<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
Merchants Capital Corporation, Vicksburg, MS
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
None
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
MERCHANTS CAPITAL CORPORATION, VICKSBURG, MISSISSIPPI
TO THE HOLDERS OF SHARES OF COMMON STOCK
NOTICE IS HEREBY GIVEN that pursuant to call of its Directors, the
Annual Meeting of Shareholders of Merchants Capital Corporation (the
"Corporation") will be held in the Board Room of Merchants Bank, third floor of
the main office, 820 South Street, Vicksburg, Mississippi, on April 15, 1997 at
4:30 P.M., local time, for the purpose of considering and voting upon the
following matters:
1. To set the number of Directors to be elected at 15.
2. To elect 15 Directors to hold office for a term of one year or
until their successors are elected and qualified.
3. To approve the adoption of the Incentive Stock Option Plan of
1997 reserving for issuance pursuant to stock options 25,000
shares of Common Stock of the Corporation (representing 3.53%
of the issued shares as of December 31, 1996).
4. Whatever other business may be properly brought before the
meeting or any adjournments thereof.
Only those shareholders of record at the close of business on February
28, 1997 shall be entitled to notice of the meeting and to vote at the meeting.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING IN PERSON,
PLEASE DATE, SIGN, AND RETURN PROMPTLY THE ACCOMPANYING PROXY. IF YOU DO ATTEND
THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON.
By Order of the Board Of Directors
Date: March 25, 1997 ----------------------------------
Howell N. Gage,
Chairman of the Board
<PAGE> 3
MERCHANTS CAPITAL CORPORATION
820 SOUTH STREET
VICKSBURG, MISSISSIPPI 39180
(601) 636-3752
PROXY STATEMENT
This statement is furnished in connection with the solicitation by the
Board of Directors of Merchants Capital Corporation, Vicksburg, Mississippi
(the "Corporation"), of Proxies for the Annual Meeting of Shareholders (the
"Annual Meeting") to be held in the Board Room of Merchants Bank, third floor
of the main office, 820 South Street, on April 15, 1997, at 4:30 P.M., local
time, and any adjournments thereof, for the purposes stated below. It is
anticipated that the Proxy Statement and Proxy first will be sent or given to
shareholders on March 25, 1997.
Holders of record of the Corporation's Common Stock, par value $5.00
per share (the "Common Stock"), as of February 28, 1997, (the "Record Date")
are entitled to vote at the Annual Meeting or any adjournments thereof. On
February 28, 1997, there were 707,516 shares of Common Stock outstanding and of
this total, 122,511 shares (17.32%) of the Common Stock of the Corporation were
held in various trust accounts by the Trust Department of the Corporation's
wholly-owned subsidiary, Merchants Bank, (the "Bank"), in a fiduciary capacity
as trustee. It is expected that these 122,511 shares (17.32%) will be voted in
favor of the proposal to fix the number of Directors to be elected at fifteen
(15); the elections of the nominees listed on pages 6 through 7; and approval
of the Incentive Stock Plan of 1997. The Corporation's insiders control
approximately 27.41% of the voting Common Stock outstanding and management is
uncertain as to how these shares will be voted on the various proposals.
Shareholders of the Corporation have cumulative voting rights. This
means that a shareholder, as provided for by law, has the right to vote the
number of shares owned by him for as many persons as there are Directors to be
elected, or to cumulate such shares and give one candidate as many votes as the
number of Directors to be elected multiplied by the number of such shares shall
equal, or to distribute them on the same principle among as many candidates as
he thinks fit; and, in deciding all other questions, each shareholder will be
entitled to one vote for each share held by him.
Pursuant to Mississippi law, directors are elected by a plurality of
the votes cast in the election of directors. A "plurality" means that the
individuals with the largest number of favorable votes are elected as
directors, up to the maximum number of directors to be chosen at the meeting.
(1)
<PAGE> 4
Pursuant to Mississippi law, action on a matter (other than the
election of directors) is approved if the votes cast favoring the action exceed
the votes cast opposing that action, unless the Corporation's Articles of
Incorporation or Mississippi law specifically requires a greater number of
affirmative votes on a particular matter. Broker non-voters and shareholder
abstentions are not counted in determining whether or not a matter has been
approved by shareholders.
Any person giving a Proxy has the right to revoke it at any time
before it is exercised. A shareholder may revoke his Proxy by personally
appearing at the Annual Meeting or by written notification to the Corporation
which is received prior to the exercise of the Proxy. All properly executed
Proxies, if not revoked, will be voted as directed. On all matters proposed by
the Board of Directors, and, if the shareholder does not direct to the
contrary, the shares will be voted "For" as stated below. The Corporation will
act as its own solicitation agent for Proxies. Directors, officers, and
employees of the Corporation and Bank may also solicit Proxies for the
Corporation's Annual Meeting. The cost of soliciting Proxies will be borne by
the Corporation.
ITEM ONE - NUMBER OF DIRECTORS
The number of Directors to be elected at the Annual Meeting will be
determined under Mississippi law by the vote of shareholders. The Board of
Directors recommends that the number of Directors be set at fifteen (15), and
it is the intent of the persons named in the Proxy to vote such Proxy "FOR" the
proposal. The proposal will be ratified if the votes cast favoring the number
of Directors exceed the votes cast opposing it.
ITEM TWO - ELECTION OF DIRECTORS
The Board of Directors, by a vote of a majority of the full Board,
nominates the persons named below for election to serve as Directors until the
1998 Annual Meeting of Shareholders and until their successors have been
elected and qualified. It is the intent of the persons named in the Proxy to
vote such Proxy "For" the election of the nominees listed below, unless
otherwise specified in the Proxy. In the event that any such nominee should be
unable to accept the office of Director, which is not anticipated, it is
intended that the persons named in the Proxy will vote for the election of such
person in the place of such nominee as the Board of Directors may recommend.
(2)
<PAGE> 5
ITEM THREE - ADOPTION OF INCENTIVE STOCK OPTION PLAN OF 1997
The Board of Directors has approved and submits to the shareholders for
approval the Incentive Stock Option Plan of 1997 (the "1997 Plan") for the
purpose of securing and retaining for the Corporation and its subsidiaries top
management of outstanding ability and making it possible to offer them an
increased incentive, in the form of a stock ownership interest in the
Corporation. A copy of the 1997 Plan is attached hereto as Exhibit 1. The
statements made in this Proxy Statement with respect to the 1997 Plan, are
qualified by and subject to the more complete information set forth in the
attached plan. The 1997 Plan provides for the granting of options to purchase
for cash an aggregate of not more than 25,000 shares of the Common Stock of the
Corporation (subject to adjustments in the event of a consolidation or other
corporate reorganization in which the Corporation is the surviving
corporation), which represents 3.53% of the issued shares of the Common Stock
as of December 31, 1996. Neither the dollar value nor the number of units which
may be received by participants under the 1997 Plan is set forth because such
amounts are not determinable at this time. Options may be granted to key
employees, including officers of the Corporation and its subsidiaries as may be
designated by the Board of Directors. The Board of Directors will select
persons to receive options from among the eligible employees, determine the
types of options and the number of shares to award to the optionees, and set
the terms, conditions and provisions of the options consistent with the terms
of the 1997 Plan. The Board of Directors will also establish rules for the
administration of the 1997 Plan.
