Document:

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                                                                     EXHIBIT 4.1

                          2000 EQUITY COMPENSATION PLAN

                                       OF

                               MORGAN KEEGAN, INC.

1.       Purpose, Awards, Effective Date.

         (a)      Purpose. The purpose of the 2000 Equity Compensation Plan of
Morgan Keegan, Inc. (the "Plan") is to further the success and advance the
interests of Morgan Keegan, Inc., a Tennessee corporation (the "Corporation"),
by encouraging and enabling selected employees and officers of the Corporation
and its Related Corporations, if any, to acquire or to increase their holdings
of common stock, $0.625 par value per share, of the Corporation (the "Common
Stock") and other proprietary interests in the Corporation in order to promote a
closer identification of their interests with those of the Corporation and its
shareholders, thereby further stimulating their efforts to enhance the
efficiency, soundness, profitability, growth and shareholder value of the
Corporation.

         (b)      Awards. Pursuant to the Plan, the Corporation intends to grant
(i) incentive stock options ("Incentive Stock Options"), as such term is defined
in Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), to
purchase shares of Common Stock; (ii) similar options to purchase Common Stock
that will not, however, be qualified as Incentive Stock Options ("Non-Qualified
Options"); (iii) shares of Common Stock that are subject to restrictions on
transfer or lienation, vesting and forfeitability provisions and such other
terms and conditions as the Committee may determine and as may be set forth in
an Agreement in respect thereof ("Restricted Stock"); and (iv) stock
appreciation rights ("SARs") pursuant to which a recipient may recognize in cash
the benefit from appreciation in the price of the Common Stock. Incentive Stock
Options and Non-Qualified Options shall be referred to herein collectively as
"Options."

         (c)      Effective Date. The Plan shall become effective on the date of
approval by the Board of Directors and the shareholders of the Corporation (the
"Effective Date").

2.       Definitions.

         (a)      As used in the Plan, the following terms have the following
respective meanings:

         "10% Shareholder" means a person who owns stock possessing more than
10% of the total combined voting power of all classes of stock of the
Corporation or of any Parent or Subsidiary of the Corporation after giving
effect to the attribution of stock ownership provisions of Section 424(d) of the
Code.

         "Affiliate" means any Person that directly or indirectly through one or
more intermediaries controls or is controlled by or is under common control with
the Corporation. For purposes of this definition, (i) "control" (including, with
correlative meaning, the terms "controlled by" and "under common control with"),
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and

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policies of such Person, whether through the ownership of voting securities or
by contract or otherwise.

         "Agreement" means any written agreement or agreements between the
Corporation and the recipient of an Award pursuant to the Plan relating to the
terms, conditions and restrictions of Options, SARs, Restricted Stock and any
other Awards conferred herein.

         "Award" means any grant of an Option or SAR, and any award of
Restricted Stock under the Plan, whether singly, in combination, or in tandem,
to an Eligible Person by the Committee pursuant to such terms, conditions,
restrictions and/or limitations, if any, as the Committee may establish.

         "Board" means the Board of Directors of the Corporation.

         "Change of Control" shall be deemed to have occurred if: (i) after the
effective date of the Plan, any "person" as defined in Section 3(a)(9) of the
Exchange Act and as used in Sections 13(d) and 14(d) thereof, including any
"group" as defined in Section 13(d) of the Exchange Act, but excluding the
Corporation and any Related Corporation, any of the Corporation's existing
shareholders as of the effective date of the Plan and any employee benefit plan
sponsored or maintained by the Corporation or any Related Corporation (including
any trustee of such plan acting as trustee), directly or indirectly, becomes a
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of
securities of the Corporation representing fifty percent (50%) or more of the
voting power of the then outstanding securities of the Corporation; (ii) the
shareholders of the Corporation approve (or, if shareholder approval is not
required, the Board approves) an agreement providing for (A) the merger or
consolidation of the Corporation with another corporation where the shareholders
of the Corporation, immediately prior to the merger or consolidation, will not
beneficially own, immediately after the merger or consolidation, shares
entitling such shareholders to a majority of all votes to which all shareholders
of the surviving corporation would be entitled in the election of directors, or
where the members of the Board, immediately prior to the merger or
consolidation, would not, immediately after the merger or consolidation,
constitute a majority of the board of directors of the surviving corporation,
(B) a sale or other disposition of all or substantially all of the assets of the
Corporation, or (C) a liquidation or dissolution of the Corporation; or (iii)
any person has commenced a tender offer or exchange offer for thirty-five
percent (35%) or more of the voting power of the then outstanding shares of the
Corporation.

         "Chief Executive Officer" means the Chief Executive Officer of the
Corporation, or if there is no Chief Executive Officer, the President, Chief
Operating Officer or other highest ranking officer of the Corporation.

         "Code" has the meaning set forth in Section 1(b) above. References to
any provision of the Code shall be deemed to include successor provisions
thereto and rules and regulations thereunder.

         "Committee" means the Compensation Committee of Morgan Keegan &
Company, Inc.

         "Common Stock" has the meaning set forth in Section 1(a) above.

         "Corporation" has the meaning set forth in Section 1(a) above.

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         "Covered Employee" shall have the meaning given the term in Section
162(m) of the Code or the regulations thereunder.

         "Effective Date" has the meaning set forth in Section 1(c) above.

         "Election" has the meaning set forth in Section 10 below.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time. References to any provision of the Exchange Act shall be
deemed to include successor provisions thereto and rules and regulations
thereunder.

         "Exercise Price" has the meaning set forth in Section 6(b) below.

         "Fair Market Value" as of a given date for purposes of the Plan and any
Option Agreement means (i) the closing sales price for the shares of Common
Stock on the New York Stock Exchange or any national exchange on which shares of
Common Stock are traded on such date (or if such market or exchange was not open
for trading on such date, the next preceding date on which it was open); or (ii)
if the Common Stock is not listed on the New York Stock Exchange or on an
established and recognized exchange, such value as the Board, in good faith,
shall determine based on such relevant facts, which may include opinions of
independent experts, as may be available to the Board.

         "Free Standing SAR" has the meaning set forth in Section 7(a) below.

         "Immediate Family" means a Participant's spouse, former spouse,
parents, children, stepchildren, adoptive relationships, sisters, brothers,
nieces, nephews, grandchildren and any person sharing the Participant's
household other than a tenant (and, for this purpose, shall also include the
Participant).

         "Incentive Stock Option" has the meaning set forth in Section 1(b)
above.

         "Modification" means any change in the terms of an Option which would
constitute a "modification" as defined in Section 424(h)(3) of the Code,
including, without limitation, such a modification to an Option as effected by a
change in the Plan and any other change in the Plan which would increase the
number of shares reserved for Options under the Plan, materially change the
administration of the Plan or otherwise materially increase the benefits
accruing to, or available for, participants in the Plan; provided, however, that
registration of Common Stock underlying Options under the Securities Act, as
amended, shall not be deemed a Modification.

         "Non-Employee Director" has the meaning set forth in Rule 16b-3,
promulgated under the Exchange Act.

         "Non-Qualified Option" has the meaning set forth in Section 1(b) above.

         "Option" has the meaning set forth in Section 1(b) above.

         "Parent" or "parent corporation" shall mean any corporation (other than
the Corporation) in an unbroken chain of corporations ending with the
Corporation if each corporation other than the Corporation owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in another corporation in the chain.

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         "Participant" means an individual eligible to receive an Award under
Section 5 below and selected by the Committee as an individual to whom an Award
shall be granted.

         "Permanent Disability" has the meaning ascribed to the term
"disability" or any substantially similar term in the Corporation's long-term
income disability plan as in effect from time to time or, if no such plan
exists, the meaning ascribed to the term "permanent and total disability" in
Section 22(e)(3) of the Code.

         "Person" means an individual, firm, partnership, association,
unincorporated organization, trust, corporation, or any other entity, including,
without limitation, a government or any department, agency or instrumentality
thereof.

