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EXHIBIT 10(h)
FIRST TENNESSEE NATIONAL CORPORATION
DIRECTORS AND EXECUTIVES DEFERRED COMPENSATION PLAN
(AMENDED AND RESTATED AS OF JANUARY 21, 1997)
I. PURPOSE
The purpose of the First Tennessee National Corporation Directors and Executives
Deferred Compensation Plan (hereinafter referred to as the "Plan") is to advance
the interests of First Tennessee National Corporation, and any successor
thereto, and its subsidiaries (hereinafter collectively referred to as the
"Company") by encouraging and enabling the Company to attract, motivate and
retain executives and nonemployee members of the Board of Directors.
II. EFFECTIVE DATE
The effective date of the Plan is July 1, 1985.
III. DEFINITIONS
A. "Accrual Account" means a bookkeeping account maintained for each
Participant which will reflect the sum of each deferral plus interest payable at
the Applicable Rate, compounded annually, on the original amount of deferral
less Interim Distributions, if any.
B. "Administrator", for the purpose of this agreement, means the Vice
President, Compensation.
C. "Applicable Rate" means that rate approved annually by the
Committee, to be not less than the Guaranteed Rate nor more than the Projected
Rate, which is credited on the Total Compensation deferred.
D. "Board" means the Board of Directors of First Tennessee National
Corporation.
E. "Base Salary" means the gross monthly salary paid to the
Participants, not including Nonemployee Directors.
F. "Cause." Termination by the Company of a Participant's employment
for "Cause" shall mean termination upon (a) the willful and continued failure by
a Participant to perform substantially his or her duties with the Company (other
than any such failure resulting from his or her incapacity due to physical or
mental illness) after a demand for substantial performance is delivered to the
Participant by the Chairman of the Board or President of the Company which
specifically identities the manner in which such executive believes that the
Participant has not substantially performed his or her duties, or (b) the
willful engaging by a Participant in illegal conduct which is materially and
demonstrably injurious to the Company. For purposes of this subsection (F), no
act, or failure to act,
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on a Participant's part shall be considered "willful" unless done, or omitted to
be done, by the Participant in bad faith and without reasonable belief that the
Participant's action or omission was in, or not opposed to, the best interests
of the Company. Any act, or failure to act, based upon authority given pursuant
to a resolution duly adopted by the Board or based upon the advice of counsel
for the Company shall be conclusively presumed to be done, or omitted to be
done, by a Participant in good faith and in the best interests of the Company.
It is also expressly understood that a Participant's attention to matters not
directly related to the business of the Company shall not provide a basis for
termination for Cause so long as the Board has approved the Participant's
engagement in such activities. Notwithstanding the foregoing, a Participant
shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to the Participant a copy of a resolution duly adopted
by the affirmative vote of not less than three quarters of the entire membership
of the Board at a meeting of the Board called and held for the purpose (after
reasonable notice to the Participant and an opportunity for Participant,
together with his or her counsel, to be heard before the Board), finding that in
the good faith opinion of the Board the Participant was guilty of the conduct
set forth above in (a) or (b) of this subsection (F) and specifying the
particulars thereof in detail.
G. "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));
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(iii) the 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
(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.
H. "Committee", for the purpose of this agreement, means the Human
Resources Committee of the Board of Directors.
I. "Director's Compensation" means the total sum of fees and retainer
earned by a Nonemployee Director.
J. "Deferral and Acknowledgment Agreement" means an agreement
substantially in the form of Exhibit A attached hereto.
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K. "Guaranteed Rate" means the annualized rate on ten (10) year United
States Treasury obligations during each Plan Year as published by Data
Resources, Inc.
L. "Incentive Compensation" means the gross amount earned by a
Participant during the Plan Year under the Company's Management Incentive Plan,
Annual Bonus Plan or the Bond Division Management Bonus Plan.
M. "Nonemployee Director" means a member of the Board of Directors of
the Company who is not concurrently a common law employee of the Company.
N. "Normal Retirement" means any termination by a Participant after
attaining the age of 65.
O. "Participant" means an individual who is authorized by the Committee
to participate in this Plan and who has executed a Deferral and Acknowledgment
Agreement.
P. "Plan Year" means (i) July 1, 1985 through December 31, 1985 and
(ii) each and every calendar year thereafter.
Q. "Projected Rate" means that rate applicable to each Participant
group as set forth below which will be credited on each date for which interest
is to be credited under the Plan:
Attained Age At End of
Year of Deferral Election Projected Rate
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39 & Under 19%
40 - 44 20%
45 - 49 21%
50 - 54 22%
55 - 59 23%
60 & Over 24%
R. "Total Compensation" means the sum of Base Salary and Incentive
Compensation, or, in the case of a Nonemployee Director, the sum of the
Director's retainer and fees.
IV. TERM
This plan is effective on the date hereof and shall be effective until
terminated by the Board; however, this Plan provides only for a deferral and
corresponding interest rate for the first Plan Year with subsequent deferrals
and corresponding interest rates to be approved by the Committee for each
separate Plan Year. This Plan may be amended, renewed, restated or extended for
additional Plan Years by the Committee and the Committee may in its sole
discretion, on the basis of financial or other considerations, not authorize the
execution of Deferral and Acknowledgment Agreements by Participants
prospectively deferring compensation for additional years. Notwithstanding the
foregoing, neither the termination nor any amendment of the Plan or any Deferral
and
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Acknowledgment Agreement shall, without the consent of the Participant, affect
the Participant's rights under any Deferral and Acknowledgment Agreement in
existence on the date of such termination or amendment.