Under the terms of the 1997 Plan, the Board of Directors may grant options to
purchase Common Stock of the Corporation at a price which may not be less than
the fair market value of the shares, as reasonably determined by the Board of
Directors. The 1997 Plan does not permit the repricing of options or the grant
of discounted options. Options may not be exercised later than ten (10) years
after the date of grant. Subject to the limitations imposed by the provisions
of the Internal Revenue Code, certain of the options granted under the 1997
Plan to key employees may be designated "Incentive Stock Options."
The options may be exercised upon the fifth anniversary of the grant thereof.
An option must be exercised within three (3) months after termination of an
employee's employment for any reason other than death or disability. Options
must be exercised within twelve (12) months after termination of an employee's
employment on account of permanent disability or after death when in the
service of the Corporation or any of its subsidiaries. However, under no
circumstances may an option be exercised after the expiration of the stated
period of the option.
(3)
<PAGE> 6
Since the contemplated options are to be granted as incentives, no cash
consideration will be received for the granting of the options. Payment in full
of the option price must be made upon exercise of any option. The options are
not transferrable by the employee who is granted the options except by will or
by laws of descent and distribution.
The 1997 Plan provides for the use of authorized but unissued shares or
treasury shares to satisfy options that are exercised. No options or awards
may be granted under the 1997 Plan after April 15, 2002, but options or awards
granted prior to April 15, 2002 may extend beyond that date. The 1997 Plan may
be discontinued by the Board of Directors, but no termination may impair
options or awards granted prior thereto.
Upon the occurrence of a change in control of the Corporation, each holder of
an unexpired option under the 1997 Plan, will have the right to exercise the
option in whole or in part without regard to the date that such option would be
first exercisable and such right will continue, with respect to any such holder
whose employment with the Corporation or its subsidiary terminates following a
change in control, for a period ending on the earlier of the date of expiration
of such option or the date which is three (3) months after such termination of
employment.
The Board of Directors may alter or amend the 1997 Plan at any time. No
amendment by the Board of Directors, however, may (i) increase the total number
of shares reserved for purposes of the 1997 Plan, (ii) reduce the option price
to an amount less than the fair market value at the time the option was
granted, (iii) change the class of employees eligible to receive awards, (iv)
extend the duration of the 1997 Plan, unless such amendment is approved by the
shareholders. No amendment or alteration may impair the right of the employees
who have been granted options with respect to options theretofore granted. The
Board of Directors has the power to interpret the 1997 Plan and to make all
other determinations necessary or advisable for its administration.
Neither the grant nor the exercise of an option designated as an incentive
stock option results in any federal tax consequences to either the employee
receiving the option or the Corporation. At the time the employee receiving the
option sells shares acquired pursuant to the exercise of an Incentive Stock
option, the excess in sales price over the exercise price will qualify as a
capital gain, provided the applicable holding period is satisfied. If the
employee receiving the option disposes of such shares within two (2) years from
the date of grant or within one (1) year of the date of the exercise, an amount
equal to the lesser of (i) the difference between the fair market value of the
shares on the date of exercise and the exercise price, or (ii) the difference
between the exercise price and sale price will be taxed as ordinary income
(4)
<PAGE> 7
and the Corporation will be entitled to a deduction in the same amount. The
excess, if any, of the sale price over the sum of the exercise price and the
amount taxed as ordinary income will qualify as capital gain if the applicable
holding period is satisfied.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ADOPTION OF ITEM THREE.
(5)
<PAGE> 8
INFORMATION CONCERNING NOMINEES
<TABLE>
<CAPTION>
Name Age Principal Occupation For Director of Amount and Nature of Percent of
the Last Five Years and Corporation Beneficial Ownership Common Stock
Bank or Corporation as Since of Common Stock as Beneficially
Offices Currently Held of 2/28/97 (a) Owned (a)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
James E. Blackburn, Jr 52 President, 1994 21,511(1) 3.04
Blackburn Motor Company,
Vicksburg, MS
Rodney E. Bounds 46 City Planner, 1995 3,411 0.48
City of Vicksburg, MS
Michael J. Chaney 53 President, CEO, 1994 1,299(2) 0.18
Chaney Oil Company
Vicksburg, MS
Howell N. Gage 49 Chairman and Chief 1982 20,340(3) 2.87
Executive Officer, 45,071(4) 6.37
Merchants Bank and
Merchants Capital Corporation,
Vicksburg, MS
Dr. W. B. Hopson, Jr. 59 President, 1981 2,284(5) 0.32
The Street Clinic,
Surgeon, Street Clinic and
Parkview Regional Medical Center,
Vicksburg, MS
Joel H. Horton 45 President and Chief 1992 2,426(6) 0.34
Operating Officer,
Merchants Bank and
Merchants Capital Corporation,
Vicksburg, MS
C. Hays Latham 43 President and Owner, 1994 7,984 1.13
L & H Investments, Inc.
Vicksburg, MS
Martin S. Lewis 42 Executive Vice President, 1988 984 0.13
Anderson-Tully Company,
Vicksburg, MS
Robert P. McConnell 58 President and Owner, 1993 20,857(7) 2.95
Rivertown Motors,
Vicksburg, MS
Fred G. Peyton 53 President and Owner, 1995 748(8) 0.10
Peyton Distributing Co., Inc.
Vicksburg, MS
Robert E. Pickett 60 Superintendent, 1994 254 0.04
Vicksburg Warren School District,
Vicksburg, MS
Landman Teller, Jr. 55 Attorney-at-Law, Partner, 1992 1,961 0.28
Teller, Martin, Chaney,and Hassell,
Vicksburg, MS
</TABLE>
(6)
<PAGE> 9
INFORMATION CONCERNING NOMINEES
<TABLE>
<CAPTION>
Name Age Principal Occupation For Director of Amount and Nature of Percent of
the Last Five Years and Corporation Beneficial Ownership Common Stock
Bank or Corporation Since of Common Stock as Beneficially
Offices Currently Held of 2/28/97 (a) Owned (a)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ernest G. Thomas 55 President and Owner, 1982 50,014 7.07
Ernest Thomas Associates Realty
Vicksburg, MS
James R. Wilkerson, Jr. 51 Executive Vice President 1992 458 (9) 0.06
and Cashier, Merchants Bank,
Secretary, Merchants Capital
Corporation, Vicksburg, MS
Robert C. Wilkerson III 57 Executive, 1984 14,351 (10) 2.03
R.C. Wilkerson, Jones of
Mississippi, Inc. (Insurance
Agency). Vicksburg, MS
ALL DIRECTORS AND EXECUTIVE
OFFICERS AS A GROUP 193,953 (11) 27.41
</TABLE>
(7)
<PAGE> 10
INFORMATION CONCERNING NOMINEES
(a) Constitutes sole ownership unless otherwise indicated.
