1
As filed with the Securities and Exchange Commission on January 31, 1994
Registration No. 33-_____AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION Washington,ON MARCH 8, 1994
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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FIRST TENNESSEE NATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
TENNESSEE 6021 62-0803242
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer(IRS employer
incorporation or organization) Classification Code Number) Identification No.)identification number)
165 MADISON AVENUE, MEMPHIS, TENNESSEE 38103
(901) 523-4444
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
HARRY A. JOHNSON, III
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
FIRST TENNESSEE NATIONAL CORPORATION
165 MADISON AVENUE, MEMPHIS, TENNESSEE 38103
(901) 523-5624523-4444
(Name,address, Address, including zip code, and telephone number, including area code,
of agent for service
With Copies to:
LINDA M. CROUCH
HEISKELL, DONELSON, BEARMAN, ADAMS, WILLIAMSservice)
COPIES TO:
H. RODGIN COHEN, ESQ.
PATRICIA A. CERUZZI, ESQ.
SULLIVAN & CALDWELL
2000 FIRST TENNESSEE BUILDING
165 MADISON AVENUE
MEMPHIS, TENNESSEE 38103
(901) 526-2000
ApproximateCROMWELL
125 BROAD STREET
NEW YORK, NEW YORK 10004
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of commencement of proposed sale of the securities to
the public: As soon as practicable after this Registration Statement becomes
effective and pursuant to the terms of the Registration Rights Agreement dated
as of January 4, 1994.Statement.
If the only securities being registered on this Formform are being offered
pursuant to dividend or interest reinvestment plans, please check the followfollowing
box. [ ]/ /
If any of the securities being registered on this Formform are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]./X/
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CALCULATION OF REGISTRATION FEE
Title of each Amount Proposed maximum Proposed maximum Amount
class of to be offering price aggregate of
securities registered(1) per unit(2) offering price Registration Fee
to be registered------------------------------------------------------------------------------------------------------------------------------
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PROPOSED MAXIMUM
AMOUNT AGGREGATE OFFERING PROPOSED
TITLE OF EACH CLASS OF SECURITIES TO BE TO BE PRICE MAXIMUM AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE
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Common Stock and 1,568,310 $37.875 $59,399,741 $20,481
Associated Rights(par value $2.50 per share)... (1)(3) (2) (1)(2)(3) N/A
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Preferred Stock (without par value)........ (1)(4) (2) (1)(2)(4) N/A
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Depositary Shares.......................... (1)(5) (2) (1)(2)(5) N/A
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Debt Securities............................ (1)(6) (2) (1)(2)(6) N/A
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Total.............................. $300,000,000 (2) $300,000,000 $103,449(7)
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(1) Based uponIn no event will the average high and low prices reportedaggregate initial price of all securities issued from
time to time pursuant to this Registration Statement exceed $300,000,000. If
any Debt Securities are issued at an original issue discount, then the
securities registered shall include such additional Debt Securities as may be
necessary such that the aggregate initial public offering price of all
securities issued pursuant to this Registration Statement will equal
$300,000,000. Any securities registered hereunder may be sold separately or
as units with other securities registered hereunder.
(2) The proposed maximum initial offering price per unit will be determined,
from time to time, by the NASDAQ/NMS
on January 27, 1994Registrant in connection with the issuance by the
Registrant of the securities registered hereunder.
(3) Subject to Footnote (1), there are being registered hereunder an
indeterminate number of shares of Common Stock of the Registrant as may be
sold, from time to time, by the Registrant. There are also being registered
hereunder an indeterminate number of shares of Common Stock of the Registrant
as shall be issuable upon conversion of convertible Debt Securities or of
shares of convertible Preferred Stock registered hereby. Each share of Common
Stock includes a right to purchase Participating Preferred Stock (the
"Rights"). Prior to the occurrence of certain events, the Rights will not be
exercisable or evidenced separately from the Common Stock.
(4) Subject to Footnote (1), there are being registered hereunder an
indeterminate number of shares of Preferred Stock of the Registrant as may be
sold, from time to time, by the Registrant.
(5) Subject to Footnote (1), there are being registered hereunder an
indeterminate number of Depositary Shares to be evidenced by Depositary
Receipts issued pursuant to a Deposit Agreement. In the event the Registrant
elects to offer to the public fractional interests in shares of the Preferred
Stock registered hereunder, Depositary Receipts will be distributed to those
persons purchasing such fractional interests, and the shares of Preferred
Stock will be issued to the Depositary under the Deposit Agreement.
(6) Subject to Footnote (1), there are being registered hereunder an
indeterminate principal amount of Debt Securities as may be sold from time to
time by the Registrant.
(7) Calculated pursuant to Rule 457(c).457(o) of the rules and regulations under the
Securities Act of 1933, as amended.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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PROSPECTUS***************************************************************************
* *
* Information contained herein is subject to completion or amendment. A *
* registration statement relating to these securities has been filed *
* with the Securities and Exchange Commission. These securities may not *
* be sold nor may offers to buy be accepted prior to the time the *
* registration statement becomes effective. This prospectus shall not *
* constitute an offer to sell or the solicitation of an offer to buy *
* nor shall there be any sale of these securities in any State in which *
* such offer, solicitation or sale would be unlawful prior to *
* registration or qualification under the securities laws of any such *
* State. *
* *
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SUBJECT TO COMPLETION, DATED MARCH 8, 1994
$300,000,000
FIRST TENNESSEE NATIONAL CORPORATION
1,568,310 SHARES OFDEBT SECURITIES, PREFERRED STOCK AND COMMON STOCK
This Prospectus relates to 1,568,310 shares of the common stock, $2.50
par value per share ("Common Stock") and associated rights of---------------------
First Tennessee National Corporation ("FTNC"First Tennessee" or the
"Corporation"). The 1,568,310 shares may offer from time to time in one or more series (i) debt
securities ("Debt Securities"), consisting of debentures, notes and/or other
unsecured evidences of indebtedness, which may be senior (the "Senior Debt
Securities") or subordinated (the "Subordinated Debt Securities"), (ii)
preferred stock, without par value, of the Corporation ("Preferred Stock") or
(iii) common stock, par value $2.50 per share, of the Corporation ("Common
Stock") (the Debt Securities, Preferred Stock and associated rights that are offered for resale herebyCommon Stock are collectively
referred to as the "Shares." The Shares may"Securities"), at an aggregate initial offering price not to
exceed U.S. $300,000,000, at prices and on terms to be offered by certain shareholders of FTNC
(the "Selling Shareholders") from time to time in transactions in the
over-the-counter market, in negotiated transactions or a combination of such
methods of sale, at fixed prices which may be changed, at market prices
prevailingdetermined at the time of
sale,sale. The Senior Debt Securities when issued will rank on a parity with all
other unsecured and unsubordinated indebtedness of the Corporation, and the
Subordinated Debt Securities when issued will be subordinated as described
herein under "Description of Debt Securities -- Subordination of the
Subordinated Debt Securities." The Debt Securities, Preferred Stock and Common
Stock may be offered, separately or together, in separate series, in amounts, at
prices relatedand on terms to be set forth in the applicable supplement or supplements
to this Prospectus (each a "Prospectus Supplement").
The accompanying Prospectus Supplement sets forth with regard to the
particular Securities in respect of which this Prospectus is being delivered (i)
in the case of Debt Securities, the title, aggregate principal amount,
denominations, maturity, rate of interest, if any (which may be fixed or
variable), or method of calculation thereof, time of payment of any interest,
any terms for redemption at the option of the Corporation or the holder, any
terms for sinking fund payments, subordination terms, if any, any conversion or
exchange rights, and the initial public offering price and the terms of the
offering thereof, (ii) in the case of Preferred Stock, the specific title, the
number of shares of Preferred Stock, any dividend, liquidation, redemption,
conversion, voting or other rights and whether interests in such prevailing market
prices or at negotiated prices.Preferred Stock
will be evidenced by Depositary Shares (as defined herein) and in such event the
Depositary (as defined herein), the initial offering price and the terms of the
offering thereof and (iii) in the case of Common Stock, the number of shares of
Common Stock, the initial offering price and the terms of the offering thereof.
The Selling ShareholdersCommon Stock of the Corporation is quoted through the NASDAQ National
Market System under the symbol "FTEN." The accompanying Prospectus Supplement
will also contain information, where applicable, as to any listing on a
securities exchange of the Securities covered by such Prospectus Supplement.
The Corporation may effect such
transactions by selling the Sharessell Securities to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessionsunderwriters acting as
principals for their own account or commissions from the Selling Shareholders and/or the purchasers of the
Shares for whom such broker-dealers may act as agents, and also may sell Securities
directly to other purchasers or through agents designated from time to whom they sell as
principals,time. The
accompanying Prospectus Supplement sets forth the names of any underwriters or
both (which compensation as to a particular broker-dealer might
beagents involved in excess of customary commissions). See "Selling Shareholders" and "Sale
of the Shares."
The Selling Shareholders listed in the table on page 7 acquired the
Shares in connection with the acquisition of SNMC Management Corporation
("SNMC") by First Tennessee Bank National Association, the principal banking
subsidiary of FTNC, on January 4, 1994, and the Shares are offered hereby
pursuant to a Registration Rights Agreement by and among FTNC and the Selling
Shareholders dated as of January 4, 1994.
None of the proceeds from the sale of the Shares bySecurities in respect of which this
Prospectus is being delivered, the Selling
Shareholders will be received by FTNC. FTNC will bear all expenses (other than
selling commissions and fees) in connection with the registration and sale of
the Shares being offered by the Selling Shareholders.
The outstanding shares of Common Stock are included for quotation on
the National Associationamounts of Securities, Dealers Automated Quotations
System/National Market System ("NASDAQ/NMS"). The last reported sale priceif any, to be
purchased by underwriters and the compensation, if any, of FTNC Common Stock on the NASDAQ/NMS on ____________, 1994 was $___________ per
share.such underwriters or
agents. See "Plan of Distribution."
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THE SHARESDEBT SECURITIES WILL BE UNSECURED OBLIGATIONS OF FTNC COMMON STOCKTHE CORPORATION AND NO
SECURITIES OFFERED HEREBY ARE NOTWILL BE SAVINGS ACCOUNTS, DEPOSITS OR OTHER
OBLIGATIONS OF AANY BANK SUBSIDIARY OF THE CORPORATION OR WILL BE INSURED BY THE
BANK INSURANCE FUND OR THE SAVINGS ASSOCIATION AND
ARE NOT INSURED BYINSURANCE FUND OF THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE HEREIN
CONTAINED AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY FTNC OR THE SELLING SHAREHOLDERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF ANY
OFFER TO BUY, THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON
TO WHOM IT IS UNLAWFUL TO MAKE AN OFFER OR SOLICITATION. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF FTNC
SINCE THE DATE HEREOF.
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THE DATE OF THIS PROSPECTUS IS ___________, 1994---------------------
The date of this Prospectus is , 1994.
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AVAILABLE INFORMATION
FTNCThe Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "SEC""Commission"). Copies of suchThe reports, proxy
statements and other information filed by the Corporation with the Commission
can be obtained, upon payment of prescribed
fees, frominspected and copied at the SECCommission's public reference facilities at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. In addition, such reports, proxy statements and other information can
be inspected at the SEC's facilities referred to above20549, and
at the SEC's
Regional Offices atfollowing regional offices of the Commission: 7 World Trade Center, Suite 1300,13th
Floor, New York, New York 1004810007 and CiticorpNorthwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. The FTNC Common Stock is included for quotation on NASDAQ/NMS and60661-2511. Copies of such reports, proxy statements and other information concerning FTNC shouldcan
be available for inspection and copying atobtained from the officesPublic Reference Section of the National Association
of Securities Dealers, Inc., 1735 KCommission, 450 Fifth
Street, N.W., Washington, D.C. 20006.20549, at prescribed rates.
This Prospectus isconstitutes a part of a Registration Statementregistration statement on Form S-3
(the "Registration Statement") filed and effectiveby the Corporation with the Commission
under the Securities Act of 1933, as amended (the "Securities Act"),. As
permitted by the rules and regulations of the Commission, this Prospectus omits
certain of the information contained in the Registration Statement and reference
is hereby made to the Registration Statement and related exhibits for further
information with respect to the sharesCorporation and the Securities offered hereby.
Statements contained herein concerning the provisions of Common Stock and associated rightsany documents filed as
an exhibit to be issued. This Prospectus
does not contain all the information set forth in the Registration Statement.
Such additional information may be obtained from the SEC's principal office in
Washington, D.C. Statements contained in this Prospectus or in any documentStatement, incorporated by reference in this Prospectus as to the contents of any contract
or other document referred to herein or
thereinotherwise filed with the Commission are not necessarily complete, and in each
instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement or such other
document, eachso filed. Each such
statement beingis qualified in all respectsits entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by the Corporation with the
SECCommission and are hereby incorporated by reference ininto this Prospectus and made a part hereof: (a) FTNC'sProspectus: (1)
Annual Report on Form 10-K for the fiscal year ended December 31, 1992, and its Form 8 filed March
23, 1993, and Forms 10-K/A filed on April 28 and June 29, 1993, amending its
Annual Report on Form 10-K; (b) FTNC's Current Reports on Form 8-K filed
February 18, 1993, August 25, 1993 and October 18, 1993; (c) FTNC's Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1993, June 30, 1993 and
September 30, 1993; (d) FTNC's proxy statement dated March 12, 1993, exclusive
of the Board Compensation Committee Report and the Total Shareholder Return
Performance Graph on pages 11-14 thereof; (e)(2) the
description of FTNCthe Corporation's Common Stock containedincluded in FTNC'sthe Corporation's
registration statement on Form 10 (File No. 0-4491) filed on April 14, 1970
pursuant to Section 12 of the Exchange Act (and any amendments or reports filed
for the purpose of updating the description); and (f) FTNC's(3) the description of the
Corporation's rights to purchase Participating Preferred Stock (the "Rights")
included in the Corporation's registration statement on Form 8-A (File No.
0-4491) filed on September 8, 1989 pursuant to which FTNC
registered the Shareholder Protection Rights underSection 12 of the Exchange Act.
All other documents and reports filed by FTNC pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act afterfrom the date of this Prospectus and prior to the
termination of the offering registered herebyof the Securities shall be deemed to be incorporated
by reference in this Prospectusherein and shall be deemed to be a part hereof from the date of the
filing of such reports and documents.
Any statement contained herein or in a document incorporated or deemed to
be incorporated herein by reference willherein shall be deemed to be modified or superseded
for the purposepurposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated herein by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded willshall not be deemed, except as so modified
or superseded, to constitute a part of the Registration Statement or this
Prospectus.
FTNC HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON TO
WHOM A COPY OF THIS PROSPECTUS HAS BEEN DELIVERED, ON THE WRITTEN OR ORAL
REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS REFERRED TO
ABOVE WHICH HAVE BEEN OR MAY BE INCORPORATED BY REFERENCE IN THIS PROSPECTUS,
OTHER THAN EXHIBITS TO SUCH DOCUMENTS. REQUESTS FOR SUCH COPIES SHOULD BE
DIRECTED TO THE TREASURER, FIRST TENNESSEE NATIONAL CORPORATION, P.O. BOX 84,
MEMPHIS, TENNESSEE 38101, TELEPHONE NUMBERThe Corporation will provide without charge to each person to whom a copy
of this Prospectus is delivered, on written or oral request of such person, a
copy of any or all documents which are incorporated herein by reference (not
including the exhibits to such documents, unless such exhibits are specifically
incorporated by reference in the document which this Prospectus incorporates).
Requests should be directed to the Treasurer of the Corporation, 165 Madison
Avenue, Memphis, Tennessee 38103; telephone number (901) 523-5630.
-523-4444.
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FTNC
FTNCTHE CORPORATION
The Corporation is a regionalTennessee corporation incorporated in 1968 and
registered as a bank holding company incorporated under the lawsBank Holding Company Act of Tennessee, which, through1956,
as amended (the "BHCA"). Through First Tennessee Bank National Association Memphis,
Tennessee ("FTB"(the
"Bank") and its other banking and banking-related subsidiaries, the Corporation provides a broad range of
financial services primarily inservices. At December 31, 1993, the State of
Tennessee. FTNC was incorporated in Tennessee in 1968. At September 30, 1993,
FTNCCorporation had consolidated total
assets of approximately $9.5$9.6 billion and consolidated total deposits of
approximately $6.7 billion and equity capital$7.1 billion. As of
approximately $656.5 million. At December 31, 1992, based on information in1993, the American Banker, an industry journal, FTNCCorporation ranked 61st63rd
among bank holding companies in the United States and first among bank holding
companies headquartered in Tennessee in terms of total assets.
