<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10Q
(Mark One)
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
-------------------------------------------------
OR
____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
----------------- ----------------------------
Commission file number 0-10826
---------------------------------------------------------
BancorpSouth, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Mississippi 64-0659571
- ------------------------------------- ----------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Mississippi Plaza, Tupelo, Mississippi 38801
- -------------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)
601/680-2000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address, and former fiscal
year, if changed since last year)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No ___
On March 31, 1998, the registrant had outstanding 22,337,048 shares of common
stock, par value $2.50 per share.
<PAGE> 2
BANCORPSOUTH, INC.
CONTENTS
PAGE
PART I. Financial Information
ITEM 1 Financial Statements (unaudited)
Consolidated Condensed Balance Sheets
March 31, 1998, and December 31, 1997 .................... 3
Consolidated Condensed Statements of Income
Three Months Ended March 31, 1998 and 1997................ 4
Consolidated Condensed Statements of Cash Flows
Three Months Ended March 31, 1998 and 1997................ 5
Notes to Consolidated Condensed Financial Statements...... 6
ITEM 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations............. 9
ITEM 3 Quantitative and Qualitative Disclosures About Market Risk 13
PART II. Other Information
ITEM 6 Exhibits and Reports on Form 8-K......................... 14
FORWARD-LOOKING STATEMENTS
Statements contained in this Report, which are not historical in
nature, are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements
include statements in the "Management's Discussion and Analysis of Financial
Conditional and Results of Operations" regarding liquidity and capital
resources. Such forward-looking statements involve certain risks and
uncertainties that could cause actual results to differ materially from
anticipated results. These risks and uncertainties include regulatory
constraints, changes in interest rates, competition from other financial
services companies, changes in the Company's operation or expansion strategy,
the general economy of the United States and the specific markets in which
the Company operates, and other factors as may be identified from time to
time in the Company's filings with the Securities and Exchange Commission or
in the Company's press releases.
<PAGE> 3
PART I
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
BANCORPSOUTH, INC.
Consolidated Condensed Balance Sheets
(Unaudited)
March 31 December 31
1998 1997
---------- ----------
ASSETS (In Thousands)
<S> <C> <C>
Cash and due from banks $122,571 $286,307
Interest bearing deposits with other banks 4,914 6,465
Held-to-maturity securities, at amortized cost 770,541 533,419
Federal funds sold 53,000 0
Loans 2,911,348 2,852,885
Less: Unearned discount 94,065 93,858
Allowance for credit losses 40,908 39,877
Net loans 2,776,375 2,719,150
---------- ----------
Available-for-sale securities, at fair value 386,722 406,212
Mortgages held for sale 56,292 39,134
Premises and equipment, net 102,067 101,373
Other assets 92,036 88,083
---------- ----------
TOTAL ASSETS $4,364,518 $4,180,143
========== ==========
LIABILITIES
Deposits:
Demand: Non-interest bearing $447,185 $467,962
Interest bearing 826,065 840,009
Savings 583,371 548,683
Time 1,867,305 1,683,601
---------- ----------
Total deposits 3,723,926 3,540,255
Federal funds purchased and securities
sold under repurchase agreements 34,150 177,450
Long-term debt 171,733 47,539
Other liabilities 65,044 54,477
---------- ----------
TOTAL LIABILITIES 3,994,853 3,819,721
---------- ----------
SHAREHOLDERS' EQUITY
Common stock 55,990 55,990
Capital surplus 96,005 95,699
Unrealized gain on
available-for-sale securities 5,478 4,482
Retained earnings 213,283 206,570
Less cost of shares held in treasury (1,091) (2,319)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 369,665 360,422
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,364,518 $4,180,143
========== ==========
<FN>
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
BANCORPSOUTH, INC.
Consolidated Condensed Statements of Income and Comprehensive Income
(Unaudited)
Three months ended
March 31
------------------------
1998 1997
--------- ---------
(In thousands except
for per share amounts)
<S> <C> <C>
INTEREST REVENUE:
Interest & fees on loans $64,008 $57,617
Deposits with other banks 97 94
Interest on federal funds sold 323 1,368
Interest on held-to-maturity securities:
U. S. Treasury 1,721 1,707
U. S. Government agencies & corporations 6,413 5,549
Obligations of states & political subdivisions 2,169 2,152
Interest and dividends on available-for-sale securities 5,853 3,612
Interest on mortgages held for sale 655 411
--------- ---------
Total interest revenue 81,239 72,510
INTEREST EXPENSE:
Interest on deposits 36,602 32,657
Interest on federal funds purchased & securities
sold under repurchase agreements 514 399
Other interest expense 2,290 847
--------- ---------
Total interest expense 39,406 33,903
--------- ---------
Net interest revenue 41,833 38,607
Provision for credit losses 2,922 1,481
--------- ---------
Net interest revenue, after provision for
credit losses 38,911 37,126
--------- ---------
OTHER REVENUE:
Mortgage lending 2,287 1,829
Trust income 735 754
Service charges 4,836 4,430
Security gains (losses), net 167 55
Life insurance income 818 1,050
Other 2,811 2,503
--------- ---------
Total other revenue 11,654 10,621
--------- ---------
OTHER EXPENSE:
Salaries and employee benefits 15,406 15,603
Occupancy, net 2,124 2,036
Equipment 3,249 2,808
Deposit insurance premiums 154 48
Other 10,172 9,953
--------- ---------
Total other expense 31,105 30,448
--------- ---------
Income before income taxes 19,460 17,299
--------- ---------
Income tax expense 6,459 5,663
--------- ---------
Net income $13,001 $11,636
--------- ---------
Other comprehensive income (loss) 996 (1,060)
--------- ---------
Comprehensive income $13,997 $10,576
========= =========
Earnings per share: Basic $0.58 $0.52
========= =========
Diluted $0.58 $0.52
========= =========
Dividends declared per share $0.22 $0.19
========= =========
<FN>
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
BANCORPSOUTH, INC.
Consolidated Condensed Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31
-------------------------
1998 1997
---------- ----------
(In Thousands)
<S> <C> <C>
Net cash provided by operating activities $5,650 $18,378
---------- ----------
Investing activities:
Proceeds from calls and maturities of
held-to-maturity securities 97,845 17,783
Proceeds from calls and maturities of
available-for-sale securities 59,204 45,255
Proceeds from sales of
available-for-sale securities 26,600 1,450
Purchases of held-to-maturity securities (332,425) (37,224)
Purchases of available-for-sale securities (64,446) (85,098)
Net increase in short-term
investments (53,000) (18,500)
Net increase in loans (59,381) (17,391)
Purchases of premises and equipment (4,017) (4,264)
Other (2,246) (11,568)
---------- ----------
Net cash used by investing activities (331,866) (109,557)
---------- ----------
Financing activities:
Net increase in deposits 183,671 62,305
Net increase (decrease) in short-term
borrowings and other liabilities (142,041) 3,547
Increase (decrease) in long-term debt 124,194 (1,040)
Payment of cash dividends (4,900) (3,997)
Issuance of common stock 5 80
Purchase of treasury stock 0 (1,315)
---------- ----------
Net cash provided by financing activities 160,929 59,580
---------- ----------
Decrease in cash and cash equivalents (165,287) (31,599)
Cash and cash equivalents at beginning of
period 292,772 171,863
---------- ----------
Cash and cash equivalents at end of period $127,485 $140,264
========== ==========
<FN>
See accompanying notes to consolidated condensed financial statements
</TABLE>
<PAGE> 6
BANCORPSOUTH, INC.
