options are granted)
of the Company's common stock with respect to which incentive
stock options are exercisable for the first time during any
calendar year by any individual employee (under this Plan and
all other similar plans of the Company and its subsidiaries)
shall not exceed $100,000, and (ii) the maximum number of
shares with respect to which options or SAR's are granted to
an individual during the term of the Plan, as defined in
Section 3 hereof, shall not exceed 200,000 shares. Incentive
stock options granted hereunder shall be clearly identified as
such at the time of grant.
7. OPTION PRICE. The option price per share to be paid by the grantee to
the Company upon exercise of the option shall be determined by the Committee,
but shall not be less than 100% of the fair market value of the share at the
time the option is granted, nor shall the price per share be less than the par
value of the share. Notwithstanding the prior sentence, the option price per
share may be less than 100% of the fair market value of the share at the time
the option is granted if:
(a) The grantee of the option has entered into an agreement with
the Company pursuant to which the grant of the option is in
lieu of the payment of compensation; and
(b) The amount of such compensation when added to the cash
exercise price of the option equals at least 100% of the fair
market value (at the time the option is granted) of the shares
subject to option.
"Fair market value" for purposes of the Plan shall be the mean between the high
and low sales prices at which shares of the Company were sold on the valuation
day as quoted by the Nasdaq Stock Market or, if there were no sales on that day,
then on the last day prior to the valuation day during which there were sales.
In the event that this method of valuation is not practicable, then the
Committee, in its discretion, shall establish the method by which fair market
value shall be determined.
8. TERMS OR QUOTAS OF OPTIONS AND RELATED SAR'S:
(a) TERM. Each option and related SAR granted under the Plan shall
be exercisable only during a term (the "Term of the Option")
commencing one year, or such other period of time (which may
be less than or more than one year) as is determined to be
appropriate by the Committee, after the date when the option
or related SAR was granted and ending (unless the option and
related SAR shall have terminated earlier under other
provisions of the Plan) on a date to be fixed by the
Committee. Notwithstanding the foregoing, each option and
related SAR granted under the Plan shall become exercisable in
full immediately upon a Change in Control.
(b) QUOTAS. The Committee shall have authority to grant options
and related SAR's exercisable in full at any time during their
term, or exercisable in quotas. Quotas or portions thereof not
purchased in earlier periods shall be cumulated and be
available for purchase in later periods. In exercising his or
her option or related SAR, the grantee may purchase less than
the full quota available to him or her.
(c) EXERCISE OF STOCK OPTIONS. Stock options shall be exercised by
delivering, mailing, or transmitting to the Committee or its
designee the following items:
(i) A notice, in the form, by the method, and at times
prescribed by the Committee, specifying the number of shares
to be purchased; and
4
<PAGE> 5
(ii) A check or money order payable to the Company for the
full option price.
In addition, the Committee in its sole discretion may
determine that it is an appropriate method of payment for
grantees to pay, or make partial payment of, the option price
with shares of Company common stock, $1.25 par value, in lieu
of cash. In addition, in its sole discretion the Committee may
determine that it is an appropriate method of payment for
grantees to pay for any shares subject to an option by
delivering a properly executed exercise notice together with a
copy of irrevocable instructions to a broker to deliver
promptly to the Company the amount of sale or loan proceeds to
pay the purchase price. To facilitate the foregoing, the
Company may enter into agreements for coordinated procedures
with one or more brokerage firms. The value of Company common
stock surrendered in payment of the exercise price shall be
its fair market value, determined pursuant to Section 7, on
the date of exercise. Upon receipt of such notice of exercise
of a stock option and upon payment of the option price by a
method other than a cashless exercise, the Company shall
promptly deliver to the grantee (or in the event the grantee
has executed a deferral agreement, the Company shall deliver
to the grantee at the time specified in such deferral
agreement) a certificate or certificates for the shares
purchased, without charge to him or her for issue or transfer
tax.
(d) EXERCISE OF SAR'S. Except as required by subsection 8(e), a
SAR shall be exercised by delivering, mailing, or transmitting
to the Committee or its designee a notice in the form, by the
method, and at times prescribed by the Committee, specifying
the grantee's election, in accordance with Subsection 4(b), to
receive cash, stock, or a combination thereof in full or
partial settlement of the SAR, or a portion thereof.
(e) CASH SETTLEMENTS OF SAR'S BY SECTION 16 GRANTEES.