FTNCThe Corporation operates principally through the Bank, which as of December
31, 1993 was the largest commercial bank headquartered in Tennessee both in
terms of total assets and deposits. At December 31, 1993, the Bank had total
assets of approximately $9.4 billion and total deposits of approximately $7.0
billion. The Bank conducts a broad range of retail and commercial banking and
fiduciary services and had 211 banking locations at December 31, 1993. The Bank
also offers a comprehensive range of financial services, including bond
broker/agency services, mortgage banking and check clearing, to companies
nationally. Bond broker/agency services provided by the Bank consist primarily
of the sale of bank-eligible securities to other financial institutions.
Subsidiaries of the Corporation and the Bank are engaged primarily in providing
mortgage banking, integrated check processing solutions, discount brokerage,
equipment finance, venture capital, investment management and credit life
insurance.
The Corporation coordinates the financial resources of the consolidated
enterprise and maintains systems of financial, operational and administrative
control that allow coordination of selected policies and activities. FTNC
operates principally through FTB, which was chartered as a nationalThe
Corporation derives substantially all of its consolidated total revenues from
the banking association in 1864. Asbusiness of September 30, 1993, FTB was the largest commercial
bank headquartered in Tennessee both in terms of total assets and deposits. At
September 30, 1993, FTB had total assets of approximately $9.3 billion, total
deposits of approximately $6.6 billion and equity capital of approximately
$611.3 million. FTB conducts a broad range of retail banking and fiduciary
services and had 205 banking locations at September 30, 1993. FTB also offers
a comprehensive range of financial services, including bond broker/ agency
services and nationwide check clearing, to companies throughout the
southeastern United States and selected national markets. Bond broker/agency
services provided by FTB consist primarily of the sale of bank-eligible
securities to other financial institutions. Subsidiaries of FTNC and FTB are
engaged primarily in providing mortgage banking, integrated check processing
solutions, discount brokerage, equipment finance, venture capital, investment
management and credit life insurance.its subsidiaries. The Corporation's principal executive
offices of FTNC are located at 165 Madison Avenue, Memphis, Tennessee 38103,38103; telephone:
(901) 523-4444.
USE OF PROCEEDS
The Corporation intends to use the net proceeds of the sales of the
Securities for general corporate purposes, which may include the reduction of
indebtedness, investments in or extensions of credit to existing and future
subsidiaries and the financing of acquisitions or such other uses as may be set
forth in the accompanying Prospectus Supplement.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
AND COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDEND REQUIREMENTS
For purposes of the following ratios, (i) earnings represent income from
continuing operations before income taxes, plus fixed charges, (ii) fixed
charges represent interest expense (excluding interest on deposits where
indicated) plus the estimated interest component of net rental expense and (iii)
combined fixed charges and preferred stock dividend requirements represent
interest expense (excluding interest on deposits where indicated), and an amount
equal to the pre-tax earnings required to meet applicable preferred stock
dividend requirements and the estimated interest component of net rental
expense. There were no shares of preferred stock outstanding during any of the
periods below indicated and therefore the combined ratio of earnings to fixed
charges and preferred stock dividend requirements would have been the same as
below for all periods indicated.
YEAR ENDED DECEMBER 31,
-------------------------------------
1993 1992 1991 1990 1989
----- ----- ----- ----- -----
Ratio of earnings to fixed charges:
Including interest on deposits........................... 1.77x 1.52x 1.28x 1.19x 1.12x
Excluding interest on deposits........................... 4.69x 4.47x 2.94x 2.13x 1.67x
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5
SUPERVISION AND REGULATION
The following discussion sets forth certain of the elements of the
comprehensive regulatory framework applicable to bank holding companies and
banks and provides certain specific information relevant to the Corporation and
its telephone number is (901) 523-4444.
Additional information about FTNCsubsidiaries. Federal regulation of financial institutions such as the
Corporation and its subsidiaries is included in
documents incorporated by reference in this Prospectus.intended primarily for the protection of
depositors and the Federal Deposit Insurance Corporation Bank Insurance Fund
rather than shareholders or other creditors. See also "Available Information"
and "Incorporation of Certain Documents by Reference."
- 3 -
5
RECENT DEVELOPMENTSGENERAL
As a bank holding company, the Corporation is subject to the regulation and
supervision of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") under the BHCA. Under the BHCA, bank holding companies
may not in general directly or indirectly acquire the ownership or control of
more than 5% of the voting shares or substantially all of the assets of any
company, including a bank, without the prior approval of the Federal Reserve
Board. The followingBHCA also restricts the types of activities in which a bank holding
company and its subsidiaries may engage. Generally, activities are limited to
banking and activities found by the Federal Reserve Board to be so closely
related to banking as to be a proper incident thereto.
In addition, the BHCA generally prohibits the Federal Reserve Board from
approving an application by a bank holding company to acquire shares of a bank
or bank holding company located outside the acquiror's principal state of
operations unless such an acquisition is specifically authorized by statute in
the state in which the bank or bank holding company whose shares are to be
acquired is located. Tennessee has adopted legislation that authorizes
nationwide interstate bank acquisitions, subject to certain state law
reciprocity requirements, including the filing of an application with and
approval of the Tennessee Commissioner of Financial Institutions. The Tennessee
Bank Structure Act of 1974 prohibits a bank holding company from acquiring any
bank in Tennessee if the banks that it controls hold 16 1/2% or more of the
total deposits in individual, partnership and corporate demand and other
transaction accounts, savings accounts and time deposits in all federally
insured financial information for FTNC for the three
monthsinstitutions in Tennessee, subject to certain limitations and
the twelve months endedexclusions. As of December 31, 1993, the Corporation estimates that its
subsidiary banks (the "Subsidiary Banks") held approximately 12% of such
deposits. Also, under this act, no bank holding company may acquire any bank in
operation for less than five years or begin a de novo bank in any county in
Tennessee with a population, in 1970, of 200,000 or less, subject to certain
exceptions. Under Tennessee law, branch banking is permitted in any county in
the state.
The Subsidiary Banks are subject to supervision and 1992examination by
applicable federal and state banking agencies. The Bank is a national banking
association subject to regulation and supervision by the Comptroller of the
Currency (the "Comptroller") as its primary federal regulator, as is First
Tennessee Bank National Association Mississippi, which is headquartered in
Southaven, Mississippi. The remaining Subsidiary Bank, Peoples and Union Bank,
is a Tennessee state-chartered bank that is not a member of the Federal Reserve
System, and therefore is subject to the regulations of and supervision by the
Federal Deposit Insurance Corporation (the "FDIC") as well as state banking
authorities. In addition, all of the Subsidiary Banks are insured by, and
subject to regulation by, the FDIC. The Subsidiary Banks are subject to various
requirements and restrictions under federal and state law, including
requirements to maintain reserves against deposits, restrictions on the types
and amounts of loans that may be granted and the interest that may be charged
thereon and limitations on the types of investments that may be made, activities
that may be engaged in, and types of services that may be offered. Various
consumer laws and regulations also affect the operations of the Subsidiary
Banks. In addition to the impact of such regulation, commercial banks are
affected significantly by the actions of the Federal Reserve Board as it
attempts to control the money supply and credit availability in order to
influence the economy.
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6
PAYMENT OF DIVIDENDS
The Corporation is a legal entity separate and distinct from its banking
and other subsidiaries. The principal source of cash flow of the Corporation,
including cash flow to pay dividends on its stock or principal (premium, if any)
and interest on debt securities, is dividends from the Subsidiary Banks. There
are statutory and regulatory limitations on the payment of dividends by the
Subsidiary Banks to the Corporation, as well as by the Corporation to its
shareholders.
Each Subsidiary Bank that is a national bank is required by federal law to
obtain the prior approval of the Comptroller for the period end. This information has been derived from unaudited consolidated
statementspayment of dividends if the
total of all dividends declared by the board of directors of such Subsidiary
Bank in any year will exceed the total of (i) its net profits (as defined and
reflects all normal recurring adjustments whichinterpreted by regulation) for that year plus (ii) the retained net profits (as
defined and interpreted by regulation) for the preceding two years, less any
required transfers to surplus. A national bank also can pay dividends only to
the extent that retained net profits (including the portion transferred to
surplus) exceed bad debts (as defined by regulation).
State-chartered banks are subject to varying restrictions on the payment of
dividends under applicable state laws. With respect to Peoples and Union Bank,
Tennessee law imposes dividend restrictions substantially similar to those
imposed under federal law on national banks, as described above.
If, in the opinion of the applicable federal bank regulatory authority, a
depository institution or a holding company is engaged in or is about to engage
in an unsafe or unsound practice (which, depending on the financial condition of
the depository institution or holding company, could include the payment of
dividends), such authority may require that such institution or holding company
cease and desist from such practice. The federal banking agencies have indicated
that paying dividends that deplete a depository institution's or holding
company's capital base to an inadequate level would be such an unsafe and
unsound banking practice. Moreover, the Federal Reserve Board, the Comptroller
and the FDIC have issued policy statements which provide that bank holding
companies and insured depository institutions generally should only pay
dividends out of current operating earnings.
In addition, under the Federal Deposit Insurance Corporation Improvement
Act of 1991 ("FDICIA"), a FDIC-insured depository institution may not make
capital distributions (including the payment of dividends) or pay any management
necessaryfees to its holding company or pay any dividend if it is undercapitalized or if
such payment would cause it to become undercapitalized. See "-- FDICIA."
At December 31, 1993, under dividend restrictions imposed under applicable
federal and state laws, the Subsidiary Banks, without obtaining regulatory
approval, could legally declare aggregate dividends of approximately $168.2
million.
The payment of dividends by the Corporation and the Subsidiary Banks may
also be affected or limited by other factors, such as the requirement to
maintain adequate capital above regulatory guidelines.
TRANSACTIONS WITH AFFILIATES
There are various legal restrictions on the extent to which the Corporation
and its nonbank subsidiaries can borrow or otherwise obtain credit from the
Subsidiary Banks. There are also legal restrictions on the Subsidiary Banks'
purchases of or investments in the securities of and purchases of assets from
the Corporation and its nonbank subsidiaries, a Subsidiary Bank's loans or
extensions of credit to third parties collateralized by the securities or
obligations of the Corporation and its nonbank subsidiaries, the issuance of
guarantees, acceptances and letters of credit on behalf of the Corporation and
its nonbank subsidiaries, and certain bank transactions with the Corporation and
its nonbank subsidiaries, or with respect to which the Corporation and its
nonbank subsidiaries act as agent, participate or have a financial interest.
Subject to certain limited exceptions, a Subsidiary Bank (including for purposes
of this paragraph all subsidiaries of such Subsidiary Bank) may not extend
credit to the Corporation or to any other affiliate (other than another
Subsidiary Bank and certain exempted affiliates) in an amount which exceeds 10%
of the Subsidiary Bank's capital stock and surplus and may not extend credit in
the aggregate to all such affiliates in an amount which exceeds 20% of its
capital stock and surplus. Further, there are legal requirements as to the type,
amount and
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7
quality of collateral which must secure such extensions of credit by the
Subsidiary Banks to the Corporation or to such other affiliates. Finally,
extensions of credit and other transactions between a Subsidiary Bank and the
Corporation or other such affiliates must be on terms and under circumstances,
including credit standards, that are substantially the same or at least as
favorable to such Subsidiary Bank as those prevailing at the time for comparable
transactions with non-affiliated companies.
CAPITAL ADEQUACY
The Federal Reserve Board has adopted risk-based capital guidelines for
bank holding companies. The minimum guideline for the ratio of total capital
("Total Capital") to risk-weighted assets (including certain off-balance-sheet
items, such as standby letters of credit) is 8%. At least half of the Total
Capital must be composed of common stock, minority interests in the equity
accounts of consolidated subsidiaries, noncumulative perpetual preferred stock
and a limited amount of cumulative perpetual preferred stock, less goodwill and
other intangible assets, subject to certain exceptions ("Tier 1 Capital"). The
remainder may consist of qualifying subordinated debt, certain types of
mandatory convertible securities and perpetual debt, other preferred stock and a
limited amount of loan loss reserves. At December 31, 1993, the Corporation's
consolidated Tier 1 Capital and Total Capital ratios were 9.60% and 12.14%,
respectively.
In addition, the Federal Reserve Board has established minimum leverage
ratio guidelines for bank holding companies. These guidelines provide for a
fair statementminimum ratio of resultsTier 1 Capital to average assets, less goodwill and certain
other intangible assets subject to certain exceptions (the "Leverage Ratio"), of
operations3% for bank holding companies that meet certain specific criteria, including
having the periods presented.
First Tennessee National Corporation
Financial Highlights
(Unaudited)
Three Months Ended Twelve Months Ended
--------------------------------- --------------------------------
December 31 December 31
--------------------------------- --------------------------------
1993 1992(1) 1993 1992(1)
---------------- --------------- --------------- ---------------
Summary Statements of Income (Dollars in
thousands, except per share data):
Interest income $151,648 $145,796 $586,467 $599,237
Less interest expense 60,617 62,246 239,913 276,303
-------- ------- ------- -------
Net interest income 91,031 83,550 346,554 322,934
Provision for loan losses 7,475 10,460 34,540 43,171
-------- ------- ------- -------
Net interest income after provision
for loan losses 83,556 73,090 312,014 279,763
Investment banking income 22,282 16,922 91,525 80,275
Securities gains (losses) (769) (785) 725 (1,678)
Service and fee income 61,654 39,289 178,239 146,412
------- ------- ------- -------
Adjusted gross income after provision
for loan losses 166,723 128,516 582,503 504,772
Noninterest operating expense 119,369 99,444 398,386 360,476
------- ------- ------- -------
Income before income taxes 47,354 29,072 184,117 144,296
Applicable income taxes 16,726 17,275 63,452 55,131
------- ------- ------- -------
Net income $ 30,628 $ 11,797 $120,665 $ 89,165
======= ======= ======= =======
Per Share Data:
Net income $ 1.06 $ .42 $ 4.26 $ 3.19
Dividends declared .42 .36 1.50 1.26
Book value 23.97 21.25 23.97 21.25
Selected Financial Ratios:
Return on average assets 1.28% .55% 1.35% 1.07%
Return on average equity 18.33 7.78 18.99 15.44
Net interest margin 4.36 4.41 4.35 4.37
Net charge-offs to average loans .55 .87 .57 .81
____________________________
(1) Includes one-time costs relatedhighest regulatory rating. All other bank holding companies generally
are required to the Home Financial
Corporation acquisition as follows: provision for loan
losses, $1.3 million; noninterest operating expense, $9.4
million; applicable income taxes, $4.9 million.
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Period-End Balance Sheet Data (Dollars in thousands):
December 31
--------------------------------------
1993 1992
------------------- ----------------
Loans, net of unearned income(1) $5,987,568 $4,610,018
Investment securities(2) 2,169,736 3,031,105
Other earning assets 323,863 474,968
--------- ---------
Total earning assets 8,481,167 8,116,091
Cash and due from banks 602,416 496,526
Other assets 525,265 313,157
--------- ---------
Total assets $9,608,848 $8,925,774
========= =========
Interest-bearing deposits $5,258,418 $5,448,923
Short-term borrowed funds 1,330,048 1,010,283
Long-term debt 89,962 126,872
--------- ---------
Total interest-bearing liabilities 6,678,428 6,586,078
Demand deposits 1,888,333 1,467,839
Other liabilities 363,102 274,344
Shareholders' equity 678,985 597,513
--------- ---------
Total liabilities and shareholders' equity $9,608,848 $8,925,774
========= =========
Period-end shares outstanding 28,325,565 28,122,606
_____________________
(1) Includes loans held for sale.
(2) Includes investment securities held for sale.
FTNC had earningsmaintain a Leverage Ratio of $120.7 million for 1993, comparedat least 3%, plus an additional
cushion of at least 100 to $89.2
million reported in 1992, or $104.8 million for 1992 after adjusting for
one-time merger costs related to the Home Financial Corporation ("HFC") merger
which closed during the fourth quarter of 1992. Net income for 1993 increased
15.2% over 1992 earnings after adjusting for the HFC one-time costs. Fourth
quarter net income of $30.6 million increased 11.7% over the fourth quarter of
1992 earnings of $27.4 million, also adjusted for the HFC one-time costs.
Earnings per share were $4.26 for the year and $1.06 for the quarter, increases
of 13.6% and 8.2%, respectively, over 1992 earnings adjusted for the HFC
one-time costs.
