MORGAN KEEGAN, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 22, 1994
NOTICE IS HEREBY GIVEN that the 1994 Annual Meeting of the Shareholders of
Morgan Keegan, Inc. (the Annual Meeting) will be held at the offices of Morgan
Keegan, Inc. (the Company),Twenty-First Floor, Morgan Keegan Tower, 50 Front
Street, Memphis, Tennessee 38103 on Tuesday, November 22, 1994, at 10:00 a.m.,
local time, for the following purposes:
1. To elect directors to serve for the ensuing year or until their successors
have been duly elected and qualified;
2. To consider and act upon a proposal to amend the Company's Restated
Charter to increase the authorized Common Stock which the Company may issue from
25,000,000 shares to 100,000,000 shares;
3. To consider and act upon a proposal to adopt the 1994 Restricted Stock
and Stock Option Plan providing for the issuance to officers and employees of
up to 1,000,000 shares of Common Stock; and
4. To consider and act upon a proposal to amend the 1989 Employee Stock
Purchase Plan to authorize the issuance of an additional 1,000,000 shares of
Common Stock.
Only shareholders of the Company of record as of the close of business on
September 30, 1994, will be entitled to notice of, and to vote at, the Annual
Meeting and any adjournments thereof.
There is enclosed, as a part of this Notice, a Proxy Statement which contains
further information regarding the meeting and the above proposals.
BY ORDER OF THE BOARD OF DIRECTORS
JOSEPH C. WELLER
Secretary
October 17, 1994
IMPORTANT
Shareholders who do not expect to attend the meeting are requested to complete,
date, sign and return the accompanying proxy in the enclosed envelope.
Shareholders who attend the meeting may vote in person even if they have
already sent in a proxy.
<PAGE>
MORGAN KEEGAN, INC.
PROXY STATEMENT
GENERAL INFORMATION
THIS PROXY STATEMENT is provided in connection with the solicitation of proxies
by the Board of Directors of Morgan Keegan, Inc. (the Company) for use at the
annual meeting of shareholders to be held on November 22, 1994, (the Annual
Meeting) and any adjournments thereof. The mailing address of the principal
executive offices of the Company is Morgan Keegan Tower, 50 Front Street,
Memphis, Tennessee 38103. This Proxy Statement and the Proxy Form, Notice of
Meeting and the Company's Annual Report, all enclose herewith, are first being
mailed to the shareholders of the Company on or about October 21, 1994.
The Proxy
The solicitation of proxies is being made primarily by the use of the
mails. The cost of preparing and mailing this Proxy Statement and
accompanying material, and the cost of any supplementary solicitations, which
may be made by mail, telephone, telegraph or personally by officers and
employees of the Company, will be borne by the Company. The shareholder
giving the proxy has the power to revoke it by delivering written notice of
of such revocation to the Secretary of the Company prior to the Annual
Meeting or by attending the meeting and voting in person. The proxy will be
voted as specified by the shareholder in the spaces provided on the Proxy
Form, or, if no specification is made, it will be voted with the terms
thereof.
Common Shares represented by properly executed proxies, unless
previously revoked, will be voted in accordance with the instructions on such
proxies. If no instruction is indicated on the proxy,the named holders of
the proxies will vote such Common Shares (i) FOR all nominees named in this
Proxy Statement; (ii) FOR the amendment of the Company's to increase the
director of authorized Common Shares to 100,000,000; (iii) of the 1994
Restricted Stock and Stock Option Plan; and (iv) FOR the amendment to the 1989
Employee Stock Purchase Plan providing an additional 1,000,000 Common Shares for
issuance pursuant thereto. The named holders of proxies also will use their
discretion in voting the Common Shares in connection with any other business
that properly may come before the Annual Meeting.
Voting Rights
On March 9, 1984, Morgan, Keegan & Company, Inc. (the Brokerage Company)
became a subsidiary of the Company, a holding company, pursuant to a plan of
reorganization (the Reorganization) approved by the shareholders of the
Brokerage Company and the Company. Pursuant to the Reorganization, the share-
holders of the Brokerage Company received shares of common stock of the
Company, $.625 par value, on a share-for-share basis in exchange for the
common stock of the Brokerage Company.
Each outstanding share is entitled to one vote. Only shareholders of
record at the close of business on September 30, 1994 will be entitled to
notice of, and to vote at, the Annual Meeting and any adjournments thereof.
As of the close of business on September 30, 1994,the Company had
outstanding 13,583,761 shares of $.625 par value common stock (the
Common Shares). Of the total number of outstanding Common Shares on September
30, 1994, the Directors and Executive Officers of the Company, consisting of
eight persons, owned 3,560,402 shares comprising 26.2% of the total.
<PAGE>
REQUIRED VOTE
Approval of each matter submitted to the Shareholders of the Company for a
vote at the Annual Meeting will require the affirmative vote of a majority of
the Common Shares voting at the Annual Meeting in person or by proxy.
OWNERSHIP OF THE COMPANY'S COMMON SHARES
Security Ownership of Certain Beneficial Owners
The following table sets forth information as of September 30, 1994,
regarding each person known to the Company to be the beneficial owner of more
than five percent of its Common Shares:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE
OF BENEFICIAL OF BENEFICIAL PERCENT OF CLASS(1)
OWNER OWNERSHIP
<C> <C> <C>
Allen B. Morgan, Jr. 1,691,723(2) 12.5%
Morgan Keegan Tower
Fifty Front Street
Memphis, Tennessee 38103
Joseph C. Weller 722,413(3) 5.3%
Morgan Keegan Tower
Fifty Front Street
Memphis, Tennessee 38103
<FN>
(1) Based on outstanding Common Shares at September 30, 1994.
(2) Excludes 37,398 shares owned by Mr. Morgan's spouse over which shares
Mr. Morgan has no voting power or investment power and in which Mr. Morgan
disclaims any beneficial ownership. Includes 48,608 shares held by Mr.
Morgan as custodian or Trustee for his minor children over which Mr.
Morgan has sole voting power and investment power.
(3) Includes 30,000 shares owned by Mr. Weller's spouse.
</TABLE>
Security Ownership of Management
The following table sets forth the beneficial ownership of the Company's
Common Shares as of September 30, 1994 by (i)each director, (ii)each director
nominee, (iii)each executive officer named in the Summary Compensation Table,
and (iv) all directors, nominees and Executive Officers as a group:
<PAGE>
<TABLE>
<CAPTION>
NAME OF AMOUNT AND NATURE
BENEFICIAL OWNER OF BENEFICIAL PERCENT OF CLASS
OWNERSHIP
<C> <C> <C>
Allen B. Morgan, Jr. 1,691,723(1) 12.5%
William W. Deupree, Jr. 507,356 3.7%
John W. Stokes, Jr. 491,616(2) 3.6%
Joseph C. Weller 722,413(3) 5.3%
Kenneth F. Clark, Jr. 28,498(4) *
Donald Ratajczak, Ph.D. 40,050(5) *
Peter S. Willmott 50,998(4) *
James E. Harwood, III 27,748(4)(6) *
All Directors, Nominees and 3,560,402 26.2%
Executive Officers as a Group
(8 Persons)
<FN>
(1) Excludes 37,398 shares owned by Mr. Morgan's spouse over which shares
Mr. Morgan has no voting power or investment power and in which Mr. Morgan
disclaims any beneficial ownership. Includes 48,608 shares held by Mr. Morgan
as custodian or Trustee for his minor children over which shares Mr. Morgan has
sole voting power and investment power.