Notwithstanding subsection 8(d), solely with respect to
Section 16 grantees, an election to receive cash in full or
partial settlement of a SAR or a portion thereof and the
actual exercise of such SAR shall be made by delivering,
mailing, or transmitting, to the Committee or its designee
during the period beginning on the third business day
following the release for publication of the Company's
quarterly or annual sales and earnings and ending on the
twelfth business day following such date a notice, in the form
and by the method prescribed by the Committee, specifying the
grantee's election to receive cash in full or partial
settlement of the SAR, or a portion thereof. Such notice shall
constitute both the grantee's election to receive cash and the
actual exercise of the SAR for a cash settlement.
(f) SAR PAYMENTS. Upon the exercise of a SAR in accordance with
subsection 8(d), the Company shall promptly deliver to the
grantee stock or cash or a combination thereof, in such
proportion as has been elected by the grantee pursuant to
subsection 8(d), equal to:
(i) The fair market value, as determined in Section 7, of one
share of Company common stock on the date of exercise of the
SAR: minus
(ii) The option price of the related option; multiplied by
(iii) The number of shares subject to option which are being
surrendered in exercise of the SAR, or portion thereof.
Provided, however, solely for the purpose of exercising an
SAR, the per share gain to the grantee as measured by the
difference between the fair market value, as described in (i),
and the option price, as described in (ii), shall not exceed
200% of the option price. For example, if the option price is
$12 per share, the gain may not exceed $24 per share or, in
this example, be based on a fair market value at the time of
exercise in excess of $36.
(g) SAR PAYMENTS TO SECTION 16 GRANTEES. Upon the exercise of a
SAR in accordance with subsection 9(e), the Company shall
promptly deliver to the grantee cash or the combination of
stock and cash, in
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<PAGE> 6
such proportion as has been elected by the grantee and
consented to by the Committee pursuant to subsections 4(b) and
8(e), equal to:
(i) The highest fair market value, as determined in Section 7,
of one share of Company common stock occurring during ten
business day period specified in subsection 8(e) during which
the grantee makes his election and exercises the SAR; minus
(ii) The option price of the related option; multiplied by
(iii) The number of shares subject to option which are being
surrendered in exercise of the SAR, or portion thereof.
Provided, however, solely for the purpose of exercising an
SAR, the per share gain to the grantee as measured by the
difference between the fair market value, as described in (i),
and the option price, as described in (ii), shall not exceed
200% of the option price. For example, if the option price is
$12 per share, the gain may not exceed $24 per share or, in
this example, be based on a fair market value at the time of
exercise in excess of $36.
(h) POSTPONEMENTS. The Committee may postpone any exercise of an
option or related SAR for such period of time as the Committee
in its discretion reasonably believes necessary to prevent any
acts or omissions that the Committee reasonably believes will
be or will result in the violation of any state or federal
law; and the Company shall not be obligated by virtue of any
provision of the Plan or the terms of any prior grant of an
option or related SAR to recognize the exercise of an option
or related SAR or to sell or issue shares during the period of
such postponement. Any such postponement shall automatically
extend the time within which the option or related SAR may be
exercised, as follows: The exercise period shall be extended
for a period of time equal to the number of days of the
postponement, but in no event shall the exercise period be
extended beyond the last day of the postponement for more days
than there were remaining in the option or related SAR's
exercise period on the first day of the postponement. Neither
the Company, nor its directors of officers, shall have any
obligation or liability to the grantee of an option or related
SAR or to a successor with respect to any shares as to which
the option or related SAR shall lapse because of such
postponement.
(i) NON-TRANSFERABILITY. All options and related SAR's granted
under the Plan shall be non-transferable other than by will or
by the laws of descent and distribution, subject to Section 10
hereof, and an option or related SAR may be exercised during
the lifetime of the grantee only by him or her or by his/her
guardian or legal representative. Also, if required by the
then current Rule 16b-3, or any successor provision, and
solely with respect to Section 16 grantees, common stock
acquired upon the exercise of an option or related SAR may not
be sold for at least six months after acquisition, except in
the case of such grantee's death or disability. Also, if
required by the then current Rule 16b-3, or any successor
provision, and solely with respect to Section 16 grantees,
then notwithstanding anything hereunto the contrary, options
and SAR's are not exercisable for at least six months after
grant except in the case of death or disability.