Return on equity was 18.99% in 1993, compared to the 18.14% return of
1992, adjusted for HFC one-time costs. Return on assets was 1.35% for the
year, improving upon last year's adjusted level of 1.26%.
Growth in 1993 net income resulted from 12.0% revenue growth on a
fully taxable equivalent200 basis lower loan loss provision, and an absence of
one-time costs incurred in the fourth quarter of 1992 from the HFC merger.
Pretax income, adjusted for the HFC merger, on a fully taxable equivalent basis
increased 16.5% over 1992 but higher federal taxes reduced net income growth to
15.2%.points. The Maryland National Mortgage Corporation ("MNMC") acquisition, which
closed in the fourth quarter of 1993, added 7.5% to noninterest income growth,
1.6% to net interest income growth, and 5.5% to noninterest expense growth in
1993. Noninterest income related to MNMC was lowered during the fourth quarter
due to the purchase accounting treatment which required FTNC to purchase MNMC
loans held for sale at market value and reduced the accounting gain realized on
sales to investors.
Net interest income growth was fueled by increases in earning assets,
as the net interest margin held level to last year's average. The net interest
margin rose in the fourth quarter of 1993 to 4.36% from 4.23% in the third
quarter due to the additional loans from consumer lending and short-term
warehouse loans resulting from the MNMC acquisition. Average loan growth
accelerated in 1993, with loans rising at an annual rate of 9.6% above the 1992
level. Loan growth was strongest in consumer lending, especially first and
second mortgage real estate-related installment loans, as consumer loans rose
24.7% above 1992. Average commercial and construction loans increased 5.0%,
showing signs of growth for the first time in six years.
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Noninterest income growth provided 67% of the increase in revenue
during 1993, raising the percentage of revenue related to fee income to 43% for
1993 and to 47% in the fourth quarter with the inclusion of MNMC. The bond
division reported record revenues in 1993 of $91.5 million, 14.0% above 1992.
Strong growth rates were also reported for other sources of fee income: trust
income increased by 10.7%, bank card income by 9.3%, deposit services by 8.7%,
and other fee income, including mortgage banking, by 45.4%. Security gains for
1993 were $0.7 million compared with losses of $1.7 million for 1992.
Noninterest operating expense grew 13.5% compared to 1992 levels
excluding the one-time expenses related to the HFC merger. Expenses grew due
to an increase in bond division and mortgage banking activity in 1993 and the
impact of the MNMC acquisition. Excluding these expenses, noninterest
operating expense grew 6.3%.
Asset quality showed improvement as the provision for loan losses
dropped by $8.6 million from 1992. Nonperforming loansCorporation's Leverage Ratio at
December 31, 1993 were $25.4 million, comparedwas 6.55%. The guidelines also provide that bank holding
companies experiencing internal growth or making acquisitions will be expected
to maintain strong capital positions substantially above the minimum supervisory
levels without significant reliance on intangible assets. Furthermore, the
Federal Reserve Board has indicated that it will consider a "tangible Tier 1
Capital leverage ratio" (deducting all intangibles) and other indicia of capital
strength in evaluating proposals for expansion or new activities.
Each of the Subsidiary Banks is subject to risk-based and leverage capital
requirements similar to those described above adopted by the Comptroller or the
FDIC, as the case may be. The Corporation believes that each of the Subsidiary
Banks was in compliance with $30.0 million at the endapplicable minimum capital requirements as of 1992. Total
nonperforming assets increased to $58.1 million at
December 31, 1993, 6.3%
above1993. Neither the $54.7 million at December 31, 1992. This increase was dueCorporation nor any of the Subsidiary Banks has
been advised by any federal banking agency of any specific minimum Leverage
Ratio requirement applicable to it.
Failure to meet capital guidelines could subject a bank to a variety of
enforcement remedies, including the termination of deposit insurance by the
FDIC, and to certain restrictions on its business and in certain circumstances
to the $14.1 million increaseappointment of a conservator or receiver. See "-- FDICIA."
All of the federal banking agencies have proposed regulations that would
add an additional risk-based capital requirement based upon the amount of an
institution's exposure to interest rate risk.
HOLDING COMPANY STRUCTURE AND SUPPORT OF SUBSIDIARY BANKS
Because the Corporation is a holding company, its right to participate in
foreclosed properties relatedthe assets of any subsidiary upon the latter's liquidation or reorganization
will be subject to the MNMC
acquisition. Net charge-offs for 1993 were $28.4 million comparedprior claims of the subsidiary's creditors (including
depositors in the case of the Subsidiary Banks) except to $36.4
millionthe extent that the
Corporation may itself be a creditor with recognized claims against the
subsidiary. In addition, depositors of a bank, and the FDIC as their subrogee,
would be entitled to priority over other creditors in 1992, while the ratioevent of net charge-offsliquidation
of a bank subsidiary.
Under Federal Reserve Board policy, the Corporation is expected to averageact as a
source of financial strength to, and to commit resources to support, each of the
Subsidiary Banks. This support may be required at times when, absent such
Federal Reserve Board policy, the Corporation may not be inclined to provide it.
In addition, any capital loans fell from
.81%by a bank holding company to any of its
subsidiary banks are subordinate in 1992right of
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8
payment to .57% in 1993.deposits and to certain other indebtedness of such subsidiary bank.
In January 1994, Hickory Venture Capital Corporation ("Hickory"the event of a bank holding company's bankruptcy, any commitment by the bank
holding company to a federal bank regulatory agency to maintain the capital of a
subsidiary bank will be assumed by the bankruptcy trustee and entitled to a
priority of payment.
CROSS-GUARANTEE LIABILITY
Under the Federal Deposit Insurance Act (the "FDIA"), a subsidiary of FTB, realized an after-tax gain of approximately $8 million from
one of its investments. The acquisition of SNMC Management Corporation
("SNMC"), parent of Sunbelt National Mortgage Corporation ("Sunbelt"), was
closed in January anddepository
institution insured by the previously announced one-time after-tax expenses of
approximately $3 million were recognized. The Hickory gain will allow a larger
proportion of the mortgage servicing rights originatedFDIC can be held liable for any loss incurred by, Sunbelt during the
first quarteror
reasonably expected to be held rather than sold, thereby acceleratingincurred by, the growth of
the mortgage servicing portfolio. FTNC will adopt SFAS 112, "Employers'
Accounting for Postemployment Benefits," in the first quarter and will
recognize the one-time costs associated with these postemployment benefit
obligations.
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SELLING SHAREHOLDERS
The following table shows the name of each Selling Shareholder and the
number of Shares being offered by each. After completion of the offering,
assuming all of the Shares being offered are sold, the Selling Shareholders
will not own any shares of Common Stock.
Common Stock Beneficially Owned
-------------------------------
Upon Percentage
Completion Owned Upon
Prior to Offered of the Completion of
Selling Shareholder Offering Hereby Offering Offering
------------------- -------- ------ -------- --------
Continental Illinois Venture 771,553
Corporation
John R. Willis 62,644
Avy H. Stein 64,296
Daniel G. Helle 9,185
Marcus D. Wedner 9,185
Harrison I. Steans 34,239
Jennifer W. Steans 83,405
Robin M. Steans 83,405
Heather A. Steans 83,405
George P. Bauer 134,325
K&E Partners 11,120
J-WAR, LTD. 110,774
TLT, LTD. 110,774
FTNC has agreed to bear all expenses (other than selling commissions
and fees)FDIC after August 9, 1989 in
connection with (i) the registrationdefault of a commonly controlled FDIC-insured depository
institution or (ii) any assistance provided by the FDIC to any commonly
controlled FDIC-insured depository institution "in danger of default." "Default"
is defined generally as the appointment of a conservator or receiver and sale"in
danger of default" is defined generally as the existence of certain conditions
indicating that a default is likely to occur in the absence of regulatory
assistance. The FDIC's claim for damages is superior to claims of shareholders
of the Shares being
offeredinsured depository institution or its holding company but is subordinate
to claims of depositors, secured creditors and holders of subordinated debt
(other than affiliates) of the commonly controlled insured depository
institution. The Subsidiary Banks are subject to these cross-guarantee
provisions. As a result, any loss suffered by the Selling ShareholdersFDIC in over-the-counter market transactions or
in negotiated transactions. See "Salerespect of any of the
Shares." FTNC has filed with the
Commission a Registration Statement on Form S-3 under the Securities Act with
respect to the resaleSubsidiary Banks would likely result in assertion of the Shares from time to time incross-guarantee
provisions, the over-the-counter
market or in negotiated transactionsassessment of such estimated losses against the Corporation's
other Subsidiary Banks and has agreed to prepare and file such
amendments and supplements to the Registration Statement as may be necessary to
keep the Registration Statement effective until the earliest of (i) two years
from the date the Registration Statement is declared effective by the
Commission, (ii) the completion of five offerings under the Registration
Statement, or (iii) the date as of which fewer than 10%a potential loss of the initial number
of Shares are held byCorporation's investment in
such other Subsidiary Banks.
FDICIA
FDICIA, which was enacted on December 19, 1991, substantially revised the
Selling Shareholders. This Prospectus forms a part
of such Registration Statement.
SALE OF THE SHARES
The saledepository institution regulatory and funding provisions of the Shares byFDIA and made
revisions to several other federal banking statutes. Among other things, FDICIA
requires the Selling Shareholders mayfederal banking regulators to take "prompt corrective action" in
respect of FDIC-insured depository institutions that do not meet minimum capital
requirements. FDICIA establishes five capital tiers: "well capitalized,"
"adequately capitalized," "undercapitalized," "significantly undercapitalized"
and "critically undercapitalized." Under applicable regulations, an FDIC-insured
depository institution is defined to be effected
from time to time in transactions in the over-the- counter market, in
negotiated transactions or throughwell capitalized if it maintains a
combinationLeverage Ratio of such methodsat least 5%, a risk-adjusted Tier 1 Capital Ratio of sale, at fixed prices, which may be changed,least
6% and a Total Capital Ratio of at market prices prevailing at the time of
the sale, at prices related to such prevailing market prices or at negotiated
prices. The Selling Shareholders may effect such transactions by selling the
Shares to or through broker-dealers,least 10% and such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
Selling Shareholders and/or the purchasers of the Shares for which such
broker-dealers may act as agents or to whom they sell as principals, or both
(which compensation asis not subject to a particular broker-dealer maydirective,
order or written agreement to meet and maintain specific capital levels. An
insured depository institution is defined to be in excessadequately capitalized if it
meets all of customary compensation).
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The Selling Shareholdersits minimum capital requirements as described above. An insured
depository institution will be considered undercapitalized if it fails to meet
any minimum required measure, significantly undercapitalized if it has a Total
Risk-Based Capital Ratio of less than 6%, a Tier 1 Risk-Based Capital Ratio of
less than 3% or a Leverage Ratio of less than 3% and any broker-dealers who act in connection
with the salecritically undercapitalized
if it fails to maintain a level of the Shares hereundertangible equity equal to at least 2% of total
assets. An insured depository institution may be deemed to be "underwriters" withinin a
capitalization category that is lower than is indicated by its actual capital
position if it receives an unsatisfactory examination rating.
FDICIA generally prohibits an FDIC-insured depository institution from
making any capital distribution (including payment of dividends) or paying any
management fee to its holding company if the meaningdepository institution would
thereafter be undercapitalized. Undercapitalized depository institutions are
subject to restrictions on borrowing from the Federal Reserve System. In
addition, undercapitalized depository institutions are subject to growth
limitations and are required to submit capital restoration plans. A depository
institution's holding company must guarantee the capital plan, up to an amount
equal to the lesser of Section 2(11)5% of the Securities Act,depository institution's assets at the time it
becomes undercapitalized or the amount of the capital deficiency when the
institution fails to comply with the plan for the plan to be accepted by the
applicable federal regulatory authority. The federal banking agencies may not
accept a capital plan without determining, among other things, that the plan is
based on realistic assumptions and any commissions
received by themis likely to succeed in restoring the
depository institution's capital. If a depository institution fails to submit an
acceptable plan, it is treated as if it is significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject to a
number of requirements and profitrestrictions, including orders to sell sufficient
voting stock to become adequately capitalized, requirements to
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9
reduce total assets and cessation of receipt of deposits from correspondent
banks. Critically undercapitalized depository institutions are subject to
appointment of a receiver or conservator, generally within 90 days of the date
on which they become critically undercapitalized.
The Corporation believes that at December 31, 1993 all of the Subsidiary
Banks were well capitalized under the criteria discussed above.
Various other legislation, including proposals to revise the bank
regulatory system and to limit the investments that a depository institution may
make with insured funds, is from time to time introduced in Congress.
BROKERED DEPOSITS AND "PASS-THROUGH" INSURANCE
The FDIC has adopted regulations under FDICIA governing the receipt of
brokered deposits and "pass-through" insurance. Under the regulations, a bank
cannot accept or rollover or renew brokered deposits unless (i) it is well
capitalized or (ii) it is adequately capitalized and receives a waiver from the
FDIC. A bank that cannot receive brokered deposits also cannot offer
"pass-through" insurance on certain employee benefit accounts. Whether or not it
has obtained such a waiver, an adequately capitalized bank may not pay an
interest rate on any resaledeposits in excess of 75 basis points over certain
prevailing market rates specified by regulation. There are no such restrictions
on a bank that is well capitalized. Because it believes that all the Subsidiary
Banks were well capitalized as of December 31, 1993, the Corporation believes
the brokered deposits regulation will have no present effect on the funding or
liquidity of any of the Shares as principals mightSubsidiary Banks.
FDIC INSURANCE PREMIUMS
The Subsidiary Banks are required to pay semiannual FDIC deposit insurance
assessments. As required by FDICIA, the FDIC adopted a risk-based premium
schedule which has increased the assessment rates for most FDIC insured
depository institutions. Under the new schedule, the premiums initially range
from $.23 to $.31 for every $100 of deposits. Each financial institution is
assigned to one of three capital groups -- well capitalized, adequately
capitalized or undercapitalized -- and further assigned to one of three
subgroups within a capital group, on the basis of supervisory evaluations by the
institution's primary federal and, if applicable, state supervisors and other
information relevant to the institution's financial condition and the risk posed
to the applicable FDIC deposit insurance fund. The actual assessment rate
applicable to a particular institution will, therefore, depend in part upon the
risk assessment classification so assigned to the institution by the FDIC.
The FDIC is authorized by federal law to raise insurance premiums in
certain circumstances. Any increase in premiums would have an adverse effect on
the Subsidiary Banks' and the Corporation's earnings.
Under the FDIA, insurance of deposits may be deemedterminated by the FDIC upon a
finding that the institution has engaged in unsafe and unsound practices, is in
an unsafe or unsound condition to continue operations or has violated any
applicable law, regulation, rule, order or condition imposed by a federal bank
regulatory agency.
DEPOSITOR PREFERENCE
The Omnibus Budget Reconciliation Act of 1993 provides that deposits and
certain claims for administrative expenses and employee compensation against an
insured depository institution would be underwriting discounts and commissions underafforded a priority over other general
unsecured claims against such an institution, including the Senior Securities,
Act.in the "liquidation or other resolution" of such an institution by any receiver.
DESCRIPTION OF FTNC CAPITAL STOCKDEBT SECURITIES
The following summariesdescription of the terms of the Debt Securities sets forth
certain general terms and provisions of the Restated Charter,
as amendedDebt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
offered hereunder (the "Charter""Offered Debt Securities"), and Bylaws, as amended,including the nature of FTNC,any
variations
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10
from the Rights Plan
(defined below)following general provisions applicable to such Offered Debt
Securities, will be described in a Prospectus Supplement relating to such
Offered Debt Securities.
Senior Debt Securities are to be issued under an Indenture (the "Senior
Indenture"), between the Corporation and the Indenture (defined below) do not purporttrustee named in the applicable
Prospectus Supplement as the trustee therefor (the "Senior Trustee").
Subordinated Debt Securities are to be complete, are qualified in their entirety by reference to such instruments,
eachissued under an Indenture (the
"Subordinated Indenture"), between the Corporation and The First National Bank
of which is an exhibitChicago as the trustee therefor (the "Subordinated Trustee"). Copies of the
forms of the Senior Indenture and the Subordinated Indenture have been filed as
exhibits to the Registration Statement of which this Prospectus is a part,part. The
Senior Indenture and the Subordinated Indenture are sometimes herein referred to
collectively as the "Indentures" and the Senior Trustee and the Subordinated
Trustee are sometimes herein referred to collectively as the "Trustees". The
following summaries of certain provisions of the Senior Debt Securities, the
Subordinated Debt Securities, the Senior Indenture and the Subordinated
Indenture, as modified or superseded by any applicable Prospectus Supplement,
are brief summaries of certain provisions thereof, do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all respects,the
provisions of the Indenture applicable to applicable Tennessee
law.
