FIRST TENNESSEE NATIONAL
CORPORATION
NON-EMPLOYEE DIRECTORS’
DEFERRED COMPENSATION STOCK OPTION PLAN
(As Restated for Amendments through
December 15, 2008)
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1.
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Purpose
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The Non-Employee
Directors’ Deferred Compensation Stock Option Plan of the
First Tennessee National Corporation has been adopted to advance
the interests of shareholders by encouraging non-employee members
of the Board of Directors to acquire proprietary interests in the
Company in the form of Stock Options granted in lieu of
Retainer/Fees that otherwise would have been paid in cash for
serving on the Board of Directors or any committee
thereof.
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2.
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Definitions
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As used in the Plan,
the following terms shall have the respective meanings set forth
below:
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(a)
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“Board” means the Board
of Directors of the Company.
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(b)
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“Common Stock” means the
common stock, par value $1.25 per share, of the Company.
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(c)
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“Company” means the
First Tennessee National Corporation, a corporation established
under the laws of the State of Tennessee.
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(d)
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“Deferred Compensation Stock
Option” or “Stock Option” means a right granted
at the election of a Non-Employee Director pursuant to
Section 6.
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(e)
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“Disability” means total
and permanent disability, which if the Participant were an employee
of the Company, would be treated as a total and permanent
disability under the terms of the Company’s long-term
disability plan for employees, as may be in effect from time to
time.
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(f)
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“Early Retirement” means
retirement from Board service after the age of 55 with 120 or more
full months of aggregate Board service.
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(g)
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“Fair Market Value”
means the average of the high and low sales prices at which shares
of Common Stock are traded, as publicly reported by the Wall
Street Journal , on the applicable date or, if there were no
sales of Common Stock reported for such date, the last prior date
for which a sale is reported.
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(h)
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“Grant Date” means the
applicable date, as specified in Section 7, on which a Stock
Option is granted to a Non-Employee Director by reason of an
election made pursuant to Section 6.
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(i)
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“Non-Employee Director”
means a member of the Board who is not an employee of the Company
or any subsidiary or affiliate of the Company at the time such
person elects to receive Retainer/Fees in the form of Stock
Options.
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(j)
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“Normal Retirement”
means the date at which any Non-Employee Director is no longer
qualified to serve on the Board based on the then-current
retirement age policy contained in the Company’s by-laws or,
if not in the by-laws, as adopted by the Board.
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(k)
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“Participant” means a
person who has received one or more Stock Options or the legal
representative, heir or estate of such person.
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(l)
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“Plan” means the
Non-Employee Directors’ Deferred Compensation Stock Option
Plan.
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1
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(m)
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“Retainer/Fees” means
the retainer and meeting attendance fees payable to a Non-Employee
Director for service as member of the Board and/or member of any
committee of the Board.
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(n)
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“1934 Act” means the
Securities Exchange Act of 1934, as amended from time to
time.
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3.
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Effective Date
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The Plan shall be
effective on the date it is approved by the shareholders of the
Company and shall remain in effect through the last Grant Date
occurring in calendar year 1999, unless the Plan is terminated by
the Board earlier than such date subject to the provisions of
Section 11. If shareholder approval is not obtained by
June 30, 1995, the Plan shall be nullified and all elections
to receive Stock Options shall be rescinded and all Non-Employee
Directors shall receive cash equal to all Retainer/Fees that had
been the subject of an election hereunder. Upon termination of the
Plan, the applicable terms of the Plan shall continue to apply to
all Stock Options which are outstanding on the date the Plan is
terminated and to any Stock Options which are granted subsequent to
such date pursuant to Section 11.
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4.
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Plan Operation
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The Plan is intended to
meet the requirements of a “formula” plan” for
purposes of Rule 16b-3 under the 1934 Act as currently
applicable to the Plan and accordingly is intended to be
self-governing. To this end the Plan is expected to require no
discretionary action by any administrative body except as
contemplated by Section 5(b). However, should any questions of
interpretation arise, they shall be resolved by the Human Resources
Committee of the Board or such other Committee as the Board may
from time to time designate. The Plan shall be interpreted to
comply with Rule 16b-3 under the 1934 Act, as then applicable
to the Company’s employee benefit plans, and any action under
this Plan that would be inconsistent with the requirements of
Rule 16b-3 as then applicable shall be null and
void.
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5.
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Common Stock Available for Stock
Options .
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(a)
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A
maximum of 450,000 shares of Common Stock may be issued upon the
exercise of Stock Options granted under the Plan. Shares of Common
Stock shall not be deemed issued until the applicable Stock Option
has been exercised and, accordingly, any shares of Common Stock
represented by Stock Options which expire unexercised or which are
canceled shall remain available for issuance under the
Plan.