V. DEFERRAL AND ACKNOWLEDGMENT AGREEMENT
A. Election to Defer. As hereinafter provided and subject to acceptance
by the Company, a Participant may elect to reduce the amount of Total
Compensation which will be paid to him or her during the Plan Year by executing
and delivering to the Company in a timely fashion a Deferral and Acknowledgment
Agreement. Notwithstanding anything herein to the contrary, during the ten
consecutive Plan Years commencing with the Plan Year with respect to which a
Participant is first authorized to participate in the Plan, such Participant may
elect to make no more than five deferrals. The preceding sentence does not
confer upon any Participant the right to make a deferral with respect to any
Plan Year; it merely places a limitation upon the total number of deferrals a
Participant may make if otherwise authorized to participate in the Plan, except
for Participants who are Nonemployee Directors who may elect to make no more
than six deferrals. Notwithstanding the 10-year limitation in this Section V(A),
employee Participants may make salary deferrals for the 1995 Plan Year unless
such a deferral would cause the Participant to exceed the five deferral
limitation.
B. Creation of Contractual Obligation. The Company, by acceptance of a
properly executed and timely delivered Deferral and Acknowledgment Agreement
agrees to pay to the Participant or his or her Designated Beneficiary, as
defined in Paragraph VII, the benefits described in Paragraph VI, which shall be
calculated based upon (i) the amount of the Total Compensation deferred by each
Participant, (ii) the interest rate established for the Plan Year by the
Committee applied to the amount deferred, (iii) the time which elapses between
the date of deferral and the date of the benefit payments, and (iv) other
factors established in this Plan and by the Committee.
C Acceptance. The Administrator is authorized to accept and approve a
properly executed Deferral and Acknowledgment Agreement on behalf of the
Company.
D. Timing of Election. A Participant may execute and deliver to the
Company a Deferral and Acknowledgment Agreement:
1. on or before December 15 of any calendar year, however, such a
Deferral and Acknowledgment Agreement shall be effective to
reduce a Participant's Total Compensation only for the next
subsequent Plan Year;
2. in the first Plan Year only, on or before July 31, 1985,
however, such a Deferral and Acknowledgment Agreement may be
executed an delivered only by a Participant who is employed as
an employee or is a Nonemployee Director on June 1, 1985 and
is only effective to reduce a Participant's Total Compensation
earned during the period from the date of the execution and
delivery of the Deferral and Acknowledgment Agreement until
the end of the first Plan Year of this Plan;
3. notwithstanding any other provision of this Plan or any
Deferral and Acknowledgment
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Agreement, no Deferral and Acknowledgment Agreement shall be
effective to defer compensation which is earned by any
Participant on or before the date upon which the Deferral and
Acknowledgment Agreement is properly executed and timely
delivered to the Company.
E. Amount of Deferral. A Participant who is not a Nonemployee Director
may elect to defer during any Plan Year any dollar amount which is less than or
equal to thirty-five percent (35%) of a Participant's Total Compensation
applicable to the Plan Year. However, a Nonemployee Director may defer any
dollar amount which is less than or equal to one hundred percent (100%) of his
or her Director's Compensation. Notwithstanding any provision of any Deferral
and Acknowledgment Agreement or this Plan to the contrary, the Deferral and
Acknowledgment Agreement of a Participant shall be modified automatically if
necessary such that all actual reductions pursuant to his or her Deferral and
Acknowledgment Agreement are made from his or her Base Salary or Incentive
Compensation or, in the case of a Nonemployee Director, from his or her
Director's Compensation.
F. Accrual of Interest. Where applicable under the terms of this Plan,
interest on the amounts in an Accrual Account shall accrue interest at the
Applicable Rate, commencing on the date on which the Total Compensation deferred
under the Deferral and Acknowledgment Agreement would have been paid. The
Applicable Rate may be adjustable only on an annual basis, effective January 1
of each Plan Year; provided, however, that no adjustment to the Applicable Rate
may affect amounts previously accrued. Notwithstanding the provisions of the
prior sentence, the Applicable Rate will be replaced by the Guaranteed Rate if
the Plan otherwise requires a recalculation of interest at the Guaranteed Rate.
The Applicable Rate for the first Plan Year shall be the Projected Rate and
shall remain so unless adjusted by the Committee as set forth herein.
VI. PAYMENT OF BENEFITS
A. Retirement Benefit. If a Participant terminates employment with the
Company and such termination constitutes a Normal Retirement, then the Company
shall pay to the Participant the monthly benefit defined in Paragraph 2 of each
of his or her Deferral and Acknowledgment Agreements on those dates specified in
this paragraph. The first benefit payable under Paragraph 2 of a Deferral and
Acknowledgment Agreement shall be paid on the thirty-first (31st) day of January
following the calendar year in which the Participant attains Normal Retirement.
Notwithstanding the foregoing, any Deferral and Acknowledgment Agreement
executed by a Participant which defers compensation which would otherwise be
payable to the Participant in or after the Plan Year in which he or she attains
Normal Retirement shall provide that the first benefit payable shall be paid on
the thirty-first (31st) day of January following the later of (i) the fifth
(5th) anniversary of the date upon which the Deferral and Acknowledgment
Agreement is accepted by the Company or (ii) his or her Normal Retirement.