AUTHORIZED CAPITAL STOCK
The authorized capital stocka particular series of FTNC currently consists of 5,000,000
shares of Preferred Stock, without par value ("Preferred Stock"Debt Securities
(the "Applicable Indenture"), including the definitions therein of certain
terms. Whenever particular provisions or defined terms in one or both of the
Indentures are referred to, such provisions or defined terms are incorporated
herein by reference. Section references used herein are references to the
Applicable Indenture. Capitalized terms not otherwise defined herein shall have
the meaning given to them in the Applicable Indenture.
GENERAL
The Debt Securities will be limited to the aggregate initial offering price
specified on the cover page of this Prospectus and will be direct, unsecured
obligations of the Corporation. The Debt Securities will not be deposits or
other obligations of a savings association or a bank and will not be insured by
the FDIC or any other governmental agency.
The Indentures do not limit the aggregate principal amount of Debt
Securities or of any particular series of Debt Securities which may be issued
thereunder and provide that Debt Securities issued thereunder may be issued from
time to time in one or more series, in each case with the same or various
maturities, at par or at a discount. (Section 301). The Indentures do not limit
the amount of other debt (including additional Senior Indebtedness or Other
Financial Obligations, each as defined in the Subordinated Indenture) that may
be issued by resolutionthe Corporation and do not contain financial or similar restrictive
covenants. The Corporation expects from time to time to incur additional
indebtedness constituting Senior Indebtedness and Other Financial Obligations.
The Indentures provide that there may be more than one trustee (each, an
"Applicable Trustee") under the Indentures with respect to different series of
Debt Securities.
Because the Corporation is a holding company and a legal entity separate
and distinct from its subsidiaries, the rights of the FTNCCorporation to participate
in any distribution of assets of any subsidiary upon its liquidation of assets
or reorganization or otherwise (and thus the ability of Holders of Debt
Securities to benefit indirectly from such distribution) would be subject to the
prior claims of creditors of that subsidiary, except to the extent that the
Corporation itself may be a creditor of that subsidiary with recognized claims.
Claims on the Corporation's Subsidiary Banks by creditors other than the
Corporation include substantial obligations with respect to deposit liabilities
(who have priority in liquidation) and federal funds purchased, securities sold
under repurchase agreements, other short-term borrowing and various other
financial obligations.
The Indentures do not contain any provision intended to provide protection
to Holders of Debt Securities against a sudden or dramatic decline in credit
quality of the Corporation that could result from a takeover, recapitalization,
special dividend or other restructuring, although the Corporation's (or a third
party's) ability to engage in such transactions may be regulated or limited by
various bank regulatory agencies.
Reference is made to the applicable Prospectus Supplement for the following
terms of the Offered Debt Securities offered thereby: (1) the title of the
Offered Debt Securities; (2) whether the Offered Debt Securities are Senior Debt
Securities or Subordinated Debt Securities; (3) any limit upon the aggregate
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11
principal amount of the Offered Debt Securities and the percentage of such
principal amount at which such Offered Debt Securities may be issued; (4) the
date or dates on which the principal of the Offered Debt Securities is scheduled
to become payable (the "Stated Maturity"); (5) the rate or rates(which may be
fixed or variable) per annum at which the Offered Debt Securities will bear
interest, or the method of determining such rate or rates, if any, the date or
dates from which any such interest will accrue, the Interest Payment Dates on
which any such interest will be payable, the Regular Record Date for the
interest payable on any Interest Payment Date, the Person to whom interest or
principal on any Offered Debt Security of such series will be payable, if other
than the Person in whose name that Offered Debt Security (or one or more
predecessor Debt Securities) is registered at the close of business on the
Regular Record Date for such interest and the extent to which, or the manner in
which, any interest payable on a permanent global Offered Debt Security on an
Interest Payment Date will be paid; (6) if other than the location specified in
this Prospectus, the place or places where the principal of and premium, if any,
and interest on the Offered Debt Securities will be payable; (7) the period or
periods within which, the price or prices at which and the terms and conditions
upon which the Offered Debt Securities will, pursuant to any mandatory sinking
fund provisions or otherwise, or may, pursuant to any optional sinking fund
provisions or otherwise, be redeemed in whole or in part by the Corporation; (8)
the period or periods within which, the price or prices at which and the terms
and conditions upon which the Offered Debt Securities may be repaid, in whole or
in part, at the option of the Holders thereof; (9) if other than denominations
of $1,000 and any integral multiple thereof, the denominations in which the
Offered Debt Securities shall be issuable; (10) if other than the principal
amount thereof, the portion of the principal amount of the Offered Debt
Securities which shall be payable upon declaration of acceleration of the
Maturity thereof; (11) the currency or currency unit of payment of principal and
premium, if any, and interest on such Offered Debt Securities, and any index
used to determine the amount of payment of principal or premium, if any, and
interest on such Offered Debt Securities; (12) whether the Offered Debt
Securities are to be issuable in permanent global form and, in such case, the
initial depositary with respect thereto and the circumstances under which such
permanent global Debt Security may be exchanged; (13) whether the subordination
provisions summarized below, or different subordination provisions, including a
different definition of "Senior Indebtedness," "Entitled Persons," "Existing
Subordinated Indebtedness" or "Other Financial Obligations," shall apply to the
Offered Debt Securities that are Subordinated Debt Securities; (14) in the case
of Subordinated Debt Securities, whether the conversion provisions summarized
below or different conversion provisions, shall apply to the Offered Debt
Securities that are Subordinated Debt Securities, and the Initial Conversion
Price, the Initial Conversion Date and the Final Conversion Date therefor and
any other terms relating to the conversion thereof into Common Stock of the
Corporation; and (15) any other terms of the Offered Debt Securities not
specified in this Prospectus. (Section 301).
FORM, REGISTRATION AND TRANSFER
Unless otherwise indicated in the applicable Prospectus Supplement,
principal, premium, if any, and interest, if any, on the Debt Securities will be
payable, and the Debt Securities will be transferable, at the agency or office
of the Corporation maintained for such purpose in the Borough of Manhattan, The
City of New York except that interest may be paid at the option of the
Corporation by check mailed to the address of the Holder entitled thereto as it
appears on the Security Register. (Sections 301, 305 and 1002).
The Corporation, the Trustee and any agent of the Corporation or Trustee
may treat the Person in whose name an Offered Debt Security is registered as the
owner for all purposes, including for the purpose of receiving payment of
principal (and premium, if any) and interest on such Offered Debt Security.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Debt Securities will be issued only in fully registered form, without coupons
(the "Registered Securities"), in denominations of $1,000 and any integral
multiple thereof. (Section 302). The Indentures provide that Offered Debt
Securities of any series may be issuable in permanent global form. (Section
301). No service charge will be made for any registration of transfer or
exchange of the Debt Securities, but the Corporation may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith. (Section 305).
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Both Senior Debt Securities and Subordinated Debt Securities may be issued
as Original Issue Discount Securities to be offered and sold at a substantial
discount below their stated principal amount. Federal income tax consequences
and other special considerations applicable to any such Original Issue Discount
Securities will be described in the applicable Prospectus Supplement. "Original
Issue Discount Security" means any Security which provides for an amount less
than the principal amount thereof to be due and payable upon the declaration of
acceleration of the Maturity thereof in accordance with the terms of the
Applicable Indenture. (Section 101).
Reference is made to the applicable Prospectus Supplement relating to any
series of Offered Debt Securities that are Original Issue Discount Securities
for the particular provisions relating to acceleration of the Maturity of a
portion of the principal amount of such series of Original Issue Discount
Securities upon the occurrence of an Event of Default and the continuation
thereof.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities ("Global Securities") that will be
deposited with, or on behalf of, a depositary (the "Global Depositary")
identified in the applicable Prospectus Supplement. Global Securities may be
issued in either registered or bearer form and in either temporary or permanent
form. Unless and until it is exchanged in whole or in part for individual
certificates evidencing Debt Securities in definitive form represented thereby,
a Global Security may not be transferred except as a whole by the Global
Depositary for such Global Security to a nominee of such Global Depositary or by
a nominee of such Global Depositary to such Global Depositary or another nominee
of such Global Depositary or by such Global Depositary or any such nominee to a
successor of such Global Depositary or a nominee of such successor. (Section
305).
The specific terms of the depositary arrangement with respect to any Debt
Securities of a series will be described in the applicable Prospectus
Supplement. The Corporation anticipates that the following provisions will
generally apply to all depositary arrangements although no assurance can be
given that such will be the case.
Upon the issuance of a Global Security, the Global Depositary or its
nominee will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Debt Securities represented by such Global
Security to the accounts of institutions that have accounts with such Global
Depositary ("participants"). The accounts to be credited shall be designated by
the underwriters or agents of such Debt Securities or by the Corporation, if
such Debt Securities are offered and sold directly by the Corporation. Ownership
of beneficial interests in a Global Security will be limited to participants or
persons that may hold interests through participants. Ownership of beneficial
interests in such Global Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the Global
Depositary or its nominee for such Global Security (with respect to interests of
participants) and the records of participants (with respect to persons other
than participants). The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a Global Security.
So long as the Global Depositary, or its nominee, is the owner of a Global
Security, such Global Depositary or such nominee, as the case may be, will be
considered the sole owner or holder of the Debt Securities represented by such
Global Security for all purposes under the Applicable Indenture. Except as set
forth below, owners of beneficial interests in a Global Security will not be
entitled to have Debt Securities represented by such Global Security registered
in their names, will not receive or be entitled to receive physical delivery of
Debt Securities of such series in definitive form and will not be considered the
owners or holders thereof under the Applicable Indenture.
Subject to the restrictions discussed under "Description of Debt
Securities -- Form, Registration and Transfer," payment of principal of,
premium, if any, and interest, if any, on, Debt Securities registered in the
name of or held by a Global Depositary or its nominee will be made to the Global
Depositary or its nominee, as the case may be, as the registered owner or the
holder of the Global Security representing such Debt Securities. None of the
Corporation, the Applicable Trustee, or any Paying Agent or the Security
Registrar for
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such Debt Securities will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests in a Global Security for such Debt Securities or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
The Corporation expects that the Global Depositary for Debt Securities of a
series, upon receipt of any payment of principal, premium, if any, or any
interest in respect of a permanent Global Security, will credit immediately
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global Security
as shown on the records of such Global Depositary or its nominee. The
Corporation also expects that payments by participants to owners of beneficial
interests in such Global Security held through such participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of such participants. Receipt
by owners of beneficial interests in a temporary Global Security of payments in
respect of such temporary Global Security will be subject to the restrictions
discussed under "Description of Debt Securities -- Form, Registration and
Transfer" above.
If the Global Depositary for Debt Securities of a series is at any time
unwilling, unable or ineligible to continue as Global Depositary and a successor
Global Depositary is not appointed by the Corporation within 90 days or an Event
of Default has occurred and is continuing, the Corporation will issue Debt
Securities of such series in definitive form in exchange for the Global Security
or Securities representing the Debt Securities of such series. In addition, the
Corporation may at any time and in its sole discretion, subject to any
limitations described in the applicable Prospectus Supplement, determine not to
have any Debt Securities of a series represented by one or more Global
Securities and, in such event, will issue Debt Securities of such series in
definitive form in exchange for the Global Security or Securities representing
such Debt Securities. Further, if the Corporation so specifies with respect to
the Debt Securities of a series, an owner of a beneficial interest in a Global
Security representing Debt Securities of such series may, on terms acceptable to
the Corporation and the Global Depositary for such Global Security, receive Debt
Securities of such series in definitive form in exchange for such beneficial
interests, subject to any limitations described in the applicable Prospectus
Supplement relating to such Debt Securities. In any such instance, an owner of a
beneficial interest in a Global Security will be entitled to physical delivery
in definitive form of Debt Securities of the series represented by such Global
Security equal in principal amount to such beneficial interest and to have such
Debt Securities registered in its name (if the Debt Securities of such series
are issuable as Registered Securities).
SUBORDINATION OF THE SUBORDINATED DEBT SECURITIES
The payment of the principal of and interest on the Subordinated Debt
Securities will, to the extent set forth in the Subordinated Indenture, be
subordinated in right of payment to the prior payment in full of all Senior
Indebtedness. Unless otherwise specified in the applicable Prospectus
Supplement, in certain events of insolvency, the payment of the principal of and
interest on the Subordinated Debt Securities will, to the extent set forth in
the Subordinated Indenture, also be effectively subordinated in right of payment
to the prior payment in full of all Other Financial Obligations. Upon any
payment or distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshalling of assets or any bankruptcy, insolvency or similar
proceedings of the Corporation, the holders of all Senior Indebtedness will
first be entitled to receive payment in full of all amounts due or to become due
thereon before the Holders of the Subordinated Debt Securities will be entitled
to receive any payment in respect of the principal of or interest on the
Subordinated Debt Securities (Section 402 of the Subordinated Indenture). If
upon any such payment or distribution of assets to creditors, there remains,
after giving effect to such subordination provisions in favor of the holders of
Senior Indebtedness, any amount of cash, property or securities available for
payment or distribution in respect of Subordinated Debt Securities (defined in
the Subordinated Indenture as "Excess Proceeds") and if, at such time, any
Entitled Persons (as defined in the Subordinated Indenture) in respect of Other
Financial Obligations have not received payment in full of all amounts due or to
become due on or in respect of such Other Financial Obligations, then such
Excess Proceeds shall first be applied to pay or provide for the payment in full
of such Other Financial Obligations before any payment or distribution may be
made in respect of the Subordinated Debt Securities (and other
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securities ranking pari passu in respect of payment). (Section 1415 of the
Subordinated Indenture). In the event of the acceleration of the Maturity of any
Subordinated Debt Securities, the holders of all Senior Indebtedness will first
be entitled to receive payment in full of all amounts due thereon before the
Holders of the Subordinated Debt Securities will be entitled to receive any
payment upon the principal of or interest on the Subordinated Debt Securities.
No payments on account of the principal of, or premium, if any, or interest on
the Subordinated Debt Securities or on account of the purchase or acquisition
thereof shall be made if there shall have occurred and be continuing a default
in any payment with respect to Senior Indebtedness, or an event of default with
respect to Senior Indebtedness permitting the holders thereof to accelerate the
maturity thereof, or if any judicial proceeding shall be pending with respect to
any such default. (Section 1404 of the Subordinated Indenture).
By reason of such subordination in favor of the holders of Senior
Indebtedness, in the event of insolvency, creditors of the Corporation who are
not holders of Senior Indebtedness or Holders of the Subordinated Debt
Securities may recover less, ratably, than the holders of Senior Indebtedness
and may recover more, ratably, than the Holders of the Subordinated Debt
Securities. By reason of the obligation of the Holders of Subordinated Debt
Securities to pay over any Excess Proceeds to Entitled Persons in respect to
Other Financial Obligations, in the event of insolvency, holders of Existing
Subordinated Indebtedness may recover less, ratably, than Entitled Persons in
respect of Other Financial Obligations and may recover more, ratably, than the
Holders of Subordinated Debt Securities (other than Existing Subordinated
Indebtedness).
Unless otherwise specified in the applicable Prospectus Supplement, "Senior
Indebtedness" of the Corporation is defined in the Subordinated Indenture to
mean the principal of, premium, if any, and interest on (1) all indebtedness of
the Corporation (including indebtedness of others guaranteed by the
Corporation), other than the Subordinated Debt Securities and obligations on
account of Existing Subordinated Indebtedness, whether outstanding on the date
of execution of the Indenture or thereafter created, incurred or assumed which
is (i) for money borrowed or (ii) evidenced by a note or similar instrument
given in connection with the acquisition of any business, properties or assets
of any kind, and (2) amendments, renewals, extensions, modifications or
refundings of any such indebtedness, unless in any case in the instrument
creating or evidencing such indebtedness or pursuant to which the same is
outstanding it is provided that such indebtedness is not superior in right of
payment to the Subordinated Debt Securities or is to rank pari passu with or
subordinate to the Subordinated Debt Securities. (Section 101 of the
Subordinated Indenture).