(2) Includes 15,000 shares owned of record by Mr. Stokes' spouse.
(3) Includes 30,000 shares owned of record by Mr. Weller's spouse.
(4) Includes option to purchase 21,000 shares pursuant to the Directors
Stock Option Plan which have not been exercised.
(5) Includes option to purchase 18,000 shares pursuant to the Directors
Stock Option Plan which have not been exercised.
(6) Includes 2,250 shares owned by the estate of Mr. Harwood's deceased
father, over which shares Mr. Harwood has sole voting power and investment
power as executor of said estate.
* Represents less than one 1% of total outstanding Common Shares.
</TABLE>
<PAGE>
(Proposal No. 1)
Election of Directors
Committees and Meetings of the Board of Directors
The business of the Company is under the general management of its Board of
Directors as provided by the Company's by-laws and the laws of Tennessee, the
Company's state of incorporation. The Board of Directors regularly meets
quarterly during the Company's fiscal year. There are presently eight directors.
The Board of Directors held four meetings during fiscal 1994, and all
directors attended all of the meetings.
The Company does not have a standing Nominating Committee or a Compensation
Committee of its Board of Directors. The Compensation Committee of the
Brokerage Company (Compensation Committee) determines the compensation for
all of the employees, including officers of the Company. The entire
Board of Directors serves in the capacity of a Nominating Committee. The
Board of Directors will accept recommendations for director nominations from
shareholders, and shareholders wishing to propose such nominees for
consideration should write to Joseph C. Weller, Secretary, at the principal
executive office of the Company.
The Company has a standing Audit Committee of its Board of Directors composed
entirely of directors who are not officers or employees of the Company or the
Brokerage Company. During fiscal 1994, the Audit Committee consisted of
Kenneth F. Clark, Jr., Donald Ratajczak, Peter S. Willmott (Chairman) and
James E. Harwood, III. The Audit Committee's function is to determine that
the Company's assets are properly accounted for and safeguarded and that
adequate operating, accounting and financial controls, consistent with
Company policy, regulatory requirements and accepted accounting practice are
in existence and adequately functioning. The Audit Committee also may make
recommendations to the Board of Directors concerning the engagement of
independent accountants to audit the books, records and accounts of the Company
at its subsidiaries. The Audit Committee met three times during the past fiscal
year.
Compensation of Directors
Directors who are employees of the Company or one of its subsidiaries do not
receive additional remuneration as directors. Directors who are not employees
receive an annual retainer of $6,000, fees of $1,500 for each board meeting,
and $500 for each committee meeting attended, and are an
acquire up to 6,000 shares of common stock pursuant to the company's 1991
Directors Stock Option Plan.
<PAGE>
Nominees for Directors
The Board of Directors proposes to nominate the following eight individuals
for election to serve as directors of the Company, each of whom is currently a
director of the Company.
______________________________________________________________________________
ALLEN B. MORGAN, JR., 52, is the Chairman of the Board and Chief Executive
Officer of the Company, positions he has held since 1983. He has also been
Chairman of the Board, Chief Executive Officer, employee and Director of the
Brokerage Company since 1969. Mr. Morgan is President and a Director
of Morgan Keegan Southern Capital Fund, and a Director of Catherine's Stores,
Inc. (member of Compensation Committee). He has been a Director of the Company
since 1983.
Committees: None
______________________________________________________________________________
WILLIAM W. DEUPREE, JR., 53, is the President of the Company and the President
and Chief Operating Officer of the Brokerage Company, positions he has held
since 1985. He has also been an employee and Director of the Brokerage Company
since 1974. Mr. Deupree is a director of NSA International, Inc. and Equity
Inns, Inc. Mr. Deupree has been a Director of the Company since 1983.
Committees: None
______________________________________________________________________________
JOHN W. STOKES, JR., 57, is the Vice President of the Company and Vice Chairman
and President of the Equity Capital Markets Division of the Brokerage Company,
positions he has held since 1983. He has been an employee and Director of the
Brokerage Company since 1970. Mr. Stokes is a director O'Charley's, Inc. and
RFS Hotel Investors, Inc. Mr. Stokes has been a Director of the Company since
1983.
Committees: None
______________________________________________________________________________
JOSEPH C. WELLER, 55, is the Secretary, Treasurer and Chief Financial Officer
of the Company, positions he has held since 1983. He has also been an Executive
Vice President and the Treasurer and Chief Financial Officer, employee and
Director of the Brokerage Company since 1969. Mr. Weller has been a Director
of the Company since 1983.
Committees: None
______________________________________________________________________________
_______________
KENNETH F. CLARK, JR., 67, is a Partner in the Memphis law firm of McDonnell
Dyer, P.L.C., a position held since September 1, 1994. From July 1990 to
September 1, 1994, Mr. Clark was a Partner in the Memphis law firm of McDonnell
Boyd. He was a Partner in the law firm of Boone, Wellford, Clark, and
Langschmidt & Apperson for more than 10 years prior thereto. Mr. Clark has
been a Director of the Company since 1984.
Committees: Audit
<PAGE>
______________________________________________________________________________
_______________
DONALD RATAJCZAK, Ph. D., 51, is the Director of the Economic Forecasting
Project at Georgia State University in Atlanta, is a Director of Morrison
Restaurants Inc. and a Trustee of Aim High Yield Fund, positions he has held
for several years. He has been a consulting economist to and other businesses
for more than five years. Dr. Ratajczak has been a Director of the Company since
1984.
Committees: Audit
______________________________________________________________________________
_______________
PETER S. WILLMOTT, 57, is the Chairman and Chief Executive Officer of Willmott
Services, Inc., a retail and consulting firm, positions held since June 1989.
He was Chairman of Carson Pirie Scott & Company, a retail merchandising, food
service and lodging concern, from June 1984 until June 1989. He was President
and Chief Executive Officer of same from June 1983 to June 1989. He was
President and Chief Operating Officer of Federal Express Corporation from
September 1980 to May 1983. Mr. Willmott is a Director of Browning- Ferris
Industries, Inc., Federal Express Corporation, International Multifoods
Corporation, MacFrugal's Bargains & Close-Outs, Inc., Maytag Corporation and
Zenith Electronics Corporation. Mr. Willmott has been a Director of the
Company since 1991.
Committees: Audit (Chairman)
______________________________________________________________________________
JAMES E. HARWOOD, III, 58, is President of Sterling Equities, Inc., a business
planning, capital and management services firm founded by him in 1991. He was
corporate vice-president of Schering Plough Corporation, a pharmaceutical and
health care products concern, from 1988 until 1990, and was the president of
Scholl, Inc., a subsidiary of Schering Plough Corporation from 1983 until 1987
and employee thereof from 1980 until 1987. He held various executive positions
with Conwood Corporation from 1960 until 1980. Mr. Harwood is a director of
Leader Financial Corporation and American Maize Products, Inc. Mr. Harwood
has been a Director of the Company since 1991.
