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:
[X] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MERCHANTS CAPITAL CORPORATION
(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)(1) 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:
[ ] 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>
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>
MERCHANTS CAPITAL CORPORATION
820 SOUTH STREET
VICKSBURG, MISSISSIPPI 39180
(601) 636-3752
PRELIMINARY 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.
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.
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.
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 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.
<PAGE>
<TABLE>
<CAPTION>
INFORMATION CONCERNING NOMINEES
Name Age Principal Amount and
Occupation Nature of
For the Last Beneficial
Five Years and Director Ownership Percent of
Bank or Corpor- of Cor- of Common Common Stock
ation as Offices poration Stock as Beneficially
Currently Held Since of 2/28/97(a) Owned(a)
<S> <C> <S> <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 1982 20,340 (3) 2.87
Chief Executive 45,071 (4) 6.37
Officer,
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 1992 2,426(6) 0.34
Chief Operating
Officer,
Merchants Bank and
Merchants Capital
Corporation,
Vicksburg, MS
C. Hays Latham 43 President and 1994 7,984 1.13
Owner, L & H
Investments, Inc.
Vicksburg, MS
Martin S.
Lewis 42 Executive Vice 1988 984 0.13
President,
Anderson-Tully
Company,
Vicksburg, MS
Robert P.
McConnell 58 President and 1993 20,857 (7) 2.95
Rivertown Motors,
Vicksburg, MS
Fred G. Peyton 53 President and 1995 748 (8) 0.10
Owner, 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, 1992 1,961 0.28
Partner, Teller,
Martin, Chaney,
and Hassell,
Vicksburg, MS
Ernest G.
Thomas 55 President and 1982 50,014 7.07
Owner, Ernest
Thomas Associates
Realty
Vicksburg, MS
James R.
Wilkerson, Jr. 51 Executive Vice 1992 458 (9) 0.06
President 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>
<PAGE>
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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors 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 the 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 upon 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:
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
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
(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
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.
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.
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:
Name (Age) Present Position
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.
No family relationships exist among the Executive Officers of the
Corporation or the Bank.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation
Name and Other All Other
Principal Annual Compensa-
Position Year Salary ($) Bonus ($) Compensation($) tion ($)
<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.
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.
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.
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.
Vesting Schedule for All Employee Benefit Plans (1)
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
- ---------------------- ------------------ ---------------
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%
(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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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
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 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,
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 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 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 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>
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.
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 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.
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>
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
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.
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