(1) Includes 6,045 shares held as custodian for children and 2,200 share
owned solely by spouse.
(2) Includes 177 shares owned jointly with spouse.
(3) Includes 467 shares held as custodian for children.
(4) Represents 45,071 shares held by the Bank's Employee Stock Ownership
Stock Bonus Plan and Trust, over which Mr. Gage has primary voting
power, but no power of disposition. The individual allocation under
this plan on behalf of Mr. Gage was not available at the time of
mailing of the proxy materials; however, this amount is not expected
to be materially different from the previous year.
(5) Includes 529 shares owned jointly with spouse.
(6) Includes 2,172 shares owned jointly with spouse.
(7) Includes 20,540 shares owned by McConnell Partners, Ltd., of which
Mr. McConnell is a limited partner and owns 37% of said partnership
and his spouse owns 37% of said partnership.
(8) Includes 517 shares owned solely by spouse.
(9) Includes 29 shares owned solely by spouse.
(10) Includes 3,701 shares owned solely by spouse.
(11) As of February 28, 1997, all of the Directors and Executive Officers
of the Corporation and the Bank as a group (consisting of 15 persons)
beneficially owned, in the aggregate, 193,953 shares (27.41%) of
Common Stock of the Corporation.
None of the Directors is a director of another company with a class of
securities registered pursuant to Section 12 of the Securities Exchange Act of
1934, as amended (the "Act"), or subject to the reporting requirements of
Section 15 (d) of the Act, or registered as an investment company under the
Investment Company Act of 1940.
(8)
<PAGE> 11
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directions and executive officers to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock. Executive officers and directors are required by
Securities and Exchange Commission Regulations to furnish the Corporation with
copies of all Section 16(a) forms they file. To the Corporation's knowledge,
based solely on a review of the copies of such reports furnished to the
Corporation and written representations that no other reports were required,
during the fiscal year ended December 31, 1996 all Section 16(a) filing
requirements applicable to the Corporation's executive officers and directors
were complied with.
PRINCIPAL STOCKHOLDERS
The following table sets forth information concerning the number of shares of
Common Stock of the Corporation held as of February 28, 1997, by the only
shareholders who are known to management to be the beneficial owners of more
than five percent (5%) of the Corporation's outstanding shares:
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
- -------------------- -------------------- --------
<S> <C> <C>
Thelma K. Blackburn 2,048 (1) 0.28
1822 Edna Drive 45,160 (2) 6.41
Vicksburg, MS 39180
Howell N. Gage 20,340 (3) 2.87
6023 Castle Road 45,071 (4) 6.37
Vicksburg, MS 39180
Ernest G. Thomas 50,014 7.07
3318 Highland Drive
Vicksburg, MS 39180
</TABLE>
______________________
(1) Includes 2,048 shares owned solely.
(2) Represents 45,361 shares held in the Blackburn Marital Trust and the
Blackburn Residuary Trust, as to which Thelma K. Blackburn has sole
voting rights but no power of disposition.
(3) Includes 467 shares held as custodian for children.
(4) Represents 45,071 shares held by the Bank's Employee Stock Ownership
Stock Bonus Plan and Trust, over which Mr. Gage has
(9)
<PAGE> 12
primary voting power and no power of disposition. The individual
allocation under this plan on behalf of Mr. Gage, was not available at
the time of mailing of the proxy materials; however, this amount is not
expected to be materially different from the previous year.
(10)
<PAGE> 13
COMMITTEES OF THE BOARD OF DIRECTORS
The Corporation and the Bank have, among other committees, a standing
Audit Committee and Trust Committee which meet monthly, and an Executive
Committee which meets twice a week.
The Audit Committee oversees the operation of the Audit Department of
the Bank, and reviews the work and findings of the Audit Department on a
monthly basis. This Committee also approves modifications of most Bank policies
other than lending policies. The Audit Committee met eleven (11) times during
the year ended December 31, 1996. Dr. W. B. Hopson, Jr., C. Hays Latham,
Robert P. McConnell, Robert E. Pickett, Landman Teller, Jr., and Rodney E.
Bounds, are members of this Committee.
The Executive Committee oversees the management of the Corporation and
the Bank on a daily basis and acts on behalf of the Board of Directors on
routine matters. This Committee also approves all extensions of credit from the
Bank over $50,000. The Executive Committee met ninety-one (91) times during the
year ended December 31, 1996. J. E. Blackburn, Jr., Ernest G. Thomas, Howell
N. Gage, Joel H. Horton, and R. C. Wilkerson III, are members of this
Committee. In addition, two different members of the regular Board of Directors
serve for a three-month period, rotating every quarter.
The Trust Committee directs, supervises, reviews, and approves all
actions and functions of the Trust Department. The Trust Committee met eleven
(11) times during the year ended December 31, 1996. Michael J. Chaney, Martin
S. Lewis, Fred G. Peyton, Joel H. Horton, and James R. Wilkerson, Jr., are
members of this Committee.
The Board of Directors of the Corporation met a total of twelve (12)
times during the year ended December 31, 1996, (including regularly scheduled
and special meetings). During 1996, all Directors, except Martin Lewis attended
75 percent or more of the total number of meetings of the Board of Directors
and of Committees of the Board on which they served.
The Directors of the Corporation are also Directors of the Bank.
(11)
<PAGE> 14
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
Executive Officers of the Corporation and the Bank as of December 31, 1996:
<TABLE>
<CAPTION>
Name (Age) Present Position
- ----------------------- ----- ----------------
<S> <C> <C>
Howell N. Gage (49) Director of the Corporation
and President of the Bank since 1982; Chairman and
Chief Executive Officer of the Bank and the
Corporation since 1992.
Joel H. Horton (45) Director of the Corporation
and Bank since 1992;
President and Chief
Operating Officer of the
Bank and the Corporation
since 1992.
James R. Wilkerson, Jr. (51) Director and Secretary of
the Corporation since 1992,
Executive Vice President
of the Bank since 1992, and
Cashier of the Bank since
1974.
</TABLE>
____________________
No family relationships exist among the Executive Officers
of the Corporation or the Bank.
(12)
<PAGE> 15
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
-------------------
Name Other All
and Annual Other
Principal Compen- Compen-
Position Year Salary ($) Bonus ($) sation($) sation($)
- --------------- ---- ------------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Howell N. Gage 1996 135,210 25,228 1278.00(2) 1,029(6)
Chairman 11,598(1) N/A(7)
Bank and
Corporation
1995 125,004 25,200 1,087.50(2) 1,183(3)
11,301(1) 1,183(4)
1,875(5)
1,176(6)
1994 117,504 -- 1,337.50(2) 1,170(3)
10,990(1) 1,170(4)
2,152(5)
1,128(6)
Joel H. Horton 1996 99,654 17,172 1,525.00(2) N/A(7)
President
Bank and
Corporation
1995 91,254 16,800 1,112.00(2) 871(3)
871(4)
2,737(5)
</TABLE>
_________________________________
(1) Deferred Compensation
(2) Automobile
(3) Profit Sharing Plan Contribution
(4) Employee Stock Ownership Plan Contribution
(5) 401-(k) Plan Contribution
(6) Dollar value of insurance premiums paid by Corporation on behalf of Mr.