(j) CERTIFICATES. The stock certificate or certificates to be
delivered under this Plan may, at the request of the grantee,
be issued in his or her name or, with the consent of the
Company, the name of another person as specified by the
grantee.
(k) RESTRICTIONS. This subsection (k) shall be void and of no
legal effect in the event of a Change of Control.
Notwithstanding anything in any other section or subsection
herein to the contrary, the following provisions shall apply
to all options and related SAR's (except options and, if any,
related SAR's designated by the Committee as FirstShare
options and related SAR's), exercises and grantees. An amount
equal to the spread realized in connection with the exercise
of an option or SAR within six months prior to a grantee's
voluntary resignation shall be paid to the Company by the
grantee in the event that the grantee, within six months
following voluntary resignation, engages, directly or
indirectly, in any activity determined by the Committee to be
competitive with any activity of the Company or any of its
subsidiaries.
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<PAGE> 7
(l) TAXES. The Company shall be entitled to withhold the amount of
any tax attributable to amounts payable or shares deliverable
under the Plan, and the Company may defer making payment or
delivery of any benefits under the Plan if any tax is payable
until indemnified to its satisfaction. The Committee may, in
its discretion and subject to such rules which it may adopt,
permit a grantee to satisfy, in whole or in part, any federal,
state and local withholding tax obligation which may arise in
connection with the exercise of a stock option or SAR, by
electing either:
(i) To have the Company withhold shares of Company common
stock from the shares to be issued upon the exercise of the
option or SAR;
(ii) To permit a grantee to tender back shares of Company
common stock issued upon the exercise of an option or SAR; or
(iii) To deliver to the Company previously owned shares of
Company common stock having a fair market value equal to the
amount of the federal, state, and local withholding tax
associated with the exercise of the option or SAR.
(m) ADDITIONAL PROVISIONS APPLICABLE TO OPTION AGREEMENTS IN LIEU OF
COMPENSATION. If the Committee, in its discretion permits participants to enter
into agreements as contemplated by Section 7 herein, then such agreements must
be irrevocable and cannot be changed by the participant once made, and such
agreements must be made at least prior to the performance of any services with
respect to which an option may be granted. Also, solely with respect to Section
16 grantees, the date of the grant of any option pursuant to an agreement
contemplated by Section 7 herein must be at least six months after the date on
which a participant enters into such agreement, and the exercise price must be
determined by reference to the fair market value of the Company's shares on the
date of grant. If any participant who enters into such an agreement terminates
employment prior to the grant of the option, then the option will not be granted
and all compensation which would have been covered by the option will be paid to
the participant in cash.
9. EXERCISE OF OPTION BY GRANTEE ON CESSATION OF EMPLOYMENT. If a person
to whom an option has been granted shall cease, for a reason other than his or
her death, disability, early retirement, retirement, or voluntary resignation,
to be employed by the Company or a subsidiary, the option and related SAR shall
terminate three months after the cessation of employment, unless it terminates
earlier under other provisions of the Plan. Until the option or related SAR
terminates, it may be exercised by the grantee for all or a portion of the
shares as to which the right to purchase had accrued under the Plan at the time
of cessation of employment, subject to all applicable conditions and
restrictions provided in Section 8 hereof. If a person to whom an option or
related SAR has been granted shall retire or become disabled, the option and
related SAR shall terminate five years after the date of early retirement,
retirement or disability, unless it terminates earlier under the Plan. Although
such exercise by a retiree or disabled grantee is not limited to the exercise
rights which had accrued at the date of early retirement, retirement or
disability, such exercise shall be subject to all applicable conditions and
restrictions prescribed in Section 8 hereof. If a person shall voluntarily
resign, his option and related SAR to the extent not previously exercised shall
terminate at once.
10. EXERCISE OF OPTION OR RELATED SAR AFTER DEATH OF GRANTEE. If the
grantee of an option and related SAR shall die while in the employ of the
Company or within three months after ceasing to be an employee, and if the
option and related SAR was in effect at the time of his or her death (whether or
not its term had then commenced), the option and related SAR may, until the
expiration of five years from the date of death of the grantee or until the
earlier expiration of the term of the option and related SAR, be exercised by
the successor of the deceased grantee. Although such exercise is not limited to
the exercise rights which had accrued at the date of death of the grantee, such
exercise shall be subject to all applicable conditions and restrictions
prescribed in Section 8 hereof.