Committees: Audit
______________________________________________________________________________
Unless a shareholder specifies otherwise, it is intended that such share-
holder's shares will be voted FOR the election of the foregoing nominees to
serve as directors until the next annual meeting and until their successors
are elected and qualified. If any nominee shall become unavailable or
unwilling to serve the Company as a director for any reason, the persons
named in the Proxy Form are expected to consult with the management of the
Company in voting the shares represented by them. The Board of Directors has
no reason to doubt the availability of any of the nominees, and each has
indicated his willingness to serve as a director of the Company if elected.
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ADOPTION OF PROPOSAL NO. 1.
Business Relationships Between Company and Nominees
Mr. Clark is a member of the law firm of McDonnell Dyer, P.L.C. The Company
and the Brokerage Company have retained McDonnell Boyd (predecessor to
McDonnell Dyer) during the past fiscal year and propose to retain McDonnell
Dyer during the present fiscal year as special counsel on select matters.
The Brokerage Company has retained Dr. Ratajczak as a consulting economist to
provide consulting services to it and its customers. Dr. Ratajczak was so
retained during the past fiscal year, and the Brokerage Company proposes to
retain Dr. Ratajczak in such capacity during the current fiscal year.
Certain Transactions with Management
During the period from August 1, 1993 through July 31, 1994, except for
indebtedness as margin account customers of the Brokerage Company, no
director or executive officer was indebted to the Company in excess of
$60,000. The indebtedness of directors and executive officers was as a result
of debit balances in margin accounts. Such indebtedness in the ordinary course
of business, on substantially the same terms, including those prevailing at
the time for comparable transactions with unaffiliated customers, and did not
involve more than the normal risk of collectibility or present other
unfavorable features.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation for services rendered for
each of the Company's last three fiscal years, of the Chief Executive Officer
and its other most highly compensated executive officers whose total annual
salary and bonus exceeded $100,000:
<TABLE>
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
<CAPTION>
NAME AND RESTRICTED ALL(6)
PRINCIPAL YEAR SALARY BONUS OTHER STOCK OPTIONS LTIP OTHER
POSITION AWARDS /SARs PAYOUTS COMPEN-
($) ($) ($) ($) (#) (#) SATION
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Allen B. 1994 $130,000 $1,206,327 0 $48,581(2)(1) 0 0 $1,549
Morgan, Jr., 1993 130,000 1,071,660 0 $41,463(1) 0 0 1,523
CEO 1992 130,000 948,023 0 $28,062(1) 0 0 $1,750
William W. 1994 $110,000 $945,000 0 $37,700(3)(1) 0 0 $1,599
Deupree, Jr., 1993 110,000 911,673 0 $26,439(1) 0 0 1,523
President 1992 110,000 831,011 0 $16,017(1) 0 0 $1,750
John W. Stokes 1994 $110,000 $1,435,278 0 $49,478(4)(1) 0 0 $1,549
Jr., Vice 1993 110,000 1,157,232 0 $40,888(1) 0 0 1,523
President 1992 110,000 1,047,232 0 $21,635(1) 0 0 $1,750
Joseph C. 1994 $110,000 $945,000 0 $38,688(5) 0 0 $1,549
Weller, 1993 110,000 911,660 0 $32,748 0 0 1,523
,Secretary 1992 110,000 826,135 0 $18,326 0 0 $1,750
<FN>
(1) Includes commissions earned on brokerage business as registered sales
representatives of the Brokerage Company. See "Report of Brokerage Company
Compensation Committee."
(2) Mr. Morgan held 14,124 shares of restricted stock as of July 31, 1994.
The total value of those shares, determined based on the closing market price
of the Common Shares as of the date of each grant, is $126,490. Dividends will
be paid on the restricted stock granted during the 1994 fiscal year.
(3) Mr. Deupree held 9,392 shares of restricted stock as of July 31, 1994.
The total value of those shares, determined based on the closing market price
of the Common Shares as of the date of each grant is $85,648. Dividends will
be paid on the restricted stock granted during the 1994 fiscal year.
(4) Mr. Stokes held 12,825 shares of restricted stock as of July 31, 1994.
The total value of those shares, determined based on the closing market price
of the Common Shares as of the date of each grant is $118,896. Dividends will
be paid on the restricted stock granted during the 1994 fiscal year.
(5) Mr. Weller held 10,602 shares of restricted stock as of July 31, 1994.
The total value of those shares, determined based on the closing market price
of the Common Shares as of the date of each grant is $95,972. Dividends will
be paid on the restricted stock granted during the 1994 fiscal year.
(6) The amounts listed in this column are the amounts of matching
contributions made by The Company to the Revised Profit Sharing and
Retirement Savings Plan on behalf of the Executive Officers.
</TABLE>
<PAGE>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Company has adopted a Supplemental Executive Retirement Plan ("SERP") for
the benefit of executive officers and key employees of the Company and its
subsidiaries. The SERP is an unfunded, non-qualified deferred compensation
plan which provides for the payment of supplemental retire benefits to
participants upon normal retirement, disability retirement or at least 20
years of employment with the Company or its subsidiaries.
Benefits under the SERP will not be paid to or will cease with respect to (if
applicable) any participant whose employment terminates prior to the
participant's attaining age 55 or 20 years of service, if such termination is
for cause, for acts of willful malfeasance or gross negligence or for violation
of non-competition provisions of the SERP. Benefits are payable out of the
general assets of the Company.
Participation in the SERP is determined by the Board of Directors of the
Company, and the SERP is administered by an ad hoc committee consisting
exclusively of Outside Directors. Current participants are Messrs. Morgan,
Deupree, Stokes and Weller. The benefit payable from the SERP is a
monthly benefit, payable for 120 months, based on the participant's age at
the date of termination of his employment, as follows:
<TABLE>
<CAPTION>
ATTAINED AGE
UPON MONTHLY
TERMINATION BENEFIT
<S> <C>
62 or older $8,333
61 $7,917
60 $7,500
59 $7,083
58 $6,667
57 $6,250
56 $5,833
55 or younger $5,417
<FN>
The estimated annual benefit to any participant who retires at the normal
retirement age of 65 is $100,000.
</TABLE>
<PAGE>
Compensation of Officers and Employees, Generally
The Compensation Committee of the Brokerage Company determines the
compensation for all officers and employees of the Company and its
subsidiaries, including the Executive Officers. The Company does not have a
compensation committee. The following report is given by
Compensation Committee.
The Brokerage Company strives to offer to officers and key employees
compensation packages that are not only competitive with packages offered by
other regional brokerage firms but that also encourage a high level of
productivity, with a view toward retaining the highest quality personnel
available. The Compensation Committee's policy is to base a substantial
portion of each Executive Officer's annual compensation upon his personal
productivity, the performance of the Company and its subsidiaries and such
officer's contribution to the overall success of the Company during the
fiscal year. Compensation of Executive Officers consists of the following
elements:
Base Salary. The base salaries of the Company's Executive Officers have
remained the same for the more than five fiscal years. The Compensation
Committee has researched the base salaries of executive officers in other
firms in the securities brokerage industry and believe the comparable to other
regional brokerage firms.