Notes to Consolidated Condensed Financial Statements
(Unaudited)
NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION AND PRINCIPLES OF
CONSOLIDATION
The accompanying unaudited consolidated condensed financial statements
have been prepared in accordance with the accounting policies in effect as of
December 31, 1997, as set forth in the annual consolidated financial
statements of BancorpSouth, Inc. (the "Company"), as of such date. In the
opinion of management, all adjustments necessary for a fair presentation of
the consolidated condensed financial statements have been included and all
such adjustments were of a normal recurring nature. The results of
operations for the three-month period ended March 31, 1998 are not
necessarily indicative of the results to be expected for the full year.
The consolidated condensed financial statements include the accounts of
the Company and its wholly-owned subsidiary, BancorpSouth Bank (the "Bank") and
the Bank's subsidiaries, Century Credit Life Insurance Company, Personal
Finance Corporation, BancorpSouth Insurance Services of Mississippi, Inc. and
BancorpSouth Insurance Services of Tennessee, Inc.
NOTE 2 - LOANS
The composition of the loan portfolio by collateral type is detailed
below:
<TABLE>
<CAPTION>
March 31 December 31
--------------------------- -------------
1998 1997 1997
---------- ---------- ----------
(in thousands)
<S> <C> <C> <C>
Commercial and agricultural $ 254,519 $ 232,024 $ 266,112
Consumer and installment 827,658 756,279 823,356
Real estate mortgage 1,634,481 1,447,644 1,571,137
Lease financing 179,489 149,909 172,436
Other 15,201 16,231 19,844
---------- ---------- ----------
Total $2,911,348 $2,602,087 $2,852,885
========== ========== ==========
</TABLE>
<PAGE> 7
The following table presents information concerning non-performing loans:
<TABLE>
<CAPTION>
March 31 December 31
1998 1997
---------- ----------
(In thousands)
<S> <C> <C>
Non-accrual loans $ 4,352 $ 4,008
Loans 90 days or more past due 6,877 7,465
Restructured loans 650 659
---------- ----------
Total non-performing loans $ 11,879 $ 12,132
========== ==========
</TABLE>
NOTE 3 - ALLOWANCE FOR CREDIT LOSSES
The following schedule summarizes the changes in the allowance for credit
losses for the periods indicated:
<TABLE>
<CAPTION>
Three month period Year ended
ended March 31 December 31
----------------------- -------------
1998 1997 1997
---------- ---------- ----------
(In tousands)
<S> <C> <C> <C>
Balance at beginning of period $39,877 $37,272 $37,272
Provision charged to expense 2,922 1,481 9,008
Recoveries 392 543 1,828
Loans charged off (2,283) (1,765) (8,827)
Acquisitions - 596 596
---------- ---------- ----------
Balance at end of period $40,908 $38,127 $39,877
========== ========== ==========
</TABLE>
NOTE 4 - PER SHARE DATA
The Company adopted SFAS No. 128, "Earnings per Share", effective for
financial statements ending after December 15, 1997. All prior period EPS
data has been restated to conform with the provisions of this Statement.
The computation of basic earnings per share is based on the weighted
average number of common shares outstanding. The computation of diluted
earnings per share is based on the weighted average number of common shares
outstanding plus the shares resulting from the assumed exercise of all
outstanding stock options using the treasury stock method. The following
table provides a reconciliation of the numerators and denominators of the
basic and diluted earnings per share computations for the periods as shown.
<PAGE> 8
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------------------------------------------------------------------
1998 1997
----------------------------------------------------------------------------------------
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
------------- ------------- ------------- ------------- ------------- -------------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Basic EPS
Income available to
common shareholders $13,001 22,296 $0.58 $11,636 22,207 $0.52
============= =============
Effect of dilutive stock
options - 261 - 161
------------- ------------- ------------- -------------
Diluted EPS
Income available to
common shareholders
plus assumed exercise $13,001 22,557 $0.58 $11,636 22,368 $0.52
============= ============= ============= ============= ============= =============
</TABLE>
NOTE 5 - COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income". This statement establishes standards for reporting
and display of comprehensive income and its components (revenues, expenses,
gains and losses) in a full set of general purpose financial statements and
is effective for fiscal years beginning after December 15, 1997. The purpose
of reporting comprehensive income is to report a measure of all changes in
equity of the Company that result from recognized transactions and other
economic events of the period other than transactions with owners in their
capacity as owners. Comprehensive income for the Company for the three
months ended March 31, 1998 and 1997 resulted from unrealized gains (losses)
on available-for-sale securities during the periods.
NOTE 6 - RECENT PRONOUNCEMENTS
In June 1997, SFAS No. 131, "Disclosures About Segments of an Enterprise
and Related Information" was issued. This statement requires that a public
business enterprise report financial and descriptive information about its
reportable operating segments. Operating segments are components of an
enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision maker in deciding how to
allocate resources and in assessing performance. This statement is effective
for fiscal years beginning after December 15, 1997. The Company intends to
comply with this statement in 1998.
In February 1998, SFAS No. 132, "Employers Disclosures about Pensions and
Other Postretirement Benefits" was issued. The statement standardizes the
disclosure requirements for pensions and other postretirement benefits to the
extent practicable. In addition, the new statement requires additional
information on changes in benefit obligations and fair value of plan assets
and eliminates certain disclosures that are no longer useful. This statement
is effective for fiscal years beginning after December 15, 1997. The Company
intends to comply with this statement in 1998.
NOTE 7 - STOCK SPLIT
On March 25, 1998, the Company's Board of Directors declared a two-for-one
stock split effected in the form of a 100% stock dividend payable on May 15,
1998 to shareholders of record on May 1, 1998. The number of shares and
option price of shares authorized under the Company's various stock option
plans will be adjusted for this dividend.
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion provides certain information concerning the
consolidated financial condition and results of operations of the Company.
This discussion should be read in conjunction with the unaudited consolidated
condensed financial statements for the periods ended March 31, 1998 and 1997
found elsewhere in this report.
RESULTS OF OPERATIONS
Net Income
The Company's net income for the first quarter of 1998 was $13.00 million,
an increase of 11.7% from $11.64 million in the first quarter of 1997. Basic
and diluted earnings per common share for the first quarter of 1998 were
$0.58, an increase of 11.5% from $0.52 for the same period in 1997. The
annualized returns on average assets for the first quarters of 1998 and 1997
were 1.23% and 1.25%, respectively.
Net Interest Revenue
Net interest revenue, the difference between interest earned on assets and
the cost of interest-bearing liabilities, is the largest component of the
Company's net income. For purposes of this discussion, all interest revenue
has been adjusted to a fully taxable equivalent basis. The primary items of
concern in managing net interest revenue are the mix and maturity balance
between interest-sensitive assets and liabilities.