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(b)
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Any
increase in the number of outstanding shares of Common Stock
through stock splits or stock dividends having a record date on or
after July 14, 2008 shall be reflected proportionately in an
increase in the aggregate number of shares then available for the
grant of Stock Options under the Plan, or becoming available
through the termination or forfeiture of Stock Options previously
granted but unexercised and in the number subject to Stock Options
then outstanding, and a proportionate reduction shall be made in
the per-share exercise price as to any outstanding Stock Options or
portions thereof not yet exercised. After any adjustment made
pursuant to this Section, the number of shares subject to each
outstanding option may be rounded down to the nearest whole number
of shares or to the nearest fraction of a whole share specified by
the Committee, all as the Committee may determine from time to
time. The Committee may approve different rounding methods for
different tranches of options or for options of different sizes
within any single tranche. If changes in capitalization other than
those considered above shall occur, the Board, as it deems
appropriate to preserve Participant’s benefits and to meet
the intent of the Plan, may make equitable adjustments to the
number of shares available under the Plan and covered by
outstanding Stock Options and to the exercise prices of outstanding
Stock Options in the event of any change in capitalization or
similar action affecting Common Stock. Such actions may include,
but are not limited to, any combination or exchange of shares,
merger, consolidation, recapitalization, spin-off or other
distribution (other than normal cash dividends) of Company assets
to shareholders, or any other change affecting the Common Stock.
Notwithstanding any other provision of this Section, in the case of
any stock dividend paid or payable at a rate of 10% or
less:
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(i)
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The
Company may implement any required adjustment of an option by
either of the following alternative methods applicable to that
option, in lieu of the method provided above.
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(a)
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The
Company may defer making any formal adjustment to individual
options until such time as it is deemed administratively
practicable and convenient. If the Company expects a series of
quarterly or other periodic stock dividends to occur, the Company
may make a single adjustment that would have the same cumulative
effect as having made adjustments for all such stock dividends,
except that the Company may make a single final rounding down
adjustment for any fractional shares rather than having to account
for rounding at the time of each such stock dividend.
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(b)
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Prior to making any such formal
adjustment(s) to such individual option or in lieu of making any
such formal adjustment(s), the Company may make one or more
informal adjustments to such individual option at the time that the
holder exercises such option (in whole or in part) in accordance
with its original terms as if no adjustment had been made for any
such stock dividends. In that case, as soon as administratively
practicable thereafter, the Company shall issue to the option
holder for no additional consideration such whole number of
additional shares to which the option holder would have been
entitled if formal adjustments to the holder’s option had
been made for each such stock dividend (except for a single final
rounding down adjustment for any fractional shares). In any case
under this alternative: (1) the Company may impose such
limitations on the issuance of such additional shares, including
the forfeiture of such additional shares, if it is not
administratively practicable for the Company to issue such
additional shares after any exercise of a stock option within such
period of time as may, in the discretion of the Company, be
appropriate to best preserve the status of such options under
Section 409A as Grandfathered Options or Excepted Options, as
hereinafter defined; and (2) if approved by the Committee, the
Company may withhold the issuance of additional shares in such
amount as may be appropriate to defray applicable withholding and
other taxes with respect to the additional shares or may make other
arrangements to defray applicable withholding and other taxes from
other sources.
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(ii)
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The
Committee may delegate to the executive officer of the Company in
charge of human resources the task of establishing and implementing
appropriate policies, procedures, and methods to implement any such
alternative adjustment methods within parameters approved by the
Committee.
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(iii)
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Regardless of whether formal
adjustments to individual options are deferred or whether only
informal adjustments are made to individual options, the number of
shares available for the issuance of options under the Plan shall
be deemed to be increased as if formal adjustments were made at the
time of each such stock dividend.
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(iv)
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Notwithstanding any provision herein
to the contrary, neither this section nor any policies or
procedures adopted hereunder shall be deemed to authorize any
feature for the deferral of compensation other than the deferral of
recognition of income until the later of (a) the exercise or
disposition of the options under Treasury Regulation §1.83-7
or (b) the time any shares acquired pursuant to the exercise
of the options first become substantially vested as defined in
Treasury Regulation §1.83-3(b). In the event of any partial
exercise or disposition of an option or any partial vesting and
delivery of shares under an option, the foregoing provisions in
this (iv) shall be applied to the options in the same
proportions.
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6.
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Elections to Receive Stock
Options . Each Non-Employee may make a
one-time irrevocable election to receive Stock Options under the
Plan, provided that such election conforms to the
following:
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(a)
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Each Non-Employee Director serving
as of January 1, 1995, must make his or her election under the
Plan no later than December 31, 1996. Such election, if any,
shall be applicable to Retainer/Fees otherwise payable to such
Non-Employee Director for service from the first day of the month
following the date of such election through December 31, 1999,
subject to the requirements of Section 9.
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(b)
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Each Non-Employee Director who is
newly appointed or elected to the Board after January 1, 1995,
must make his or her election, if any, under the Plan no later than
30 days following the commencement of such person’s Board
service. Such election, if any, shall be applicable to
Retainer/Fees earned by such Non-Employee Director from the date of
such election through December 31, 1999, subject to the
requirements of Section 9. The above notwithstanding, no
election under the Plan shall be permitted after June 30,
1999.
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(c)
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In
making an irrevocable election to receive Retainer/Fees in the form
of Stock Options, the Non-Employee Director must designate that the
election is for all or a specified portion of the Retainer/Fees
payable to him or her through December 31, 1999.
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7.
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Effective Grant Dates
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(a)
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The
Grant Dates for Stock Options granted pursuant to an election
covered by Section 6(a) made by a Non-Employee Director serving on
the Board as of January 1, 1995 shall be June 30 and
December 31 for each of the calendar years such election is in
effect.
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