Incentive Compensation. Incentive bonuses are routinely paid to those persons
making significant contributions to the profitability of the Company and its
subsidiaries. The Brokerage Company maintains several bonus pools which are
distributed among officers and employees by the Compensation Committee based
upon such factors as gross commission production, contribution to the net
income of the Company, new client development, contribution to Company
management and long-range planning, management of individual profit centers
and demonstrated firm leadership. Bonuses are distributed to a broad cross-
section of employees of the Company and its subsidiaries, with 398 employees
having received bonuses totaling approximately $27.7 million for the 1994
fiscal year. Of such bonuses, approximately $4.5 million was paid to Executive
Officers. Messrs. Morgan, Deupree and Stokes, in addition to performing
responsibilities as Executive Officers and senior management of the Company,
maintain day-to-day client relationships and, consequent levels of brokerage
business on behalf of clients of the Brokerage Company. An element of their
compensation is their respective share of brokerage commissions from their
selling efforts, which for the fiscal year ended July 31, 1994 amounted to
approximately $1,200,000 or 26.6% of their approximately $4.5 million
total incentive compensation.
Restricted Stock Awards. Pursuant to the Company's 1983 and 1985 Restricted
Stock and Incentive Stock Option Plans, the Company periodically awards
shares of stock to officers and key employees of the Company and its
subsidiaries. Restricted stock must be returned to the Company if the
recipient forfeits such shares by reason of termination of employment within
a fixed period established by the Compensation Committee. After the expiration
of any restriction period, the recipient owns such shares free of restrictions.
The number of shares awarded to a particular recipient is subjectively
determined by the Compensation Committee, which considers gross revenue
production, contribution to the net income of the Company, new client
development, management contribution and demonstrated leadership, among other
things, in determining the number of shares to be granted to a particular
person.
<PAGE>
The Company believes that restricted stock awards are a key element in the
overall compensation packages of officers and key employees because such
awards recognize productivity and profitability while at the same time giving
recipients a vested long-term interest in the success of the Company through
stock ownership. Consequently, the Company routinely grants restricted stock
to a broad cross-section of employees of the Company's subsidiaries, with
approximately 23% of such employees having received awards during the 1994
fiscal year. Each Executive Officer received an award of restricted stock in
1994, in the aggregate amount of 13,419 shares, which constituted
approximately 6.1% of all shares of restricted stock granted.
Compensation of Chief Executive Officer
Mr. Morgan's base salary has remained at $130,000 per year for the last five
years, consistent with the Compensation Committee's and Board of Directors'
view that the Company should continue to place greater emphasis on incentive
and production-based compensation for Executive Officers tied to the
financial and strategic performance of the Company.
Other cash compensation paid to Mr. Morgan in 1994 consisted of $1,206,327 of
incentive bonus based on the overall performance of the Company and his role
in achieving such performance, of which approximately 35% was attributable to
Mr. Morgan's share of commissions on brokerage business conducted by
him. In addition to the foregoing, Mr. Morgan was granted 3,737 shares of
the Company's restricted stock during 1994, which shares had a value at the
time of grant of approximately $48,581.
The Company achieved record earnings in 1994 for the fourth consecutive year,
with earnings increasing approximately 4% over 1993. Moreover, the Company,
under Mr. Morgan's leadership, achieved a 340% increase in the net income of
its corporate finance department. For the period January 1, 1994 through June
30, 1994, the Company was ranked among the top 10 managing underwriters of
initial public offerings (excluding closed-end funds) and substantially
enhanced its stature as a corporate finance firm. The Company sustained its
profitability growth in a year of rising interest rates and falling profits at
many other publicly-held brokerage firms. The Compensation Committee
determined Mr. Morgan's incentive bonus based primarily upon the foregoing
factors and his continued high level of personal productivity to the
success of the Company. The Compensation Committee believes Mr. Morgan's
compensation to be commensurate with the compensation paid to the chief
executive officers of corporations within the Company's peer group.
<TABLE>
<CAPTION>
Compensation Committee Outside Directors
<S> <C>
Allen B. Morgan, Jr. Kenneth F. Clark, Jr.
William W. Deupree, Jr. James E. Harwood III
John W. Stokes, Jr. Donald Ratajczak
Joseph C. Weller Peter S. Willmott
</TABLE>
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Company does not have a compensation committee, and the Compensation
Committee of the Brokerage Company makes all decisions regarding executive
compensation. The members of the Compensation Committee of the Brokerage
Company are Messrs. Morgan, Deupree, Stokes and Weller, all whom are
Executive Officers and each of whom during the 1994 fiscal year participated
in deliberations regarding Executive Officers' compensation.
<PAGE>
PERFORMANCE GRAPH
REPORT OF THE BROKERAGE COMPANY
COMPENSATION COMMITTEE
<TABLE>
<CAPTION>
<S> <C>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
</TABLE>
<PAGE>
(Proposal No. 2)
Amendment of Charter to Authorize
Additional Common Shares
Description of Common Shares
The Company's charter of incorporation presently authorizes the issuance of
capital stock consisting of 25,000,000 shares, $.625 par value. Holders of
the Common Shares are entitled to receive such dividends as may be legally
declared by the Board of Directors. Each shareholder is entitled to one vote
per share, in person or by proxy, at all meetings of the shareholders and on
all proposals before such meetings, and Common Shares may not be cumulatively
voted for the election of directors. The Common Shares do not have preemptive,
subscription, redemption or conversion rights. The Company's issued and out-
standing Common Shares are fully paid and nonassessable. In the event of
voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Company, the net assets of the Company are distributable pro
rata to the holders of the Common Shares in accordance with their respective
rights and interests.
The issued and outstanding Common Shares are listed on the New York Stock
Exchange. The Transfer Agent and Registrar is Bank of Boston, Boston,
Massachusetts.
The Charter Amendment
On August 24, 1994, the Board of Directors adopted the following resolution
concerning an amendment to the Company's charter:
RESOLVED: That the authorized capital stock of the Corporation be increased from
twenty-five million (25,000,000) shares to one hundred million (100,000,000)
shares and that Article 6 of the Corporation's Restated Charter be amended
to read as follows:
"6. The maximum number of shares of capital stock which the Corporation shall
have authority to issue is one hundred million (100,000,000) shares of common
stock with a par value of sixty-two and one-half ($.625) cents per share."
The purpose of the increase in the amount of authorized shares is to provide
the necessary Common Shares for the 1994 Restricted Stock and Stock Option Plan
and the 1989 Employee Stock Purchase Plan as well as providing additional
Common Shares that may be issued in the future for other corporate purposes.
The timing of issuance (if any) of the additional Common Shares and the amount
or kind of consideration to be received upon any such issuance is presently
unknown. The Company does not anticipate seeking shareholder authorization
for the issuance of additional Common Shares prior to the issuance of the
Common Shares that may be authorized as described herein.
If the proposed amendment is approved by the shareholders, a Certificate of
Amendment of the Company's Charter will be filed with the Secretary of State,
State of Tennessee, and upon acceptance by the Secretary of State, the
amendment will become effective.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ADOPTION OF PROPOSAL NO. 2.
<PAGE>
(Proposal No. 3)
Adoption of 1994 Restricted Stock
and Stock Option Plan
The Board of Directors has approved and submits to the shareholders for
approval the 1994 Restricted Stock and Stock Option Plan (the "1994 Plan") to
provide incentives to attract and retain officers and key employees. The 1994
Plan, if approved by the shareholders, is to be administered by the Compensation
Committee of the Brokerage Company. However, with respect to awards under the
1994 Plan to members of such Compensation Committee, the directors of the
Company who are not officers or employees thereof ("Independent Directors")
will act as the Compensation Committee. The 1994 Plan is which will expire
August 24, 2004.