Gage.
(7) The individual allocation under the plans listed in (3), (4) and (5) were
not available at the time of mailing of the proxy materials; however,
these amounts are not expected to be materially different from the
previous year.
Directors' Fees
The Directors of the Corporation and the Bank are paid $2,000 per year,
plus $100 for each meeting attended. The non-officer Directors of the
Corporation who are members of the Audit and Trust Committees of the Board of
Directors also are paid $50 per committee meeting attended. Non-officer
Directors who are non-rotating members of the Executive Committee also are paid
$10,000 per year, plus $50 for each meeting attended. Directors who are
rotating members of the Executive Committee are paid $100 per committee meeting
attended.
(13)
<PAGE> 16
Profit Sharing Plan
The Bank maintains a Profit Sharing Plan (the "Plan") for the benefit
of all employees. The Plan was established on January 1, 1956, and amended
January 1, 1986, with a plan year ending December 31. The Plan is administered
by an Administrative Committee elected by the Board of Directors of the Bank.
The duties of the Administrative Committee consist of making all decisions
relative to investments and payments of Plan benefits. The Bank is trustee of
the Plan and implements the decisions of the Administrative Committee.
Contributions to the Plan are made from profits of the Bank at the
direction of the Board of Directors. During the year ended December 31, 1996,
$19,672.84 was contributed for the benefit of all Plan participants. Allocation
to participants is based on the following point formula: three (3) points for
each year of service and one (1) point for each $100 of salary earned. The
amount of contributions allocated in 1996 to the accounts of Messrs. Gage,
Horton, and Wilkerson were not available at the time of mailing of the proxy
materials; however, these amounts are not expected to be materially different
from the previous year.
Eligibility for participation in the Plan becomes effective for the
calendar year in which an employee completes at least 1,000 hours of service.
The vesting schedule for all employee benefit plans is listed on page 16.
Forfeitures arising out of the termination of employment are
re-allocated among the remaining participants in the Plan. No forfeitures occur
as a result of death, disability, or retirement.
The method of payment to participants is at the discretion of the
Administrative Committee, except in the case of the death of the participant,
in which case a lump sum payment is made to the participant's designated
beneficiary. A participant's interest must be paid out over a period not to
exceed ten years.
Since the contributions to the Plan are not actuarially computed, a
participant has no assurance as to the amount which will be available upon
retirement other than the balance in his or her individual account.
(14)
<PAGE> 17
Employee Stock Ownership Stock Bonus Plan and Trust
An Employee Stock Ownership Stock Bonus Plan and Trust (the "ESOP") was
adopted by the Board of Directors of the Corporation and the Bank on January
11, 1983, effective as of January 1, 1983, providing eligibility for all
persons employed by the Corporation and the Bank who have worked a minimum of
1,000 hours during the year and are employed on December 31 of each year for
which a contribution is made.
Contributions to the ESOP for the year ended December 31, 1996, totaled
$19,672.86. Each participant has an account which is maintained by the trustee
of the ESOP, Howell N. Gage. Funds in each account will be invested in the
Common Stock of the Corporation. The amount of retirement benefit is based upon
the fair market value of the participant's account.
Normal retirement age for the ESOP is sixty-five (65) years, but
participants may be given early retirement within the ten-year period
immediately preceding the normal retirement age. A participant becomes vested
with respect to contributions made by the Corporation and the Bank according to
the vesting schedule on page 13.
The individual allocation of the contributions under the ESOP for 1996
on behalf of Messrs. Gage, Horton, and Wilkerson were not available at the time
of mailing of the proxy materials; however, these amounts are not expected to
be materially different from the previous year.
ESOP participants will have the right to direct the voting of all
Corporation stock in the fund allocated to their accounts. Any nonallocated
stock will be voted in the discretion of the trustee.
(15)
<PAGE> 18
401 (k) Plan
The Bank has established Merchants Bank 401 (k) Plan and Trust,
effective July 1, 1989, to recognize and reward the efforts of its employees.
Employees (including executive officers of the Corporation who are also
employees of the Bank) who have completed 1 year of service are eligible to
participate in the Plan. Employees may become participants in the Plan on the
first day of the month coinciding with or next following the date they satisfy
the eligibility requirements. Participants may elect to defer a percentage of
their compensation each year instead of receiving that amount in cash. This
percentage, however, may not exceed the limitations prescribed by law.
Additionally, the total deferrals of a participant in any calendar year or plan
year may not exceed a dollar limit which is set by law. The limit for 1996 was
$9,500. Each year the Bank will contribute to the Plan a matching contribution
equal to 50% of the amount of the salary reduction each participant elected to
defer. In applying this matching percentage, only salary reduction up to 6% of
the participant's compensation will be considered. In addition, the Employer
may make discretionary contributions for each plan year in an amount to be
determined each year by the Employer.
All salary deferral contributions are 100% vested. All of the
Employer's discretionary contributions and matching contributions are subject
to the vesting schedule on page 16.
Participants are allowed to withdraw vested benefits in the event of
death, disability, termination of employment, or in the event of undue
financial hardship. The Plan has a normal retirement date of 65 years of age.
The bank's contributions to the 401 (k) Plan for the year ended December 31,
1996, totaled $63,697.66. The individual allocation of the contributions to the
401 (k) for 1996 on behalf of Messrs. Gage, Horton, and Wilkerson were not
available at the time of mailing of the proxy materials; however, these amounts
are not expected to be materially different from the previous year.
(16)
<PAGE> 19
Vesting Schedule for All Employee Benefit Plans (1)
<TABLE>
<CAPTION>
If his completed Years The vested The percentage
of Credited Service percentage of of his share
shall have been his share shall be to be forfeited
- ---------------------------- ------------------ ---------------
<S> <C> <C>
less than 3 years 0% 100%
3 full years but less than 4 20% 80%
4 full years but less than 5 40% 60%
5 full years but less than 6 60% 40%
6 full years but less than 7 80% 20%
7 full years and more 100% 0%
</TABLE>
(1) Messrs. Gage, Horton, and Wilkerson all have 7 or more years of credited
service and, thus, are fully vested.
CERTAIN TRANSACTIONS WITH MANAGEMENT
During the fiscal year, and up to the date of this Proxy Statement,
extensions of credit, both direct and indirect, to individual Directors,
executive officers, and principal shareholders of the Corporation, and their
associates, were made only in the ordinary course of the Bank's business;
terms, interest rates, and collateral requirements were substantially the same
for comparable transactions with other persons doing business with the Bank.