Net interest revenue was $42.9 million for the three months ended
March 31, 1998, compared to $39.6 million for the same period in 1997.
Earning assets averaged $3.96 billion in the first quarter of 1998, compared
with $3.49 billion in the respective period in 1997. Average interest-bearing
liabilities were $3.37 billion in the first quarter of 1998, compared with
$2.94 billion for the same period of 1997.
Net interest revenue, expressed as a percentage of average earning assets,
was 4.40% for the first quarter of 1998, as compared to 4.62% for the same
period of 1997. This decrease in net interest margin is primarily due to the
fact that the average rate paid on interest-sensitive liabilities rose at a
faster pace than did the average yield earned on interest-earning assets.
Provision and Allowance for Credit Losses
The provision for credit losses charged to operating expense is an amount
which, in the judgment of management, is necessary to maintain the allowance
for credit losses at a level that is adequate to meet the present and poten-
tial risks of losses in the Company's current portfolio of loans.
Management's judgment is based on a variety of factors which include the
Company's experience related to loan balances, charge-offs and recoveries,
scrutiny of individual loans and risk factors, results of regulatory agency
reviews of loans, and present and anticipated future economic conditions of
the Company's market area. Material estimates that are particularly
susceptible to significant change in the near term are a necessary part of
this process. Future additions to the allowance may be necessary based on
changes in economic conditions. In addition, various regulatory agencies, as
an integral part of their examination process, periodically review the
Company's allowance for credit losses. These agencies may require the
Company to recognize additions to the allowance based on their judgments
about information available to them at the time of their examination.
<PAGE> 10
The provision for credit losses totaled $2.92 million for the first
quarter of 1998, compared to $1.48 million for the same period of 1997. This
increase is due to the growth in the Company's loan portfolio and an increase
in credit losses during the first quarter of 1998 when compared to the first
quarter of 1997. The allowance for credit losses as a percent of loans
outstanding was 1.45% at March 31, 1998 and at December 31, 1997.
Other Revenue
Other revenue for the quarter ended March 31, 1998 totaled $11.65 million,
compared to $10.62 million for the same period of 1997, a 9.7% increase.
Mortgage lending revenue of $2.29 million was reported in the first quarter
of 1998, compared to $1.83 million in the same period of 1997. Trust income
was basically unchanged in the first quarter of 1998 compared to the same
period in 1997. Service charges on deposit accounts in the first quarter of
1998 increased 9.16% from the same period in 1997. Net security gains were
$167,000 in the first quarter of 1998 compared to a net gain of $55,000 in
the first quarter of 1997.
Other Expense
Other expense totaled $31.11 million for the first quarter of 1998, a
2.16% increase over other expense for the same period during 1997. The most
significant change in a component of other expense relates to the Company's
stock option plans, expense for which is reported under the caption salaries
and employee benefits. Certain of the stock option plans contain a provision
for stock appreciation rights (SARs) which require the recognition of expense
for stock price appreciation. During the first quarter of 1997, expense
related to SARs was $6,000. During the first quarter of 1998, because of a
decline in the Company's stock price from December 31, 1997, expense recovery
of $780,000 was recorded. Occupancy expense showed a modest increase for the
first quarter of 1998 compared to the same period during the prior year.
Deposit insurance was $154,000 for the quarter ended March 31, 1998 compared
to $48,000 for the same period in 1997. Except as discussed above, the
components of other expense reflect normal increases for personnel related
expenses and general inflation in the cost of services and supplies purchased
by the Company.
Income Tax
Income tax expense was $6.46 million for the first quarter of 1998 (an
effective tax rate of 33.2%) and $5.66 million for the first quarter of 1997
(an effective tax rate of 32.7%). This increase resulted from decrease in
the relative level of the Company's investment in assets with respect to
which earnings are afforded favorable tax treatment and an increase in the
Company's taxable net income.
FINANCIAL CONDITION
Earning Assets
The percentage of earning assets to total assets measures the
effectiveness of management's efforts to invest available funds into the most
efficient and profitable uses. Earning assets at March 31, 1998 were $4.09
billion or 93.7% of total assets, compared with $3.74 billion, or 89.6% of
total assets at December 31, 1997.
The securities portfolios are used to make various term investments, to
provide a source of liquidity and to serve as collateral to secure certain
types of deposits. Held-to-maturity securities at March 31, 1998 were $770.5
million, compared with $533.4 million at the end of 1997, a 44.45% increase.
Available-for-sale securities were $386.7 million at March 31, 1998, compared
to $406.2 million at December 31, 1997, a 4.80% decrease.
<PAGE> 11
The loan portfolios of the Company's bank subsidiary make up the largest
single component of the Company's earning assets. The Company's lending
activities include both commercial and consumer loans. Loan originations are
derived from a number of sources including direct solicitation by the
Company's loan officers, real estate broker referrals, mortgage loan
companies, current savers and borrowers, builders, attorneys, walk-in
customers and, in some instances, other lenders. The Company has established
disciplines and systematic procedures for approving and monitoring loans that
vary depending on the size and nature of the loan. Loans, net of unearned
discount, totaled $2.82 billion at March 31, 1998, which represents a 2.1%
increase from $2.76 billion at December 31, 1997.
At March 31, 1998, the Company did not have any concentrations of loans in
excess of 10% of total loans outstanding. Loan concentrations are considered
to exist when there are amounts loaned to a multiple number of borrowers
engaged in similar activities that would cause them to be similarly impacted
by economic or other conditions. However, the Company does conduct business
in a geographically concentrated area. The ability of the Company's
borrowers to repay loans is to some extent dependent upon the economic
conditions prevailing in its market area.
In the normal course of business, management becomes aware of possible
credit problems in which borrowers exhibit potential for the inability to
comply with the contractual terms of their loans, but which do not currently
meet the criteria for disclosure as problem loans. Historically, some of
these loans are ultimately restructured or placed in non-accrual status.
The Company's policy provides that loans, other than installment loans,
are generally placed on non-accrual status if, in management's opinion, payment
in full of principal or interest is not expected, or when payment of
principal or interest is more than 90 days past due, unless the loans are
both well secured and in the process of collection. Non-performing loans were
0.42% of all loans outstanding at March 31, 1998 compared to 0.44% at
December 31, 1997.
Allowance for Credit Losses
The Company attempts to maintain the allowance for credit losses at a
level that, in the opinion of management, is adequate to meet the present and
potential risks of losses on its current portfolio of loans. Management's
judgement is based on a variety of factors that include examining potential
losses in specific credits and considering the general risks associated with
lending functions such as current and anticipated economic conditions,
business trends in the Company's region and nationally, historical experience
as related to losses, changes in the mix of the loan portfolio and credits
which bear substantial risk of loss but which cannot be readily quantified.
Material estimates that are particularly susceptible to significant change in
the near term are a necessary part of this process. Future additions to the
allowance may be necessary based on changes in economic conditions. In
addition, various regulatory agencies, as an integral part of their
examination process, periodically review the Company's allowance for credit
losses. These agencies may require the Company to recognize additions to the
allowance based on judgments by the agencies about information available to
them at the time of their examination.