The 1994 Plan provides for the grant of stock options to purchase a specified
number of Common Shares ("Options") or grants of restricted Common Shares
("Restricted Stock"), which grants may be made to such officers and key
employees and on such terms as the Compensation Committee, indiscretion, may
fix. Under the 1994 Plan, an aggregate of 1,000,000 Common Shares may be
awarded to officers and key employees of the Company and its subsidiaries.
The 1994 Plan does not specify how many Common Shares out of the total number
of Common Shares available under the 1994 Plan may be subject to the Options or
issued as Restricted Stock, such allocation being within the discretion of
the Compensation Committee. The number of Common Shares that may be subject to
awards pursuant to the 1994 Plan is subject to adjustment on account of stock
splits, stock dividends, recapitalizations, reclassifications, reorganizations
and similar transactions. No grants may be made to Independent Directors.
The 1994 Plan permits the Compensation Committee to grant shares of Restricted
Stock to a participant subject to the terms and conditions imposed by the
Compensation Committee. These terms will include a restriction period (the
"Restriction Period") during which the shares of Restricted Stock may not be
sold, assigned, transferred, pledged or otherwise encumbered. Except for such
restrictions on transfer and such other restrictions as the Compensation
Committee may impose, the participant will have all the rights of a holder of
Common Stock as to such Restricted Stock including the right to vote the shares
and the right receive any cash distributions with respect thereto. If so deter-
mined by the Compensation Committee in the applicable Restricted Stock
agreement, the Compensation Committee may require the payment with respect to
Restricted Stock to be deferred and reinvested in additional Restricted Stock.
Except as provided by the Compensation Committee at the time of grant or
otherwise, upon a termination of employment for any reason except death,
disability, retirement or a change in control of the Company during the
Restriction Period, all shares still subject to restriction will be forfeited
by the participant.
The 1994 Plan also permits the Compensation Committee to grant Options to
participants. The terms and conditions of each Option grant, including,
without limitation, option prices, vesting terms and other conditions upon
exercise, shall be determined by the Compensation Committee option agreement
between the participant and the Company; provided, however, that Options will
automatically vest upon the death, disability or retirement of the participant
or upon a change in control of the Company. Options granted under the 1994
Plan may be incentive stock options ("ISOs") under Section 422 of the Code
or non-qualified options, at the discretion of the Compensation Committee. The
1994 Plan provides that the exercise price of an Option will be fixed by the
Compensation Committee on the date of grant; however, the exercise price of
an ISO must not be less than the Fair Market Value of a share of Common Stock
on the date of the grant. Fair market value ("Fair Market Value") for any given
date means the closing price of a share of Common Stock as reported on the
NYSE composite tape on such date. The exercise price of an ISO granted to any
participant who owns more than 10% of the total combined voting of all classes
of stock of the Company may not be less than 110% of the fair market value of
the shares of Common Stock on the date of grant. Any ISOs granted to such
participants also must expire within 10 years from the date of grant. Moreover,
Options granted under the 1994 Plan will not be ISOs to the extent that the
aggregate fair market value of the Common Shares with respect to which ISOs
under the 1994 Plan (or under any other plan maintained by the Company) first
become exercisable in any year exceeds $100,000.
<PAGE>
The Board of Directors believes it to be in the best interest of the Company
and its shareholders to adopt the 1994 Plan providing for the award of up to
1,000,000 Common Shares to officers and key employees, and the Board of
Directors adopted resolutions to that effect at its August 24, 1994 regular
meeting.
The affirmative vote of the holders of a majority of the outstanding shares of
Common Stock entitled to vote at the Meeting is required to authorize the
1994 Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ADOPTION OF PROPOSAL NO. 3.
<PAGE>
(Proposal No. 4)
Amendment to 1989 Employee
Stock Purchase Plan
The Morgan Keegan Employee Stock Purchase Plan ("Stock Purchase Plan")
provides a means for employees to purchase Common Stock of the Company
at an advantageous price. The Stock Purchase Plan is administered by the
Compensation Committee. The Company was initially authorized to issue up to
300,000 Common Shares pursuant to the Stock Purchase Plan, which amount has
been increased by reason of stock splits to an aggregate of 900,000 at July
31, 1994. The Board of Directors at its regular meeting on August 24,
1994 authorized an amendment to the Stock Purchase Plan authorizing the
issuance of an additional 1,000,000 shares, and such amendment is presented
hereby to the shareholders of the Company for approval. The Compensation
Committee may annually grant options to employees to purchase up to an
aggregate of 150,000 Common Shares at a price equal to 85% of the
market price of the Common Shares determined as of various times.
Each person employed by the Company or any subsidiary thereof on January 1
("Entry Date") of any Plan Year (January 1 through December 31) is eligible
to participate in the Stock Purchase Plan unless that employee (i) customarily
works 20 hours per week or less; (ii) customarily works five months or less in
any calendar year; or (iii) owns directly or indirectly Common Shares
possessing 5% or more of the total combined voting power of all the
outstanding Common Shares or comprises 5% or more of the total value of all
outstanding Common Shares. Consequently, Messrs. Morgan and Weller are
ineligible to participate in the Stock Purchase Plan. Employees on approved
military or maternity leave from employment retain their eligibility to
participate in the Stock Purchase Plan, notwithstanding the reduction in the
number of days and hours they work during the particular calendar year
within which such leave occurs.
The Compensation Committee has absolute discretion to grant or not to grant
options to purchase Common Shares during any Plan Year, and may grant
options to purchase up to 150,000 Common Shares (subject to adjustment in
the event of stock splits, stock dividends, recapitalizations, reclassific-
ations and other reorganizations that result in changes in the outstanding
Common Shares in any Plan Year). If employees cumulatively subscribe to
purchase more than 150,000 Common Shares pursuant to the Stock Purchase Plan in
any Plan Year, then the number of shares purchasable by each employee will be
reduced proportionally so that no more than 150,000 shares are purchased by all
eligible employees. Employees participate in the Stock Purchase Plan by
making an election at the beginning of each Plan Year and by authorizing
payroll deductions during such Plan Year.
On December 31 of the Plan Year, if options to purchase Common Shares pursuant
to the Stock Purchase Plan shall have been granted for that Plan Year,
the Compensation Committee shall purchase for each participant the number of
whole Common Shares (subject to proportionate reduction in the event of
oversubscription by all employees) determined by dividing the participant's
accumulated payroll deductions by the lesser of the following values:
(i) the greater of (a) 85% of the market price per share of the Common Shares
on January 1 of the Plan Year; or (b) 85% of the mean average market price
per share on the first day of each month during the
Plan Year on December 31 thereof; or
(ii) 85% of the market price per share on December 31 of the Plan Year.
<PAGE>
The balance of accumulated payroll deductions not used to purchase Common
Shares is to be promptly refunded to employees.
The affirmative vote of the holders of a majority of the outstanding shares of
Common Stock entitled to vote at the Meeting is required to authorize the
proposed amendment to the 1989 Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ADOPTION OF PROPOSAL NO. 4.
SHAREHOLDER PROPOSALS FOR 1994
Pursuant to the Securities Exchange Act of 1934, shareholder proposals intended
to be presented at the 1995 annual meeting of shareholders of the Company must
be received by the Company at its executive offices on or before July 15, 1995.