These extensions of credit, in the opinion of the Bank's management, do not
involve more than the normal risk of collectibility or present any other
unfavorable features. At December 31, 1996, the aggregate amount of such loans
and extensions of credit outstanding was approximately $ 6,589,172.18.
For the calendar year 1996, R. C. Wilkerson, Jones of Mississippi Inc.,
of which Mr. R. C. Wilkerson III, a Director, is President, was paid $
95,893.00 in insurance premiums by the Bank. The Board of Directors believes
this payment was reasonable and comparable to or lower than premiums charged by
other insurance agencies who customarily provide such service.
(17)
<PAGE> 20
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed May & Co., Vicksburg, Mississippi,
a firm of independent certified public accountants, as auditors for the fiscal
year ending December 31, 1996, and until their successors are selected. May &
Co. have been auditors for the Corporation since April 16, 1991.
The Corporation has been advised that neither the firm nor any of its
partners has any direct or any material indirect financial interest in the
securities of the Corporation or any of its subsidiaries, except as auditors
and consultants on accounting procedures and tax matters. The Board does not
anticipate that representatives of May & Co. will attend the Annual Meeting.
OTHER MATTERS
The Board of Directors does not intend to bring any matters before the
Annual Meeting other than those specifically set forth in the Notice of Annual
Meeting of Shareholders, nor does it know of any matters to be brought before
the Annual Meeting by others. If, however, any other matters properly come
before the Annual Meeting, it is the intention of the persons named in the
accompanying Proxy to vote such Proxy in accordance with the judgment of the
Board on any such matters.
THE ANNUAL REPORT OF THE CORPORATION FOR THE FISCAL YEAR ENDED DECEMBER
31, 1996, IS ENCLOSED. THE ANNUAL REPORT IS NOT TO BE REGARDED AS PROXY
SOLICITING MATERIAL. ANY SHAREHOLDER WHO HAS NOT RECEIVED AN ANNUAL REPORT MAY
OBTAIN ONE FROM THE CORPORATION. THE CORPORATION ALSO WILL PROVIDE, ON REQUEST,
WITHOUT CHARGE, COPIES OF ITS ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1996, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
SHAREHOLDERS WISHING TO RECEIVE A COPY OF THE ANNUAL REPORT ON FORM 10-K ARE
DIRECTED TO WRITE TO THE UNDERSIGNED AT THE ADDRESS OF THE CORPORATION. IT IS
ANTICIPATED THAT THE FORM 10-K WILL BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ON OR ABOUT MARCH 25, 1997.
(18)
<PAGE> 21
PROPOSALS FOR 1998 ANNUAL MEETING
Any shareholder who wishes to present a proposal at the Corporation's
next Annual Meeting, now scheduled for April 21, 1998, and who wishes to have
the proposal included in the Corporation's Proxy Statement and form of Proxy
for that meeting, must submit the proposal to the undersigned at the address of
the Corporation no later than November 18, 1997.
THE ACCOMPANYING PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND MAY
BE REVOKED PRIOR TO ITS EXERCISE.
By Order of the Board of Directors
Dated: March 25, 1997
-----------------------------------
Howell N. Gage
Chairman of the Board
(19)
<PAGE> 22
EXHIBIT 1
MERCHANTS CAPITAL CORPORATION AND
MERCHANTS BANK
INCENTIVE STOCK OPTION PLAN OF 1997
1. Purpose of Plan
The purpose of this Stock Option Plan ("Plan") is to aid Merchants
Capital Corporation (the "Corporation") and Merchants Bank (the "Bank") in
securing and retaining top management Key Employees of outstanding ability by
making it possible to offer them an increased incentive, in the form of a
proprietary interest in the Corporation, to join or continue in the service of
the Corporation and/or the Bank and to increase their efforts for its welfare
and success.
2. Definitions
As used in this Plan, the following words shall have the following
meanings:
(a) "Board" means the Board of Directors of the Corporation;
(b) "Code" means the Internal Revenue Code of 1986, as amended;
(c) "Common Stock" means the $5.00 par value common stock of Merchants
Capital Corporation;
(d) "Bank" means Merchants Bank, a Mississippi corporation, which is a
wholly-owned subsidiary of Merchants Capital Corporation;
(e) "Corporation" means Merchants Capital Corporation, a Mississippi
corporation with its principal office located at Vicksburg, Mississippi:
(f) "Disability" means the Participant's inability to engage in any
substantial gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not less than
twelve (12) months;
(g) "Incentive Stock Option" means a stock option to purchase shares
of Common Stock, which is intended to qualify as an incentive stock option
defined in Code Section 422;
(h) "Key Employee" means any person in the regular full-time common
law employment of the Corporation or any Subsidiary including the Bank, as an
executive or non-executive officer thereof, who in the opinion of the Board, is
or is expected to be
<PAGE> 23
primarily responsible for the management, growth or protection of some part or
all of the business of the Corporation;
(i) "Option" means an Incentive Stock Option;
(j) "Parent" means any corporation in an unbroken chain of
corporations if each of the corporations owns stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain;
(k) "Participant" means a person to whom an Option is granted that has
not expired and ceased to be exercisable under the Plan; and
(l) "Subsidiary" means any corporation other than the Corporation in
an unbroken chain of corporations beginning with the Corporation if each of the
corporations other than the last corporation in the unbroken chain owns fifty
percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
3. Administration of Plan
The Plan shall be administered by the Board. In the event that a
director of the Board is eligible to be selected for the grant of an Option,
during such membership as a director, such director shall recuse himself and
not participate in the discussion nor vote on the award of the Option to him.
The Board shall have power and authority to administer, construe and interpret
the Plan, to make rules for carrying it out and to make changes in such rules.
4. Granting of Options and $100,000 Limitation
The Board may from time to time grant Options under the Plan to such
Key Employees and subject to the limitations of paragraph (a) of Section 7, for
such number of shares as the Board may determine after receiving
recommendations from the compensation committee or the executive officers of
the Bank or other Subsidiary that employs the Participant. Subject to the
provisions of the Plan, the Board may impose such terms and conditions as it
deems advisable on the grant of an Option. Any of the foregoing to the contrary
notwithstanding, the following limitations shall apply to the grant of any
Incentive Stock Option:
(a) The aggregate fair market value, determined at the time the
Incentive Stock Option is granted, of the stock exercised by a Participant for
the first time during any calendar year shall not exceed $100,000.
(b) Any Option granted to a Participant, who immediately before such
grant owns stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock either
<PAGE> 24
of the Corporation or any Subsidiary shall not be an Incentive Stock Option,
unless (i) at the time such Option is granted the Option price per share is not
less than one hundred ten percent (110%) of the optioned stock's then fair
market value; and (ii) the Option shall not be exercisable after the expiration
of five (5) years from the date of the grant of the Option.