Unless otherwise specified in the applicable Prospectus Supplement, "Other
Financial Obligations" means (a) all obligations of the Corporation under direct
credit substitutes, (b) obligations of, or any such obligation directly or
indirectly guaranteed by, the Corporation for purchased money or funds, (c) any
deferred obligation of, or any such obligation directly or indirectly guaranteed
by, the Corporation incurred in connection with the acquisition of any business,
properties or assets not evidenced by a note or similar instrument given in
connection therewith, and (d) all obligations of the Corporation to make payment
pursuant to the terms of financial instruments, such as (1) securities contracts
and foreign currency exchange contracts, (2) derivative instruments, such as
swap agreements (including interest rate and foreign exchange rate swap
agreements), cap agreements, floor agreements, collar agreements, interest rate
agreements, foreign exchange rate agreements, options, commodity futures
contracts, commodity option contracts, and (3) in the case of both (1) and (2)
above, similar financial instruments, other than (x) obligations on account of
Senior Indebtedness, and (y) obligations on account of indebtedness for money
borrowed ranking pari passu with or subordinate to the Subordinated Debt
Securities. Unless otherwise specified in the applicable Prospectus Supplement
relating to the particular series of Subordinated Debt Securities offered
thereby, "Entitled Person" means any person who is entitled to payment pursuant
to the terms of Other Financial Obligations. (Section 101 of the Subordinated
Indenture).
Unless otherwise specified in the applicable Prospectus Supplement,
"Existing Subordinated Indebtedness" means the obligations of the Corporation
under securities issued pursuant to the indenture, dated as of June 1, 1987,
between the Corporation and Security Pacific National Trust Company (New York),
as trustee, relating to the Corporation's 10 3/8% Subordinated Capital Notes due
1999 (the "Subordinated Capital Notes"). (Section 101 of the Subordinated
Indenture). As of the date of this Prospectus, there was outstanding
approximately $75.0 million aggregate principal amount of Existing Subordinated
Indebtedness.
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The Corporation's obligations under the Subordinated Debt Securities shall
rank pari passu in right of payment with each other and with the Existing
Subordinated Indebtedness, subject (unless otherwise specified in the applicable
Prospectus Supplement relating to the particular series of Subordinated Debt
Securities offered thereby) to the obligations of the Holders of Subordinated
Debt Securities (other than Existing Subordinated Indebtedness) to pay over any
Excess Proceeds to Entitled Persons in respect of Other Financial Obligations as
provided in the Subordinated Indenture.
The applicable Prospectus Supplement may further describe the provisions,
if any, applicable to the subordination of the Subordinated Debt Securities of a
particular series offered thereby.
CONVERSION OF THE SUBORDINATED DEBT SECURITIES
If so specified in the applicable Prospectus Supplement, Subordinated Debt
Securities will be convertible into Common Stock of the Corporation prior to
redemption during the time period specified in the applicable Prospectus
Supplement, initially at the Initial Conversion Price therefor specified in such
Prospectus Supplement ("Convertible Subordinated Debt Security"). (Section 1501
of the Subordinated Indenture).
The conversion price will be subject to adjustment in certain events,
including (i) dividends (and other distributions) payable in Common Stock on any
class of capital stock of the Corporation, (ii) the issuance to all holders of
Common Stock of rights or warrants entitling them to subscribe for or purchase
Common Stock at less than the current market price (as defined), (iii)
subdivisions, combinations and reclassifications of Common Stock, and (iv)
distributions to all holders of Common Stock of evidences of indebtedness of the
Corporation or assets (including securities, but excluding those dividends,
rights, warrants and distributions referred to above and dividends and
distributions paid in cash out of the retained earnings of the Corporation). In
addition to the foregoing adjustments, the Corporation will be permitted to make
such reductions in the conversion price as it considers to be advisable in order
that any event treated for Federal income tax purposes as a dividend of stock or
stock rights will not be taxable to the holders of the Common Stock. (Section
1504 of the Subordinated Indenture). In case of certain consolidations or
mergers to which the Company is a party or the transfer of substantially all of
the assets of the Corporation, each Convertible Subordinated Debt Security then
outstanding would, without the consent of any Holders of such Convertible
Subordinated Debt Security, become convertible only into the kind and amount of
securities, cash and other property receivable upon the consolidation, merger or
transfer by a holder of the number of shares of Common Stock into which such
Convertible Subordinated Debt Security might have been converted immediately
prior to such consolidation, merger or transfer (assuming such holder of Common
Stock failed to exercise any rights of election and received per share the kind
and amount received per share by a plurality of non-electing shares). (Section
1512 of the Subordinated Indenture). Generally no adjustments to the conversion
price will be required to be made until cumulative adjustments amount to 1% or
more of the conversion price as last adjusted. (Section 1505 of the Subordinated
Indenture).
Fractional shares of Common Stock are not to be issued upon conversion,
but, in lieu thereof, the Corporation will pay a cash adjustment based upon
market price (as determined by the Board of Directors). (Section 1504 of the
Subordinated Indenture). Convertible Subordinated Debt Securities surrendered
for conversion during the period from the close of business on any Regular
Record Date next preceding any Interest Payment Date to the opening of business
on such Interest Payment Date (except Convertible Subordinated Debt Securities
called for redemption on a Redemption Date within such period) must be
accompanied by payment of an amount equal to the interest thereon which the
registered Holder is to receive. If any Convertible Subordinated Debt Security
is converted after any Regular Record Date and on or prior to the next
succeeding Interest Payment Date (other than any Convertible Subordinated Debt
Security whose Maturity is prior to such Interest Payment Date), interest whose
Stated Maturity is on such Interest Payment Date shall be payable on such
Interest Payment Date notwithstanding such conversion, and such interest
(whether or not punctually paid or duly provided for) shall be paid to the
Person in whose name that Convertible Subordinated Debt Security (or one or more
Predecessor Securities) is registered at the close of business on such Regular
Record Date. Except where Convertible Subordinated Debt Securities surrendered
for conversion must be accompanied by payment as described above, no interest on
converted Convertible Subordinated Debt Securities will be payable by the
Company on any Interest Payment Date subsequent to
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the date of conversion. No other payment or adjustment for interest or dividends
is to be made upon conversion. (Sections 307 and 1503 of the Subordinated
Indenture).
If at any time the Corporation makes a distribution of property to its
shareholders which would be taxable to such shareholders as a dividend for
Federal income tax purposes (e.g., distributions of evidences of indebtedness or
assets of the Corporation, but generally not stock dividends or rights to
subscribe for Common Stock) and, pursuant to the anti-dilution provisions of the
Subordinated Indenture, the conversion price of Convertible Subordinated Debt
Securities is reduced, such reduction may be deemed to be the payment of a
taxable dividend to holders of Convertible Subordinated Debt Securities.
LIMITATION ON DISPOSITION OF VOTING STOCK OF PRINCIPAL SUBSIDIARY BANKS
The Senior Indenture contains a covenant by the Corporation that it will
not sell, assign, transfer, grant a security interest in or otherwise dispose of
any shares of, securities convertible into or options, warrants or rights to
subscribe for or purchase shares of, Voting Stock (other than directors'
qualifying shares) of any Principal Subsidiary Bank and that it will not permit
any Principal Subsidiary Bank to issue (except to the Corporation) shares of,
securities convertible into, or options, warrants or rights to subscribe or
purchase shares of, Voting Stock, except for sales, assignments, transfers,
grants of security interests or other dispositions which: (1) are for fair
market value (as determined by the Board of Directors of the Corporation) and,
after giving effect to such dispositions and to any potential dilution, the
Corporation will own not less than 80 percent of the shares of Voting Stock of
such Principal Subsidiary Bank; (2) are made in compliance with an order of a
court or regulatory authority of competent jurisdiction, a condition imposed by
any such court or authority permitting the acquisition by the Corporation,
directly or indirectly, of any other bank or entity the activities of which are
legally permissible for a bank holding company or a subsidiary thereof to engage
in, or an undertaking made to such authority in connection with such an
acquisition (provided that the assets of the bank or entity being acquired and
its consolidated subsidiaries equal or exceed 75% of the assets of such
Principal Subsidiary Bank or such Subsidiary owning, directly or indirectly, any
shares of voting stock of such Principal Subsidiary Bank and its respective
consolidated Subsidiaries on the date of acquisition); or (3) are made to the
Corporation or any Wholly-Owned Subsidiary if such Wholly-Owned Subsidiary
agrees to be bound by this covenant and the Corporation agrees to maintain such
Wholly-Owned Subsidiary as a Wholly-Owned Subsidiary. Notwithstanding the
foregoing, any Principal Subsidiary Bank may be merged into or consolidated with
another banking institution organized under the laws of the United States, any
State thereof or the District of Columbia, if after giving effect to such merger
or consolidation, the Corporation or any Wholly-Owned Subsidiary owns at least
80 percent of the Voting Stock of such other banking institution then issued and
outstanding free and clear of any security interest and if, immediately after
giving effect thereto, no Event of Default, and no event which, after notice or
lapse of time or both, would become an Event of Default, shall have happened and
be continuing. (Sections 101 and 1008 of the Senior Indenture). A Principal
Subsidiary Bank is defined in the Senior Indenture to mean any Subsidiary which
is a Bank and has total assets equal to 30 percent or more of the consolidated
assets of the Corporation determined as of the date of the most recent audited
financial statements of such entities. At present, the only Principal Subsidiary
Bank is First Tennessee Bank National Association. Voting Stock is defined in
the Senior Indenture to mean stock of the class or classes having general voting
power under ordinary circumstances to elect at least a majority of the board of
directors, managers or trustees of such corporation (irrespective of whether or
not at the time stock of any other class or classes shall have contingent voting
rights).
The Subordinated Indenture contains no such covenant and the foregoing
covenant is not a covenant for the benefit of any series of Subordinated Debt
Securities. The Indenture relating to the Subordinated Capital Notes, however,
does contain a substantially identical covenant for the benefit of such
Subordinated Capital Notes.
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DEFAULTS
The Senior Indenture
An Event of Default is defined in the Senior Indenture as, with respect to
Debt Securities of any series issued thereunder: (1) default in payment of
principal of or premium, if any, on any Debt Security of that series at
Maturity; (2) default for 30 days in payment of interest of any Debt Security of
that series; (3) default in the deposit of any sinking fund payment when due in
respect of that series; (4) default in the performance, or breach, of any other
covenant of the Corporation in the Senior Indenture or in the Debt Securities of
that series, continued for 30 days after written notice to the Corporation by
the Senior Trustee or to the Corporation and the Senior Trustee by the Holders
of not less than 25 percent of the aggregate principal amount of the Outstanding
Securities of that series; (5) failure to pay when due any indebtedness of the
Corporation or any Principal Subsidiary Bank for borrowed money in excess of
$5,000,000, or acceleration of the maturity of any such indebtedness in excess
of such amount if acceleration results from a default under the instrument
giving rise to such indebtedness and is not annulled within 30 days after due
notice, unless in either case such default is contested in good faith by
appropriate proceedings; (6) certain events of bankruptcy, insolvency or
reorganization of the Corporation, or any Principal Subsidiary Bank; and (7) any
other Event of Default with respect to Debt Securities of that series that is
specified in the applicable Prospectus Supplement. (Section 501 of the Senior
Indenture).
The Senior Indenture provides that, if any Event of Default with respect to
Debt Securities of any series at the time outstanding thereunder occurs and is
continuing, either the Senior Trustee or the Holders of not less than 25 percent
in principal amount of the Outstanding Securities of that series may declare the
principal amount (or, if the Debt Securities of that series are Original Issue
Discount Securities, such portion of the principal amount as may be specified in
the terms of that series) of all Debt Securities of that series to be due and
payable immediately (provided that no such declaration is required upon certain
events of bankruptcy). The Holders of a majority in aggregate principal amount
of the Outstanding Securities of that series may annul a declaration of
acceleration of the Securities of such series, but only if all Events of Default
have been remedied on all payments due on the Debt Securities of that series
(other than those due as a result of acceleration) have been made and certain
other conditions have been met. (Section 502 of the Senior Indenture). Subject
to the duty of the Senior Trustee upon the occurrence and continuation of an
Event of Default to act with the required standard of care, the Senior Trustee
will be under no obligation to exercise any of its rights or powers under the
Senior Indenture at the request or direction of any of the Holders, unless such
Holders shall have offered to the Senior Trustee reasonable indemnity. (Section
603 of the Senior Indenture). The Holders of a majority in aggregate principal
amount of the Outstanding Securities of that series will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Senior Trustee or exercising any trust or power conferred on
the Senior Trustee. (Section 512 of the Senior Indenture). The Holders of a
majority in aggregate principal amount of the Outstanding Securities of that
series may waive any past default under the Senior Indenture with respect to
such series, except a default in the payment of principal or interest or a
default in respect of each covenant in the Senior Indenture which cannot be
modified without the consent of the Holder of each Outstanding Security of the
series affected. (Section 513 of the Senior Indenture). See the second paragraph
under "Modification and Waiver" below. In the event of the bankruptcy,
insolvency or reorganization of the Corporation, the claims of Holders would be
subject as to enforcement to the broad equity power of a Federal Bankruptcy
Court, and to the determination by that court of the nature of the rights of the
Holders.
The Senior Indenture contains a provision entitling the Senior Trustee,
subject to the duty of the Senior Trustee upon the occurrence and continuation
of an Event of Default to act with the required standard of care, to be
indemnified by the Holders of any series of Outstanding Securities thereunder
before proceeding to exercise any right or power under the Indenture at the
request of the Holders of such series of Securities. (Section 603 of the Senior
Indenture). The Senior Indenture provides that the Holders of a majority in
principal amount of Outstanding Securities thereunder of any series may direct
the time, method and place of conducting any proceeding for any remedy available
to the Senior Trustee, or exercising any trust or other power conferred on the
Senior Trustee, with respect to the Debt Securities of such series, provided
that the Senior Trustee may decline to act if such direction is contrary to law
or the Senior Indenture. (Section 512 of the Senior Indenture).
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The Corporation will file annually with the Senior Trustee a certificate as
to compliance with all conditions and covenants in the Senior Indenture.
(Section 1004 of the Senior Indenture).
The Subordinated Indenture
Payment of principal of the Subordinated Debt Securities may be accelerated
only upon an Event of Default (as defined below). There is no right of
acceleration in the case of a default in the payment of interest or the payment
of principal prior to the date of maturity or a default in the performance of
any other covenant of the Corporation in the Subordinated Indenture, unless the
terms of a particular series of Subordinated Debt Securities specifically
provide otherwise, in which case any such extension of such right of
acceleration will be described in the applicable Prospectus Supplement.
An Event of Default is defined in the Subordinated Indenture as certain
events involving the bankruptcy, insolvency or reorganization of the Corporation
and any other Event of Default which may be provided for with respect to the
Subordinated Debt Securities of that series. (Section 501 of the Subordinated
Indenture). A Default, with respect to Debt Securities of that series, is
defined in the Subordinated Indenture to include: (1) any Event of Default with
respect to any Debt Securities of that series; (2) a default in the payment of
principal or premium, if any, of any Debt Security of that series at its
Maturity; (3) default in the payment of any interest on any Debt Security of
that series when due, continued for 30 days; (4) default in the making of any
sinking fund payment; (5) default in the performance, or breach, of any other
covenant or warranty of the Corporation in the Subordinated Indenture or in the
Debt Securities of that series, continued for 30 days after written notice to
the Corporation by the Subordinated Trustee or to the Corporation and the
Subordinated Trustee by the Holders of not less than 25 percent in aggregate
principal amount of the Outstanding Securities of such series; or (v) any other
Default with respect to Debt Securities of that series that is specified in the
applicable Prospectus Supplement. (Section 503 of the Subordinated Indenture).
If an Event of Default with respect to the Subordinated Debt Securities of any
series occurs and is continuing, either the Subordinated Trustee or the Holders
of not less than 25 percent in aggregate principal amount of the Outstanding
Securities of that series may accelerate the maturity of all Outstanding
Securities of such series. The Holders of a majority in aggregate principal
amount of the Outstanding Securities of that series may annul a declaration of
acceleration of the Securities of such series, but only if all Events of Default
have been remedied and all payments due on the Debt Securities of that series
(other than those due as a result of acceleration) have been made and certain
other conditions have been met. (Section 502 of the Subordinated Indenture).
Subject to the duty of the Subordinated Trustee upon the occurrence and
continuation of a Default to act with the required standard of care, the
Subordinated Trustee will be under no obligation to exercise any of its rights
or powers under the Subordinated Indenture at the request or direction of any of
the Holders, unless such Holders shall have offered to the Subordinated Trustee
reasonable indemnity. (Section 603 of the Subordinated Indenture). The Holders
of a majority in aggregate principal amount of the Outstanding Securities of
that series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Subordinated Trustee
or exercising any trust or power conferred on the Subordinated Trustee. (Section
512 of the Subordinated Indenture). The Holders of a majority in aggregate
principal amount of the Outstanding Securities of that series may waive any past
default under the Subordinated Indenture with respect to such series, except a
default in the payment of principal or interest or a default in respect of a
covenant in the Subordinated Indenture which cannot be modified without the
consent of the Holder of each Outstanding Security of the series affected.