RELATIONSHIPS WITH INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young has served as auditors for the Company and its subsidiaries for
many years and will continue to so serve until and unless changed by action of
the Board of Directors. It has not been the practice of the Company, and it is
not required by its Articles of Incorporation or the By-Laws, to submit
Company's selection of auditors to the shareholders for ratification.
A partner of Ernst & Young is expected to be present at the annual meeting
with the opportunity to make a statement if he desires to do so and is
expected to be available to respond to appropriate questions.
OTHER MATTERS
The Board of Directors knows of no other business to be brought before the
meeting. If any other matters properly come before the meeting, the proxies
will be voted on such matters in accordance with the judgment of the persons
named as proxies therein, or their substitutes, present and acting at the
meeting.
INCORPORATION BY REFERENCE
The consolidated financial statements of the Company, included in the Company's
1994 Annual Report which accompanies this Proxy Statement, are hereby
incorporated by reference into this Proxy Statement as if stated verbatim
herein.
BY ORDER OF THE BOARD OF DIRECTORS
JOSEPH C. WELLER
Secretary
October 17, 1994
<PAGE>
EXHIBIT A
Morgan Keegan, Inc.
1994 Restricted Stock and Stock Option Plan
1. Purposes of the Plan
The purposes of the Morgan Keegan, Inc. 1994 Restricted Stock and Stock Option
Plan (the "Plan") are to advance the interests of Morgan Keegan, Inc. and its
subsidiaries, including Morgan Keegan & Company, Inc. (collectively, the
"Company"), to increase stockholder value by providing the Company's
officers and key employees with a proprietary interest in the growth and
performance of the Company and with incentives for continued service with
and rewards for outstanding service to the Company, its subsidiaries and/or
its affiliates, and to provide the Company with an additional means to attract
and retain qualified officers and key employees. The Plan will be known as
the "1994 Restricted Stock and Stock Option Plan." Pursuant to the Plan,
the Compensation Committee (as hereinafter designated) may grant stock options
and restricted stock awards to officers and other key employees of Morgan
Keegan, Inc., Morgan Keegan & Company, Inc., and their respective
subsidiaries and/or affiliates, on the terms and subject to the conditions set
forth in this Plan.
2. Definitions
As used in the Plan, the following terms shall have the meanings set forth
below:
2.1 "Award" means any form of Stock Option or Restricted Stock granted under
the Plan, whether singly, in combination, or in tandem, to a Participant by
the Compensation Committee pursuant to such terms, conditions, restrictions,
and/or limitations, if any, as the Compensation Committe establish.
2.2 "Award Agreement" means a written agreement setting forth the terms of
an Award.
2.3 "Board" means the Board of Directors of Morgan Keegan, Inc.
2.4 "Change in Control" means any transaction pursuant to which (i) the
Company merges with another corporation and is not the surviving entity, (ii)
substantially all of the Company's assets are sold to persons or entities not
affiliated with the Company, (iii) shares of Common Stock are issued or acquired
by persons or entities not affiliated with the Company, who, acting as a
group, have the voting power to change the composition of the Board, or (iv)
any other transaction of a nature similar to the foregoing.
2.5 "Code" means the Internal Revenue Code of 1986, as amended. References
to any provision of the Code shall be deemed to include successor provisions
thereto and rules and regulations thereunder.
2.6 "Compensation Committee" means the Compensation Committee of Morgan Keegan
& Company, Inc. Notwithstanding the foregoing, with respect to Awards to
members of the Compensation Committee of Morgan Keegan & Company, Inc., the
directors of Morgan Keegan, Inc. who are not officers or employees thereof
will act as the Compensation Committee, and the term "Compensation Committee"
as used herein shall mean those persons, where the context so requires.
2.7 "Common Stock" means the Common Stock of the Company, $.625 par value.
2.8 "Company" means Morgan Keegan, Inc., its subsidiaries and its affiliates.
<PAGE>
2.9 "Disability" means the inability to substantially perform the usual
duties of the person's occupation by reason of a medically determinable
physical or mental impairment which can be expected to be of long, continued
and indefinite duration as determined by the Compensation Committee.
2.10 "Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time. References to any provision of the Exchange Act shall be deemed
to include successor provisions thereto and rules and regulations thereunder.
2.11 "Fair Market Value," unless otherwise required by an applicable provision
of the Code, as of any date, means the last sales price of the Common Stock
on such date as reported on the New York Stock Exchange Consolidated Tape.
2.12 "Incentive Stock Option" ("ISO") means any Stock Option intended to be,
and designated and qualifying as, an "incentive stock option" within the
meaning of Section 422 of the Code.
2.13 "Non-Qualified Stock Option" means any Stock Option awarded under this
Plan that is not intended to be an Incentive Stock Option or that fails to
meet the requirements applicable to an Incentive Stock Option.
2.14 "Option" or "Stock Option" means a right granted pursuant to the Plan to
purchase shares of Common Stock, and includes the terms Incentive Stock Option
and Non-Qualified Stock Option.
2.15 "Option Price" or "Exercise Price" means the price per share at which
Common Stock may be purchased upon the exercise of an Option.
2.16 "Participant" means any individual to whom an Award has been granted by
the Compensation Committee under the Plan.
2.17 "Restricted Stock" means shares of Common Stock issued pursuant to a
Restricted Stock Award which are subject to forfeiture provisions or such other
conditions as may be determined by the Compensation Committee and specified in
an Award Agreement.
2.18 "Retirement" means retirement from active employment under a retirement
plan of the Company, or pursuant to an employment agreement with any of the
aforementioned, or termination of employment at or after age 55 under
circumstances which the Compensation Committee, in its sole discretion,
deems equivalent to retirement.
2.19 "Termination of Employment" means the termination of a Participant's
active employment with the Company which is not deemed to be a Retirement or
a termination due to a Disability.
3. Administration
3.1 The Plan shall be administered and interpreted by the Compensation
Committee.
3.2 The Compensation Committee shall have the authority to (a) establish
such rules and regulations as it deems necessary for the proper operation and
administration of the Plan; (b) select the persons to receive Awards under
the Plan; (c) determine the form of an Award, or combinations thereof, and
whether such Awards are to operate on a tandem basis and/or in conjunction
with or apart from other awards made by the Company, either within or outside
of this Plan; (d) determine the number of shares of Common Stock to be
covered by each such Award granted hereunder; (e) determine the terms and
conditions, not inconsistent with the terms of this Plan, of any Award
granted hereunder (including, but not limited to, any restriction or limitation
on transfer, any vesting schedule or acceleration thereof, and any forfeiture
provisions or waiver thereof), regarding any Award and the
<PAGE>
shares of Common Stock relating thereto, based on such factors as the
Compensation Committee shall determine, in its sole discretion;
(f) determine whether Common Stock payable with respect to an Award
under this Plan shall be deferred, either automatically or at the election of
the Participant; and (g) make any other determination or take any action that
the Compensation Committee deems necessary or desirable for the administration
of the Plan.