Management does not believe the allowance for credit losses can be
fragmented by category of loans with any precision that would be useful to
investors but is doing so in this report only in an attempt to comply with
disclosure requirements of regulatory agencies. The allocation of allowance
by loan category is based in part on evaluations of specific loans' past
history and on economic conditions within specific industries or geographical
areas. Accordingly, since all of these conditions are subject to change, the
allocation is not necessarily indicative of the breakdown of any future
losses. The following table presents (a) the allocation of the allowance for
credit losses by loan category and (b) the percentage of each category in the
loan portfolio to total loans for the periods indicated.
<PAGE> 12
<TABLE>
<CAPTION>
March 31 December 31
-------------------------------------------------- ----------------------------
1998 1997 1997
-------------------------- ---------------------- ----------------------------
(Dollars in thousands)
ALLOWANCE % OF ALLOWANCE % OF ALLOWANCE % OF
FOR LOANS TO FOR LOANS TO FOR LOANS TO
CREDIT TOTAL CREDIT TOTAL CREDIT TOTAL
LOSSES LOANS LOSSES LOANS LOSSES LOANS
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Commercial and agricultural $ 2,990 8.74% $ 3,448 8.92% $ 2,985 9.33%
Consumer and installment 15,245 28.43% 12,175 29.06% 14,760 28.86%
Real estate mortgage 19,920 56.14% 20,254 55.64% 19,415 55.07%
Lease financing 2,601 6.17% 2,205 5.76% 2,592 6.04%
Other 152 0.52% 45 0.62% 125 0.70%
---------- ---------- ---------- ---------- ---------- ----------
Total $ 40,908 100.00% $ 38,127 100.00% $ 39,877 100.00%
========== ========== ========== ========== ========== ==========
</TABLE>
The following table provides an analysis of the allowance for credit losses
for the periods indicated:
<PAGE> 13
<TABLE>
<CAPTION>
Year ended
Three months ended March 31 December 31
--------------------------- -------------
1998 1997 1997
---------- ---------- ----------
(in thousands)
<S> <C> <C> <C>
Balance, beginning of period $ 39,877 $ 37,272 $ 37,272
Loans charged off:
Commercial and agricultural (166) (85) (678)
Consumer & installment (1,739) (1,587) (7,107)
Real estate mortgage (334) (87) (994)
Lease financing (44) (6) (48)
---------- ---------- ----------
Total loans charged off (2,283) (1,765) (8,827)
---------- ---------- ----------
Recoveries:
Commercial and agricultural 62 104 214
Consumer & installment 256 260 1,205
Real estate mortgage 56 171 352
Lease financing 18 8 57
---------- ---------- ----------
Total recoveries 392 543 1,828
---------- ---------- ----------
Net charge-offs (1,891) (1,222) (6,999)
Provsion charged to operating expense 2,922 1,481 9,008
Acquistions 596 596
---------- ---------- ----------
Balance, end of period $ 40,908 $ 38,127 $ 39,877
========== ========== ==========
Average loans for period $2,793,508 $2,505,720 $2,569,445
========== ========== ==========
RATIOS:
Net charge offs to average loans 0.07% 0.05% 0.27%
========== ========== ==========
</TABLE>
Deposits and Other Interest-bearing Liabilities
Deposits originating within the communities served by the Company continue
to be the Company's primary source of funding its earning assets. Total
deposits at the end of the first quarter of 1998 were $3.72 billion as
compared to $3.54 billion at December 31, 1997, representing a 5.19%
increase. Included in the deposit growth is approximately $175 million of
public funds obtained in the first quarter of 1998 and scheduled to mature in
the third quarter of 1998. The Company also borrowed $125 million from the
Federal Home Loan Bank during the first quarter of 1998. Of these funds, $50
million matures in 10 years, $50 million matures in 15 years and $25 million
matures in 20 years. These borrowings were initially invested in short-term
securities and are to be used by the Company over time to fund loans of
similar maturities.
LIQUIDITY
Liquidity is the ability of the Company to fund the needs of its
borrowers, depositors and creditors. The Company's traditional sources of
liquidity include maturing loans and investment securities, purchased federal
funds and its base of core deposits. Management believes these sources are
adequate to meet liquidity needs for normal operations.
<PAGE> 14
The Company continues to pursue a lending policy stressing adjustable rate
loans, in furtherance of its strategy for matching interest sensitive assets
with an increasingly interest sensitive liability structure.
CAPITAL RESOURCES
The Company is required to comply with the risk-based capital requirements
of the Board of Governors of the Federal Reserve System (FRB). These
requirements apply a variety of weighting factors which vary according to the
level of risk associated with the particular assets. At March 31, 1998, the
Company's Tier 1 capital and total capital, as a percentage of total risk-
adjusted assets, were 12.31% and 13.56%, respectively. Both ratios exceed the
required minimum levels for these ratios of 4.0% and 8.0%, respectively. In
addition, the Company's leverage capital ratio (Tier 1 capital divided by
total assets, less goodwill) was 8.54% at March 31, 1998, compared to the
required minimum leverage capital ratio of 3%.
The Company's current capital position continues to provide it with a
level of resources available for the acquisition of depository institutions
and businesses closely related to banking in the event opportunities arise.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
During the three months ended March 31, 1998, there were no material
changes to the quantitative and qualitative disclosures about market risks
presented in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
<PAGE> 15
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(10.1) BancorpSouth, Inc. 1994 Stock Incentive Plan, as amended and
restated
(10.2) BancorpSouth, Inc. 1995 Non-Qualified Stock Option Plan for
Non-Employee Directors, as amended and restated
(27.1) Financial Data Schedule for the period ended March 31, 1998
(27.2) Restated Financial Data Schedule for the period ended
March 31, 1997
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended March 31, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BancorpSouth, Inc.
-------------------------------------
(Registrant)
/s/ L. Nash Allen, Jr.
DATE: May 14, 1998 -------------------------------------
L. Nash Allen, Jr.
Treasurer and
Chief Financial Officer
<PAGE>
BANCORPSOUTH, INC.