7
<PAGE> 8
11. PYRAMIDING OF OPTIONS. The Committee in its sole discretion may from
time to time permit the method of exercising options known as pyramiding (the
automatic application of shares received upon the exercise of a portion of a
stock option to satisfy the exercise price for additional portions of the
option).
12. SHAREHOLDER RIGHTS. No person shall have any rights of a shareholder by
virtue of a stock option and related SAR except with respect to shares actually
issued to him or her, and issuance of shares shall confer no retroactive right
to dividends.
13. ADJUSTMENT FOR CHANGES IN CAPITALIZATION. Any increase in the number of
outstanding shares of common stock of the Company occurring through stock splits
or stock dividends after the adoption of the Plan shall be reflected
proportionately:
(a) In an increase in the aggregate number of shares then
available for the grant of options and related SAR's under the
Plan, or becoming available through the termination of options
and related SAR's previously granted but unexercised;
(b) In the number available to grant to any one person;
(c) In the number subject to options and related SAR's then
outstanding; and
(d) In the quotas remaining available for exercise under
outstanding options and related SAR's,
and a proportionate reduction shall be made in the per-share option price as to
any outstanding options and related SAR's or portions thereof not yet exercised.
Any fractional shares resulting from such adjustments shall be eliminated. If
changes in capitalization other than those considered above shall occur, the
Board of Directors shall make such adjustments in the number and class of shares
for which options and related SAR's may thereafter be granted, and in the number
and class of shares remaining subject to options and related SAR's previously
granted and in the per-share option price as the Board in its discretion may
consider appropriate, and all such adjustments shall be conclusive; provided,
however, that the Board shall not make any adjustments with respect to the
number of shares subject to previously granted incentive stock options or
available for grant as options if such adjustment would constitute the adoption
of a new plan requiring shareholder approval before further incentive stock
options could be granted.
14. TERMINATION, SUSPENSION, OR MODIFICATION OF PLAN. The Board of
Directors may at any time terminate, suspend, or modify the Plan, except that
the Board of Directors shall not amend the Plan in violation of law and shall
not, without shareholder approval, make any amendment to the Plan (other than
amendments pursuant to Section 13 herein) that would:
(a) Increase the number of shares specified in Section 4(a);
(b) Extend the duration of the Plan specified in Section 3; or
(c) Modify the class of employees eligible to receive options and
related SAR's under the Plan.
No termination, suspension, or modification of the Plan shall adversely affect
any right acquired by any grantee, or by any successor of a grantee (as provided
in Section 10 hereof), under the terms of an option and related SAR's granted
before the date of such termination, suspension, or modification, unless such
grantee or successor shall consent, but it shall be conclusively presumed that
any adjustment for changes in capitalization as provided in Section 13 does not
adversely affect any such right.
15. APPLICATION OF PROCEEDS. The proceeds received by the Company from the
sale of its shares under the Plan will be used for general corporate purposes.
8
<PAGE> 9
16. NO RIGHT TO EMPLOYMENT. Neither the adoption of the Plan nor the
granting of any stock option or SAR shall confer upon the grantee any right to
continue in the employ of the Company or any of its subsidiaries or interfere in
any way with the right of the Company or the subsidiary to terminate such
employment at any time.
17. SUCCESSORS. This Plan shall bind any successor of the Company, its
assets or its businesses (whether direct or indirect, by purchase, merger,
consolidation or otherwise), in the same manner and to the same extent that the
Company would be obligated under this Plan if no succession had taken place. In
the case of any transaction in which a successor would not by the foregoing
provision or by operation of law be bound by this Plan, the Company shall
require such successor expressly and unconditionally to assume and agree to
perform the Company's obligations under this Plan, in the same manner and to the
same extent that the Company would be required to perform if no such succession
had taken place. The term "Company," as used in the Plan, shall mean the Company
as hereinbefore defined and any successor or assignee to the business or assets
which by reason hereof becomes bound by this Plan.