B. Alternative Retirement Benefit. If a Participant, prior to a Change
in Control, is, on the date of Normal Retirement, or becomes thereafter, but
prior to a Change in Control, a proprietor, officer, partner, or employee of, or
otherwise is or becomes, prior to a Change in Control, affiliated with (i) any
business that is in competition with the Company or (ii) any government agency
having
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regulatory jurisdiction over the business activities of the Company, then, upon
that date, no further benefit payments shall be made to the Participant or any
other person under any provision of this Plan, except that, the Participant
shall be paid in lump sum on the thirty-first (31st) day of January following
that date, an amount equal to the value of the Accrual Account recalculated over
the entire period of deferral at an interest rate equal to the Guaranteed Rate,
compounded annually, from the date on which the deferred compensation would have
been paid to the date on which the act occurs or status is first attained. In
the event Interim Distributions are made to the Participant, said payments shall
reduce the amount to which the Guaranteed Rate is applied. If the above
calculation results in a negative amount, such amount shall not be collected
from, or enforced against the Participant as a claim by the Company.
C. Interim Distributions. A Participant shall be paid the benefits
defined in Paragraph 3 of his or her Deferral and Acknowledgment Agreement on
those dates stated in that paragraph of each Deferral and Acknowledgment
Agreement (hereinafter referred to as "Interim Distributions"). However, no
Interim Distribution shall be paid to any Participant as a result of the
Deferral and Acknowledgment Agreement if the Participant is age fifty-eight (58)
or older on any day during the Plan Year in which a Deferral and Acknowledgment
Agreement is executed. No Interim Distribution shall be paid to a Participant on
or after the date upon which the Participant or his or her Designated
Beneficiary receives any benefit or payment under any other paragraph of this
Plan or any other paragraph of his or her Deferral and Acknowledgment Agreement.
D. Pre-Retirement, Pre-Disability Death Benefit. If a Participant dies
on or before the date upon which he or she is first entitled to receive a
benefit under this paragraph, then his or her Designated Beneficiary, as defined
in Paragraph VII, shall be paid in lump sum or, at the discretion of the
Administrator, in five (5) annual installments with interest paid on the unpaid
balance at the Applicable Rate, an amount equal to the value of the Accrual
Account. In the event Interim Distributions are made to the participant, said
payments shall reduce the amount to which the Applicable Rate is applied. If the
above calculation results in a negative amount, such amount shall not be
collected from or enforced against the Designated Beneficiary or the
Participant's estate as a claim by the Company. If the Participant's Designated
Beneficiary receives or is entitled to receive a benefit hereunder, then no
person or persons shall receive or be entitled to receive any benefit or payment
under any other paragraph of this Plan or under any Deferral and Acknowledgment
Agreement, notwithstanding any other provision of this Plan or any Deferral and
Acknowledgment Agreement. The benefit payable under this paragraph, if lump sum,
shall be paid on the thirty-first day of January following the Participant's
date of death (including interest thereon at the Applicable Rate). In the event
installment payments are elected, said payments shall commence on the
thirty-first day of January following the Participant's death and continue
thereafter on January 31st of each successive year.
E. Pre-Retirement Disability Benefit. If a Participant suffers a
Disability or becomes Disabled, as those terms are defined in the First
Tennessee National Corporation Long Term Disability Income Plan, as amended from
time to time, prior to that date upon which he or she receives or is entitled to
receive a benefit under this paragraph, then he or she shall be paid by the
Company in lump sum, or at the discretion of the Administrator, in five (5)
annual installments with interest paid on the unpaid balance at the Applicable
Rate, an amount equal to the value of the
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Accrual Account. In the event Interim Distributions are made to a Participant,
said payments shall reduce the amount to which the Applicable Rate is applied.
If the above calculation results in a negative amount, such amount shall not be
collected from, or enforced against the Participant as a claim by the Company.
If the Participant receives or is entitled to receive a benefit hereunder, then
no person or persons shall receive or be entitled to receive any benefit or
payment under any other paragraph of this Plan or under any Deferral and
Acknowledgment Agreement, notwithstanding any other provisions of this Plan or
any Deferral and Acknowledgment Agreement. The benefit payable under this
paragraph, if lump sum, shall be paid on the thirty-first (31st) day of January
following the Participant's date of Disability (including interest thereon at
the Applicable Rate). In the event installments payments are elected, said
payments shall commence on the thirty-first day of January following the
Participant's Disability and continue thereafter on January 31st of each
successive year.
F. Termination of Employment Prior to Retirement. If a Participant,
prior to a Change in Control, terminates employment with the Company or is
terminated by the Company for Cause and if such termination is prior to death,
disability and Normal Retirement, then he or she shall be paid in lump sum on
the thirty-first (31st) day of January following his or her date of termination
an amount equal to the value of the Accrual Account recalculated over the entire
period of deferral at an interest rate equal to the Guaranteed Rate, compounded
annually, from the date on which the deferred compensation would have been paid
to the date on which the benefit herein is paid. In the event Interim
Distributions are made, said payments shall reduce the amount to which the
Guaranteed Rate is applied. If the above calculation results in a negative
amount, such amount shall not be collected from, or enforced against the
Participant as a claim by the Company. If the Participant receives or is
entitled to receive a benefit hereunder, then no person or persons shall then or
thereafter receive any benefit or payment under any other paragraph of this Plan
or any Deferral and Acknowledgment Agreement, notwithstanding any other
provision of this Plan or any Deferral and Acknowledgment Agreement.
Notwithstanding the foregoing, if the Participant's termination occurs prior to
a Change in Control and prior to death, disability and Normal Retirement and is
as the result of any reason other than voluntary termination, or a termination
by the Company for Cause, then the value of the Accrual Account distributed to
such Participant shall be calculated over the entire period of deferral at the
Applicable Rate.