         "Plan" has the meaning set forth in Section 1(a) above.

         "Predecessor" or "predecessor corporation" means a corporation which
was a party to a transaction described in Section 424(a) of the Code (or which
would be so described if a substitution or assumption under that Section had
occurred) with the Corporation, or a corporation which is a Parent or Subsidiary
of the Corporation, or a predecessor of any such corporation.

         "Related Corporation" means any Parent, Subsidiary or predecessor of
the Corporation.

         "Related Option" has the meaning set forth in Section 7(a) below.

         "Restricted Stock" has the meaning set forth in Section 1(b) above.

         "Retirement" means retirement from active employment under a retirement
plan of the Company, or pursuant to an employment agreement with the
Corporation, or termination of employment at or after age 55 under circumstances
which the Committee, in its sole discretion, deems equivalent to retirement.

         "SARs" has the meaning set forth in Section 1(b) above.

         "Securities Act" means the Securities Act of 1933, as amended from time
to time. References to any provision of the Securities Act shall be deemed to
include successor provisions thereto and rules and regulations thereunder.

         "Subsidiary" or "subsidiary corporation" means any corporation that is
a "subsidiary corporation" as such term is defined in Section 424(f) of the
Code.

         "Tandem SAR" has the meaning set forth in Section 7(a) below.

         "Tax Date" has the meaning set forth in Section 10 below.

         (b)      References in these definitions to provisions of the Code
shall, when appropriate to effectuate the purpose of the Plan, be deemed to be
references to such provisions of the Code and regulations promulgated thereunder
as the same may from time to time be amended or to successor provisions to such
provisions.

1.       Administration.

         (a)      Administrator. The Plan shall be administered by the
Committee.

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         (b)      Authority of Committee. Any action of the Committee with
respect to the Plan may be taken by a written instrument signed by all of the
members of the Committee and any such action so taken by written consent shall
be as fully effective as if it had been taken by a majority of the members at a
meeting duly held and called. Subject to the provisions of the Plan, and unless
authority is granted to the Chief Executive Officer as provided in Section 3(d),
the Committee shall have the full and final authority in its sole discretion to
take any action with respect to the Plan including, without limitation, the
authority to: (i) select the persons to receive Awards under the Plan; (ii)
determine the form of an Award and whether, if such Award is an Option, such
Option is to operate on a tandem basis and/or in conjunction with or apart from
other Awards made by the Corporation, either within or outside of this Plan;
(iii) determine the number of shares of Common Stock to be covered by each Award
hereunder; (iv) determine the terms and conditions, not inconsistent with the
terms of this Plan, of any Award hereunder (including, but not limited to, any
restriction or limitation on transfer, any vesting schedule or acceleration
thereof, and any forfeiture provision or waiver thereof), regarding any Award
and the shares of Common Stock relating thereto, based on such factors as the
Committee shall determine, in its sole and absolute discretion; and (v) make any
other determination or take any action that the Committee deems necessary or
desirable for the administration of the Plan. The Committee shall also have
authority, in its sole discretion, to accelerate the date that any Award which
was not otherwise exercisable or vested shall become exercisable or vested in
whole or in part without any obligation to accelerate such date with respect to
any other Award granted to any recipient.

         (c)      Power of Committee. The Committee shall have full power and
authority to administer and interpret the Plan, to make factual determinations
and to adopt or amend such rules, regulations, agreements and instruments for
implementing the Plan and for the conduct of its business as it deems necessary
or advisable, in its sole discretion. The Committee's interpretations of the
Plan and all determinations made by the Committee pursuant to the powers vested
in it hereunder shall be conclusive and binding on all persons having any
interest in the Plan or in any Awards granted hereunder. All powers of the
Committee shall be executed in its sole discretion, in the best interest of the
Corporation, not as a fiduciary, and in keeping with the objectives of the Plan
and need not be uniform as to similarly situated individuals.

         (d)      Delegation. Notwithstanding Section 3(b) and Section 3(c)
above, the Committee may delegate to the Chief Executive Officer the authority
to grant Awards, and to make any or all of the determinations reserved for the
Committee in the Plan and summarized in Section 3(b) or Section 3(c) above with
respect to such Awards, to any individual who, at the time of said grant or
other determination, (i) is not deemed to be an officer or director of the
Corporation within the meaning of Section 16 of the Exchange Act; (ii) is not
deemed to be a Covered Employee; and (iii) is otherwise eligible under Section 5
below. To the extent that the Committee has delegated authority to grant Awards
pursuant to this Section 3(d) to the Chief Executive Officer, references to the
Committee shall include references to such person, subject, however, to the
requirements of the Plan, Rule 16b-3 and other applicable law.

4.       Shares of Stock Subject to the Plan; Award Limitations.

         (a)      Number of Shares. The number of shares of Common Stock that
may be issued pursuant to Awards shall be three million (3,000,000).

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         (b)      Sources of Shares. The shares to be issued hereunder shall be
issued from authorized but unissued shares. The Corporation hereby reserves
sufficient authorized shares of Common Stock to meet the grant of Awards
hereunder.

         (c)      Excess Shares. Any shares subject to an Award which is
subsequently forfeited, expires or is terminated may again be the subject of an
Award granted under the Plan. To the extent that any shares of Common Stock
subject to an Award are not delivered to a Participant (or his beneficiary)
because the Award is forfeited or canceled or because the Award is settled in
cash, such shares shall not be deemed to have been issued for purposes of
determining the maximum number of shares of Common Stock available for issuance
under the Plan. If the option price of an Option granted under the Plan is
satisfied by tendering shares of Common Stock, only the number of shares issued
net of the shares of Common Stock tendered shall be deemed issued for purposes
of determining the maximum number of shares of Common Stock available for
issuance under the Plan.

         (d)      Adjustment. If there is any change in the number or kind of
shares of Common Stock outstanding (i) by reason of a stock dividend, spin off,
recapitalization, stock split, or combination or exchange of shares; (ii) by
reason of a merger, reorganization or consolidation involving the Corporation;
by reason of a reclassification or change in par value; or (iv) by reason of any
other extraordinary or unusual event affecting the outstanding Common Stock as a
class without the Corporation's receipt of consideration, or if the value of
outstanding shares of Common Stock is substantially reduced as a result of a
spinoff or the Corporation's payment of an extraordinary dividend or
distribution, the maximum number of shares of Common Stock available for Awards,
the maximum number of shares of Common Stock for which any individual
participating in the Plan may receive Awards in any year, the number of shares
covered by outstanding Awards, the kind of shares issued under the Plan, and the
price per share of such Awards shall be equitably adjusted by the Committee to
reflect any increase or decrease in the number of, or change in the kind or
value of, issued shares of Common Stock to preclude, to the extent practicable,
the enlargement or dilution of rights and benefits under such Awards; provided,
however, that any fractional shares resulting from such adjustment shall be
eliminated. Any adjustments determined by the Committee shall be final, binding
and conclusive.

5.       Eligibility for Participation.

         (a)      General Qualifications. A Participant must be an employee of
the Corporation or a Related Corporation. For purposes of the Plan, an
individual shall be considered to be an "employee" only if there exists between
the individual and the Corporation or a Related Corporation the legal and bona
fide relationship of employer and employee. In determining the persons to whom
Awards shall be made and the number of shares to be covered by each Award, the
Committee may take into account the nature of the services rendered by, and the
responsibilities borne by, such eligible persons, their present and potential
contributions to the Corporation's success and such other factors as the
Committee in its discretion shall deem relevant. Awards may be made to persons
who hold or have held options, restricted stock and/or stock appreciation rights
under previous plans, and a person who has received an Award under the Plan may
receive additional Awards under the Plan or under any future stock or option
plan if the Committee shall so determine.

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         (b)      Incentive Stock Options. Incentive Stock Options under this
Plan may be granted only to officers (who are employees) and to other employees
of the Corporation or a Related Corporation, as determined by the Committee. A
director of the Corporation may receive an Incentive Stock Option under this
Plan only if such person is otherwise an employee of the Corporation or a
Related Corporation.