1994 STOCK INCENTIVE PLAN
Amended and Restated Effective February 14, 1998
<PAGE>
BANCORPSOUTH, INC. 1994 STOCK INCENTIVE PLAN
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS
1.1 Affiliate..............................................................1
1.2 Agreement..............................................................1
1.3 Award..................................................................1
1.4 Board..................................................................1
1.5 Code...................................................................1
1.6 Committee..............................................................1
1.7 Company................................................................1
1.8 Date of Exercise.......................................................1
1.9 Exchange Act...........................................................1
1.10 Fair Market Value......................................................2
1.11 Incentive Option.......................................................2
1.12 Nonqualified Option....................................................2
1.13 Option.................................................................2
1.14 Participant............................................................2
1.15 Plan...................................................................2
1.16 Restricted Stock.......................................................3
1.17 Stock..................................................................3
1.18 Ten Percent Shareholder................................................3
ARTICLE II. PURPOSE OF PLAN.................................................3
ARTICLE III. ADMINISTRATION
3.1 Administration of Plan.................................................3
3.2 Authority to Grant Awards..............................................4
3.3 Persons Subject to Section 16(b).......................................4
ARTICLE IV. ELIGIBILITY AND LIMITATIONS ON GRANTS
4.1 Participation..........................................................4
4.2 Grant of Awards........................................................4
4.3 Limitations on Grants..................................................4
4.4 Limitation on Incentive Options........................................4
4.5 Restricted Stock.......................................................4
ARTICLE V. STOCK SUBJECT TO PLAN
5.1 Source of Shares.......................................................5
5.2 Maximum Number of Shares...............................................5
5.3 Forfeitures............................................................5
ARTICLE VI. EXERCISE OF AWARDS
6.1 Exercise Price.........................................................5
6.2 Right to Exercise......................................................5
<PAGE>
6.3 Maximum Exercise Period................................................5
6.4 Transferability........................................................6
6.5 Employee Status........................................................6
ARTICLE VII. METHOD OF EXERCISE
7.1 Exercise...............................................................6
7.2 Payment................................................................6
7.3 Federal Withholding Tax Requirements...................................6
7.4 Shareholder Rights.....................................................6
7.5 Issuance and Delivery of Shares........................................7
ARTICLE VIII. ADJUSTMENT UPON CORPORATE CHANGES
8.1 Adjustments to Shares..................................................7
8.2 Substitution of Awards on Merger or Acquisition........................7
8.3 Effect of Certain Transactions.........................................7
8.4 No Adjustment Upon Certain Transactions................................9
8.5 Fractional Shares......................................................9
ARTICLE IX. COMPLIANCE WITH LAW AND REGULATORY APPROVAL
9.1 General................................................................9
9.2 Representations by Participants........................................9
ARTICLE X. GENERAL PROVISIONS
10.1 Effect on Employment..................................................10
10.2 Unfunded Plan.........................................................10
10.3 Rules of Construction.................................................10
10.4 Governing Law.........................................................10
10.5 Compliance With Section 16 of the Exchange Act........................10
10.6 Amendment.............................................................10
10.7 Duration of Plan......................................................11
10.8 Effective Date of Plan................................................11
<PAGE> 1
BANCORPSOUTH, INC. 1994 STOCK INCENTIVE PLAN
AS AMENDED AND RESTATED
PREAMBLE
WHEREAS, BancorpSouth, Inc. (the "Company") previously established the
BancorpSouth, Inc. 1994 Stock Incentive Plan through which the Company could
award options to purchase the common stock of the Company, $2.50 par value
("Stock"), to officers, employees and consultants of the Company and its
affiliates;
WHEREAS, the Company desires to amend and restate this Plan in order to:
(i) conform with the requirements for a "performance based compensation" plan
within the meaning of section 162(m)(4)(C); (ii) conform to changes to the
Securities and Exchange Commission Rule 16b-3; (iii) prospectively eliminate
the award of stock appreciation rights under the Plan and to permit the award
of restricted shares of Stock; and (iv) provide for certain administrative
modifications that are intended to simplify Plan administration;
NOW, THEREFORE, the Company hereby amends and restates the BancorpSouth,
Inc. 1994 Stock Incentive Plan (the "Plan"), effective February 14, 1998:
ARTICLE I. DEFINITIONS
1.1 Affiliate. A "parent corporation," as defined in section 424(e) of
the Code, or "subsidiary corporation," as defined in section 424(f) of the Code,
of the Company.
1.2 Agreement. A written agreement (including any amendment or supplement
thereto) between the Company or Affiliate and a Participant specifying
the terms and conditions of an Award granted to such Participant.
1.3 Award. A right that is granted under the Plan to a Participant by the
Company, which may be in the form of Options or Restricted Stock.
1.4 Board. The board of directors of the Company.
1.5 Code. The Internal Revenue Code of 1986, as amended.
1.6 Committee. A committee composed of at least two individuals (or such
number that satisfies section 162(m)(4)(C) of the Code and Rule 16b-3 of the
Exchange Act) who are members of the Board and are not employees of the Company
or an Affiliate, and who are designated by the Board as the "stock incentive
committee" or are otherwise designated to administer the Plan.
1.7 Company. BancorpSouth, Inc. and its successors.
1.8 Date of Exercise. The date that the Company accepts tender of the
exercise price of an Option.
1.9 Exchange Act. The Securities Exchange Act of 1934, as amended.
<PAGE> 2
1.10 Fair Market Value. On any given date, Fair Market Value shall be the
applicable description below (unless, where appropriate, the Committee
determines in good faith the fair market value of the Stock to be otherwise):
(a) If the Stock is reported on the New York Stock Exchange or the
American Stock Exchange, then Fair Market Value shall be the closing price of
the Stock on such exchange on which such Stock is traded on the trading day as
of which Fair Market Value is being determined, or on the next preceding day on
which such Stock is traded if no Stock was traded on such trading day.
(b) If the Stock is not reported on the New York Stock Exchange or the
American Stock Exchange but is reported on the Nasdaq National Market System
or another Nasdaq automated quotation system, and market information is
published on a regular basis, then Fair Market Value shall be the closing price
of the Stock, as so published, on the trading day as of which Fair Market Value
is being determined, or the closing price on the next preceding trading day on
which such prices were published if no Stock was traded on such trading day.
(c) If market information is not so published on a regular basis, then
Fair Market Value shall be the average of the high bid and low asked prices of
the Stock in the over-the-counter market over a period of trading days that is
reasonably representative of the normal trading of the Stock for the date on
which Fair Market Value is being determined, as reported by a generally
accepted reporting service.
(d) If the Stock is not publicly traded, Fair Market Value shall be the
value determined in good faith by the Committee or the Board. However, such
determination shall not take into account any restriction on the stock, except
for a restriction which by its terms will never lapse.
1.11 Incentive Option. An Option that is intended to qualify as an
"incentive stock option" within the meaning of section 422 of the Code. An
Incentive Option, or a portion thereof, shall not be invalid for failure to
qualify under section 422 of the Code, but shall be treated as a Nonqualified
Option.
1.12 Nonqualifed Option. An Option that is not an Incentive Option.
1.13 Option. The right that is granted hereunder to a Participant to
purchase from the Company a stated number of shares of Stock at the price set
forth in an Agreement. As used herein, an Option includes both Incentive
Options and Nonqualified Options.
1.14 Participant. An officer, employee or consultant of the Company or of
an Affiliate who either satisfies the requirements of Article IV and is
selected by the Committee to receive an Award, or receives an Award pursuant
to grant specified in this Plan.
1.15 Plan. The BancorpSouth, Inc. 1994 Stock Incentive Plan.
<PAGE> 3
1.16 Restricted Stock. A grant of Stock that is subject to restrictions on
transfer and/or a risk of forfeiture by and to the Participant, as described in
Section 4.5. Shares of Stock that are subject to any such restrictions or
risks of forfeiture shall cease to be Restricted Stock at the time that such
restrictions and risks of forfeiture lapse in accordance with the terms of the
Agreement or Plan.
1.17 Stock. The common stock of the Company, $2.50 par value.
1.18 Ten Percent Shareholder. An individual who owns more than 10% of the
total combined voting power of all classes of stock of the Company or an
Affiliate at the time he is granted an Incentive Option. For the purpose of
determining if an individual is a Ten Percent Shareholder, he shall be deemed
to own any voting stock owned (directly or indirectly) by or for his brothers
and sisters (whether by whole or half blood), spouse, ancestors or lineal
descendants and shall be considered to own proportionately any voting
stock owned (directly or indirectly) by or for a corporation, partnership,
state or trust of which such individual is a shareholder, partner or
beneficiary.