G. Early Retirement Benefit. If a Participant other than a Nonemployee
Director terminates employment with the Company after the date on which he or
she qualifies to receive an early retirement benefit, as defined in the First
Tennessee National Corporation Pension Plan, or if a Participant who is a
Nonemployee Director terminates as a director of the Company after at least 10
years of service as a director of the Company, then the Participant shall be
entitled to receive a monthly benefit as described in paragraph 2 of each of his
or her Deferral and Acknowledgment Agreements, however, the Accrual Account
shall be recalculated over the entire period of deferral using an interest rate
equal to the Guaranteed Rate (unless a higher rate is approved by the
Committee). In addition, said benefit shall commence on the later of (i) the
thirty-first (31st) day of January following the calendar year in which the
Participant commences early retirement, or (ii) the January 31 of the year
immediately following the fifth anniversary of the execution date of the
Deferral and Acknowledgment Agreement (unless a later date, which is prior to or
coincident with the Participant's attainment of the age of 65, is approved by
the Committee). In the event Interim Distributions are made, said payments shall
reduce the amount to which the Guaranteed Rate is
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applied. If the above calculation results in a negative amount, such amount
shall not be collected from, or enforced against the Participant as a claim by
the Company. If the Participant receives or is entitled to receive a benefit
hereunder, then no person or persons shall then or thereafter receive any
benefit or payment under any other paragraph of this Plan or any Deferral and
Acknowledgment Agreement, notwithstanding any other provision of this Plan or
any Deferral and Acknowledgment Agreement.
H. Change in Control.
(i) This Section VI.H(i) applies solely to Participants who are current
or former Nonemployee Directors. After a Change in Control, the value
of the Accrual Account distributed to a Participant or to the trustee
of a trust for the benefit of one or more Participants shall be
calculated over the entire period of deferral through the date of the
Change in Control at the Applicable Rate. Thereafter, interest shall
accrue at the Applicable Rate unless the Participant voluntarily
terminates or is terminate by the Company for Cause, in which case
interest shall accrue from the date of the Change in Control at the
Guaranteed Rate. Thus, if a Participant's termination occurs on or
after a Change in Control and is the result of any reason other than a
voluntary termination or a termination by the Company for Cause, then
the value of the Accrual Account distributed to such Participant shall
be calculated over the entire period of deferral at the Applicable
Rate.
(ii) Notwithstanding any provision of this Plan to the contrary, in the
event a Change in Control or "Pre-Change in Control Date" (as defined
below) occurs, the Company shall make a lump sum payment (a "Payment")
to each Participant other than current or former Nonemployee Directors
(except as provided below) on a date (the "Payment 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 the Change in Control, but in any event prior to the
effective date of such Change in Control). For purposes of this Section
VI.H (ii), "Determination Date" shall mean the date of the Change in
Control (or, if an agreement to effectuate a Change in Control pursuant
to a Business Combination has been executed, the date one month prior
to the date such agreement was executed). If a Payment is to be made,
the amount of the Payment shall be determined as follows:
(1) (a) If on the Payment Date a Participant is (I) employed by
the Company or any Subsidiary (provided that any Participant
whose employment is terminated by the Company other than for
Cause (as defined below) on or after the Determination Date
shall be deemed solely for purposes of this Section
VI.H(ii)(1)(a) to be employed on the Payment Date by the
Company or any Subsidiary), (II) receiving or entitled to
receive benefits under Section VI.A, or (III) otherwise
designated by the Committee as eligible to receive benefits
under this Section VI.H(ii)(1)(a), the Company shall pay on
the Payment Date to such Participant a Payment in an amount
equal to the present value as of the Payment Date of the
remaining scheduled Interim Distributions and
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retirement distributions to be made to such Participant as of
December 31, 1996 (based upon assumed continued accruals at an
interest rate equal to the Applicable Rate effect on December
31, 1996, as disclosed to such Participant by the Company in
its statement of benefits under this Plan), to the extent such
distributions have not been made; provided, that in the event
a Participant eligible for a Payment under this Section
VI.H(ii)(1)(a) has already received prior to the Payment Date
a lump sum benefit under Section VI.F, the amount of Payment
to such Participant shall be an amount equal to the excess, if
any, of (x) the amount of the Payment determined under this
Section VI.H(ii)(1)(a) (without regard to this proviso), over
(y) the amount of the lump sum benefit already received
pursuant to Section VI.F. For purposes of this Section
VI.H(ii)(1)(a), the "present value" shall be determined on an
interest-only basis (i.e., without discount for mortality)
using a discount rate of 4.2%, compounded annually (see
Exhibit B for an illustration of such present value
calculation).