9
<PAGE> 1
<TABLE>
Exhibit 21
PARENTS AND SUBSIDIARIES
The following is a list of all subsidiaries of First Tennessee National
Corporation at December 31, 1998. Each subsidiary is 100% owned by its immediate
parent, and all are included in the Consolidated Financial Statements:
<CAPTION>
Type of Ownership Jurisdiction of
Subsidiary By the Corporation Incorporation
---------- ------------------ -------------
<S> <C> <C>
Cleveland Bank & Trust Company Direct Tennessee
First National Bank of Springdale Direct United States
First Tennessee Bank National Association (1) Direct United States
"A" PLUS Strategic Alliances, Inc. Indirect Tennessee
Check Consultants, Incorporated Indirect Tennessee
Check Consultants Company of Tennessee, Inc. Indirect Tennessee
Community Leasing Corporation * Indirect Tennessee
Community Money Center, Inc.* Indirect Tennessee
East Tennessee Service Corporation* Indirect Tennessee
Upper East Tennessee Insurance Agency* Indirect Tennessee
Federal Flood Certification Corporation Indirect Texas
First Funds, Inc.* Indirect Tennessee
First Horizon Money Center, Inc. Indirect Tennessee
First Tennessee ABS, Inc. Indirect Delaware
First Tennessee Brokerage, Inc. Indirect Tennessee
First Tennessee Capital Assets Corporation Indirect Tennessee
First Tennessee Commercial Loan Management, Inc. Indirect Tennessee
First Tennessee Equipment Finance Corporation Indirect Tennessee
First Tennessee Housing Corporation Indirect Tennessee
First Tennessee Merchant Equipment, Inc. Indirect Tennessee
First Tennessee Merchant Services, Inc. Indirect Tennessee
FT Real Estate Securities Holding Company, Inc. Indirect Arkansas
FT Real Estate Securities Company, Inc. Indirect Arkansas
FT Realty Securities QRS, Inc. Indirect Arkansas
First Tennessee Securities Corporation Indirect Tennessee
FT Mortgage Holding Corporation Indirect Illinois
FT Mortgage Companies (2) Indirect Kansas
First Tennessee Mortgage Services, Inc. Indirect Tennessee
FT Reinsurance Company Indirect Vermont
Hickory Venture Capital Corporation Indirect Alabama
JPO, Inc. Indirect Tennessee
TSMM Corporation Indirect Tennessee
FTB Futures Corporation* Direct Tennessee
Hickory Capital Corporation Direct Tennessee
Highland Capital Management Corp. Direct Tennessee
Martin & Company, Inc. Direct Tennessee
Mountain Financial Company* Direct Tennessee
Norlen Life Insurance Company Direct Arizona
Peoples and Union Bank Direct Tennessee
Peoples Bank Direct Mississippi
Planters Bank Direct Mississippi
<FN>
*Inactive.
(1) Divisions of this subsidiary do business in certain
jurisdictions under the following names: First Express, First
Money Center, First Securities Company in Mobile, First
Tennessee Capital Markets, Garland Capital Management, Garland
Trust, Gulf Pacific Mortgage.
(2) Divisions of this subsidiary do business in certain
jurisdictions under the following names: Atlantic Coast
Mortgage, Carl I. Brown Mortgage, CIB Mortgage, Customer One
Mortgage, Emerald Mortgage, EquiBanc Mortgage Corporation, 1st
Coastal Mortgage, First Tennessee Mortgage Company, Inc., FTB
Mortgage Services, Keystone Mortgage, HomeBanc Mortgage
Corporation, McGuire Mortgage, MNC Mortgage, Mortgage
Resources, Patriot Financial Group, Premier Mortgage, Premier
Mortgage Resources, Priority One, Mortgage Bankers, Select
Mortgage Resources, Sunbelt National Mortgage.
</FN>
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated January 19, 1999, included in First Tennessee National
Corporation's 1999 Proxy Statement, into the Company's 1998 Annual Report on
Form 10-K, and previously filed registration statement file Nos. 33-8029, 33-
9846, 33-40398, 33-44142, 33-52561, 33-57241, 33-58975, 33-63809, 33-64471,
333-16225, 333- 16227, 333-17457, 333-17457-01, 333-17457-02, 333-17457-03,
333-17457-04, and 333-70075 and to all references to our firm included therein.
Arthur Andersen LLP
Memphis, Tennessee
March 23, 1999
<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 ELBERT L. THOMAS, JR., JAMES F.