ARTICLE II. PURPOSE OF PLAN
The purpose of the Plan is to provide a performance incentive to, and to
encourage stock ownership by, officers, employees and other persons providing
services to the Company and its Affiliates, and to align the interests of such
individuals with those of the Company, its Affiliates and its shareholders. It
is intended that Participants may acquire or increase their proprietary
interests in the Company and be encouraged to remain in the employ of the
Company or of its Affiliates. The proceeds received by the Company from the
sale of Stock pursuant to this Plan may be used for general corporate purposes.
ARTICLE III. ADMINISTRATION
3.1 Administration of Plan. The Plan shall be administered by the
Committee. The express grant in the Plan of any specific power to the
Committee shall not be construed as limiting any power or authority of the
Committee. Any decision made or action taken by the Committee to administer
the Plan shall be final and conclusive. No member of the Committee shall be
liable for any act done in good faith with respect to this Plan or any
Agreement or Award. The Company shall bear all expenses of Plan
administration. In addition to all other authority vested with the Committee
under the Plan, the Committee shall have complete authority to:
(a) Interpret all provisions of this Plan;
(b) Prescribe the form of any Agreement and notice and manner for
executing or giving the same;
(c) Make amendments to all Agreements;
(d) Adopt, amend, and rescind rules for Plan administration; and
(e) Make all determinations it deems advisable for the administration of
this Plan.
<PAGE> 4
3.2 Authority to Grant Awards. The Committee shall have authority to
grant Awards upon such terms the Committee deems appropriate and that are not
inconsistent with the provisions of this Plan. Such terms may include
conditions on the exercise of all or any part of an Award.
3.3 Persons Subject to Section 16(b). Notwithstanding anything in the
Plan to the contrary, the Committee, in its absolute discretion, may bifurcate
the Plan so as to restrict, limit or condition the use of any provision of the
Plan to participants who are officers subject to section 16(b) of the Exchange
Act, without so restricting, limiting or conditioning the Plan with respect to
other Participants.
ARTICLE IV. ELIGIBILITY AND LIMITATIONS ON GRANTS
4.1 Participation. The Committee may from time to time designate
officers, employees and other persons providing services to the Company and its
Affiliates to whom Awards are to be granted and are eligible to become
Participants. Such designation shall specify the number of shares of Stock,
if any, subject to each Award. All Awards granted under this Plan shall be
evidenced by Agreements which shall be subject to applicable provisions of this
Plan or such other provisions as the Committee may adopt that are not
inconsistent with the Plan.
4.2 Grant of Awards. An Award shall be deemed to be granted to a
Participant at the time that the Committee designates in a writing that is
adopted by the Committee as the grant of an Award, and that makes reference to
the Participant and the number of shares of Stock that are subject to the Award.
Accordingly, an Award may be deemed to be granted prior to the approval of this
Plan by the shareholders of the Company and prior to the time that an
Agreement is executed by the Participant and the Company.
4.3 Limitations on Grants. A person who is not an employee of the Company
or an Affiliate is not eligible to receive an Incentive Option. No person may
receive Awards with respect to more than 60,000 shares of Stock (subject to
increases and adjustments as provided in Article VIII) in any one-year period.
4.4 Limitation on Incentive Options. To the extent that the aggregate
Fair Market Value of Stock with respect to which Incentive Options are
exercisable for the first time by a Participant during any calendar year (under
all stock incentive plans of the Company and its Affiliates) exceeds $100,000
(or the amount specified in section 422 of the Code), determined as of the date
an Incentive Option is granted, such Options shall be treated as Nonqualified
Options. This provision shall be applied by taking Incentive Options into
account in the order in which they are granted.
4.5 Restricted Stock. An award of Restricted Stock to a Participant is a
grant of Stock that is subject to forfeiture and/or restrictions on transfer
that are identified in an Agreement. The Committee may grant Restricted Stock
to a Participant as a part of a "deposit share," "performance award" or any
other arrangement established by the Committee and specified in an Agreement.
A Participant who receives Restricted Stock shall be treated as a shareholder
of the Company for all purposes, except that the rights of the Participant may
be limited under the terms of the Agreement. Unless otherwise specified in an
Agreement, Participants shall be entitled to receive dividends on and exercise
voting rights with respect to shares of restricted stock.
<PAGE> 5
ARTICLE V. STOCK SUBJECT TO PLAN
5.1 Source of Shares. Upon the exercise of an Option or the grant of an
Award of Restricted Stock, the Company shall deliver to the Participant
authorized but previously unissued Stock or Stock that is held by the Company
as treasury stock.
5.2 Maximum Number of Shares. Effective February 14, 1998, the maximum
aggregate number of shares of Stock that may be issued pursuant to the exercise
of Awards is increased by 1,000,000 shares to 1,458,000 shares, subject to
increases and adjustments as provided in Article VIII. Provided, however, that
the portion of this aggregate limit that may be issued pursuant to Awards that
are Restricted Stock is limited to 46,800 shares of Stock. The numerical
limits specified in this Section are subject to increases and adjustments as
provided in Article VIII.
5.3 Forfeitures. If any Award granted hereunder expires or terminates for
any reason without having been exercised in full, the shares of Stock subject
thereto shall again be available for issuance of an Award under this Plan.
ARTICLE VI. EXERCISE OF AWARDS
6.1 Exercise Price. The exercise price of an Incentive Option shall not
be less than 100% of the Fair Market Value of a share of Stock on the date the
Incentive Option is granted. In the case of a Ten Percent Shareholder,
however, the exercise price of an Incentive Option shall not be less than
110% of the Fair Market Value of a share of Stock on the date the Incentive
Option is granted. The exercise price of a Nonqualified Option shall not be
less than 85% of the Fair Market Value of a share of stock on the date the
Nonqualified Option is granted. If the exercise price of an Option is changed
after the date it is granted, such change shall be deemed to be a termination
of the existing Option and the issuance of a new Option.
6.2 Right to Exercise. An Award shall be exercisable on any date
established by the Committee or provided for in an Agreement, provided, however,
that Options shall not be exercisable and Restricted Stock shall not be
transferable until at least six months after the Award is granted. A
Participant must exercise an Incentive Option while he is an employee of the
Company or an Affiliate or within the periods that may be specified in the
Agreement after termination of employment, death, disability or a "change of
control" (as defined in any change of control agreement to which the Company
and any such Participant are parties).
6.3 Maximum Exercise Period. The maximum period in which an Award may be
exercised shall be determined by the Committee on the date of grant except that
no Incentive Option shall be exercisable after the expiration of 10 years (five
years in the case of Incentive Options granted to a Ten Percent Shareholder)
from the date it was granted. The terms of any Award may provide that it is
exercisable for a shorter period. All Incentive Options shall terminate on the
date the Participant's employment with the Company terminates, except as
otherwise provided in the Agreement with respect to termination of employment,
death, disability or a "change of control" (as defined in any change of control
agreement to which the Company and any such Participant are parties).