(b) For purposes of Section VI.H(ii), termination by the
Company of a Participant's employment for "Cause" shall mean
termination upon (I) the willful and continued failure by such
Participant to perform substantially such Participant's duties
with the Company (other than any such failure resulting from
such Participant's incapacity due to physical or mental
illness) after a written demand for substantial performance is
delivered to such Participant by the Chairman of the Board,
Chief Executive Officer or President of the Company which
specifically identifies the manner in which such person
believes that such Participant has not substantially performed
such Participant's duties, which failure to perform causes
material and demonstrable economic harm to the Company or its
Affiliates (as defined below), (II) the willful engaging by
such Participant in illegal conduct which is materially and
demonstrably injurious to the Company, or (III) the conviction
of such Participant of, or a plea of guilty or nolo contendere
by such Participant to, a felony. For purposes of this Section
VI.H(ii)(1)(b), no act, or failure to act, on such
Participant's part shall be considered "willful" unless done,
or omitted to be done, by such Participant in bad faith and
without reasonable belief that such Participant's action or
omission was in, or not opposed to, the best interests of the
Company or its Affiliates. Any act, or failure to act, based
upon authority given pursuant to a resolution duly adopted by
the Board or based upon the advice of counsel for the Company
or upon the instructions of the Chief Executive Officer or
other senior executive officer of the Company shall be
conclusively presumed to be done, or omitted to be done, by
such Participant in good faith and in the best interests of
the Company and its Affiliates. For purposes of this Section
VI.H(ii)(1)(b), "Affiliate" means any person directly or
indirectly controlling, controlled by, or under common control
with the Company. It is also expressly understood that such
Participant's attention to matters or such Participant's
engagement in activities not directly related to the business
of the Company shall not provide a basis for termination for
Cause so long as the Board has approved such Participant's
engagement in such activities prior to or following a Change
in Control. Notwithstanding the foregoing, in the case of
clause (I) or (II) of this Section VI.H(ii)(1)(b), such
Participant shall not be deemed to have been terminated for
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Cause unless and until there shall have been delivered to such
Participant a copy of a resolution duly adopted by the
affirmative vote of not less than three-fourths (3/4) of the
entire membership of the Board (excluding such Participant if
such Participant is a Board member) at a meeting of the Board
called and held for such purpose (after reasonable notice to
such Participant and an opportunity for such Participant,
together with such Participant's counsel, to be heard before
the Board), finding that in the good faith opinion of the
Board such Participant was guilty of the conduct set forth
above in clause (I) or (II) of this Section VI.H(ii)(1)(b) and
specifying the particulars thereof in detail. The Company must
notify such Participant of any event constituting Cause within
ninety (90) days following the Company's knowledge of its
existence or such event shall not constitute Cause under this
Section VI.H(ii)(1)(b).
(2) If on the Payment Date a Participant is (a) entitled to
receive a lump sum benefit under Section VI.B or (b) entitled
to receive a lump sum benefit under Section VI.F (other than
any Participant eligible to receive a Payment pursuant to the
proviso in clause (I) of Section VI.H(ii)(1)(a)), the Company
shall pay on the Payment Date to such Participant a Payment in
an amount equal to the amount of such lump sum benefit
otherwise payable under such applicable Section to such
Participant (with continued interest accruals through the
Payment Date only).
(3) If on the Payment Date a Participant is receiving or entitled
to receive benefits under Section VI.G (other than any
Participant designated by the Committee as eligible to receive
benefits under Section VI.H(ii)(1)(a)(III) above), the Company
shall pay on the Payment Date to such Participant a Payment in
an amount equal to the unpaid balance as of the Payment Date
of the Accrual Account (as recalculated under Section VI.G) in
respect of such Participant; provided, that if such
Participant has begun receiving monthly payments under Section
VI.G, the Payment shall be in an amount equal to the present
value as of the Payment Date of the remaining monthly payments
to be made to such Participant under Section VI.G. For
purposes of this Section VI.H(ii)(3), the "present value"
shall be determined in the same manner as under Section
VI.H(ii)(1)(a), except that the discount rate of 4.2% shall be
replaced by the discount rate used to determine (under such
Participant's applicable Deferral and Acknowledgment Agreement
or Agreements) the monthly payments that are currently being
paid to such Participant.
(4) If on the Payment Date a Participant (or such Participant's
Designated Beneficiary) is receiving or entitled to receive a
benefit under Section VI.D or Section VI.E, the Company shall
pay on the Payment Date to such Participant (or such
Participant's Designated Beneficiary) a Payment in an amount
equal to the amount of such lump sum benefit otherwise payable
under such applicable Section to such Participant (or such
Participant's Designated Beneficiary) (with continued interest
accruals through the Payment Date only); provided, that if
such Participant (or such Participant's Designated
Beneficiary) is scheduled to receive such benefit in
installments, the Company shall pay to such Participant (or
such Participant's Designated Beneficiary)
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the unpaid balance as of the Payment Date of the Accrual
Account in respect of such Participant; provided, further,
that if such Participant (or such Participant's Designated
Beneficiary) has begun to receive installment payments under
Section VI.D or Section VI.E, the Payment shall be in an
amount equal to the present value as of the Payment Date of
the remaining installment payments to be made to such
Participant under such applicable Section. For purposes of
this Section VI.H(ii)(4), the "present value" shall be
determined in the same manner as under Section VI.H(ii)(1)(a),
except that the discount rate of 4.2% shall be replaced by the
discount rate used by the Administrator to determine the
installment payments that are currently being paid to such
Participant.
If any Participant receives a payment pursuant to this Section
VI.H(ii), then no persons or persons shall receive or be
entitled to receive any benefit or payment under any other
paragraph of this Plan or under any Deferral and
Acknowledgment Agreement, notwithstanding any other provision
of this Plan or any Deferral and Acknowledgment Agreement.
(iii) The provisions of Section VI.H(ii) shall not apply to a
Participant who is a current or former Nonemployee Director; provided,
however, that the provisions of Section VI.H(ii) shall apply to the
extent any Participant defers Base Salary or Incentive Compensation
earned while such Participant was not a Nonemployee Director.