         (c)      Other Awards. Employees of the Corporation or a Related
Corporation who the Committee determines are providing bona fide services to the
Corporation or a Related Corporation, whether or not otherwise compensated, may
receive any form of Award, except an Incentive Stock Option, at the discretion
of the Committee.

6.       Granting of Options.

         (a)      General. Subject to the limitations of the Plan, the Committee
may in its sole and absolute discretion grant Options to such eligible
individuals in such numbers, upon such terms and at such times as the Committee
shall determine. Notwithstanding the foregoing, however, no Participant shall
during any fiscal year be granted Options to purchase greater than 10% of the
total number of shares of Common Stock available for issuance under the Plan.
Both Incentive Stock Options and Non-Qualified Options may be granted under the
Plan. To the extent necessary to comply with Section 422 of the Code and related
regulations, if an Option is designated as an Incentive Option but does not
qualify as such under Section 422 of the Code, the Option (or portion thereof)
shall be treated as a Non-Qualified Option. An Incentive Option shall be
considered to be granted on the date that the Committee acts to grant the
Option, or on any later date specified by the Committee as the effective date of
the Option. A Non-Qualified Option shall be considered to be granted on the date
the Committee acts to grant the Option or any other date specified by the
Committee as the date of grant of the Option.

         (b)      Option Price. The price per share at which an Option may be
exercised (the "Exercise Price") shall be established by the Committee at the
time the Option is granted and shall be set forth in the terms of the agreement
evidencing the grant of the Option; provided, that (i) in the case of an
Incentive Stock Option, the Exercise Price shall be no less than the Fair Market
Value per share of the Common Stock on the date the Incentive Stock Option is
granted and (ii) in no event shall the Exercise Price of any Option be less than
the par value per share of the Common Stock. Notwithstanding the foregoing, the
Exercise Price of an Incentive Stock Option granted to a 10% Shareholder shall
not be less than one hundred ten percent (110%) of the Fair Market Value of the
Common Stock on the date of grant.

         (c)      Limits on Incentive Stock Options. Each Incentive Stock Option
shall provide that, if the aggregate Fair Market Value of the Common Stock on
the date of the grant with respect to which Incentive Stock Options are
exercisable for the first time by a Participant during any calendar year, under
the Plan or any other stock option plan of the Corporation (or a Parent or
Subsidiary of the Corporation), exceeds $100,000, then the Option, as to the
excess, shall be treated as a Non-Qualified Stock Option. An Incentive Stock
Option shall not be granted to any person who is not an employee of the
Corporation or a Parent or Subsidiary of the Corporation. If and to the extent
that an Option designated as an Incentive Stock Option fails so to qualify under
the Code, the Option shall remain outstanding according to its terms as a
Non-Qualified Stock Option.

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         (d)      Option Term. The term of an Option shall be determined by the
Committee at the time the Option is granted. With respect to Incentive Stock
Options, such period shall not extend more than ten years from the date on which
the Option is granted; provided, however, that the term of an Incentive Stock
Option granted to an employee who is a 10% Shareholder shall not exceed five
years from the date of grant. Any Option or portion thereof not exercised before
expiration of the option period shall terminate.

         (e)      Exercisability of Options. Options shall become exercisable in
accordance with such terms and conditions, consistent with the Plan, as may be
determined by the Committee and specified in the Agreement or an amendment to
the Agreement. The Committee may accelerate the exercisability of any or all
outstanding Options at any time for any reason.

         (f)      Exercise of Options. A Participant may exercise an Option that
has become exercisable, in whole or in part, by delivering written notice to the
Corporation at such place as the Corporation shall direct. Such notice shall
specify the number of shares to be purchased pursuant to an Option and the
aggregate purchase price to be paid therefor, and shall be accompanied by the
payment of the Exercise Price. Such payment shall be in the form of (i) cash;
(ii) delivery of written notice of exercise to the Corporation and delivery to a
broker of written notice of exercise and irrevocable instructions to promptly
deliver to the Corporation the amount of sale or loan proceeds to pay the option
price; or (iii) a combination of the foregoing methods, as elected by the
Participant. Shares of Common Stock tendered or withheld in payment on the
exercise of an Option shall be valued at their Fair Market Value on the date of
exercise. Any shares of Common Stock used to exercise an Option shall have been
held by the Participant for the requisite period of time to avoid adverse
accounting consequences to the Corporation with respect to the exercise of the
Option. The Participant shall pay the Exercise Price and the amount of any
withholding tax due at the time of exercise. Shares of Common Stock shall not be
issued upon exercise of an Option until the Exercise Price is fully paid and any
required withholding is made.

         (g)      Nontransferability of Options. Options shall not be
transferable other than by will or the laws of intestate succession. The
designation of a beneficiary does not constitute a transfer. An Option shall be
exercisable during the Participant's lifetime only by him or by his guardian or
legal representative. If a Participant is subject to Section 16 of the Exchange
Act, shares of Common Stock acquired upon exercise of an Option may not, without
the consent of the Committee, be disposed of by the Participant until the
expiration of six months after the date the Option was granted.

7.       Stock Appreciation Rights.

         (a)      Grant of SARs. Subject to the limitations of the Plan, the
Committee may in its sole and absolute discretion grant SARs to such eligible
individuals, in such numbers, upon such terms and at such times as the Committee
shall determine. SARs may be granted to an optionee of an Option (hereinafter
called a "Related Option") with respect to all or a portion of the shares of
Common Stock subject to the Related Option (a "Tandem SAR") or may be granted
separately to an eligible key employee (a "Freestanding SAR"). Subject to the
limitations of the Plan, SARs shall be exercisable in whole or in part upon
notice to the Corporation upon such terms and conditions as are provided in the
Agreement relating to the grant of the SAR.

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         (b)      Tandem SARs. A Tandem SAR may be granted either concurrently
with the grant of the Related Option or (if the Related Option is a
Non-Qualified Option) at any time thereafter prior to the complete exercise,
termination, expiration or cancellation of such Related Option. Tandem SARs
shall be exercisable only at the time and to the extent that the Related Option
is exercisable (and may be subject to such additional limitations on exercise as
the Committee may provide in the Agreement), and in no event after the complete
termination or full exercise of the Related Option. For purposes of determining
the number of shares of Common Stock that remain subject to such Related Option
and for purposes of determining the number of shares of Common Stock in respect
of which other Awards may be granted, upon the exercise of Tandem SARs, the
Related Option shall be considered to have been surrendered to the extent of the
number of shares of Common Stock with respect to which such Tandem SARs are
exercised. Upon the exercise or termination of the Related Option, the Tandem
SARs with respect thereto shall be canceled automatically to the extent of the
number of shares of Common Stock with respect to which the Related Option was so
exercised or terminated. Subject to the limitations of the Plan, upon the
exercise of a Tandem SAR, the Participant shall be entitled to receive from the
Corporation, for each share of Common Stock with respect to which the Tandem SAR
is being exercised, consideration equal in value to the excess of the Fair
Market Value of a share of Common Stock on the date of exercise over the Related
Option price per share; provided, that the Committee may, in any agreement
granting Tandem SARs, establish a maximum value payable for such SARs.

         (c)      Freestanding SARs. Unless an individual agreement provides
otherwise, the base price of a Freestanding SAR shall be not less than one
hundred percent (100%) of the Fair Market Value of the Common Stock on the date
of grant of the Freestanding SAR. Subject to the limitations of the Plan, upon
the exercise of a Freestanding SAR, the Participant shall be entitled to receive
from the Corporation, for each share of Common Stock with respect to which the
Freestanding SAR is being exercised, consideration equal in value to the excess
of the Fair Market Value of a share of Common Stock on the date of exercise over
the base price per share of such Freestanding SAR; provided, that the Committee
may, in any agreement granting Freestanding SARs, establish a maximum value
payable for such SARs.