<PAGE> 6
6.4 Transferability. Generally, any Award granted under this Plan shall
not be transferable except by will or by the laws of descent and distribution,
and shall be exercisable during the lifetime of the Participant only by the
Participant. However, a Nonqualified Option or Restricted Stock granted under
this Plan may be transferable to the extent provided in an Agreement.
Provided, further, that no right or interest of a Participant in any Award
shall be liable for, or subject to, any lien, obligation or liability of such
Participant.
6.5 Employee Status. The Committee shall determine the extent to which a
leave of absence for military or government service, illness, temporary
disability, or other reasons shall be treated as a termination or interruption
of employment for purposes of determining questions of forfeiture and exercise
of an Award after termination of employment; provided, however, that if the
period treated as employment with respect to an Incentive Option exceeds three
months, such Option shall be deemed a Nonqualified Option.
ARTICLE VII. METHOD OF EXERCISE
7.1 Exercise. An Option granted hereunder shall be deemed to have been
exercised on the Date of Exercise. Subject to the provisions of Articles VI
and IX, an Option may be exercised in whole or in part at such times and in
compliance with such requirements as the Committee shall determine.
7.2 Payment. Unless otherwise provided by the Agreement, payment of the
Option price shall be made in cash (including an exercise involving the pledge
of shares and a loan through a broker described in Securities Exchange
Commission Regulation T) or, to the extent approved by the Committee, Stock
that was acquired prior to the exercise of the Option, other consideration
acceptable to the Committee or a combination thereof.
7.3 Federal Withholding Tax Requirements. Upon exercise of a Non-
qualified Option by a Participant who is an employee of the Company or an
Affiliate, the Participant shall, upon notification of the amount due and prior
to or concurrently with the delivery of the certificates representing the
shares, pay to the Company amounts necessary to satisfy applicable federal,
state and local withholding tax requirements or shall otherwise make
arrangements satisfactory to the Company for such requirements. Such
withholding requirements shall not apply to the exercise of an Incentive
Option, or to a disqualifying disposition of Stock that is acquired with an
Incentive Option, unless the Committee gives the Participant notice that
withholding described in this Section is required.
7.4 Shareholder Rights. No Participant shall have any rights as a
stockholder with respect to shares subject to Options prior to the Date of
Exercise of such Option. However, a Participant shall enjoy the rights to
receive dividends and to vote shares of Restricted Stock beginning on the date
that Restricted Stock is awarded.
7.5 Issuance and Delivery of Shares. Shares of Stock issued pursuant to
the exercise of Options hereunder shall be delivered to Participants by the
Company (or its transfer agent) as soon as administratively feasible after a
Participant receives an award of Restricted Stock or exercises an Option
hereunder and executes any applicable shareholder agreement or agreement
described in Section 9.2 that the Company requires at the time of exercise.
ARTICLE VIII. ADJUSTMENT UPON CORPORATE CHANGES
8.1 Adjustments to Shares. The maximum number of shares of stock with
respect to which Awards hereunder may be granted and which are the subject of
outstanding Options, and the exercise price thereof, shall be adjusted as the
Committee determines (in its sole discretion) to be appropriate, in the event
that:
(a) the Company or an Affiliate effects one or more stock dividends, stock
splits, reverse stock splits, subdivisions, consolidations or other similar
events;
(b) the Company or an Affiliate engages in a transaction to which section
424 of the Code applies; or
(c) there occurs any other event which in the judgment of the Committee
necessitates such action;
Provided, however, that if an event described in paragragh (a) or (b) occurs,
the Committee shall make adjustments to the limits on Awards specified in
Sections 4.3 and 5.2 that are proportionate to the modifications of the Stock
that are on account of such corporate changes. Notwithstanding the foregoing,
the Committee may not modify the Plan or the terms of any Awards then
outstanding or to be granted hereunder to provide for the issuance under the
Plan of a different class of stock or kind of securities.
8.2 Substitution of Awards on Merger or Acquisition. The Committee may
grant Awards in substitution for stock awards, stock options, stock
appreciation rights or similar awards held by an individual who becomes an
employee of the Company or an Affiliate in connection with a transaction to
which section 424(a) of the Code applies. The terms of such substituted Awards
shall be determined by the Committee in its sole discretion, subject only to
the limitations of Article V.
<PAGE> 7
8.3 Effect of Certain Transactions. The provisions of this Section 8.3
shall apply to the extent that an Agreement does not otherwise expressly
address the matters contained herein. If the Company experiences an event
which results in a "Change in Control," as defined in Section 8.3(a), then,
whether or not the vesting requirements set forth in any Agreement have been
satisfied, (i) all shares of Restricted Stock that are outstanding at the time
of the change in Control shall become fully vested immediately prior to the
Change in Control event, and (ii) all Options that are outstanding at the time
of the Change in Control shall become fully vested and exercisable immediately
prior to the Change in Control event.
(a) A Change in Control will be deemed to have occurred for purposes
hereof, if:
<PAGE> 8
(1) any "person" as such term is used in Sections 13(d) and 14(d) of the
Exchange Act, other than a trustee or other fiduciary holding securities under
an employee benefit plan of the Company or a corporation controlling the
Company or owned directly or indirectly by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the Company,
becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing more than 25%
of the total voting power represented by the Company's then outstanding Voting
Securities (as defined below), or
(2) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board and any new director whose
election by the Board or nomination for election by the Company's shareholders
was approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or
(3) the shareholders of the Company approve a merger or consolidation of
the Company with any other corporation, other than a merger or consolidation
which would result in the Voting Securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into Voting Securities of the surviving
entity) more than 65% of the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation, or
(4) the shareholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the Company of
all or substantially all of its assets.
For purposes of this Section 8.3(a), "Voting Securities" of an entity shall
mean any securities of the entity which vote generally in the election of its
directors.
(b) If, as a result of the Change in Control, the Company is not the
surviving entity after the transaction, or survives only as a subsidiary that
is controlled by another entity, all Options that are held by the Participant
immediately after the Change in Control shall be assumed by the entity which is
the survivor of the transaction, or converted into options to purchase the
common stock of the surviving entity, in a transaction to which section 424(a)
of the Code applies.
(c) Notwithstanding the foregoing, a portion of the acceleration of
vesting described in this Section shall not occur with respect to an Award to
the extent such acceleration of vesting would cause the Participant or holder
of such Award to realize less income, net of taxes, after deducting the amount
of excise taxes that would be imposed pursuant to section 4999 of the Code,
than if accelerated vesting of that portion of the Award did not occur. This
Section 8.3(c) shall not apply to Awards that were granted prior to the
February 14, 1998 amendment and restatement of this Plan.
<PAGE> 9
8.4 No Adjustment Upon Certain Transactions. The issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, for cash or property, or for labor or services rendered, either
upon direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, outstanding Awards.
8.5 Fractional Shares. Only whole shares of Stock may be acquired through
the exercise of an Award. Any amounts tendered in the exercise of an Award
remaining after the maximum number of whole shares have been purchased will be
returned to the Participant in the form of cash.