VII. BENEFICIARY DESIGNATION
Upon the death of the Participant, any benefit or benefits remaining to be paid
to the Participant under the terms and conditions of this Plan, shall be paid to
that person or persons designated by the Participant in the Deferral and
Acknowledgment Agreement governing said benefit or benefits. If no Designated
Beneficiary has been chosen by the Participant or if no Designated Beneficiary
is then living on the date of the Participant's death, then the remaining
benefit or benefits shall be paid to the personal representative, executor, or
administrator of the Participant's estate who shall be deemed to be a Designated
Beneficiary.
VIII. RECALCULATION EVENTS
A. Treatment of This Plan Under Applicable Federal Income Tax Laws. The
adoption and maintenance of the Plan is conditioned upon (i) the applicability
of Section 451 (a) of the Internal Revenue Code of 1986 ("Code") to the
Participant's recognition of gross income as a result of his or her
participation, (ii) the fact that Participants will not recognize gross income
as a result of participation in this Plan until and to the extent that benefits
are received, (iii) the applicability of Code Section 404 (a) (5) to the
deductibility of the amounts paid to Participants hereunder, (iv) the fact that
the Company will not receive a deduction for amounts credited to any accounting
reserve created as a result of this Plan until and only to the extent that
benefits are paid, and (v) the very limited applicability of the provisions of
the Employee Retirement Income Security Act of 1974. If
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the Internal Revenue Service, the Department of Labor or any court determines or
find as a fact or legal conclusion that any of the above conditions is untrue
and issues or intends to issue an assessment, determination, opinion or report
stating such, or if the opinion of the legal counsel of the Company based upon
legal authorities then existing is that any of the above assumptions is
incorrect, then, if the Committee so elects, a Recalculation Event shall be
deemed to have occurred. If a Recalculation Event occurs under this or any other
section of this Plan, then the Participant thereafter, or a Designated
Beneficiary, shall be paid benefits on the dates stated in Paragraph VI, herein,
or in the Deferral and Acknowledgment Agreement; however, the amount of each
benefit stated in Paragraphs 2 and 3 of the Deferral and Acknowledgment
Agreement shall be recalculated and restated, at the Committee's discretion,
using a rate of interest not less than the Guaranteed Rate nor more than the
Projected Rate on each date upon which interest should have been or will be
calculated, compounded annually. If the Participant receives or is entitled to
receive a benefit as a result of the occurrence of a Recalculation Event, then
no person or persons shall receive or be entitled to receive any benefit or
payment under any other Paragraph of this Plan or under any Deferral and
Acknowledgment Agreement, notwithstanding any other provision of the Plan or the
Deferral and Acknowledgment Agreement.
B. Changes in the Internal Revenue Code of 1986. Subsequent to December
15, 1992, and prior to a Change in Control, (1) if Code Section 11(b) is deleted
or amended or a surtax or other addition to tax is imposed hereafter and, as a
result thereof, the amount of federal income tax imposed on taxable income of
corporations in excess of One Hundred Thousand Dollars ($100,000) is less than
thirty-four percent (34%), (2) if a tax is imposed by the federal government on
income, sales, consumption, or the value of goods and services which is not
currently contained in the Code, or (3) if the Code is amended or restated so
extensively that in the opinion of the legal counsel of the Company the tax
treatment of this Plan to the Company has materially changed to the detriment of
the Company, then, if the Committee so elects, a Recalculation Event shall be
deemed to have occurred and a benefit will be payable only as described in
Paragraph VIII.A.
[Plan does not contain a Section IX.]
X. CLAIMS PROCEDURE
A. Administration. The Plan shall be administered by the Administrator.
B. Benefit Payments. All benefits described in this Plan shall be paid
when due. In the event the Participant or Designated Beneficiary fails to
receive a benefit which he or she feels is due, a written claim for the benefit
shall be submitted in writing to the Administrator. The Administrator shall
review the claim when filed and advise the claimant as to whether the claim is
approved or denied. If the claim is wholly or partially denied, the
Administrator shall furnish a written denial within 90 days after receipt of the
filed claim unless special circumstances required an extension of time for
processing the claim, in which case the Administrator shall furnish the written
denial within 180 days after receipt of the filed claim. The written denial
shall contain (a) the specific reason or reasons for denial; (b) specific
reference to pertinent Plan provisions on which the denial is based; (c) a
description of any additional information necessary for the claimant to perfect
the claim and an
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explanation of why such material or information is necessary; and (d)
appropriate information as to the steps to be taken if the claimant wishes to
appeal the denial of the claim.
C. Appeal. The claimant may appeal the denial of the claim to the
Committee within 90 days after receipt of such decision. The appeal shall be in
writing addressed to the Committee and shall state the reason why it should
grant the appeal. The Committee shall conduct a full and fair review of the
claim and shall issue its decision within 60 days of the receipt of the appeal
unless there are special circumstances, in which case a decision shall be
rendered within 120 days of the receipt of the appeal. The Committee's decision
shall be in writing, stating the reasons therefor and shall make specific
references to the pertinent Plan provisions on which the decision is based.
D. Binding Effect. The Committee's decision upon appeal, or the
Administrator's initial decision if no appeal is taken, shall be final,
conclusive and binding on all parties.
E. Claims after Change in Control. Notwithstanding anything in Section
X to the contrary, after a Change in Control:
1. Subsection (D) shall be inoperative;
2. the "90" and "180" day periods in subsection (B) shall be
changed to "15" and "30" day periods, respectively;
3. the "90", "60" and "120" day periods in subsection (C) shall
be changed to "30", "15", and "30" day periods, respectively;
and
4. if the claim has not been wholly approved within 90 days after
receipt by the Administrator, then the claimant may bring a
lawsuit in a court of competent jurisdiction to enforce
claimant's rights under the Plan. All attorneys' fees and all
other costs and expenses incurred by claimant in connection
with such litigation shall be the obligation of and shall be
paid on a timely basis by the Company regardless of whether
claimant prevails in such litigation.