         (d)      Exercise of SARs. Subject to the terms of the Plan, SARs shall
be exercisable in whole or in part upon such terms and conditions as are
provided in the Agreement relating to the grant of the SAR. The period during
which an SAR may be exercisable shall not exceed ten (10) years from the date of
grant or, in the case of Tandem SARs, such shorter term as may apply to the
Related Option. Any SAR or portion thereof not exercised before expiration of
the period stated in the Agreement relating to the grant of the SAR shall
terminate. SARs may be exercised by giving written notice to the Corporation at
such place as the Committee shall direct. The date of exercise of the SAR shall
mean the date on which the Corporation shall have received notice from the
Participant of the exercise of such SAR.

         (e)      Consideration; Election. The consideration to be received upon
the exercise of the SAR by the Participant shall be paid in cash, shares of
Common Stock (valued at Fair Market Value on the date of exercise of such SAR)
or a combination of cash and shares of Common Stock, as elected by the
Participant, subject to the terms of the Plan and the applicable Agreement.
Ownership by the Participant (or his beneficiary) of the shares of Common Stock
acquired upon exercise of an SAR for shares shall be reflected by a book entry
in the stock records

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maintained by the Corporation and its transfer agent as soon as practicable
following receipt of notice of exercise. No fractional shares of Common Stock
will be issuable upon exercise of the SAR and, unless otherwise provided in the
applicable Agreement, the Participant will receive cash in lieu of fractional
shares.

         (f)      Limitations. The applicable Agreement shall contain such
terms, conditions and limitations consistent with the Plan as may be specified
by the Committee. Unless otherwise so provided in the applicable agreement or
the Plan, any such terms, conditions or limitations relating to a Tandem SAR
shall not restrict the exercisability of the Related Option.

         (g)      Nontransferability. SARs shall not be transferable other than
by will or the laws of intestate succession. The designation of a beneficiary
does not constitute a transfer. SARs may be exercised during the Participant's
lifetime only by him or by his guardian or legal representative. If the
Participant is subject to Section 16 of the Exchange Act, shares of Common Stock
acquired upon exercise of an SAR may not, without the consent of the Committee,
be disposed of by the Participant until the expiration of six months after the
date the SAR was granted.

8.     Restricted Stock Awards.

         (a)      Restricted Stock Awards. Subject to the limitations of the
Plan, the Committee may grant Restricted Stock Awards to such Eligible Persons,
in such amounts and subject to such terms and conditions, as the Committee may
determine in its sole discretion, including such restrictions on transferability
and other restrictions as the Committee may impose, which restrictions may lapse
separately or in combination at such times, under such circumstances, in such
installments, or otherwise, as the Committee shall determine.

         (b)      Issuance of Restricted Stock. Restricted Stock awarded under
the Plan shall be recorded as owned by the Participant by means of a book entry
in the stock records maintained by the Corporation and its transfer agent, and
the Corporation shall instruct its transfer agent regarding the terms,
conditions and restrictions applicable to such Restricted Stock. Each
Participant awarded Restricted Stock shall have delivered a stock power to the
Corporation, endorsed in blank, relating to the Restricted Stock for so long as
the Restricted Stock is subject to a risk of forfeiture.

         (c)      Voting and Dividend Rights of Restricted Stock. Unless
otherwise determined by the Committee at the time of an Award, the holder of
Restricted Stock shall have the right to vote the Restricted Stock and to
receive dividends, if any, thereon, unless and until such shares are forfeited.

         (d)      Nontransferability. The recipient of Restricted Stock shall
not sell, transfer, assign, pledge or otherwise encumber shares subject to the
Award until the restrictions have lapsed, expired or until all conditions to
vesting have been met. Restricted Stock shall not be transferable other than by
will or the laws of intestate succession until the restrictions have lapsed,
expired or until all conditions to vesting have been met. The designation of a
beneficiary does not constitute a transfer. If a Participant of a Restricted
Award is subject to Section 16 of the Exchange Act, shares of Common Stock
subject to such Award may not, without the consent of the Committee, be sold or
otherwise disposed of within six (6) months following the date of grant of such
Award.

<PAGE>   11

9.     Termination of Employment.

         (a)      Death of Participant. In the event of the death of a
Participant, any Incentive Stock Options granted to such Participant may be
exercised by the person or persons to whom the Participant's rights under any
such Incentive Stock Options pass by will or by the laws of descent and
distribution (including the Participant's estate during the period of
administration) at any time prior the respective expiration dates of any such
Incentive Stock Options. In addition, all Non-Qualified Options and SARs held by
such Participant shall immediately vest and become exercisable in accordance
with their terms, and all Restricted Stock held by such Participant shall
immediately vest and become non-forfeitable.

         (b)      Permanent Disability of Participant. In the event that any
Participant's employment with the Corporation shall terminate as a result of the
Permanent Disability of such Participant, such Participant may exercise any
Incentive Stock Options granted to him pursuant to the Plan at any time prior to
the earlier of (i) the respective expiration dates of any such Incentive Stock
Options or (ii) the date which is the first anniversary of the date of such
termination of employment. In addition, all Non-Qualified Options and SARs held
by such Participant shall immediately vest and become exercisable in accordance
with their terms, and all Restricted Stock held by such Participant shall
immediately vest and become non-forfeitable.

         (c)      Retirement of Participant. In the event of the Retirement of a
Participant, any Incentive Stock Options held by him under the Plan shall
immediately vest and shall be exercisable at any time prior to the earlier of
(i) the respective expiration dates of any such Incentive Stock Options or (ii)
the date which is ninety (90) days after the date of such termination. In
addition, all Non-Qualified Options and SARs held by such Participant shall
immediately vest and become exercisable in accordance with their terms, and all
Restricted Stock held by such Participant shall immediately vest and become non-
forfeitable.

         (d)      Other Termination of Employment. Upon the termination of any
Participant's employment with the Corporation for any reason other than death,
Permanent Disability or Retirement, any Incentive Stock Options held by him that
are vested as of the date of such termination shall be exercisable at any time
prior to the earlier of (i) the respective expiration dates of any such vested
Incentive Stock Options or (ii) the date which is ninety (90) days after the
date of such termination. In addition, the terms and conditions of Non-Qualified
Options, SARs and Restricted Stock shall be as specifically provided for in the
Agreement executed by the Participant at the time of an Award.

         (e)      Non-Competition. Unless an Agreement specifies otherwise,
a Participant shall forfeit all unexercised, unearned, and/or unpaid Awards,
including, but not by way of limitation, Awards earned but not yet paid, all
unpaid dividends and dividend equivalents, and all interest, if any, accrued on
the foregoing if: (i) in the opinion of the Committee, the Participant, without
the prior written consent of the Corporation, engages directly or indirectly in
any manner or capacity as a principal, agent, partner, officer, director,
shareholder, employee or otherwise, in any business or activity competitive with
the business conducted by the Corporation or any Parent, Subsidiary or Affiliate
of the Corporation; (ii) the Participant at any time divulges to any person or
entity other than the

<PAGE>   12

Corporation (or any Parent, Subsidiary, or Affiliate of the Corporation) any
trade secrets, methods, processes or the proprietary or confidential information
of the Corporation (or any Parent, Subsidiary, or Affiliate of the Corporation);
(iii) the Participant performs any act or engages in any activity which in the
opinion of Chief Executive Officer of the Corporation is inimical to the best
interests of the Corporation. Ownership of not more than four and 99/100 percent
(4.99%) of the outstanding capital stock of a company subject to the periodic
and other reporting requirements of the Exchange Act shall not be a violation of
this Section 9(f).

10.      Withholding of Taxes. The Corporation shall withhold all required
local, state and federal taxes from any amount payable in cash with respect to
an Award. The Corporation shall require any recipient of an Award payable in
shares of the Common Stock to pay to the Corporation in cash the amount of any
tax or other amount required by any governmental authority to be withheld and
paid over by the Corporation to such authority for the account of such
recipient.