5. Terms of Options
The terms of each Option granted under the Plan shall be as determined
from time to time by the Board and shall be set forth in an Incentive Stock
Option Agreement in a form attached hereto as Exhibit "A" and approved by the
Board; provided, however, the terms of such agreement shall not exceed the
following limitations:
(a) Subject to paragraph (b) of Section 4 with regard to 10% owners,
the Option price per share shall not be less than one hundred percent (100%) of
the fair market value of the optioned stock at the time the Option is granted.
(b) Subject to paragraph (e) of this Section, the Option shall be
exercisable in whole or in part from time to time during the period beginning
on date of grant of the Option, and ending no later than the expiration of ten
(10) years from the date of grant of the Option, unless an earlier expiration
date shall be stated in the Option or the Option shall cease to be exercisable
pursuant to paragraph (d) of this Section 5.
(c) Payment in full of the Option price for shares purchased pursuant
to an Option shall be made upon exercise of the Option (in whole or in part)
and shall be made in cash.
(d) If a Participant's employment with the Corporation, the Bank or
other Subsidiary terminates, the following rules shall apply:
(i) If a Participant's employment with the Corporation, the Bank
or other Subsidiary terminates other than by reason of the Participant's death,
disability or retirement after reaching age 65, the Participant's Option shall
thereupon expire and cease to be exercisable upon the expiration of the earlier
of ten (10) years from the date of grant of the Option, or three (3) months
from the date of such termination.
(ii) If the Participant's employment with the Corporation, the
Bank or other Subsidiary terminates by reason of his death, the Participant's
Option shall terminate and cease to be exercisable upon the expiration of the
earlier of ten (10) years from the date of grant of the Option, or one (1) year
from the date of death. Such Option may be exercised by the duly appointed
personal representative of the deceased Participant's estate.
(iii) If a Participant's employment with the Corporation,
<PAGE> 25
the Bank or other Subsidiary terminates by reason of Disability, the
Participant's Option shall terminate and cease to be exercisable upon the
expiration of the earlier of ten (10) years from the date of grant of the
Option, or one (1) year from the date of such termination in the case of
disability.
(iv) If a Participant's employment with the Corporation, the Bank
or other Subsidiary terminates by reason of retirement after reaching age 65
(other than for Disability), the Participant's Option shall expire and cease to
be exercisable upon the expiration of the earlier of ten (10) years from the
date of grant of the Option, or three (3) months from the date of such
termination.
(v) Notwithstanding anything contained herein to the contrary,
if a Participant's employment with Corporation, the Bank or other Subsidiary is
terminated for cause (fraud, embezzlement, failure to perform job
responsibilities, etc.) as determined by the Board, in the Board's sole
discretion, or if a Participant competes with the Corporation, the Bank or
other Subsidiary, any Option granted to that Participant shall be immediately
revoked and terminated and the Participant shall have no further rights under
this Plan. For purposes of this Plan, competition with the Corporation, the
Bank or other Subsidiary shall include direct or indirect ownership of or
employment with a financial services business within a 100 mile radius of any
office operated by the Corporation, the Bank or other Subsidiary.
(e) The options granted hereunder, except as noted in this paragraph
(e) below (pertaining to change of control), shall vest and be exercisable on
the fifth anniversary of the grant hereof.
In the event that the Corporation has a change of control in which 51%
or more of the stock of the Corporation is acquired or the Corporation is
merged or consolidated with another corporation in an acquisition transaction
or the Corporation sells substantially all of the assets of the Corporation,
the Bank or Subsidiary which employs the Participant is merged or consolidated
with another Bank or Subsidiary not owned at least 50% by the Corporation or
its Subsidiary or such Bank or Subsidiary has a change of control in which 51%
or more of the stock of the Bank or Subsidiary is acquired or such transaction,
the vesting schedule set forth above shall not be applicable and the holder of
any options granted hereunder shall be 100% vested in such options, subject to
the other terms and conditions herein.
6. Exercise of Options
The holder of an Option who decides to exercise the Option in whole or
in part shall give notice to the Secretary of the Corporation of such exercise
in writing on a form approved by the Board. Any exercise shall be effective as
of the date specified in the notice of exercise, but not earlier than the date
the notice of exercise and payment in full of the Option price is actually
<PAGE> 26
received and in the hands of the Secretary of the Corporation.
7. Limitations and Conditions
(a) The total number of shares of Common Stock that may be optioned as
Incentive Stock Options under the Plan is twenty-five thousand (25,000) shares
of Merchants Capital Corporation's $5.00 par value common stock. Such total
number of shares may consist, in whole or in part, of unissued shares or
reacquired shares. The foregoing numbers of shares may be increased or
decreased by the events set forth in Section 9.
(b) There shall be no limitations on the amount of shares of Common
Stock that may be optioned as Incentive Stock Options under the Plan as set
forth in Section 7(a) above, on an annual basis. The amount of shares to be
optioned, within the total limitation set forth in Section 7(a) above, shall be
determined solely at the discretion of the Board as set forth herein. If there
is a proposed acquisition, merger, change of control or other takeover of the
Corporation, the Bank or other Subsidiary that employs the Participant as
defined in Section 5(e) of this Plan, the Board, at its sole discretion, may
issue any options authorized under this Plan but unissued prior to such time.
(c) Any shares that have been optioned that cease to be subject to an
Option (other than by reason of exercise of the Option) shall again be
available for option and shall not be considered as having been theretofore
optioned.
(d) No Option shall be granted under the Plan after April 15, 2002, (5
years after the effective date), and the Plan shall terminate on such date, but
Options theretofore granted may extend beyond that date in accordance with the
Plan. At the time an Option is granted or amended or the terms or conditions of
an Option are changed, the Board may provide for limitations or conditions on
the exercisability of the Option.
(e) An Option shall not be transferable by the Participant otherwise
than by Will or by the laws of descent and distribution. During the lifetime of
the Participant, an Option shall only be exercisable by the Participant.
(f) No person shall have any rights of a stockholder as to shares
under option until, after exercise of the Option, such shares shall have been
recorded on the Corporation's official stockholder records as having been
issued or transferred.
(g) The Corporation shall not be obligated to deliver any shares until
there has been compliance with such laws or regulations as the Corporation may
deem applicable. The Corporation shall use its best efforts to effect such
compliance. In addition to the foregoing and not by way of limitation, the
Corporation may require that the person exercising the Option represent and
warrant at the time of such exercise that any shares
<PAGE> 27
acquired by exercise are being acquired only for investment and without any
present intention to sell or distribute such shares, if, in opinion of counsel
for the Corporation, such a representation is required under the Securities Act
of 1933 or any other applicable law, regulation or rule of any governmental
agency.