XI. MISCELLANEOUS PROVISIONS
A. Governing Law. This Plan and the Deferral and Acknowledgment
Agreements are subject to the laws of the State of Tennessee.
B. 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
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15
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.
C. Discharge of Company's Obligation. The payment by the Company of the
benefits due under each and every Deferral and Acknowledgment Agreement to the
Participant or to the Designated Beneficiary discharges the Company's
obligations hereunder, and the Participant has no further rights under this Plan
or the Deferral and Acknowledgment Agreements upon receipt by the appropriate
person of all benefits.
D. Social Security and Income Tax Withholding. The Participants agree
as a condition of participation hereunder that the Company may withhold federal,
state, and local income taxes and Social Security taxes from any distribution or
benefit paid hereunder.
E. Notice; Delivery of Deferral and Acknowledgment Agreement. Any
notice required to be delivered hereunder and any Deferral and Acknowledgment
Agreement is properly delivered to the Company when personally delivered to, or
actually received from the United States mail, postage prepaid, by the
Administrator.
F. Nature of Obligations Created Hereunder. The Participants agree as a
condition of participation hereunder that:
1. the Company only has a contractual obligation to make payments
to or on behalf of the Participants, and the rights of
Participants under this Plan and the Deferral and
Acknowledgment Agreements are no greater than the rights of
any general unsecured creditor of the Company;
2. to the extent that any person, other than a Participant,
acquires a right to receive payments from the Company under
this Plan or any Deferral and Acknowledgment Agreement, such
right is no greater than the rights of any general unsecured
creditor of the Company;
3. nothing contained in this Plan or any Deferral and
Acknowledgment Agreement shall create or be construed to
create a trust of any kind or a fiduciary relationship between
the Company and any Participant;
4. the rights of any Participant may not be sold, assigned,
transferred, pledged, or encumbered, nor shall any interest of
the Participant be liable to the claim of any creditor of the
Participant or subject to any judicial process involving the
Participant;
5. no Participant shall have any rights in any specific assets of
the Company, and any accounting reserve established as a
result of the Plan only reflects a contractual obligation of
the Company on its books of accounting and does not constitute
a segregated fund of assets or separation of assets, and the
obligations of the Company
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only are payable from its operating assets at the time the
payment is due.
6. neither this Plan nor any Deferral and Acknowledgment
Agreement constitutes a modification of the employment
conditions of any Participant, and no right to continued
employment is created by this Plan or the Deferral and
Acknowledgment Agreement.
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EXHIBIT A
DEFERRAL AND ACKNOWLEDGMENT AGREEMENT
FOR THE FIRST TENNESSEE NATIONAL CORPORATION
DIRECTORS AND EXECUTIVES DEFERRED COMPENSATION PLAN
---------------------------------------------------
1. Amount of Deferral. I, ________________________________________________,
hereby agree to participate in the First Tennessee National Corporation
Directors and Executives Deferred Compensation Plan ("Plan"). I have read the
Plan in its entirety and agree to its terms and conditions, which are
incorporated herein by reference. Pursuant to the terms of the Plan, I elect
to defer from my Base Salary to be paid to me in 19__, and from my Incentive
Compensation payable in 19__, if any, the following:
(a)__________________ Dollars or __________% from my Base Salary;
(b)__________________ Dollars or __________% from my
Incentive Compensation Annual Award;
(c)__________________ Dollars or __________% from my Incentive
Compensation Long-Term Award*;
(d) Other
(Explain) _________________________________________________
_________________________________________________
_________________________________________________
* Only cash award may be deferred.
I understand that my Base Salary and Incentive Compensation which ordinarily
would be paid to me will be reduced by the amount of my deferral. I recognize
that I am entitled to benefits hereunder and that this Agreement is subject to
the terms and conditions of the Plan.
2. Retirement Benefits. Retirement benefits will begin on January 31 following
the later of (1) the fifth anniversary of the execution of this Agreement or
(2) the Normal Retirement date, as set forth in the Plan. In consideration for
my deferral, the Company shall pay to me the following benefits from my Accrual
Account on the dates specified in Paragraph VI of the Plan, if I am entitled to
these benefits under the terms and conditions of the Plan:
A total of one hundred eighty (180) monthly payments, calculated initially
as 180 equal payments, including interest at the Applicable Rate in effect on
January 1 following attainment of Normal Retirement. In the event the
Applicable Rate in effect on the date of the first payment hereunder is changed
during the period in which benefits are being paid, a recalculation of the
monthly benefit for the remaining period shall be made to reflect the change in
the Applicable Rate.
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3. Interim Distributions. In consideration for my deferral, the Company shall
pay to me the benefits set forth on Exhibit "B", a copy of which is attached
hereto and made a part hereof, on January 31 of each year in which I am
entitled to receive such benefits under the terms and conditions of the Plan.
An Interim Distribution shall be payable so long as the value of the Accrual
Account equals or exceeds the value of the benefit payable. In the event that,
on any January 31 of a year in which an Interim Distribution is payable the
value of the Accrual Account is less than the amount of the scheduled payment,
then the balance of the Accrual Account shall be paid to the Participant and no
further benefits shall be payable under the Plan.
4. Primacy of Plan. I recognize that I am entitled to benefits hereunder and
that this Agreement is subject to the terms and conditions of the Plan.