11.      Consequences of a Change of Control. Notwithstanding any other
provision of the Plan to the contrary, in the event of a Change of Control: (a)
all Options and SARs outstanding as of the date of such Change of Control shall
become fully exercisable, whether or not then otherwise exercisable; (b) all
restrictions applicable to any Restricted Stock Award shall be deemed to have
expired, and such Restricted Stock Awards shall become fully vested and payable
to the fullest extent of the original grant of the applicable Award.
Notwithstanding the foregoing, in the event of a merger, share exchange,
reorganization or other business combination affecting the Corporation or a
Related Corporation, the Committee may, in its sole and absolute discretion,
determine that any or all Awards granted pursuant to the Plan shall not vest or
become exercisable on an accelerated basis, if the Board of Directors of the
surviving or acquiring corporation, as the case may be, shall have taken such
action, including but not limited to the assumption of Awards granted under the
Plan or the grant of substitute awards (in either case, with substantially
similar terms as Awards granted under the Plan), as in the reasonable opinion of
the Committee is equitable or appropriate to protect the rights and interests of
participants under the Plan. For the purposes herein, the Committee authorized
to make the determinations provided for in this Section 11 shall be appointed by
the Board of Directors, two-thirds of the members of which shall have been
directors of the Corporation prior to the merger, share exchange, reorganization
or other business combinations affecting the Corporation or a Related
Corporation.

12.      Performance Based Compensation. To the extent that Section 162(m) of
the Code is applicable, the Committee shall have discretion to determine the
extent, if any, that Awards conferred under the Plan to Covered Employees shall
comply with the qualified performance-based compensation exception to employer
compensation deductions set forth in Section 162(m) of the Code.

13.      No Right or Obligation of Continued Employment. Nothing contained in
the Plan shall require the Corporation or a Related Corporation to continue the
employment or service of a Participant, nor shall any such individual be
required to remain in the employment or service of the Corporation or a Related
Corporation. Except as otherwise provided in the Plan, Awards granted under the
Plan to employees of the Corporation or a Related Corporation shall not be
affected by any change in the duties or position of the Participant, as

<PAGE>   13

long as such individual remains an employee of, or in service to, the
Corporation or a Related Corporation.

14.      Unfunded Plan; Retirement Plan. Neither a Participant nor any other
person shall, by reason of the Plan, acquire any right in or title to any
assets, funds or property of the Corporation or any Related Corporation
including, without limitation, any specific funds, assets or other property
which the Corporation or any related corporation, in their discretion, may set
aside in anticipation of a liability under the Plan. A participant shall have
only a contractual right to the Common Stock or amounts, if any, payable under
the Plan, unsecured by any assets of the Corporation or any related corporation.
Nothing contained in the Plan shall constitute a guarantee that the assets of
such corporations shall be sufficient to pay any benefits to any person. In no
event shall any amounts accrued, distributable or payable under the Plan be
treated as compensation for the purpose of determining the amount of
contributions or benefits to which any person shall be entitled under any
retirement plan sponsored by the Corporation or a related corporation that is
intended to be a qualified plan within the meaning of Section 401(a) of the
Code.

15.      Amendment and Termination of the Plan.

         (a)      Amendment. The Board may amend or terminate the Plan at any
time; provided, however, that if the Common Stock becomes publicly traded, the
Board shall not amend the Plan without shareholder approval if such approval is
required by (i) Section 162(m) of the Code and if Section 162(m) is applicable
to the Plan; (ii) the Securities Act; or (iii) the Exchange Act.

         (b)      Termination of Plan. The Plan shall terminate on the day
immediately preceding the tenth anniversary of its effective date unless
terminated earlier by the Board or unless extended by the Board with the
approval of the shareholders.

         (c)      Termination and Amendment of Outstanding Awards. A termination
or amendment of the Plan that occurs after an Award is granted shall not
materially impair the rights of a Participant unless the Participant consents.
The termination of the Plan shall not impair the power and authority of the
Committee with respect to an outstanding Award. No termination, Modification, or
amendment of the Plan, may, without the consent of the Participant to whom any
Award shall theretofore have been made, adversely affect the rights of such
Participant under such Award; nor shall any such Modification or amendment be
deemed to effect a Modification, extension or renewal of any such Award
previously made except pursuant to an express written agreement to such effect,
executed by the Corporation and the Participant.

         (d)      Governing Document. The Plan shall be the controlling
document. No other statements, representations, explanatory materials or
examples, oral or written, may amend the Plan in any manner. The Plan shall be
binding upon and enforceable against the Corporation and its successors and
assigns.

16.      Restrictions on Shares. The Committee may impose such
restrictions on any shares representing Awards hereunder as it may deem
advisable, including without limitation restrictions under the
Securities Act, under the requirements of any stock exchange or similar
organization and under any blue sky or state securities laws applicable
to such shares.  Notwithstanding any other Plan provision to the

<PAGE>   14

contrary, the Corporation shall not be obligated to issue or deliver shares of
Common Stock under the Plan or make any other distribution of benefits under the
Plan, or take any other action, unless such delivery, distribution or action is
in compliance with all applicable laws, rules and regulations (including but not
limited to the requirements of the Securities Act). The Corporation may give
instructions to its transfer agent regarding such restrictions as may be
prescribed from time to time by applicable laws and regulations or as may be
advised by legal counsel with respect to shares of Common Stock issued pursuant
to an Award hereunder.

17.      No Fractional Shares. No fractional shares of Common Stock shall be
issued or delivered pursuant to the Plan or any Option. The Committee shall
determine whether cash, other awards or other property shall be issued or paid
in lieu of such fractional shares or whether such fractional shares or any
rights thereto shall be forfeited or otherwise eliminated.

18.      Miscellaneous.

         (a)      Options in Connection with Corporate Transactions and
Otherwise. Nothing contained in this Plan shall be construed to (i) limit the
right of the Committee to grant Options under this Plan in connection with the
acquisition, by purchase, lease, merger, consolidation or otherwise, of the
business or assets of any corporation, firm or association, including options
granted to employees thereof who become employees of the Corporation, or for
other proper corporate purpose, or (ii) limit the right of the Corporation to
grant stock options or make other awards outside of this Plan. Without limiting
the foregoing, the Committee may grant Options to an employee of another
corporation who becomes an employee of the Corporation by reason of a corporate
merger, consolidation, acquisition of stock or property, reorganization or
liquidation involving the Corporation or any of its subsidiaries in substitution
for a stock option or restricted stock grant made by such corporation. The
Committee shall prescribe the provisions of the substitute Options.

         (b)      If the Committee determines that such action is advisable, the
Corporation may assist any Participant in obtaining financing from the
Corporation or from any bank or other third party, on such terms as are
determined by the Committee, and in such amount as is required to accomplish the
purposes of the Plan, including, but not limited to, permitting the exercise of
an Award and/or paying any taxes in respect thereof to the extent permitted by
law. Such assistance may take any form that the Committee deems appropriate,
including, but not limited to, a direct loan from the Corporation, a guarantee
of the obligation by the Corporation, or the maintenance by the Corporation of
deposits with such bank or third party.

         (b)      Compliance with Law. The Plan, the grant and exercise of
Options, and the obligations of the Corporation to issue or transfer shares of
Common Stock under Options shall be subject to all applicable laws and to
approvals by any governmental or regulatory agency as may be required. The
Committee may revoke any Award if it is contrary to law or modify an Award to
bring it into compliance with any valid and mandatory government regulation. The
Committee may also adopt rules regarding the withholding of taxes on payments to
Participants. The Committee may, in its sole discretion, agree to limit its
authority under this Section 18(b).

<PAGE>   15

         (c)      Ownership of Stock. A Participant shall have no rights as a
shareholder with respect to any shares of Common Stock covered by an Option
until the shares are issued or transferred to the Participant or Successor
Participant on the stock transfer records of the Corporation.

         (e)      Governing Law. The validity, construction, interpretation and
effect of the Plan and grant instruments issued under the Plan shall exclusively
be governed by and determined in accordance with the law of the State of
Tennessee, without regard to conflict of laws principles.