KEEN, CLYDE A. BILLINGS, JR., and TERESA A. ROSENGARTEN, 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 Annual
Report on Form 10-K for the fiscal year ended December 31, 1998 to be filed with
the Securities and Exchange Commission, pursuant to the provisions of the
Securities Exchange Act of 1934, by First Tennessee National Corporation
("Corporation") and, further, to execute and sign any and all 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>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Ralph Horn Chairman of the Board, March 19, 1999
- -------------------------------------- President and Chief Executive
Ralph Horn Officer and a Director
(principal executive officer)
Elbert L. Thomas, Jr. Executive Vice President and March 19, 1999
- -------------------------------------- Chief Financial Officer
Elbert L. Thomas, Jr. (principal financial officer)
James F. Keen Senior Vice President and March 19, 1999
- -------------------------------------- Controller (principal
James F. Keen accounting officer)
Robert C. Blattberg
- -------------------------------------- Director March 19, 1999
Robert C. Blattberg
Carlos H. Cantu
- -------------------------------------- Director March 19, 1999
Carlos H. Cantu
</TABLE>
Page 1 of 2
<PAGE> 2
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
George E. Cates Director March 19, 1999
- --------------------------------------
George E. Cates
J. Kenneth Glass Director March 19, 1999
- --------------------------------------
J. Kenneth Glass
James A. Haslam, III Director March 19, 1999
- --------------------------------------
James A. Haslam, III
John C. Kelley, Jr. Director March 19, 1999
- --------------------------------------
John C. Kelley, Jr.
R. Brad Martin Director March 19, 1999
- --------------------------------------
R. Brad Martin
Joseph Orgill, III Director March 19, 1999
- --------------------------------------
Joseph Orgill, III
Vicki R. Palmer Director March 19, 1999
- --------------------------------------
Vicki R. Palmer
Michael D. Rose Director March 19, 1999
- --------------------------------------
Michael D. Rose
William B. Sansom Director March 19, 1999
- --------------------------------------
William B. Sansom
</TABLE>
Page 2 of 2
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
EXHIBIT 27
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FIRST
TENNESSEE NATIONAL CORPORATION'S DECEMBER 31, 1998, FINANCIAL STATEMENTS FILED
IN ITS 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCES TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 811,881
<INT-BEARING-DEPOSITS> 1,211
<FED-FUNDS-SOLD> 124,239
<TRADING-ASSETS> 358,304
<INVESTMENTS-HELD-FOR-SALE> 1,816,485
<INVESTMENTS-CARRYING> 609,804
<INVESTMENTS-MARKET> 610,364
<LOANS> 12,784,507
<ALLOWANCE> 136,013
<TOTAL-ASSETS> 18,733,961
<DEPOSITS> 11,723,039
<SHORT-TERM> 4,339,292
<LIABILITIES-OTHER> 1,057,646
<LONG-TERM> 414,450
100,000
0
<COMMON> 80,609
<OTHER-SE> 1,018,925
<TOTAL-LIABILITIES-AND-EQUITY> 18,733,961
<INTEREST-LOAN> 931,561
<INTEREST-INVEST> 159,614
<INTEREST-OTHER> 42,602
<INTEREST-TOTAL> 1,133,777
<INTEREST-DEPOSIT> 376,635
<INTEREST-EXPENSE> 593,238
<INTEREST-INCOME-NET> 540,539
<LOAN-LOSSES> 51,351
<SECURITIES-GAINS> 3,976
<EXPENSE-OTHER> 1,121,769
<INCOME-PRETAX> 352,922
<INCOME-PRE-EXTRAORDINARY> 226,380
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 226,380
<EPS-PRIMARY> 1.77<F1>
<EPS-DILUTED> 1.72<F1>
<YIELD-ACTUAL> 3.80
<LOANS-NON> 27,807
<LOANS-PAST> 35,554
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 31,703
<ALLOWANCE-OPEN> 125,859
<CHARGE-OFFS> 48,552
<RECOVERIES> 10,760
<ALLOWANCE-CLOSE> 136,013
<ALLOWANCE-DOMESTIC> 136,013
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>FIRST TENNESSEE NATIONAL CORPORATION EFFECTED A TWO-FOR-ONE STOCK SPLIT ON
FEBRUARY 20, 1998. THIS CURRENT FINANCIAL DATA SCHEDULE AND THE DECEMBER 31,
1997 FINANCIAL DATA SCHEDULE FILED WITH THE 1997 FORM 10-K REFLECT THIS STOCK
SPLIT. FINANCIAL DATA SCHEDULES PRIOR TO DECEMBER 31, 1997, HAVE NOT BEEN
RESTATED TO REFLECT THE STOCK SPLIT.
</FN>
</TABLE>