(Section 513 of the Subordinated Indenture). See the second paragraph under
"Modification and Waiver" below.
In the event of the bankruptcy, insolvency or reorganization of the
Corporation, the claims of the Holders would be subject as to enforcement to the
broad equity power of a Federal Bankruptcy Court, and to the determination by
that court of the nature of the rights of the Holders.
The Corporation will file annually with the Subordinated Trustee a
certificate as to compliance with all conditions and covenants in the
Subordinated Indenture. (Section 1004 of the Subordinated Indenture).
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DEFEASANCE AND DISCHARGE
Each Indenture provides that the terms of any series of Debt Securities
issued thereunder may provide that the Corporation may terminate all or certain
of its obligations under such Indenture with respect to the Debt Securities of
such series on the terms and subject to the conditions contained in the
Applicable Indenture, by (a) depositing irrevocably with the Applicable Trustee
as trust funds in trust (1) in the case of Debt Securities denominated in a
foreign currency, money in such foreign currency or Foreign Government
Obligations (as defined below) of the foreign government or governments issuing
such foreign currency, (2) in the case of Debt Securities denominated in U.S.
dollars, U.S. dollars or U.S. Government Obligations (as defined below), in each
case in an amount which through the payment of interest, principal or premium,
if any, in respect thereof in accordance with their terms will provide (without
any reinvestment of such interest, principal or premium), not later than one
business day before the due date of any payment, money, or (3) a combination of
money and U.S. Government Obligations (as hereinafter defined) or Foreign
Government Obligations, as applicable, sufficient to pay the principal of or
premium, if any, and interest on, the Debt Securities of such series as such are
due and (b) satisfying certain other conditions precedent specified in the
Applicable Indenture. Such deposit and termination is conditioned, among other
things, upon the Corporation's delivery of (a) an opinion of independent counsel
that the Holders of the Debt Securities of such series will have no federal
income tax consequences as a result of such deposit and termination and (b) if
the Debt Securities of such series are then listed on the New York Stock
Exchange, an opinion of counsel that the Debt Securities of such series will not
be delisted as a result of the exercise of this option. (Article Thirteen).
"U.S. Government Obligations" means securities that are (1) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (2) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, under
clauses (1) or (2) are not callable or redeemable at the option of the issuer
thereof. "Foreign Government Obligations" means securities denominated in a
Foreign Currency that are (1) direct obligations of a foreign government for the
payment of which its full faith and credit is pledged or (2) obligations of a
Person controlled or supervised by and acting as an agency or instrumentality of
a foreign government the payment of which is unconditionally guaranteed as a
full faith and credit obligation by such foreign government, which, in either
case, under clauses (1) or (2) are not callable or redeemable at the option of
the issuer thereof. (Section 101).
The applicable Prospectus Supplement will state whether any defeasance
provisions of the Applicable Indenture will apply to Offered Debt Securities.
MODIFICATION AND WAIVER
Certain modifications and amendments of each of the Indentures may be made
by the Corporation and the Trustee under the Applicable Indenture only with the
consent of the Holders of not less than a majority in aggregate principal amount
of the Outstanding Securities of each series issued under such Indenture and
affected by the modification or amendment, provided that no such modification or
amendment may, without the consent of the Holder of each Outstanding Security
issued under such Indenture and affected thereby: (1) change the Stated Maturity
of the principal of, or any installment of principal of or interest on, any such
Debt Security; (2) reduce the principal amount of, or the premium, if any, or
the interest on, any such Debt Security (including in the case of an Original
Issue Discount Security the amount payable upon acceleration of the maturity
thereof); (3) change the place of payment where, or the coin or currency or
currency unit in which, any principal of, or premium, if any, or interest on,
any such Debt Security is payable; (4) impair the right to institute suit for
the enforcement of any such payment on or after the Stated Maturity thereof (or,
in the case of redemption, on or after the Redemption Date); (5) reduce the
above-stated percentage of Outstanding Securities of any series the consent of
the Holders of which is necessary to modify or amend the Applicable Indenture;
or (6) modify the foregoing requirements or reduce the percentage of aggregate
principal amount of Outstanding Securities of any series required to be held by
Holders seeking to waive compliance with certain provisions of the Applicable
Indenture or seeking to waive certain defaults. (Section 902).
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The Holders of not less than a majority in aggregate principal amount of
the Outstanding Securities of any series may on behalf of the Holders of all
Debt Securities of that series waive, insofar as that series is concerned,
compliance by the Corporation with certain restrictive provisions of the
Applicable Indenture. (Section 1008 of the Subordinated Indenture, Section 1009
of the Senior Indenture). The Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities of any series may on behalf of
the Holders of all Debt Securities of that series waive any past default under
the Applicable Indenture with respect to that series, except a default in the
payment of the principal of, or premium, if any, or interest on any Debt
Security of that series or in respect of a covenant or provision which under the
Applicable Indenture cannot be modified or amended without the consent of the
Holder of each Outstanding Security issued thereunder of the series affected.
(Section 513).
Each of the Senior Indenture and the Subordinated Indenture may be modified
or amended by the Corporation and the Trustee under the Applicable Indenture
without the consent of Holders of the Outstanding Securities issued under such
Indenture for the following purposes: (i) to evidence the succession of another
Person to the Corporation and the assumption by such successor of the covenants
of the Corporation, (ii) to add to the covenants of the Corporation or to
surrender any of its rights or powers, (iii) to add any Defaults or Events of
Default, (iv) to add to or change the provisions of the Applicable Indenture to
facilitate the issuance of Debt Securities in bearer or uncertificated form, (v)
to modify the Applicable Indenture provided that such modification (A) will not
apply to any Debt Securities of any series created prior to such modification or
modify the rights of any holder of such Security and (B) will become effective
only when there is no such Security Outstanding, (vi) to secure the Securities,
(vii) to establish the form and terms of Securities of any series in accordance
with the Applicable Indenture, (viii) to evidence the acceptance of an
appointment by a successor Trustee with respect to Debt Securities of one or
more series or to add to or change any provisions of the Indentures to provide
for or facilitate the administration of the trusts thereunder by more than one
trustee, or (ix) to make provision for conversion rights or (x) to cure any
ambiguity, corrector supplement any defective or inconsistent provision or make
other provisions with respect to matters arising under the Indentures which do
not adversely affect the interests of the Holders of Debt Securities or any
Series in any material respect. (Section 901).
Each Indenture provides that in determining whether the Holders of the
requisite principal amount of the Outstanding Securities issued under such
Indenture have given any request, demand, authorization, direction, notice,
consent or waiver thereunder or are present at a meeting of Holders of Debt
Securities for quorum purposes, (1) the principal amount of an Original Issue
Discount Security that shall be deemed to be Outstanding shall be the amount of
the principal thereof that would be due and payable as of the date of such
determination upon acceleration of the Maturity thereof, and (2) the principal
amount of a Debt Security denominated in a foreign currency or currency unit
shall be the U.S. dollar equivalent, determined on the date of original issuance
of such Debt Security, of the principal amount of such Debt Security or, in the
case of an Original Issue Discount Security, the U.S. dollar equivalent,
determined on the date of original issuance of such Debt Security, of the amount
determined as provided in (1) above. (Section 101).
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indentures each provide that the Corporation may not consolidate with
or merge into any other Person or transfer its properties and assets
substantially as an entirety to any Person unless (1) the Person formed by such
consolidation or into which the Corporation is merged or the Person to which the
properties and assets of the Corporation are so transferred shall be a
corporation or partnership organized and validly existing under the laws of the
United States, any State thereof or the District of Columbia and shall expressly
assume by a supplemental indenture the payment of the principal of and premium,
if any, and interest on the Senior Debt Securities or the Subordinated Debt
Securities, as the case may be, and the performance of the other covenants of
the Corporation under the Applicable Indenture; (2) immediately after giving
effect to such transaction, no Event of Default or Default, as applicable, and
no event which, after notice or lapse of time or both, would become an Event of
Default or Default, as applicable, shall have occurred and be continuing; and
(3) certain other conditions are met. (Section 801).
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TRUSTEES
Any Trustee may resign or be removed with respect to one or more series of
Debt Securities and a successor Trustee may be appointed to act with respect to
such series. (Section 610). In the event that two or more persons are acting as
Trustee with respect to different series of Debt Securities, each such Trustee
shall be a Trustee of a trust under the related Indenture separate and apart
from the trust administered by any other such Trustee (Section 611), and any
action described herein to be taken by the "Trustee" may then be taken by each
such Trustee with respect to, and only with respect to, the one or more series
of Debt Securities for which it is Trustee.
In the normal course of business, the Corporation and its subsidiaries may
conduct banking transactions with any Trustee, and any Trustee may conduct
banking transactions with the Corporation and its subsidiaries.
The First National Bank of Chicago will be the Subordinated Trustee under
the Subordinated Indenture, unless otherwise specified with respect to any
series of Offered Debt Securities in the applicable Prospectus Supplement.
GOVERNING LAW
The Indentures and the Debt Securities will be governed by, and construed
in accordance with, the laws of the State of New York.
DESCRIPTION OF CAPITAL STOCK
The Corporation's Restated Charter, as amended (the "Charter") authorizes
the issuance of up to 50,000,000 shares of FTNC Common Stock and 5,000,000 shares of
Preferred Stock. The Corporation intends to propose for shareholder approval at
the annual shareholders' meeting in April 1994 an amendment to the Charter to
increase the number of authorized shares of Common Stock from 50,000,000 to
100,000,000. As of January 6,February 23, 1994, there were 30,124,03830,175,456 shares of
FTNC Common Stock and no
shares of Preferred Stock outstanding. Also,were issued and outstanding, approximately 3.3 million
shares of FTNC Common Stock arewere reserved for issuance under various employee stock
plans and FTNC'sthe Corporation's dividend reinvestment plan, and approximately 1.81.6
million shares arewere reserved for issuance in connection with pending
acquisitions and, 281,640anticipated to close in the first quarter of 1994. In addition,
30,175 shares of Preferred Stock are reserved for issuance under the Rights Plan
(as defined herein)(defined below). The Common Stock of the Corporation is quoted through the
NASDAQ National Market System under the symbol "FTEN."
DESCRIPTION OF PREFERRED STOCK
The FTNC Boardfollowing is authorized, without further action bya description of certain general terms and provisions of
the shareholders, to provide for the issuancePreferred Stock. The particular terms of up to 5,000,000 sharesany series of Preferred Stock without par value,will
be described in the applicable Prospectus Supplement. If so indicated in a
Prospectus Supplement, the terms of any such series may differ from the terms
set forth below.
The summary of terms of the Corporation's Preferred Stock contained in this
Prospectus does not purport to be complete and is subject to, and qualified in
its entirety by, the provisions of the Charter and the Articles of Amendment
relating to each series of the Preferred Stock (the "Articles of Amendment"),
which will be filed as an exhibit to or incorporated by reference in the
Registration Statement of which this Prospectus is a part at or prior to the
time of issuance of such series of the Preferred Stock.
Under the Charter, the Corporation's Preferred Stock may be issued from
time to time in one or more series, and, with respectwithout shareholder approval, when
authorized by the Board of Directors. Subject to each such series, haslimitations prescribed by law,
the authorityBoard of Directors is authorized to fixdetermine the voting powers (including voting power)(if any),
designations,designation, preferences and relative, participating, optional or other special
rights, and the qualifications, limitations or restrictions thereof. Currently, nothereof, for each
series of Preferred Stock that may be issued, and to fix the number of shares of
each such series. Thus, the Board of Directors, without shareholder approval,
could authorize the issuance of Preferred Stock with voting, conversion and
other rights that could adversely affect the voting power and other rights of
holders of Common Stock or other series of Preferred Stock.
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The Preferred Stock shall have the dividend, liquidation, redemption and
voting rights set forth below unless otherwise described in a Prospectus
Supplement relating to a particular series of the Preferred Stock. The
applicable Prospectus Supplement will describe the following terms of the series
of Preferred Stock in respect of which this Prospectus is being delivered: (1)
the title of such Preferred Stock and the number of shares offered; (2) the
amount of liquidation preference per share; (3) the initial public offering
price at which such Preferred Stock will be issued; (4) the dividend rate (or
method of calculation), the dates on which dividends shall be payable and the
dates from which dividends shall commence to cumulate, if any; (5) any
redemption or sinking fund provisions; (6) any conversion or exchange rights;
(7) any additional voting, dividend, liquidation, redemption, sinking fund and
other rights, preferences, privileges, limitations and restrictions; (8) any
listing of such Preferred Stock on any securities exchange; and (9) the relative
ranking and preferences of such Preferred Stock as to dividend rights and rights
upon liquidation, dissolution or winding up of the affairs of the Corporation.
General
The Preferred Stock offered hereby will be issued in one or more series.
Shares of Preferred Stock, upon issuance against full payment of the purchase
price therefor, will be fully paid and nonassessable. Neither the par value nor
the liquidation preference is indicative of the price at which the Preferred
Stock will actually trade on or after the date of issuance.
Rank
The Preferred Stock shall, with respect to dividend rights and rights upon
liquidation, winding up and dissolution of the Corporation, rank prior to the
Corporation's Common Stock and to all other classes and series of equity
securities of the Corporation now or hereafter authorized, issued or outstanding
(the Common Stock and such other classes and series of equity securities
collectively may be referred to herein as the "Junior Stock"), other than any
classes or series of equity securities of the Corporation which by their terms
specifically provide for a ranking on a parity with (the "Parity Stock") or
senior to (the "Senior Stock") the Preferred Stock as to dividend rights and
rights upon liquidation, winding up or dissolution of the Corporation. The
Preferred Stock shall be junior to all outstanding debt of the Corporation. The
Preferred Stock shall be subject to creation of Senior Stock, Parity Stock and
Junior Stock to the extent not expressly prohibited by the Corporation's
Charter. Unless otherwise specified in the applicable Prospectus Supplement, the
Preferred Stock shall rank on a parity with all other preferred stock of the
Corporation and with each other series of Preferred Stock.
Dividends
Holders of Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds of the Corporation legally
available for payment, cash dividends, payable at such dates and at such rates
per share per annum as described in the applicable Prospectus Supplement. Such
rate may be fixed or variable or both. Each declared dividend shall be payable
to holders of record as they appear at the close of business on the stock books
of the Corporation on such record dates, not more than 60 calendar days
preceding the payment dates therefor, as are determined by the Board of
Directors (each of such dates, a "Record Date").
Such dividends may be cumulative or noncumulative, as described in the
applicable Prospectus Supplement. If dividends on a series of Preferred Stock
are outstanding.
FTNCnoncumulative and if the Board of Directors fails to declare a dividend in
respect of a dividend period with respect to such series, then holders of such
Preferred Stock will have no right to receive a dividend in respect of such
dividend period, and the Corporation will have no obligation to pay the dividend
for such period, whether or not dividends are declared payable on any future
dividend payment dates. If dividends of a series of Preferred Stock are
cumulative, the dividends on such shares will accrue from and after the date set
forth in the applicable Prospectus Supplement.