         (f)      Time of Awards. Nothing contained in the Plan shall constitute
an Award hereunder. Any Award pursuant to the Plan shall take place only upon
approval by the Committee of a resolution recommending an Award under this Plan.
Notice of the determination shall be given to each person to whom an Award is so
made within a reasonable time after the date of such Award. After the making of
an Award under this Plan, a written Agreement shall be duly executed by or on
behalf of the Corporation and the Participant.

         (g)      Form and Terms of Award Agreement. Agreements evidencing
Awards pursuant to the Plan shall be in such form and shall contain such terms
not inconsistent with the Plan as the Committee may approve. Award Agreements
may contain such terms, conditions, restrictions and limitations in respect of
Options, SARs and/or Restricted Stock (and such provisions for the enforcement
of compliance with the Securities Act and/or with state "Blue Sky" laws) as the
Committee, in its sole discretion, may determine. To the extent any term in any
Award Agreement shall be inconsistent with any term of this Plan, the term in
this Plan shall govern.

         (h)      Partial Invalidity. The invalidity or unenforceability of any
particular provision of this Plan or any Award Agreement shall not effect the
other provisions of this Plan or such Award Agreement nor affect the validity or
enforceability of the other provisions of Award Agreements under this Plan, and
this Plan and Awards hereunder shall be construed in all respects as if such
invalid or unenforceable provision were omitted.

         (i)      Special Provisions with Respect to Incentive Stock Options
under this Plan and Non-Qualified Stock Options. The Committee in making any
Award of an Option shall indicate whether it intends the Option to be an
Incentive Stock Option under this Plan or a Non-Qualified Stock Option and shall
cause the Award Agreement with respect thereto to indicate such intention.
Should a person hold both one or more Incentive Stock Options under this Plan
and one or more Non-Qualified Stock Options, all of such Options shall be
exercisable in accordance with their respective terms and limitations, and
nothing in this Plan shall be construed as causing the exercise of any such
Option to preclude the exercise of any such other Option in accordance with its
terms.

         (j)      Rule 16b-3 Savings Provision. It is the intent of the
Corporation that this Plan comply in all respects with any applicable provisions
of Rule 16b-3 and Rule 16a-1(c)(3) under the Exchange Act in connection with any
grant of Awards to or other transaction by a Participant who is subject to
Section 16 of the Exchange Act (except for transactions exempted under
alternative Exchange Act Rules or acknowledged in writing to be non-exempt by
such Participant). Accordingly, if any provision of this Plan or any Award
Agreement does not comply with the requirements of Rule 16b-3 or Rule
16a-1(c)(3) as then applicable to any such transaction, such provision will be
construed or deemed amended to the extent necessary to conform to the applicable
requirements of Rule 16b-3 or Rule 16a-1(c)(3) so that such Participant shall
avoid liability under Section 16(b).

         (k)      Headings. Section headings are for reference only. In the
event of a conflict between a title and the content of a Section, the
content of the Section shall control.<PAGE>   1
                                                                     EXHIBIT 4.2

                   1994 Restricted Stock and Stock Option Plan

1.       Purposes of the Plan

         The purposes of the Morgan Keegan, Inc. 1994 Restricted Stock and Stock
Option Plan (the "Plan") are to advance the interests of Morgan Keegan, Inc. and
its subsidiaries, including Morgan Keegan & Company, Inc. (collectively, the
"Company"), to increase stockholder value by providing the Company's officers
and key employees with a proprietary interest in the growth and performance of
the Company and with incentives for continued service with and rewards for
outstanding service to the Company, its subsidiaries and/or its affiliates, and
to provide the Company with an additional means to attract and retain qualified
officers and key employees. The Plan will be known as the "1994 Restricted Stock
and Stock Option Plan." Pursuant to the Plan, the Compensation Committee (as
hereinafter designated) may grant stock options and restricted stock awards to
officers and other key employees of Morgan Keegan, Inc., Morgan Keegan &
Company, Inc., and their respective subsidiaries and/or affiliates, on the terms
and subject to the conditions set forth in this Plan.

2.       Definitions

         As used in the Plan, the following terms shall have the meanings set
forth below:

         2.1      "Award" means any form of Stock Option or Restricted Stock
granted under the Plan, whether singly, in combination, or in tandem, to a
Participant by the Compensation Committee pursuant to such terms, conditions,
restrictions, and/or limitations, if any, as the Compensation Committee may
establish.

         2.2      "Award Agreement" means a written agreement setting forth the
terms of an Award.

         2.3      "Board" means the Board of Directors of Morgan Keegan, Inc.

         2.4      "Change in Control" means any transaction pursuant to which
(i) the Company merges with another corporation and is not the surviving entity,
(ii) substantially all of the Company's assets are sold to persons or entities
not affiliated with the Company, (iii) shares of Common Stock are issued or
acquired by persons or entities not affiliated with the Company, who, acting as
a group, have the voting power to change the composition of the Board, or (iv)
any other transaction of a nature similar to the foregoing.

         2.5      "Code" means the Internal Revenue Code of 1986, as amended.
References to any provision of the Code shall be deemed to include successor
provisions thereto and rules and regulations thereunder.

<PAGE>   2

         2.6      "Compensation Committee" means the Compensation Committee of
Morgan Keegan & Company, Inc. Notwithstanding the foregoing, with respect to
Awards to members of the Compensation Committee of Morgan Keegan & Company,
Inc., the directors of Morgan Keegan, Inc. who are not officers or employees
thereof will act as the Compensation Committee, and the term "Compensation
Committee" as used herein shall mean those persons, where the context so
requires.

         2.7      "Common Stock" means the Common Stock of the Company, $.625
par value.

         2.8      "Company" means Morgan Keegan, Inc., its subsidiaries and its
affiliates.

         2.9      "Disability" means the inability to substantially perform the
usual duties of the person's occupation by reason of a medically determinable
physical or mental impairment which can be expected to be of long, continued and
indefinite duration as determined by the Compensation Committee.

         2.10     "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time. References to any provision of the Exchange Act shall
be deemed to include successor provisions thereto and rules and regulations
thereunder.

         2.11     "Fair Market Value," unless otherwise required by an
applicable provision of the Code, as of any date, means the last sales price of
the Common Stock on such date as reported on the New York Stock Exchange
Consolidated Tape.

         2.12     "Incentive Stock Option" ("ISO") means any Stock Option
intended to be, and designated and qualifying as, an "incentive stock option"
within the meaning of Section 422 of the Code.

         2.13     "Non-Qualified Stock Option" means any Stock Option awarded
under this Plan that is not intended to be an Incentive Stock Option or that
fails to meet the requirements applicable to an Incentive Stock Option.

         2.14     "Option" or "Stock Option" means a right granted pursuant to
the Plan to purchase shares of Common Stock, and includes the terms Incentive
Stock Option and Non-Qualified Stock Option.

         2.15     "Option Price" or "Exercise Price" means the price per share
at which Common Stock may be purchased upon the exercise of an Option.

          2.16 "Participant" means any individual to whom an Award has been
granted by the Compensation Committee under the Plan.

<PAGE>   3

         2.17     "Restricted Stock" means shares of Common Stock issued
pursuant to a Restricted Stock Award which are subject to forfeiture provisions
or such other conditions as may be determined by the Compensation Committee and
specified in an Award Agreement.

         2.18     "Retirement" means retirement from active employment under a
retirement plan of the Company, or pursuant to an employment agreement with any
of the aforementioned, or termination of employment at or after age 55 under
circumstances which the Compensation Committee, in its sole discretion, deems
equivalent to retirement.

         2.19     "Termination of Employment" means the termination of a
Participant's active employment with the Company which is not deemed to be a
Retirement or a termination due to a Disability.