8. Transfers and Leaves of Absence
For the purposes of the Plan: (a) a transfer of a Participant's
employment without an intervening period from the Corporation to a Subsidiary
or vice versa, or from one subsidiary to another or from parent to Subsidiary
or vice versa, shall not be deemed a termination of employment, and (b) a Key
Employee who is granted in writing a leave of absence of no more than ninety
(90) days, or if more than ninety (90) days, which guarantees his or her
employment with the Corporation, the Bank or other Subsidiary at the end of
such leave, shall be deemed to have remained in the employ of the Corporation,
the Bank or other Subsidiary during such leave of absence.
9. Stock Adjustments
In the event of any merger, consolidation, stock dividend, split-up,
combination or exchange of shares or recapitalization or change in
capitalization, the total number of shares set forth in paragraph (a) of
Section 7 shall be proportionately and appropriately adjusted. In any such
case, the number and kind of shares that are subject to any Option (including
any Option outstanding after termination of employment) and the Option price
per share shall be proportionately and appropriately adjusted without any
change in the aggregate Option price to be paid thereto upon the exercise of
the Option. The determination by the Board as to the terms of any of the
foregoing adjustments shall be conclusive and binding.
10. Amendment and Termination
(a) The Board shall have the power to amend the Plan, including the
power to change the amount of the aggregate fair market value of the shares for
which any Key Employee may be granted fair market value of the shares for which
any Key Employee may be granted Incentive Stock Options under Section 4 to the
extent provided in Code Section 422. It shall not, however, except as otherwise
provided in the Plan, increase the maximum number of shares authorized for the
Plan, nor change the class of eligible employees to other than Key Employees,
nor reduce the basis upon which the minimum Option price is determined, nor
extend the period within which Options under the Plan may be granted, nor
provide for an Option that is exercisable during a period of more than ten (10)
years from the date it is granted. It shall have no power (without the consent
of the person or person at the time entitled to exercise the Option) to change
the terms and conditions of any Option after the Option is granted in a manner
that would adversely
<PAGE> 28
affect the rights of such persons except to the extent, if any provided in the
Option.
(b) The Board may suspend or terminate the Plan at any time. No such
suspension or termination shall affect Options then in effect.
11. No Employment Right
The grant of an Option hereunder shall not constitute an agreement or
understanding, expressed or implied, on the part of the Corporation, a Parent
or any Subsidiary, to employ the Participant for any specified period and shall
not confer upon any employee the right to continue in the employment of the
Corporation, any Parent or any Subsidiary, nor affect any right which the
Corporation, a Parent or Subsidiary may have to terminate the employment of
such employee.
12. Effective Date
The Plan is adopted on and shall be effective as of ___, 1997.
-----------------------------------
Secretary
<PAGE> 29
EXHIBIT A
MERCHANTS CAPITAL CORPORATION AND MERCHANTS BANK
INCENTIVE STOCK OPTION AGREEMENT UNDER
INCENTIVE STOCK OPTION PLAN OF 1997
THIS AGREEMENT, made this day of _______, 19______, by and between
Merchants Capital Corporation ("Corporation") with its principal office located
at 820 South Street, Vicksburg, Mississippi; Merchants Bank ("Bank"); and Joel
H. Horton ("Participant"), of Vicksburg, Mississippi.
WITNESSETH:
WHEREAS, the Corporation on ___, 1997, adopted, by action of its
Shareholders, the "Merchants Capital Corporation, Merchants Bank Incentive
Stock Option Plan of 1997" ("Plan"), effective ___,1997; and
WHEREAS, under such Plan, certain shares of the Corporation are made
available for purchase by Key Employees of the Corporation or the Bank which is
a subsidiary of the Corporation through the grant of options; and
WHEREAS, the Participant is an employee of the Bank and is Key Employee
under the Plan, and therefore, eligible for the grant of stock options
thereunder; and
WHEREAS, the Board of Directors of the Corporation under the Plan has
determined that the Participant shall be granted certain options under the Plan
as an incentive to his continued superior performance as an employee of the
Corporation.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto do hereby agree as follows:
1. Grant of Option. The Corporation hereby grants to the Participant
an option ("Option") to purchase ( ) shares of the $5.00 par value common
stock of the Corporation, upon the terms and condition set forth below and in
the Plan document. The date of such grant is the date of this Agreement. The
number of Options specified above in this paragraph shall be adjusted as
provided in Section 9 of the Plan.
2. Option Price. The Option shall be exercisable at the price of
___($__) per share, which price has been determined by the Board to be at least
one hundred percent (100%) or one hundred ten percent (110%) for a 10%
shareholder of the fair market value of such shares as of the date of this
Agreement.
<PAGE> 30
3. Terms of Purchase. The purchase of any shares pursuant to the
Participant's exercise of the Option shall be for cash, payable in full upon
such exercise.
4. Period of Option. The Option shall be exercisable over the period
described below.
(a) Earliest Date of Exercise. The Option granted hereby shall become
first exercisable as the Option is vested as provided in Section 5 hereof;
provided, however, in no event shall any shares be available for purchase
hereunder prior to the date on which the Plan is approved by the stockholders
of the Corporation; provided, further, however, in no event shall the number of
shares available for purchase hereunder increase beyond that available on the
date of the Participant's termination of employment with the Corporation (as
defined under the Plan), irrespective of the date on which the Option shall
expire under paragraph (b) of this Section 4.
(b) Latest Date of Exercise. In no event shall any shares be available
for purchase hereunder and the Option shall expire upon the earlier of (i) ten
years from the date of grant of the Option or five years from the date of grant
of the Option in case the Participant is already a 10% shareholder of the
Corporation, and (ii)(A) in the event of the Participant's termination of
employment with Corporation or Bank for any reason other than death or
disability (as defined under the Plan), upon the expiration of three (3) months
from the date of such termination; (B) in the event of the Participant's
termination of employment as aforesaid by reason of his disability, upon the
expiration of one (1) year from the date of such termination; or (C) in the
event of the Participant's termination of employment as aforesaid by reason of
his death, upon the expiration of one (1) year from this date of death.
Notwithstanding to the contrary herein, if the employment of Participant is
terminated for cause or if the Participant competes with the Corporation or the
Bank as provided in the Plan, this Option is immediately revoked and
terminated.
(c) Prior Outstanding Options. This Option is exercisable despite the
existence of any other incentive option (defined under Section 422) which was
granted to the Participant, before the granting of this Option, and which
earlier incentive stock option is for the purchase of shares in the Corporation
or in a corporation which at the date of grant hereunder is a Parent (as
defined under the Plan) or as Subsidiary (as defined under the Plan) or a
predecessor of any of such corporations.
5. Vesting. The options granted hereunder may be exercised by the
participant on the fifth anniversary of the grant thereof.
In the event that t the Corporation has a change of control in which
51% or more of the stock of the Corporation is acquired or the Corporation is
merged or consolidated with another corporation in an acquisition transaction
or the Corporation sells substantially all of the assets of the Corporation, or
the Bank
<PAGE> 31
which employs the Participant is merged or consolidated with another Bank not
owned at least 50% by the Corporation or its Subsidiary or such Bank has a
change of control in which 51% or more of the stock of the Bank is acquired or
such Bank sells substantially all of its assets, then immediately prior to any
such transaction, the vesting schedule set forth above shall not be applicable
and the holder of any options granted hereunder shall be 100% vested in such
options, subject to the other terms and conditions herein.