No full dividends shall be declared or paid or set apart for payment on
preferred stock of the Corporation of any series ranking, as to dividends, on a
parity with or junior to the series of Preferred Stock offered by the
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applicable Prospectus Supplement for any period unless full dividends for the
immediately preceding dividend period on such Preferred Stock (including any
accumulation in respect of unpaid dividends for prior dividend periods, if
dividends on such Preferred Stock are cumulative) have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
is set apart for such payment. When dividends are not so paid in full (or a sum
sufficient for such full payment is not so set apart) upon such Preferred Stock
and any other preferred stock of the Corporation ranking on a parity as to
dividends with the Preferred Stock, dividends upon such Preferred Stock and
dividends on such other preferred stock ranking on a parity with the Preferred
Stock shall be declared pro rata so that the amount of dividends declared per
share on such Preferred Stock and such other preferred stock ranking on a parity
with the Preferred Stock shall in all cases bear to each other the same ratio
that accrued dividends for the then-current dividend period per share on such
Preferred Stock (including any accumulation in respect of unpaid dividends for
prior dividend periods, if dividends on such Preferred Stock are cumulative) and
accrued dividends, including required or permitted accumulations, if any, on
shares of such other preferred stock, bear to each other. No interest, or sum of
money in lieu of interest, shall be payable in respect of any dividend
payment(s) on Preferred Stock which may be in arrears. Unless full dividends on
the series of Preferred Stock offered by the applicable Prospectus Supplement
have been declared and paid or set apart for payment for the immediately
preceding dividend period (including any accumulation in respect of unpaid
dividends for prior dividend periods, if dividends on such Preferred Stock are
cumulative), (a) no cash dividend or distribution (other than in shares of
Junior Stock) may be declared, set aside or paid on the Junior Stock, (b) the
Corporation may not, directly or indirectly, repurchase, redeem or otherwise
acquire any shares of its Junior Stock (or pay any monies into a sinking fund
for the redemption of any shares) except by conversion into or exchange for
Junior Stock, and (c) the Corporation may not, directly or indirectly,
repurchase, redeem or otherwise acquire any Preferred Stock ranking on parity as
to dividends (or pay any monies into a sinking fund for the redemption of any
shares of any such stock) otherwise than pursuant to pro rata offers to purchase
or a concurrent redemption of all, or a pro rata portion, of the outstanding
Preferred Stock and ranking on parity as to dividends (except by conversion into
or exchange for Junior Stock).
Any dividend payment made on a series of Preferred Stock shall first be
credited against the earliest accrued but unpaid dividend due with respect to
shares of such series which remains payable.
Redemption
The terms, if any, on which Preferred Stock of any series may be redeemed
will be set forth in the applicable Prospectus Supplement.
Liquidation
In the event of a voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation, the holders of a series of
Preferred Stock will be entitled, subject to the rights of creditors, but before
any distribution or payment to the holders of Common Stock or any other security
ranking junior to the Preferred Stock on liquidation, dissolution or winding up
of the Corporation, to receive a liquidating distribution in the amount of the
liquidation preference per share as set forth in the applicable Prospectus
Supplement plus accrued and unpaid dividends for the then-current dividend
period (including any accumulation in respect of unpaid dividends for prior
dividend periods, if dividends on such series of Preferred Stock are
cumulative). If the amounts available for distribution with respect to the
Preferred Stock, and all other outstanding stock of the Corporation ranking on a
parity with the Preferred Stock upon liquidation, dissolution or winding up are
not sufficient to satisfy the full liquidation rights of all the outstanding
Preferred Stock and stock ranking on a parity therewith upon liquidation,
dissolution or winding up, then the holders of each series of such stock will
share ratably in any such distribution of assets in proportion to the full
respective preferential amount (which in the case of preferred stock may include
accumulated dividends) to which they are entitled. After payment of the full
amount of the liquidation preference, the holders of Preferred Stock will not be
entitled to any further participation in any distribution of assets by the
Corporation.
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Voting
The terms, if any, on which Preferred Stock of any series may be entitled
to vote will be set forth in the applicable Prospectus Supplement.
Conversion
The terms, if any, on which Preferred Stock of any series may be converted
into another class or series of securities of the Corporation will be set forth
in the applicable Prospectus Supplement.
No Other Rights
The shares of a series of Preferred Stock will not have any preferences,
voting powers or relative, participating, optional or other special rights
except as set forth above or in the applicable Prospectus Supplement, the
Charter and in the applicable Articles of Amendment or as otherwise required by
law.
Transfer Agent and Registrar
The transfer agent for each series of Preferred Stock will be described in
the related Prospectus Supplement.
DESCRIPTION OF COMMON STOCK
The FTNC Board is authorized to issue a maximumfollowing summary of 50,000,000 sharesthe terms and provisions of the Common Stock $2.50 par value per share.does
not purport to be complete and is qualified in its entirety by reference to the
Charter, which is filed as an exhibit to the Registration Statement of which
this Prospectus is a part.
The holders of the FTNC Common Stock are entitled to receive, ratably, such
dividends as may be declared by the FTNC
Board of Directors of the Corporation from
funds legally available therefor.therefor, provided that if any shares of Preferred Stock
are at the time outstanding, the payment of dividends on Common Stock or other
distributions (including purchases of Common Stock) may be subject to the
declaration and payment of full cumulative dividends, and the absence of
arrearages in any mandatory sinking fund, on outstanding shares of Preferred
Stock. The Board of Directors of the Corporation currently intends to maintain
its present policy of paying regular quarterly cash dividends; however, the
declaration and amount of future dividends will depend on circumstances existing
at the time, including the Corporation's earnings, financial condition and
capital requirements. See "Supervision and Regulation."
The holders of the outstanding shares of FTNC Common Stock are entitled to one vote
for each such share on all matters presented to shareholders, and are not entitled to cumulate votes forincluding elections of
directors. There is no cumulative voting in the election of directors.directors, which
means that the holders of a majority of the outstanding Common Stock can elect
all of the directors then standing for election. The holders of Common Stock do
not have any conversion, redemption or preemptive rights to subscribe to any
securities of the Corporation. Upon any dissolution, liquidation or winding up
of FTNCthe Corporation resulting in a distribution of assets to the shareholders,
the holdersnumber of FTNCshares of Common Stock are entitled to receive such assets ratably
according to their respective holdingsnumber of shares after payment of all liabilities
and obligations and satisfaction of the liquidation preferences of any shares of
Preferred Stock at the time outstanding.
The sharesCorporation's Board of FTNC Common Stock have no preemptive,
redemption, subscription or conversion rights. The shares of FTNC Common Stock
will be, when issued in accordance with the Merger Agreement, fully paid and
nonassessable. Under FTNC's Charter, the FTNC Board is authorized to issue
authorized shares of FTNC Common Stock without further action by FTNC's
shareholders. However, the FTNC Common Stock is traded in the over-the-counter
market and is quoted on the NASDAQ/NMS, which requires shareholder approval of
the issuance of additional shares of FTNC Common Stock in certain situations.
The Transfer Agent for the Common Stock is The First National Bank of Boston.
- 8 -
10
The FTNC BoardDirectors is divided into three classes, which
results in approximately 1/3one-third of the directors being elected each year. In
addition, the Charter and the Bylaws,Corporation's bylaws, among other things,
generally give to the FTNC Board the authority to fix the number of directors on the FTNC Board and to
remove directors from and fill vacancies on the FTNC Board, other than removal for
cause and the filling of vacancies created thereby which are reserved to
shareholders exercising at least a majority of the voting power of all
outstanding voting stock of FTNC.the Corporation. To change these provisions of the
Bylaws,bylaws, other than by action of the FTNC Board, and to amend these provisions of the
Charter or to adopt any provision of the Charter inconsistent with such Bylawbylaw
provisions, would require approval by the holders of at least 80% of the voting
power of all outstanding voting stock. Such classification of the FTNC Board and such
other provisions of the Charter and the Bylawsbylaws may have a
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significant effect on the ability of the shareholders of FTNCthe Board to change the
composition of an incumbent FTNC Board or to benefit from certain transactions which
are opposed by the FTNC Board.
SHAREHOLDER PROTECTION RIGHTS PLAN
Each share of FTNC Common Stock has, and each share ofUnder the FTNC Common
Stock issued in the Merger will have, attached to it one right (a "Right")
issued pursuant to aCorporation's Shareholder Protection Rights Agreement, dated as
of September 7, 1989 (the "Rights Plan"). Each, each share of Common Stock has, and
each share of Common Stock offered hereby will have, attached to it a Right entitles its holder to
purchase 1/100th of a share of Participating Preferred Stock, without par value,
for $76.67 (the "Exercise Price"), subject to adjustment, upon the business day
following the earlier of (i) the 10th day after commencement of a tender or
exchange offer which, if consummated, would result in a person'sperson becoming the
beneficial owner of 10% or more of the outstanding shares of FTNC Common Stock (an
"Acquiring Person") and (ii) the first date (the "Flip-in Date") of public
announcement that a person has become an Acquiring Person. The Rights will
expire on the earliest of (i) the Exchange Time (defined below), (ii) September
18, 1999 and (iii) the date on which the Rights are redeemed as described below.
The FTNC Board of Directors may, at its option, at any time prior to the Flip-in
Date, redeem all the Rights at a price of $.01 per Right. If a Flip-in Date
occurs, each Right (other than Rights beneficially owned by the Acquiring Person
or its affiliates, associates or transferees, which Rights will become void), to
the extent permitted by applicable law, will constitute the right to purchase
shares of FTNC Common Stock or Participating Preferred Stock having an aggregate
market price equal to twice the Exercise Price for an amount in cash equal to
the then-current Exercise Price. In addition, the FTNC Board of Directors may, at its
option, at any time after a Flip-in Date and prior to the time that an Acquiring
Person becomes the beneficial owner of more than 50% of the outstanding shares
of FTNC Common Stock, elect to exchange the Rights (other than Rights beneficially
owned by the Acquiring Person) for shares of FTNC Common Stock or Participating
Preferred Stock at an exchange ratio of one share of FTNC Common Stock or 1/100th of
a share of Participating Preferred Stock per Right (the "Exchange Time"Right"). FTNCThe
Corporation may not agree to be acquired by an Acquiring Person without
providing that each Right, upon such acquisition, will constitute the right to
purchase common stock of the Acquiring Person having an aggregate market price
equal to twice the Exercise Price for an amount in cash equal to the
then-current Exercise Price. The Rights will not prevent a takeover of FTNC.the
Corporation. The Rights, however, may have certain anti-takeover effects. The
Rights may cause substantial dilution to a person or group that acquires 10% or more of the outstanding FTNC
Common Stockan Acquiring Person unless the Rights
are first redeemed by the FTNC Board.
SUBORDINATED CAPITAL NOTES DUE 1999
On June 10, 1987, FTNC issued $75,000,000 principal amountBoard of 10 3/8%
Subordinated Capital Notes Due 1999 (the "Capital Notes").Directors.
The Capital Notes
currently constitute Tier 2 capital underCommon Stock shall have equal dividend, distribution, liquidation and
other rights, and shall have no preference, appraisal or exchange rights. All
outstanding shares of Common Stock are, and the Federal Reserve Board's
risk-based capital guidelines. Pursuantshares offered hereby, upon
issuance, will be, fully paid and non-assessable.
The transfer agent for the Common Stock is The First National Bank of
Boston.
DESCRIPTION OF DEPOSITARY SHARES
The description set forth below and in any Prospectus Supplement of certain
provisions of the Deposit Agreement and of the Depositary Shares and Depositary
Receipt (each as defined below) does not purport to be complete and is subject
to and qualified in its entirety by reference to the Indenture, dated asforms of June 1,
1987 (the "Indenture"), between FTNCDeposit Agreement
and Security Pacific National Trust
Company (New York), Trustee, at maturityDepositary Receipts relating to each series of the Capital Notes are required to be
exchanged for Common Stock, Preferred Stock which
have been or certain other eligible capital
securities towill be issued by FTNC ("Capital Securities") having a market value
equalfiled with the Commission at or prior to the principal amounttime of the
Capital Notes,
- 9 -
11
except tooffering of such series of the extent that FTNC,Preferred Stock.
GENERAL
The Corporation may, at its option, shall elect to payoffer fractional interests in
shares of Preferred Stock ("Depositary Shares"), rather than shares of Preferred
Stock. In the event such option is exercised, the Corporation will provide for
the issuance by a Depositary to the public of receipts for Depositary Shares
("Depositary Receipts"), each of which will represent a fractional interest (to
be set forth in the Prospectus Supplement relating to a particular series of
Preferred Stock which will be filed with the Commission at or prior to the time
of offering such series of the Preferred Stock as described below) of a share of
Preferred Stock.
The shares of any series of the Preferred Stock underlying the Depositary
Shares will be deposited under a separate Deposit Agreement (the "Deposit
Agreement") each between the Corporation and a bank or trust
24
26
company selected by the Corporation having its principal office in the United
States and having a combined capital and surplus of at least $50,000,000 (the
"Depositary"). The Prospectus Supplement relating to a series of Depositary
Shares will set forth the name and address of the Depositary. Subject to the
terms of the applicable Deposit Agreement, each owner of a Depositary Share will
be entitled, in proportion to the applicable fractional interest in a share of
Preferred Stock underlying such Depositary Shares, to all the rights and
preferences of the Preferred Stock underlying such Depositary Share (including
dividend, voting, redemption, conversion and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the Deposit Agreement.
Pending the preparation of definitive engraved Depositary Receipts, the
Depositary may, upon the written order of the Corporation, issue temporary
Depositary Receipts substantially identical to (and entitling the holders
thereof to all the rights pertaining to) the definitive Depositary Receipts but
not in definitive form. Definitive Depositary Receipts will be prepared
thereafter without unreasonable delay, and temporary Depositary Receipts will be
exchangeable for definitive Depositary Receipts at the Corporation's expense.
Upon surrender of Depositary Receipts at the office of the Depositary and
upon payment of the charges provided in the Deposit Agreement and subject to the
terms thereof, a holder of Depositary Shares is entitled to have the Depositary
deliver to such holder the whole shares of Preferred Stock underlying the
Depositary Shares evidenced by the surrendered Depositary Receipts. No
fractional shares of such Preferred Stock shall be delivered.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the Preferred Stock to the record holders
of Depositary Shares relating to such Preferred Stock in proportion to the
numbers of such Depositary Shares owned by such holders on the relevant record
date. The Depositary shall distribute only such amount, however, as can be
distributed without attributing to any holder of Depositary Shares a fraction of
one cent, and any balance not so distributed shall be added to and treated as
part of the next sum received by the Depositary for distribution to record
holders of Depositary Shares.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary determines that it is not feasible to
make such principal amount from amounts representing proceeds of other issuances of
Capital Securities designated for such use.
USE OF PROCEEDS
Nonedistribution in which case the Depositary may, with the approval of
the Corporation, sell such property and distribute the net proceeds from such
sale to such holders.
The Deposit Agreement will also contain provisions relating to the manner
in which any subscription or similar rights offered by the Corporation to
holders of the Preferred Stock shall be made available to holders of Depositary
Shares.
REDEMPTION OF DEPOSITARY SHARES
If the series of Preferred Stock represented by the applicable series of
Depositary Shares is redeemable, such Depositary Shares will be redeemable from
the proceeds received by the Depositary resulting from the redemption, in whole
or in part, of such Preferred Stock. Whenever the Corporation redeems any
Preferred Stock held by the Depositary, the Depositary will redeem as of the
same redemption date the number of Depositary Shares representing the Preferred
Stock so redeemed.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the Preferred
Stock are entitled to vote, the Depositary will mail the information contained
in such notice of meeting to the record holders of the Depositary Shares
relating to such Preferred Stock. Each record holder of such Depositary Shares
on the record date (which will be the same date as the record date for the
Preferred Stock) will be entitled to instruct the Depositary as to the exercise
of the voting rights pertaining to the number of shares of Preferred Stock
underlying such holder's Depositary Shares. The Depositary will endeavor,
insofar as practicable, to vote the
25
27
number of shares of Preferred Stock underlying such Depositary Shares in
accordance with such instructions, and the Corporation will agree to take all
action which may be deemed necessary by the Depositary in order to enable the
Depositary to do so. To the extent the Depositary does not receive specific
instructions from the holders of Depositary Shares relating to such Preferred
Stock, it will abstain from voting the related shares of Preferred Stock unless
otherwise indicated in the Prospectus Supplement.
AMENDMENT AND TERMINATION OF DEPOSITARY AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Corporation and the Depositary. However, any amendment which
materially and adversely alters the rights of the existing holders of Depositary
Shares will not be effective unless such amendment has been approved by the
record holders of at least a majority of the Depositary Shares issued under such
Depositary Agreement then outstanding. A Deposit Agreement may be terminated by
the Corporation or the Depositary only if (i) all outstanding Depositary Shares
relating thereto have been redeemed or (ii) there has been a final distribution
in respect of the Preferred Stock of the relevant series in connection with any
liquidation, dissolution or winding up of the Corporation and such distribution
has been distributed to the holders of the related Depositary Shares.
CHARGES OF DEPOSITARY
The Corporation will pay all transfer and other taxes and governmental
charges arising solely from the existence of the depositary arrangements. The
Corporation will pay charges of the Depositary in connection with the initial
deposit of the Preferred Stock and any redemption of the Preferred Stock.
Holders of Depositary Shares will pay other transfer and other taxes and
governmental charges and such other charges as are expressly provided in the
Deposit Agreement to be for their accounts.
MISCELLANEOUS
The Depositary will forward to the holders of Depositary Shares all reports
and communications from the company which are delivered to the Depositary and
which the Corporation is required to furnish to the holders of the Preferred
Stock.