5. Designated Beneficiary. For any and all purposes of this Plan, I hereby
designate ______________________________________ as my beneficiary pursuant to
Paragraph VII of the Plan.
_______________________________
Signature
_______________________________
Date
Accepted by Company:
_______________________________
Signature
_______________________________
Date
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AMENDMENT TO
DEFERRAL AND ACKNOWLEDGMENT AGREEMENT[S]
FOR THE FIRST TENNESSEE NATIONAL CORPORATION
DIRECTORS AND EXECUTIVES DEFERRED COMPENSATION PLAN
---------------------------------------------------
The Deferral and Acknowledgment Agreement[s] for the First Tennessee
National Corporation Directors and Executives Deferred Compensation Plan by and
between _______________________("Participant") and First Tennessee National
Corporation [is] [are] hereby amended, effective as of January 21, 1997, as set
forth below:
1. Paragraph 4 is revised in its entirety to read as follows:
"4. Primacy of Plan. I hereby acknowledge that I am entitled to benefits
hereunder and that this Agreement is subject to the terms and conditions of the
Plan (attached as Annex A), except as provided to the contrary in paragraph 6
of this Agreement."
2. A new paragraph 6 is added at the end of [each of] the Agreement[s] to
read in its entirety as follows:
"6. Change in Control. (I) Notwithstanding anything in the Plan or this
Agreement to the contrary, in the event a Change in Control (as defined in the
Plan) or the "Pre-Change in Control Date" (as defined below) occurs, if on the
"Payment Date" (as defined below) I am (a) employed by the Company or any
Subsidiary (provided that if my employment is terminated by the Company other
than for Cause (as defined in Section VI.H(ii)(1)(b) of the Plan) on or after
the Determination Date, I shall be deemed solely for purposes of this paragraph
6(i)(a) to be employed on the Payment Date by the Company or any Subsidiary),
(b) receiving or entitled to receive benefits under Section VI.A of the Plan,
or (c) otherwise designated by the Committee as eligible to receive benefits
under Section VI.H(ii)(1)(a)(III) of the Plan, the Company shall make a lump
sum payment ("Payment") to me on a date (the "Payment 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 of 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). For
purposes of this paragraph 6, "Determination Date" shall mean the date of the
Change in Control (or, if an agreement to effectuate a Change in Control
pursuant to a Business Combination has been executed, the date one month prior
to the date such agreement was executed).
(ii) If a Payment is to be made, such Payment shall be in an amount equal
to the present value as of the Payment Date, determined on an interest-only
basis (i.e., without discount for mortality) using a discount rate of 4.2%,
compounded annually, of the remaining scheduled Interim Distributions and
retirement distributions (as described on Exhibit 1) to be made to me under the
Plan as set forth in this Agreement [and all other Deferral and Acknowledgment
Agreements in respect of the Plan to which I am a party], and no further
benefits will be payable to me under the Plan or pursuant to this Agreement [or
any other Deferral and Acknowledgment Agreements in respect of the Plan to
which I am a party]; provided, that in the event I am eligible for a Payment
under paragraph 6(i) and I have already received a lump sum
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benefit under Section VI.F of the Plan, the amount of the Payment to be made to
me shall be an amount equal to the excess, if any, of (x) the amount of the
Payment determined under this paragraph 6(ii) (without regard to this proviso),
over (y) the amount of the lump sum benefit I have already received pursuant to
Section VI.F of the Plan.
(iii) If a Change in Control of the Company were to occur on a date after
the date (a) all scheduled Interim Distributions and retirement distributions
(as described on Exhibit 1) under the Plan have been distributed to me, or (b)
a distribution or series of distributions (other than in connection with a
Change in Control of the Company) in lieu of such scheduled Interim
Distributions and retirement distributions has been distributed to me, I would
not receive any additional benefits as a result to such Change in Control,
except that if (x) I am eligible for a Payment under paragraph 6(i)(a) above,
(y) my employment is terminated by the Company other than for Cause (as defined
in Section VI.H(ii)(1)(b) of the Plan) on or after the Determination Date, and
(z) I have received a lump sum benefit under Section VI.F of the Plan, I will
be entitled to the Payment described in the proviso of paragraph 6(ii). The
amounts shown on the attached Exhibit 2 would be the total amounts payable
under paragraphs 6(i) and 6(ii) above (taking into account any payment made
pursuant to Section VI.F of the Plan, if applicable) if the Payment were made
on the possible Change in Control dates shown on Exhibit 2. The possible
Change in Control dates shown on Exhibit 2 are for illustrative purposes only,
however, and are not an indication that a Change in Control of the Company will
occur, is projected to occur or that there is any current plan to effect a
Change in Control of the Company.
(iv) If I am not eligible for a Payment under clause (a), (b), or (c) of
paragraph 6(i) above, then in the event a Change in Control (as defined in the
Plan) occurs, my benefits under this Agreement (and the amount of any lump sum
payment otherwise payable to me under the Plan) will be determined in
accordance with the applicable provisions of Section VI.H(ii) of the Plan.
(v) It is understood that all references to Sections and defined terms
used in this paragraph 6 are references to such Sections and defined terms as
in effect as of the date hereof under the Plan. Any amendment or modification
of such Sections or defined terms shall not, without my written consent,
adversely affect my rights under this Agreement."
IN WITNESS WHEREOF, the parties hereto have executed or caused to be duly
executed this Amendment on the dates indicated below.
COMPANY
-------------------------------
By:
Date:
PARTICIPANT
-------------------------------
Date:
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