6. Nontransferability. The Option is not transferable by the
Participant, in whole or in part, to any person, except by Will or by any
applicable law of descent and distribution. The Option shall not be
exercisable, in whole or in part, during the lifetime of the Participant by any
person other than the Participant.
7. Construction. The Option is intended to qualify for treatment as
an "incentive stock option" under Section 422 of the Internal Revenue Code of
1986, as amended, and any question arising hereunder shall be resolved, where
possible, consistent with such intention. This Agreement shall be construed in
accordance with the laws of the State of Mississippi.
8. No Contract of Employment. Neither this Agreement, nor the Plan,
shall be construed to constitute an agreement or understanding, expressed or
implied, on the part of the Corporation or the Bank, or Parent or any
Subsidiary, to employ the Participant for any specified period and shall not
confer upon any employee the right to continue in the employment of the
Corporation, the Bank, and Parent or any Subsidiary nor affect any right which
the Corporation, the Bank, a Parent or Subsidiary may have to terminate the
employment of such employee.
9. Withholding. As a condition to the issuance of shares pursuant to
any exercise of this Option, the Participant authorizes the Corporation or the
Bank to withhold in accordance with applicable law from any cash compensation
payable to him any taxes required to be withheld by the Corporation or the Bank
under federal, state or local law as a result of such exercise; provided,
however, if at the time of such exercise no such compensation remains payable,
the Participant agrees to remit the amount of any such required withholding, if
any, to the Corporation or the Bank.
10. Legal Restriction. This Option may not be exercised if the
issuance of shares pursuant to such exercise would constitute a violation of
any applicable federal or state securities or other law or regulation. The
person exercising the Option, as a condition to such exercise, shall represent
to the Corporation that the shares acquired thereby are being acquired for
investment and not with a present view to distribution or resale, unless
counsel for the Corporation is then of the opinion that such representation is
not required under the Securities Act of 1933 or any other applicable law,
regulation or rule of any governmental agency.
<PAGE> 32
11. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the Participant and his heirs, and shall be binding upon the
Corporation and the Bank and their successors and assigns.
12. Incorporation of Plan. This Agreement is made pursuant to and is
subject to the terms and conditions of the Plan, which terms and conditions are
hereby incorporated by reference herein.
13. Amendment. This Agreement may be amended by the Corporation at any
time (i) if the Corporation determines, in its sole discretion, that amendment
is necessary or advisable in light or any addition to or change in the Internal
Revenue Code of 1986 or in the regulations issued thereunder, or any federal or
state securities law or other law or regulation, which change occurs after the
date of this Agreement and by its terms applies to that Agreement; or (ii)
other than in the circumstances described in clause (i), with the consent of
the Grantee.
14. Governing Law. This Agreement shall be governed by Mississippi
law, except to the extent preempted by federal law, which shall to that extent
govern.
IN WITNESS WHEREOF, the Corporation and the Bank, by their authorized
representative, and the Participant do hereby affix their signatures on the
date first written above.
ATTEST: MERCHANTS CAPITAL CORPORATION
By:
- ----------------------------------- ----------------------------------
Printed Name:
------------------------
Title:
-------------------------------
BANK:
MERCHANTS BANK
By:
----------------------------------
Printed Name:
------------------------
Title:
-------------------------------
EXECUTIVE:
-------------------------------------
Joel H. Horton
<PAGE> 33
PROXY FOR ANNUAL MEETING
MERCHANTS CAPITAL CORPORATION, VICKSBURG, MISSISSIPPI
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
KNOW ALL MEN BY THESE PRESENTS that the undersigned shareholder of
MERCHANTS CAPITAL CORPORATION, VICKSBURG, MISSISSIPPI, does hereby nominate,
constitute, and appoint James E. Blackburn, Jr., and Ernest G. Thomas as
proxies or either one of them (with full power of substitution), and hereby
authorizes them to represent and vote, as designated below, all the shares of
Merchants Capital Corporation held of record as of February 28, 1997, by the
undersigned, at the annual meeting of its shareholders to be held in the Board
Room of Merchants Bank, third floor of the main office, 820 South Street,
Vicksburg, Mississippi, on April 15, 1997, at 4:30 P.M., or any adjournments
thereof, with all the powers the undersigned would possess if personally
present, as follows:
1. Fixing the number of directors to be elected at 15.
FOR _________ AGAINST __________ ABSTAIN ___________
2. The election of the following 15 persons as directors
(INSTRUCTION: AUTHORITY TO VOTE FOR ANY NOMINEE MAY BE
WITHHELD BY LINING THROUGH OR OTHERWISE STRIKING OUT THE
NAME OF ANY NOMINEE).
FOR all nominees AGAINST all
except as indicated ________ nominees __________
James E. Blackburn, Jr. Robert P. McConnell
Rodney E. Bounds Fred G. Peyton
Michael J. Chaney Robert E. Pickett
Howell N. Gage Landman Teller, Jr.
W.B. Hopson, Jr. Ernest G. Thomas
Joel H. Horton James R. Wilkerson, Jr.
C. Hays Latham Robert C. Wilkerson III
Martin S. Lewis
<PAGE> 34
3. To approve the adoption of the Incentive Stock Option
Plan of 1997 reserving for issuance pursuant to stock
options 25,000 shares of Common Stock of the Corporation
(representing 3.53% of the issued shares as of
December 31, 1996)
FOR ________ AGAINST ________ ABSTAIN ________
4. In their discretion, proxies are authorized to vote
upon such other business as may be properly brought
before the meeting or any adjournments thereof.
FOR ________ AGAINST ________ ABSTAIN _________
This Proxy, when properly executed, will be voted in accordance with
the specific indications above. IN THE ABSENCE OF SUCH INDICATIONS, THIS PROXY
WILL BE VOTED "FOR" ITEM 1; THE NOMINEES LISTED IN ITEM 2; ITEM 3; AND ITEM 4.
If any other matters shall properly come before the meeting, it is the
intention of the persons named as proxy holders to vote on such matters in
accordance with their judgment.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE CORPORATION
AND MAY BE REVOKED PRIOR TO ITS EXERCISE.
DATE:
------------------------ ---------------------------------
Signature of Shareholder
---------------------------------
Signature of Shareholder
When signing as attorney, executor, trustee, or guardian, please give full
title. If more than one trustee, all should sign. All joint owners must sign.
IF YOU PLAN TO ATTEND THE MEETING, PLEASE PLACE A
CHECK MARK HERE _____. WHETHER OR NOT YOU PLAN TO
ATTEND, PLEASE SIGN AND RETURN THIS PROXY AT ONCE IN
THE POSTAGE PAID ENVELOPE PROVIDED.