3.       Administration

         3.1      The Plan shall be administered and interpreted by the
Compensation Committee.

         3.2      The Compensation Committee shall have the authority to (a)
establish such rules and regulations as it deems necessary for the proper
operation and administration of the Plan; (b) select the persons to receive
Awards under the Plan; (c) determine the form of an Award, or combinations
thereof, and whether such Awards are to operate on a tandem basis and/or in
conjunction with or apart from other awards made by the Company, either within
or outside of this Plan; (d) determine the number of shares of Common Stock to
be covered by each such Award granted hereunder; (e) determine the terms and
conditions, not inconsistent with the terms of this Plan, of any Award granted
hereunder (including, but not limited to, any restriction or limitation on
transfer, any vesting schedule or acceleration thereof, and any forfeiture
provisions or waiver thereof), regarding any Award and the shares of Common
Stock relating thereto, based on such factors as the Compensation Committee
shall determine, in its sole discretion; (f) determine whether Common Stock
payable with respect to an Award under this Plan shall be deferred, either
automatically or at the election of the Participant; and (g) make any other
determination or take any action that the Compensation Committee deems necessary
or desirable for the administration of the Plan.

         3.3      Unless authority is specifically reserved to the Board under
the terms of the Plan, the Company's Charter or By-Laws, or applicable law, the
Compensation Committee shall have sole discretion in exercising authority under
the Plan. The Compensation Committee may delegate to officers or managers of the
Company or any subsidiary the authority, subject to such terms as the
Compensation Committee shall determine, to perform administrative functions and,
with respect to Participants not subject to Section 16 of the Exchange Act, to
perform such other functions as the Compensation Committee may determine, to the
extent permitted under Rule 16b-3 and applicable law. Any

<PAGE>   4

decision, interpretation or other action made or taken in good faith by or at
the direction of the Company, the Board, or the Compensation Committee (or any
of its members pursuant to any authority duly delegated to any such member)
arising out of or in connection with the Plan shall be within the absolute
discretion of all or any of them, as the case may be, and shall be final,
binding and conclusive on the Company and all employees and Participants and
their respective beneficiaries, heirs, executors, administrators, successors and
assigns.

4.       Eligibility

         Officers and key employees of the Company and its present and future
subsidiaries, who are responsible for or contribute to the management, growth
and profitability of the business of the Company, are eligible to receive Awards
under the Plan.

5.       Shares Available for Awards

         5.1      The maximum number of shares of Common Stock of the Company
that may be used in conjunction with the grant of Awards under the Plan is
1,000,000 (subject to adjustment as provided in Section 5.4 below).

         5.2      Shares of stock which are attributable to Awards which expire
or are otherwise terminated, cancelled, surrendered or forfeited, during a
calendar year, are available for issuance or use in connection with future
Awards, during the calendar year in which they expire or otherwise become
available, provided, however, that, if any such shares could not again be
available for Awards to a Participant who is subject to Section 16 of the
Exchange Act under applicable share counting requirements of Rule 16b-3, such
shares shall be available exclusively for Awards to Participants who are not
subject to Section 16.

         5.3      Shares of Common Stock to be issued under the Plan may be
authorized and unissued shares of Common Stock, treasury stock or a combination
thereof.

         5.4      In the event of a merger, consolidation, reorganization,
recapitalization, stock split, stock dividend, other extraordinary dividend or
other change in corporate structure or capitalization affecting the Common
Stock, the Compensation Committee may make appropriate adjustment in the number
or kind of shares subject to options, rights and other Awards granted under the
Plan, and/or the exercise price and other terms and conditions of Awards or
appropriate adjustment in the maximum number of shares referred to in Section 5
of the Plan, as the Compensation Committee may determine to be necessary or
appropriate in order to prevent dilution or enlargement of the rights of
Participants.

<PAGE>   5

6.       Awards Under the Plan

         6.1      Stock Options. The Compensation Committee may grant Incentive
Stock Options ("ISO"), Non-Qualified Stock Options or both to purchase shares of
Common Stock from the Company to such officers and key employees, in such
amounts and subject to such terms and conditions, as the Compensation Committee
shall determine in its sole discretion, subject to the provisions of the Plan,
provided, however, that in no event may any Stock Option be granted hereunder
after the expiration of 10 years after the date of the Plan. The automatic or
discretionary grant of "reload" Stock Options is specifically authorized.

         In the case of ISO's, the terms and conditions of such grants,
including the exercise price of the purchase of Common Stock, shall be subject
to and comply with the requirements of Section 422 of the Code, as from time to
time amended, and any implementing regulations.

         The exercise price at which shares of Common Stock may be purchased
pursuant to the grant of an Option shall be fixed by the Compensation Committee
at the time of grant; however, the price of an ISO must be equal to or greater
than the Fair Market Value of the shares of Common Stock covered thereby. The
exercise price of an ISO granted to any Participant who owns shares of Common
Stock possessing more than 10% of the total combined voting power of all
outstanding shares of Common Stock of the Company must be at least equal to 110%
of the fair market value of the shares of Common Stock on the date of grant.
Options granted under the Plan will not be ISOs to the extent that the Fair
Market Value of the shares of Common Stock with respect to which ISOs first
become exercisable in any year exceeds $100,000.

         6.2      Restricted Stock Awards. The Compensation Committee may grant
Restricted Stock Awards ("RSAs") to such officers and key employees, in such
amounts and subject to such terms and conditions as the Compensation Committee
may determine in its sole discretion, including such restrictions on
transferability and other restrictions as the Compensation Committee may impose,
which restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, or otherwise, as the Compensation
Committee shall determine.

         Restricted Stock granted under the Plan shall be evidenced by
certificates registered in the name of the Participant and bearing an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such Restricted Stock. The Company shall retain physical
possession of any such certificates, and each Participant awarded Restricted
Stock shall have delivered a stock power to the Company, endorsed in blank,
relating to the Restricted Stock for so long as the Restricted Stock is subject
to a risk of forfeiture.

<PAGE>   6

         Unless otherwise determined by the Compensation Committee at the time
of an Award, the holder of an RSA shall have the right to vote the restricted
shares and to receive dividends thereon, unless and until such shares are
forfeited.

         In the event all or any of the shares subject to RSA are forfeited due
to failure to meet or comply with restrictions imposed by the Compensation
Committee at the time of grant prior to the lapse of such restrictions, the
Company shall repay to the Participant (or the Participant's estate) any cash
amount paid by the Participant for such forfeited shares.

         6.3      Consideration; Tandem and Substitute Awards. Except as
provided in this Section 6.3 or to the extent that payment of lawful
consideration may be required under the Tennessee Business Corporation Act, only
services may be required as consideration for the grant (but not the exercise)
of any Award. Awards granted under the Plan may, in the discretion of the
Compensation Committee, be granted either alone or in addition to, in tandem
with, or in substitution for, any other Award granted under the Plan or any
award granted under any other plan of the Company or any business entity to be
acquired by the Company or any other right of a Participant to receive payment
from the Company. If an Award is granted in substitution for another Award under
the Plan or other award, the Compensation Committee shall require the surrender
of such additional Award or other award in consideration for the grant of the
new Award. Awards granted in addition to or in tandem with additional Awards or
awards under other plans may be granted either as of the same time as or a
different time from the grant of such additional Awards or other awards.

         6.4      Vesting; Forfeiture. Awards of Options and Restricted Stock
will vest and become non-forfeitable as determined by the Compensation
Committee. Notwithstanding the foregoing, RSAs shall vest and become
non-forfeitable upon the Death, Disability or Retirement of a Participant or
upon a Change in Control. Subject to the provisions of Section 422A of the Code
and Rule 16b-3, Options shall become exercisable in accordance with their terms
in the event of Death, Disability or Retirement of a Participant or upon a
Change in Control. Upon the termination of employment of any Participant for any
reason other than Death, Disability, Retirement or Change in Control, any
unvested Options or RSAs shall expire and be forfeited to the Company and shall
thereafter be subject to reissuance under the 1994 Plan.