3.3 Unless authority is specifically reserved to the Board under the terms
of the Plan, the Company's Charter or By-Laws, or applicable law, the
Compensation Committee shall have sole discretion in exercising authority
under the Plan. The Compensation Committee may delegate to officers or
managers of the Company or any subsidiary the authority, subject to such terms
as the Compensation Committee shall determine, to perform administrative
functions and, with respect to Participants not subject to Section 16 of the
Exchange Act, to perform such other functions as the Compensation Committee
may determine, to the extent permitted under Rule 16b-3 and applicable
law. Any decision, interpretation or other action made or taken in good
faith by or at the direction of the Company, the Board, or the Compensation
Committee (or any of its members pursuant to any authority duly delegated
to any such member) arising out of or in connection with the Plan shall be
within the absolute discretion of all or any of them, as the case may be, and
shall be final, binding and conclusive on the Company and all employees and
Participants and their respective beneficiaries, heirs, executors,
administrators, successors and assigns.
4. Eligibility
Officers and key employees of the Company and its present and future
subsidiaries, who are responsible for or contribute to the management,
growth and profitability of the business of the Company, are eligible to
receive Awards under the Plan.
5. Shares Available for Awards
5.1 The maximum number of shares of Common Stock of the Company that may be
used in conjunction with the grant of Awards under the Plan is 1,000,000
(subject to adjustment as provided in Section 5.4 below).
5.2 Shares of stock which are attributable to Awards which expire or are
otherwise terminated, cancelled, surrendered or forfeited, during a calendar
year, are available for issuance or use in connection with future Awards,
during the calendar year in which they expire or otherwise provided, however,
that, if any such shares could not again be available for Awards to a
Participant who is subject to Section 16 of the Exchange Act under
applicable share counting requirements of Rule 16b-3, such shares shall
be available exclusively for Awards to Participants who are not subject to
Section 16.
5.3 Shares of Common Stock to be issued under the Plan may be authorized
and unissued shares of Common Stock, treasury stock or a combination thereof.
5.4 In the event of a merger, consolidation, reorganization,
recapitalization, stock split, stock dividend, other extraordinary dividend
or other change in corporate structure or capitalization affecting the
Common Stock, the Compensation Committee may make appropriate adjustment in
the number or kind of shares subject to options, rights and other Awards
granted under the Plan, and/or the exercise price and other terms and
conditions of Awards or appropriate adjustment in the maximum number of
shares referred to in Section 5 of the Plan, as the Compensation Committee
may determine to be necessary or appropriate in order to prevent dilution
or enlargement of the rights of Participants.
<PAGE>
6. Awards Under the Plan
6.1 Stock Options. The Compensation Committee may grant Incentive Stock
Options ("ISO"), Non-Qualified Stock Options or both to purchase shares of
Common Stock from the Company to such officers and key employees, in such
amounts and subject to such terms and conditions, as the Compensation
Committee shall determine in its sole discretion, subject to the provisions
of the Plan, provided, however, that in no event may any Stock Option be
granted hereunder after the expiration of 10 years after the date of
the Plan. The automatic or discretionary grant of "reload" Stock Options
is specifically authorized.
In the case of ISO's, the terms and conditions of such grants, including the
exercise price of the purchase of Common Stock, shall be subject to and comply
with the requirements of Section 422 of the Code, as from time to time amended,
and any implementing regulations.
The exercise price at which shares of Common Stock may be purchased pursuant to
the grant of an Option shall be fixed by the Compensation Committee at the
time of grant; however, the price of an ISO must be equal to or greater than
the Fair Market Value of the shares of Common Stock covered thereby. The
exercise price of an ISO granted to any Participant who owns shares of Common
Stock possessing more than 10% of the total combined voting power of all
outstanding shares of Common Stock of the Company must be at least equal to
110% of the fair market value of the shares of Common Stock on the date of
grant. Options granted under the Plan will not be ISOs to the extent that
the Fair Market Value of the shares of Common Stock with respect to
which ISOs first become exercisable in any year exceeds $100,000.
6.2 Restricted Stock Awards. The Compensation Committee may grant Restricted
Stock Awards ("RSAs") to such officers and key employees, in such amounts and
subject to such terms and conditions as the Compensation Committee may
determine in its sole discretion, including such restrictions on
transferability and other restrictions as the Compensation Committee may
impose, which restrictions may lapse separately or in combination at such times,
under such circumstances, in such installments, or otherwise as the
Compensation Committee shall determine.
Restricted Stock granted under the Plan shall be evidenced by certificates
registered in the name of the Participant and bearing an appropriate
legend referring to the terms, conditions, and restrictions applicable to such
Restricted Stock. The Company shall retain physical possession of any such
certificates, and each Participant awarded Restricted Stock shall
have delivered a stock power to the Company, endorsed in blank,
relating to the Restricted Stock for so long as the Restricted Stock is
subject to a risk of forfeiture.
Unless otherwise determined by the Compensation Committee at the time of
an Award, the holder of an RSA shall have the right to vote the
restricted shares and to receive dividends thereon, unless and until such
shares are forfeited.
In the event all or any of the shares subject to RSA are forfeited due to
failure to meet or comply with restrictions imposed by the Compensation
Committee at the time of grant prior to the lapse of such restrictions,
the Company shall repay to the Participant (or the Participant's estate) any
cash amount paid by the Participant for such forfeited shares.
6.3 Consideration; Tandem and Substitute Awards. Except as provided in this
Section 6.3 or to the extent that payment of lawful consideration may be
required under the Tennessee Business Corporation Act, only services may be
required as consideration for the grant (but not the exercise) of any Award.
Awards granted under the Plan may, in the discretion of the Compensation
Committee, be granted either alone or in addition to,
<PAGE>
in tandem with, or in substitution for, any other Award granted under the
Plan or any award granted under any other plan of the Company
or any business entity to be acquired by the Company or any other right of
a Participant to receive payment from the Company. If an Award is granted in
substitution for another Award under the Plan or other award, the Compensation
Committee shall require the surrender of such additional Award or
other award in consideration for the grant of the new Award. Awards granted
in addition to or in tandem with additional Awards or awards
under other plans may be granted either as of the same time as or a
different time from the grant of such additional Awards or other awards.
6.4 Vesting; Forfeiture. Awards of Options and Restricted Stock will vest and
become non-forfeitable as determined by the Compensation Committee.
Notwithstanding the foregoing, RSAs shall vest and become non-forfeitable
upon the Death, Disability or Retirement of a Participant or upon a Change in
Control. Subject to the provisions of Section 422A of the Code and Rule 16b-3,
Options shall become exercisable in accordance with their terms in the event
of Death, Disability or Retirement of a Participant or upon a Change in Control.
Upon the termination of employment of any Participant for any reason other
than Death, Disability, Retirement or Change in Control, any unvested
Options or RSAs shall expire and be forfeited to the Company and shall
thereafter be subject to reissuance under the 1994 Plan.
7. Award Agreements
Awards under the Plan shall be evidenced by an agreement approved by the
Compensation Committee that sets forth the terms, conditions and limitations
of an Award. The Compensation Committee may amend agreements theretofore
entered into, either prospectively or retroactively, including, but not
limited to, the acceleration of vesting of or lapse of restrictions on an
Award and the extension of time to exercise an Award, except that,
no such amendment shall affect the Award in a materially adverse manner
without the consent of the Participant (except for an amendment made to cause
the Plan to qualify for an exemption provided by Rule 16b-3). Any Award
Agreement shall contain vesting and forfeiture provisions which are consistent
with the provisions of Section 6.4 hereof.