Neither the Depositary nor the Corporation will be liable if it is
prevented or delayed by law or any circumstance beyond its control in performing
its obligations under the Deposit Agreement. The obligations of the Corporation
and the Depositary under the Deposit Agreement will be limited to performance in
good faith of their duties thereunder and they will not be obligated to
prosecute or defend any legal proceeding in respect of any Depositary Shares or
Preferred Stock unless satisfactory indemnity is furnished. They may rely upon
written advice of counsel or accountants, or information provided by persons
presenting Preferred Stock for deposit, holders of Depositary Shares or other
persons believed to be competent and on documents believed to be genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to the Corporation
notice of its election to do so, and the Corporation may at any time remove the
Depositary, and such resignation or removal will take effect upon the
appointment of a successor Depositary and its acceptance of such appointment.
Such successor Depositary must be appointed within 60 days after delivery of the
notice of resignation or removal and must be a bank or trust company having its
principal office in the United States and having a combined capital and surplus
of at least $50,000,000.
PLAN OF DISTRIBUTION
The Corporation may sell the Securities to one or more underwriters for
public offering and sale by them or may sell the Securities to investors
directly or through agents. The applicable Prospectus Supplement will set forth
the terms of the offering of the Securities offered thereby, including the names
of any underwriters,
26
28
agents or dealers, the purchase price of such Securities and the proceeds to the
Corporation from any sale, any underwriting discounts and other items
constituting underwriters' compensation and any discounts and commissions
allowed or reallowed or paid to dealers or agents. The Corporation has reserved
the right to sell the Securities directly to investors on its own behalf in
those jurisdictions where it is authorized to do so.
Underwriters may offer and sell the Securities at a fixed price or prices
that may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. The
Corporation also may, from time to time, authorize dealers, acting as the
Corporation's agents, to offer and sell the Securities upon such terms and
conditions as set forth in the related Prospectus Supplement. In connection with
the sale of the SharesSecurities, underwriters may receive compensation from the
Corporation in the form of underwriting discounts or commissions and may also
receive commissions from purchasers of the Securities for whom they may act as
agent. Underwriters may sell the Securities to or through dealers, and such
dealers may receive compensation in the form of discounts, concession or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agents.
Any underwriting compensation paid by the Selling
ShareholdersCorporation to underwriters or
agents in connection with the offering of the Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the related Prospectus Supplement. Dealers and agents
participating in the distribution of the Securities may be deemed to be
underwriters, and any discounts and commissions received by FTNC.
LEGAL MATTERS
A legal opinionthem and any profit
realized by them on resale of the Securities may be deemed to be underwriting
discounts and commissions. Underwriters, dealers and agents may be entitled,
under agreements entered into with the Corporation, to indemnification against
and contribution towards certain civil liabilities.
If so indicated in the related Prospectus Supplement, the Corporation will
authorize dealers acting as the Corporation's agents to solicit agreements by
certain institutions to purchase Debt Securities from the Corporation at the
public offering price set forth in the related Prospectus Supplement pursuant to
delayed delivery contracts ("Contracts") providing for payment and delivery on
the date or dates stated in a Prospectus Supplement. Each Contract will be for
an amount not less than, and the aggregate amount of the Debt Securities based
on the liquidation value thereof, sold pursuant to Contracts will be not less
nor more than the respective amounts stated in a Prospectus Supplement.
Institutions, with whom Contracts, when authorized, may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions and other institutions, but
will in all cases be subject to the effectapproval of the Corporation. Contracts will
be subject to the condition that the Shares and associated Rights
offered hereby, when sold,purchase by an institution of the
Securities covered by Contracts will not at the time of delivery be prohibited
under the laws of any jurisdiction in the United States to which such
institution is subject.
Any Securities issued hereunder (other than Common Stock) will be validly issued, fully paidnew
issues of securities with no established trading market. Any underwriters or
agents to or through whom such Securities are sold by the Corporation for public
offering and nonassessable, has been renderedsale may make a market in such Securities, but such underwriters or
agents will not be obligated to do so and may discontinue any market at any time
without notice. No assurance can be given as to the liquidity of the trading
market for any such Securities.
Certain of the underwriters, dealers or agents and their associates may be
customers of, engage in transactions with, and perform services for, the
Corporation and certain of its affiliates in the ordinary course of business.
Except as otherwise stated in the applicable Prospectus Supplement, any loans
and outstanding commitments to such underwriters, dealers or agents and their
associates will be made on terms, including interest rates and collateral, no
more favorable than those prevailing at the time for comparable transactions
with other persons and will not involve more than normal risk of collectibility.
VALIDITY OF THE SECURITIES
The validity of the Securities will be passed upon for the Corporation by
ClydeHarry A. Billings, Jr.Johnson, III, Esq., Executive Vice President and General Counsel FTNC.of the
Corporation, unless otherwise specified in the applicable Prospectus Supplement,
and for any underwriters by the counsel named in the applicable Prospectus
27
29
Supplement. At February 28, 1994, Mr. BillingsJohnson beneficially ownsowned approximately
9,20030,948 shares of
FTNC Common Stock.
EXPERTS
The consolidated financial statements of FTNCthe Corporation and its
subsidiaries incorporated in this Prospectus by reference in FTNC'sfrom the Corporation's
Annual Report on Form 10-K for the year ended December 31, 19921993 have been
audited by Arthur Andersen & Co., independent public accountants, as set forthstated in
their report, thereon dated January 19,
1993, included therein and incorporated herein by reference. Such consolidated
financial statements are18, 1994, which is incorporated herein by reference,
and have been so incorporated in reliance on such
report given upon the authorityreport of such firm given
upon their authority as experts in accounting and auditing.
With respect to the 1991 and 1990 financial statements of Home Financial
Corporation, a company acquired by FTNCthe Corporation during 1992 in a transaction
accounted for as a pooling of interests,pooling-of-interests, Arthur Andersen & Co. relied upon the
report of Baylor and Backus, independent accountants, whose report dated
February 21, 1992, except with respect to the information discussed in Note 27,
as to which the date is October 21, 1992, was incorporated by reference in FTNC'sthe
Corporation's Form 10-K for 19921993 and is incorporated herein by reference.
- 10 -28
1230
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ItemITEM 14. Other ExpensesOTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with the issuance and distribution of
Issuance and Distribution.the securities being registered, other than Underwriting Compensation, are as
follows:
Registration fee to the SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20,549registration fee........................................... $103,449
Printing expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000and engraving expenses................................ *
Legal fees and disbursements................................... *
Accounting fees and expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000
Legaldisbursements.............................. *
Trustee's fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000disbursements............................... *
Blue Sky fees and expenses..................................... 20,000
Miscellaneous expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 451
------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $33,000
======(including transfer agent, listing and rating
agency fees)................................................. *
All fees and expenses are estimates except for the registration fee to
the SEC.
Item- ---------------
* To be provided by amendment.
ITEM 15. Indemnification of Directors and OfficersINDEMNIFICATION OF DIRECTORS AND OFFICERS.
Tennessee Code Annotated, Sections 48-18-50148-1-406 through 48-18-509
authorize48-1-411 authorizes a
corporation to provide for the indemnification of officers, directors, employees
and agents in terms sufficiently broad to permit indemnification under certain
circumstances for liabilities (including reimbursement for expenses incurred)
arising under the Securities Act of 1933, as amended. FTNCThe Corporation has
adopted the provisions of the Tennessee statute pursuant to Article XXVIII of
its Bylaws. Also, FTNCthe Corporation has a "Directors'Directors' and Officers' Liability
Insurance Policy"Policy which provides coverage sufficiently broad to permit
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended.
Tennessee Code Annotated Section 48-12-102 permits the inclusion in the
charter of a Tennessee corporation of a provision, with certain exceptions,
eliminating the personal monetary liability of directors to the corporation or
its shareholders for breach of the duty of care. FTNCThe Corporation has adopted the
provisions of the statute in Article 13 of its charter.
The shareholders of FTNCthe Corporation have approved an amendment to Article
XXVIII of the Bylaws pursuant to which FTNCthe Corporation is required to indemnify
each director and any officers designated by the FTNCCorporation's Board of
Directors, and advance expenses, to the maximum extent not prohibited by law. In
accordance with the foregoing, the FTNC Board is authorized to enter into individual
indemnity agreements with the directors and such officers. Such indemnity
agreements have been approved for all of the directors and certain officers.
ItemReference is also made to the Underwriting Agreements filed as Exhibits
hereto, for provisions regarding indemnification of the registrant's officers
and directors against certain liabilities.
II-1
31
ITEM 16. ExhibitsEXHIBITS.
Exhibits
Number Description
------ -----------EXHIBIT
NUMBER DESCRIPTION
- ------- --------------------------------------------------------------------------------
4(a)
1.1 -- Form of Underwriting Agreement (for Common Stock Certificate, incorporatedStock)*
1.2 -- Form of Underwriting Agreement (for Preferred Stock)*
1.3 -- Form of Underwriting Agreement (for Debt Securities)**
4.1 -- Restated Charter, as amended, of the Registrant (incorporated by reference to
Exhibit 3(B) to FTNC's registration statement on
Form S-4 (No. 33-51223), filed November 30, 1993
4(b) Shareholder Protection Rights Agreement, dated as of September 7, 1989, between FTNC and FTB as Rights Agent,
incorporated by reference to FTNC's Registration Statement on Form 8-A, filed September 8, 1989
4(c) Indenture, dated as of June 1, 1987, between FTNC and Security Pacific National Trust Company (New York), Trustee
incorporated by reference to FTNC'sthe Registrant's Annual Report on Form 10-K for the fiscal year ended December
31, 1991
II-1
13
4(d) FTNC and certain1991)
4.2 -- By-laws, as amended, of its consolidated subsidiaries have outstanding certain long-term debt. See Note 13 on Page 34
of FTNC's 1992the Registrant (incorporated by reference to the
Registrant's Annual Report on Form 10-K for the fiscal year ended December 31,
1993)
4.3 -- Specimen certificate representing Common Stock (incorporated by reference to Shareholders. Nonethe
Registrant's Registration Statement on Form S-4 (No. 33-51223) filed on November
30, 1993)
4.4 -- Form of such debt exceeds 10%Articles of Amendment with respect to the Preferred Stock*
4.5 -- Form of specimen certificate representing Preferred Stock*
4.6 -- Form of Indenture for Senior Debt Securities
4.7 -- Form of Senior Debt Security (included in Exhibit 4.4)
4.8 -- Form of Indenture for Subordinated Debt Securities
4.9 -- Form of Subordinated Debt Security (included in Exhibit 4.6)
4.10 -- Form of Deposit Agreement
5 -- Opinion of Harry A. Johnson, III, Esq., Executive Vice President and General
Counsel of the total assetsCorporation**
12 -- Statement Regarding Computation of FTNCConsolidated Ratios of Earnings to Fixed
Charges and its
consolidated subsidiaries. Thus, copies of constituent instruments defining the rights of holders of such debt are
not required to be included as exhibits. FTNC agrees to furnish copies of such instruments to the SEC upon
request.
5 Opinion Regarding Legality
23(a)Combined Fixed Charges and Preferred Stock Dividend Requirements
23.1 -- Consent of Arthur Andersen & Co.
23(b)23.2 -- Consent of Baylor and Backus
23(c)23.3 -- Consent of Ernst & Young
23(d) Consent of ClydeHarry A. Billings, Jr. includedJohnson, III, Esq. (included in his opinion filed as Exhibit
55.1)
24 -- Powers of Attorney
28 Registration Rights Agreement dated as25 -- Statement of January 4, 1994 by and among First Tennessee National Corporation and the
Selling ShareholdersEligibility of Trustee on Form T-1
Item- ---------------
* To be filed by post-effective amendment or by a current report on Form 8-K
pursuant to the Securities Exchange Act of 1934, as appropriate.
** To be filed by amendment.
ITEM 17. Undertakings
(a)UNDERTAKINGS.
The undersigned Registrantregistrant hereby undertakes:
(1) toTo file, during any period in which offers or sales of the
securities are being
made, a post-effective amendment to this Registration
Statement:registration statement:
(i) toTo include any Prospectusprospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) toTo reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment)amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration
Statement;registration statement;
(iii) toTo include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information set forth in the Registration
Statement.
Provided,registration
statement;
II-2
32
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required [or]
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrantregistrant pursuant to sectionSection 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) that,That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statementregistration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) toTo remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-2
14
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant for expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(c) The undersigned Registrantregistrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant'sregistrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statementregistration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-3
15
SIGNATURES
PursuantThe undersigned registrant hereby undertakes to file an application for the
requirementpurpose of determining the eligibility of the trustee to act under subsection
(a) of section 310 of the Trust Indenture Act of 1939 in accordance with the
rules and regulations prescribed by the Commission under section 305(b)(2) of
the Trust Indenture Act of 1939.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 the Registrant
certifies that it has reasonable groundsmay be permitted to believe that it meets alldirectors, officers and controlling persons of the
requirementsregistrant pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for filing on Form S-3 and has duly caused its Registration
Statement to be signed on its behalfindemnification against such liabilities (other than the
payment by the undersigned, thereunto duly
authorized,registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the Citysuccessful defense of Memphis, Stateany action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of Tennessee, on January 28,its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-3
33
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, FIRST TENNESSEE
NATIONAL CORPORATION CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT
MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT ON FORM S-3 TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF MEMPHIS AND STATE OF
TENNESSEE, ON MARCH 8, 1994.
FIRST TENNESSEE NATIONAL CORPORATION,
By: /s/ JamesJAMES F. Keen
-----------------------------------------KEEN
------------------------------------
James F. Keen
Senior Vice President and
Controller
Pursuant to the requirements of the Securities Act ofPURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATE INDICATED.
SIGNATURE TITLE DATE
--------- ----- ----- ------------------------------------------ -------------------------------- --------------
*RONALD TERRY* Chairman of the Board and January 28,Chief March 8, 1994
- ---------------------------------- Chief------------------------------------------ Executive Officer (principal(Chief
Ronald Terry executive officer)
*Executive Officer)
SUSAN SCHMIDT BIES* Executive Vice President and January 28,March 8, 1994
- ---------------------------------------------------------------------------- Chief Financial Officer
(principal
Susan Schmidt Bies financial officer)
*(Principal Financial Officer)
JAMES F. KEEN* Senior Vice President and January 28,March 8, 1994
- ---------------------------------------------------------------------------- Controller (principal(Principal
James F. Keen accounting officer)Accounting Officer)
JACK A. BELZ* Director January __,March 8, 1994
- ----------------------------------------------------------------------------
Jack A. Belz
*ROBERT C. BLATTBERG* Director January 28,March 8, 1994
- ----------------------------------------------------------------------------
Robert C. Blattberg
*JOHN HULL DOBBS* Director January 28,March 8, 1994
- ----------------------------------------------------------------------------
John Hull Dobbs
*RALPH HORN* Director January 28,March 8, 1994
- ----------------------------------------------------------------------------
Ralph Horn
*J. P. HYDE, III* Director January 28,March 8, 1994
- ----------------------------------------------------------------------------
J. R.P. Hyde, III
*JOSEPH ORGILL, III* Director January 28,March 8, 1994
- ----------------------------------------------------------------------------
Joseph Orgill, III
CAMERON E. PERRY* Director January __,March 8, 1994
- ----------------------------------------------------------------------------
Cameron E. Perry
II-4
1634
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------- --------------
*RICHARD E. RAY* Director January 28,March 8, 1994
- ----------------------------------------------------------------------------
Richard E. Ray
*VICKI G. ROMAN* Director January 28,March 8, 1994
- ----------------------------------------------------------------------------
Vicki G. Roman
*MICHAEL D. ROSE* Director January 28,March 8, 1994
- ----------------------------------------------------------------------------
Michael D. Rose
WILLIAM B. SANSON* Director January __,March 8, 1994
- ----------------------------------------------------------------------------
William B. SansomSanson
GORDON P. STREET, JR.* Director January __,March 8, 1994
- ----------------------------------------------------------------------------
Gordon P. Street, *Jr.
Director
January 28, 1994
- ----------------------------------
Ronald Terry
* Director January 28, 1994
- ----------------------------------------------------------------------------
Norfleet R. Turner
By: /s/ /Clyde*By: CLYDE A. Billings, Jr. January 28, 1994
----------------------------BILLINGS, JR.
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Clyde A. Billings, Jr.
*As Attorney-in-Fact
(The Power of Attorney is included herein as Exhibit 24.)
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