7.       Award Agreements

         Awards under the Plan shall be evidenced by an agreement approved by
the Compensation Committee that sets forth the terms, conditions and limitations
of an Award. The Compensation Committee may amend agreements theretofore entered
into, either prospectively or retroactively, including, but not limited to, the
acceleration of vesting of or lapse of restrictions on an Award and the
extension of time to exercise an Award, except that, no such amendment shall
affect the Award in a materially

<PAGE>   7

adverse manner without the consent of the Participant (except for an amendment
made to cause the Plan to qualify for an exemption provided by Rule 16b-3). Any
Award Agreement shall contain vesting and forfeiture provisions which are
consistent with the provisions of Section 6.4 hereof.

8.       Miscellaneous Provisions Related to Participants

         8.1.     The grant of an Award shall not be construed as giving a
Participant the right to be retained in the employ of the Company. The Company
may at any time dismiss a Participant from employment, free from any liability
or any claim under the Plan, unless otherwise expressly provided in the Plan or
in any Award Agreement. No Participant or other person shall have any claim to
be granted any Award, and there is no obligation for uniformity of treatment of
Participants or holders or beneficiaries of Awards.

         8.2.     Except as may be otherwise provided under Section 6.3, no
Award granted under the Plan, unless otherwise provided in the Award Agreement,
shall entitle the holder of such Award to any dividend, voting or other right of
a stockholder unless and until the date of issuance under the Plan of the shares
that are subject to such Award.

         8.3.     The purchase price of the shares of Common Stock as to which
an Option is exercised shall be paid in cash or by check, except that the
Compensation Committee may, in its discretion, allow such payment to be by
surrender of unrestricted shares of Common Stock (valued at their then Fair
Market Value at the date of exercise), or by a combination of cash, check and
unrestricted shares of Common Stock (valued at their then Fair Market Value at
the date of exercise), or by a combination of cash, check and unrestricted
shares of Common Stock.

         8.4.     A Participant may be required to pay to the Company, and the
Company shall have the right to deduct from all amounts paid to a Participant
(whether under the Plan or otherwise), any taxes required by law to be paid or
withheld in respect of Awards hereunder to such Participant. The Compensation
Committee may provide for additional cash payments to holders of Awards to
defray or offset any tax arising from the grant, vesting exercise or payment of
any Award or, at the election of the holder of the Award, the Compensation
Committee may withhold shares or accept the transfer of shares to the Company,
in such amounts as are equivalent to the Fair Market Value of the withholding
obligations.

         8.5.     If the Compensation Committee determines that such action is
advisable, the Company may assist any Participant in obtaining financing from
the Company or from any bank or other third party, on such terms as are
determined by the Compensation Committee, and in such amount as is required to
accomplish the purposes of the Plan, including, but not limited to, permitting
the exercise of an Award and/or paying any taxes in respect thereof to the
extent permitted by law. Such assistance may

<PAGE>   8

take any form that the Compensation Committee deems appropriate, including, but
not limited to, a direct loan from the Company, a guarantee of the obligation by
the Company, or the maintenance by the Company of deposits with such bank or
third party.

         8.6.     Awards, and any right that comes within the general definition
of "derivative security" of Rule 16a-1(c) under the Exchange Act, shall not be
assignable or transferable by a Participant except by will or the laws of
descent and distribution (or pursuant to a beneficiary designation authorized
under Section 8.7), and during the Award holder's lifetime, such Awards and
rights shall be exercisable only by such holder or such holder's duly appointed
guardian or legal representative.

         8.7.     Each Participant may file and maintain with the Company a
written designation of one or more persons as the beneficiary or beneficiaries
who shall be entitled to receive the Award or related payment payable under the
Plan upon the Participant's death. If no such designation is in effect at the
time of a Participant's death, or if no designated beneficiary survives the
Participant or if such designation conflicts with the law, the Participant's
estate shall be entitled to receive the Award or related payment, if any,
payable under the Plan upon the Participant's death.

9.       Governing Law

         The validity, construction, and effect of the Plan, any rules and
regulations relating to the Plan and any Award Agreement shall be determined in
accordance with the laws of the State of Tennessee and applicable federal law.

10.      Severability

         If any provision of the Plan or any Award is or becomes or is deemed to
be invalid, illegal, or unenforceable in any jurisdiction or as to any
Participant or Award under any law deemed applicable by the Compensation
Committee, such provision or Award shall be construed or deemed amended to
conform to applicable laws, or if it cannot be construed or deemed amended, in
the determination of the Compensation Committee, without materially altering the
intent of the Plan or the Award, such provision shall be stricken as to such
jurisdiction, Participant or Award and the remainder of the Plan and any such
Award shall remain in full force and effect.

11.      Unfunded Plan

         The Plan is intended to constitute an "unfunded" plan. Unless otherwise
determined by the Compensation Committee, the Plan shall be unfunded and shall
not create (or be construed to create) a trust or a separate fund or funds. To
the extent that

<PAGE>   9

any person acquires a right to receive payments from the Company pursuant to an
Award, such right (unless otherwise determined by the Compensation Committee)
shall be no greater than the right of any unsecured general creditor of the
Company.

12.      Rule 16b-3 Compliance

         12.1     Unless a Participant could otherwise transfer an equity
security, derivative security, or shares issued upon exercise of a derivative
security granted under the Plan without incurring liability under Section 16(b)
of the Exchange Act, (i) an equity security issued under the Plan, other than an
equity security issued pursuant to the exercise of a derivative security granted
under the Plan, shall be held for at least six months from the date of
acquisition, and (ii) at least six months shall elapse from the date of
acquisition of a derivative security to the date of disposition of the
derivative security (other than upon exercise or conversion) or disposition of
any underlying equity security issued pursuant to the exercise or conversion of
such derivative security.

         12.2     It is the intent of the Company that this Plan comply in all
respects with applicable provisions of Rule 16b-3 and Rule 16a-1(c)(3) under the
Exchange Act in connection with any grant of Awards to or other transaction by a
Participant who is subject to Section 16 of the Exchange Act (except for
transactions exempted under alternative Exchange Act Rules or acknowledged in
writing to be non-exempt by such Participant). Accordingly, if any provision of
this Plan or any Award Agreement does not comply with the requirements of Rule
16b-3 or Rule 16a-1(c)(3) as then applicable to any such transaction, such
provision will be construed or deemed amended to the extent necessary to conform
to the applicable requirements of Rule 16b-3 or Rule 16a-1(c)(3) so that such
Participant shall avoid liability under Section 16(b).

         12.3     No Option shall be granted prior to December 31, 1994, that
has an option price, base price, or exercise price less than 50% of the fair
market value of the underlying shares at the date of grant.

13.      Effective Date and Term of Plan

         13.1     The Plan shall be submitted to the stockholders of the Company
for their approval at the Annual Meeting of Stockholders to be held November 22,
1994. The Plan shall become effective upon the affirmative vote of the holders
of a majority of the shares of Common Stock present, or represented, and
entitled to vote at the meeting.

         13.2     The Plan shall remain in effect until August 24, 2004, unless
sooner terminated by the Board. After this date, no further Awards may be
granted but previously granted Awards shall remain outstanding in accordance
with their applicable terms and conditions, as stated in the Award Agreement,
and conditions of the Plan.

<PAGE>   10

14.      Amendment and Termination of the Plan

         14.1     The Plan may be amended by the Board in any respect, without
the consent of stockholders or Participants, except that any such amendment
(although effective when made) shall be subject to the approval of the Company's
stockholders within one year after such Board action if such stockholder
approval is required by any federal or state law or regulation or the rules of
any stock exchange or automated quotation system on which the Common Stock may
then be listed or quoted, and the Board may otherwise, in its discretion,
determine to subject any other amendment to the Plan to stockholders for
approval. In addition, no amendment may materially impair the rights of a
Participant under any Award previously granted under the Plan without the
consent of such Participant, unless required by law.

         14.2     The Plan may be terminated at any time by the Board. No
further Awards may be made under the Plan after termination, but termination
shall not affect the rights of any Participant under, or the authority of the
Compensation Committee with respect to, any grants or awards made prior to
termination.

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