8. Miscellaneous Provisions Related to Participants
8.1 The grant of an Award shall not be construed as giving a Participant
the right to be retained in the employ of the Company. The Company may
at any time dismiss a Participant from employment, free from any liability
or any claim under the Plan, unless otherwise expressly provided in the Plan
or in any Award Agreement. No Participant or other person shall have any
claim to be granted any Award, and there is no obligation for uniformity
of treatment of Participants or holders or beneficiaries of Awards.
8.2 Except as may be otherwise provided under Section 6.3, no Award granted
under the Plan, unless otherwise provided in the Award Agreement, shall entitle
the holder of such Award to any dividend, voting or other right of a stock-
holder unless and until the date of issuance under the Plan of the shares
that are subject to such Award.
8.3 The purchase price of the shares of Common Stock as to which an Option
is exercised shall be paid in cash or by check, except that the Compensation
Committee may, in its discretion, allow such payment to be by surrender of
unrestricted shares of Common Stock (valued at their then Fair Market Value at
the date of exercise), or by a combination of cash, check and unrestricted
shares of Common Stock (valued at their then Fair Market Value at the date
of exercise), or by a combination of cash, check and unrestricted
shares of Common Stock.
8.4 A Participant may be required to pay to the Company, and the Company
shall have the right to deduct from all amounts paid to a Participant
(whether under the Plan or otherwise), any taxes required by law to be
<PAGE>
paid or withheld in respect of Awards hereunder to such Participant. The
Compensation Committee may provide for additional cash payments to holders of
Awards to defray or offset any tax arising from the grant, vesting exercise
or payment of any Award or, at the election of the holder of the Award, the
Compensation Committee may withhold shares or accept the transfer of shares to
the Company, in such amounts as are equivalent to the Fair Market Value of the
withholding obligations.
8.5 If the Compensation Committee determines that such action is advisable,
the Company may assist any Participant in obtaining financing from the
Company or from any bank or other third party, on such terms as are determined
by the Compensation Committee, and in such amount as is required to accomplish
the purposes of the Plan, including, but not limited to, permitting the exercise
of an Award and/or paying any taxes in respect thereof to the extent permitted
by law. Such assistance may take any form that the Compensation Committee deems
appropriate, including, but not limited to, a direct loan from the Company, a
guarantee of the obligation by the Company, or the maintenance by the Company
of deposits with such bank or third party.
8.6 Awards, and any right that comes within the general definition of
"derivative security" of Rule 16a-1(c) under the Exchange Act, shall not be
assignable or transferable by a Participant except by will or the laws of
descent and distribution (or pursuant to a beneficiary designation authorized
under Section 8.7), and during the Award holder's lifetime, such
Awards and rights shall be exercisable only by such holder or such holder's
duly appointed guardian or legal representative.
8.7 Each Participant may file and maintain with the Company a written
designation of one or more persons as the beneficiary or beneficiaries who
shall be entitled to receive the Award or related payment payable under
the Plan upon the Participant's death. If no such designation is in effect at
the time of a Participant's death, or if no designated beneficiary survives
the Participant or if such designation conflicts with the
law, the Participant's estate shall be entitled to receive the Award or
related payment, if any, payable under the Plan upon the Participant's death.
9. Governing Law
The validity, construction, and effect of the Plan, any rules and regulations
relating to the Plan and any Award Agreement shall be determined in accordance
with the laws of the State of Tennessee and applicable federal law.
10. Severability
If any provision of the Plan or any Award is or becomes or is deemed to be
invalid, illegal, or unenforceable in any jurisdiction or as to any Participant
or Award under any law deemed applicable by the Compensation Committee, such
provision or Award shall be construed or deemed amended to conform to
applicable laws, or if it cannot be construed or deemed amended, in the
determination of the Compensation Committee, without materially altering
the intent of the Plan or the Award, such provision shall be stricken as to
such jurisdiction, Participant or Award and the remainder of the Plan and
any such Award shall remain in fullforce and effect.
11. Unfunded Plan
The Plan is intended to constitute an "unfunded" plan. Unless otherwise
determined by the Compensation Committee, the Plan shall be unfunded and shall
not create (or be construed to create) a trust or a separate fund or funds.
To the extent that any person acquires a right to receive payments from the
Company pursuant to an Award, such right (unless otherwise determined by the
Compensation Committee) shall be no greater than the right of any
unsecured general creditor of the Company.
<PAGE>
12. Rule 16b-3 Compliance
12.1 Unless a Participant could otherwise transfer an equity security,
derivative security, or shares issued upon exercise of a derivative
security granted under the Plan without incurring liability under
Section 16(b) of the Exchange Act, (i) an equity security issued under the
Plan, other than an equity security issued pursuant to the exercise
of a derivative security granted under the Plan, shall be held for at least six
months from the date of acquisition, and (ii) at least six months shall elapse
from the date of acquisition of a derivative security to the date of
disposition of the derivative security (other than upon exercise or
conversion) or disposition of any underlying equity security issued pursuant
to the exercise or conversion of such derivative security.
12.2 It is the intent of the Company that this Plan comply in all respects
with applicable provisions of Rule 16b-3 and Rule 16a-1(c)(3) under the
Exchange Act in connection with any grant of Awards to or other
transaction by a Participant who is subject to Section 16 of the Exchange Act
(except for transactions exempted under alternative Exchange Act Rules
or acknowledged in writing to be non-exempt by such Participant). Accordingly,
if any provision of this Plan or any Award Agreement does not comply with the
requirements of Rule 16b-3 or Rule 16a-1(c)(3) as then applicable to any such
transaction, such provision will be construed or deemed amended to the
extent necessary to conform to the applicable requirements of Rule
16b-3 or Rule 16a-1(c)(3) so that such Participant shall avoid liability
under Section 16(b).
12.3 No Option shall be granted prior to December 31, 1994, that has an
option price, base price, or exercise price less than 50% of the fair
market value of the underlying shares at the date of grant.
13. Effective Date and Term of Plan
13.1 The Plan shall be submitted to the stockholders of the Company for
their approval at the Annual Meeting of Stockholders to be held November
22, 1994. The Plan shall become effective upon the affirmative vote of the
holders of a majority of the shares of Common Stock present, or represented,
and entitled to vote at the meeting.
13.2 The Plan shall remain in effect until August 24, 2004, unless sooner
terminated by the Board. After this date, no further Awards may be granted but
previously granted Awards shall remain outstanding in accordance with their
applicable terms and conditions, as stated in the Award Agreement, and
conditions of the Plan.
14. Amendment and Termination of the Plan
14.1 The Plan may be amended by the Board in any respect, without the
consent of stockholders or Participants, except that any such
amendment (although effective when made) shall be subject
to the approval of the Company's stockholders within one year after such
Board action if such stockholder approval is required by any federal
or state law or regulation or the rules of any stock exchange or automated
quotation system on which the Common Stock may then be listed or quoted, and
the Board may otherwise, in its discretion, determine to subject
any other amendment to the Plan to stockholders for approval. In addition, no
amendment may materially impair the rights of a Participant under any Award
previously granted under the Plan without the consent of such Participant,
unless required by law.
14.2 The Plan may be terminated at any time by the Board. No further Awards
may be made under the Plan after termination, but termination shall
not affect the rights of any Participant under, or the authority of the
Compensation Committee with respect to, any grants or awards made prior
to termination.
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