ARTICLE IX. COMPLIANCE WITH LAW AND REGULATORY APPROVAL
9.1 General. No Award shall be exercisable, no Stock shall be issued, no
certificates for shares of Stock shall be delivered and no payment shall be
made under this Plan except in compliance with all federal or state laws and
regulations (including, without limitation, withholding tax requirements),
federal and state securities laws and regulations and the rules of all
securities exchanges or self-regulatory organizations on which the
Company's shares may be listed. The Company shall have the right to rely on an
opinion of its counsel as to such compliance. Any certificate issued to
evidence shares of Stock for which an Award is exercised may bear such legends
and statements as the Committee upon advice of counsel may deem advisable to
assure compliance with federal or state laws and regulations.
9.2 Representations by Participants. As a condition to the exercise of an
Award, the Company may require a Participant to represent and warrant at the
time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares,
if, in the opinion of counsel for the Company, such representation is required
by any relevant provision of the laws referred to in Section 9.1. At the
option of the Company, a stop transfer order against any shares of stock may be
placed on the official stock books and records of the Company, and a legend
indicating that the stock may not be pledged, sold or otherwise transferred
unless an pinion of counsel was provided (concurred in by counsel for the
Company) and stating that such transfer is not in violation of any applicable
law or regulation may be stamped on the stock certificate in order to assure
exemption from registration. The Committee may also require such other action
or agreement by the Participants as may from time to time be necessary to
comply with federal or state securities laws. This provision shall not
obligate the Company or any Affiliate to undertake registration of options or
stock hereunder.
<PAGE> 10
ARTICLE X. GENERAL PROVISIONS
10.1 Effect on Employment. Neither the amendment and restatement of this
Plan, nor its operation, nor any documents describing or referring to this Plan
(or any part thereof) shall confer upon any employee any right to continue in
the employ of the Company or an Affiliate or in any way affect any right and
power of the Company or an Affiliate to terminate the employment of any
employee at any time with or without assigning a reason therefor.
10.2 Unfunded Plan. The Plan, insofar as it provides for grants, shall be
unfunded, and the Company shall not be required to segregate any assets that
may at any time be represented by grants under this Plan. Any liability of the
Company to any person with respect to any grant under this Plan shall be based
solely upon contractual obligations that may be created hereunder. No such
obligation of the Company shall be deemed to be secured by any pledge of, or
other encumbrance on, any property of the Company.
10.3 Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
masculine gender when used herein refers to both masculine and feminine. The
reference to any statute, regulation or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
10.4 Governing Law. The laws of the State of Mississippi shall apply to
all matters arising under this Plan, to the extent that federal law does not
otherwise apply or preempt Mississippi law.
10.5 Compliance With Section 16 of the Exchange Act. With respect to
persons subject to liability under Section 16 of the Exchange Act, transactions
under this Plan are intended to comply with all applicable conditions of rule
16b-3 (or successor provisions) under the Exchange Act. To the extent any
provision of this Plan or action by Committee fails to so comply, it shall be
deemed null and void to the extent permitted by law and deemed advisable by the
Committee.
10.6 Amendment. The Board may amend or terminate this Plan at any time;
provided, however, an amendment that would have a material adverse effect on
the rights of a Participant under an outstanding Award is not valid with
respect to such Award without the Participant's consent, except as necessary
for Incentive Options to maintain qualification under the Code; and provided,
further, that the shareholders of the Company must approve, in general meeting:
(a) 12 months before or after the date of adoption, any amendment that
increases the aggregate number of shares of Stock that may be issued under
Incentive Options or changes the employees (or class of employees) eligible to
receive Incentive Options;
(b) before the effective date thereof, any amendment that changes the
number of shares in the aggregate which may be issued pursuant to Awards
granted under the Plan or the maximum number of shares with respect to which
any individual may receive options in any calendar year; and
(c) before the effective date thereof, any amendment that increases the
period during which Awards may be granted or exercised.
<PAGE> 11
10.7 Duration of Plan. This Plan shall continue until it is terminated by
the Board pursuant to Section 10.6. However, no Incentive Option may be
granted under this Plan with respect to the additional shares of Stock that are
reserved for grant effective February 14, 1998, pursuant to Section 5.2, after
February 13, 2008, which is 10 years after the date that this amendment and
restatement of the Plan is adopted by the Board. No Incentive Option may be
granted under this Plan after December 27, 2004, with respect to shares of
Stock that were originally reserved for grant effective December 28, 1994.
Incentive Options granted before such dates shall remain valid in accordance
with their terms.
10.8 Effective Date of Plan. This Plan was first adopted by the Board on
December 28, 1994, was thereafter approved by the shareholders of the Company,
and was amended and restated effective February 14, 1998. All Awards granted
hereunder shall be governed by the terms of this amended and restated Plan;
provided, however, that the terms of the Plan prior to this amendment shall
apply to the extent that the terms of this restated Plan would have a
material adverse effect on the rights of a Participant under an outstanding
Award, unless the Participant has given consent to the change, or would modify
the vesting rights and rights to exercise an outstanding Award.
IN WITNESS WHEREOF, the undersigned officer has executed this amendment and
restatement of the Plan on this the _____ day of ____________, 1998, but to be
effective as provided in Section 10.8.
BANCORPSOUTH, INC.
By: ______________________________
Its: ______________________________
<PAGE>
BANCORPSOUTH, INC.
1995 NON-QUALIFIED STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS
Amended and Restated as of February 14, 1998
<PAGE>
BANCORPSOUTH, INC.
1995 NON-QUALIFIED STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS
1.1 Affiliate............................................................. 1
1.2 Agreement............................................................. 1
1.3 Award................................................................. 1
1.4 Board................................................................. 1
1.5 Code.................................................................. 1
1.6 Committee............................................................. 1
1.7 Company............................................................... 1
1.8 Date of Exercise...................................................... 1
1.9 Exchange Act.......................................................... 1
1.10 Fair Market Value.................................................... 1
1.11 Option............................................................... 2
1.12 Participant.......................................................... 2
1.13 Plan................................................................. 2
1.14 Restricted Stock..................................................... 2
1.15 Stock................................................................ 2
Article II. Purpose of Plan.............................................. 2
Article III. Administration
3.1 Administration of Plan ............................................... 3
3.2 Authority to Grant Options ........................................... 3
ARTICLE IV. Eligibility and Limitations On Grants
4.1 Participation......................................................... 3
4.2 Restricted Stock...................................................... 5
4.3 Agreements............................................................ 5
ARTICLE V. STOCK SUBJECT TO PLAN
5.1 Source of Shares...................................................... 5
5.2 Maximum Number of Shares.............................................. 5
5.3 Forfeitures........................................................... 6
ARTICLE VI, EXERCISE OF OPTIONS
6.1 Restriction on Exercise............................................... 6
6.2 Maximum Exercise Period............................................... 6
6.3 Transferability....................................................... 6
<PAGE>
ARTICLE VII. METHOD OF EXERCISE
7.1 Exercise.............................................................. 6
7.2 Payment............................................................... 6
7.3 Federal Withholding Tax Requirements.................................. 6
7.4 Shareholder Rights.................................................... 6
7.5 Issuance and Delivery of Shares....................................... 6
ARTICLE VIII. ADJUSTMENT UPON CORPORATE CHANGES
8.1 Adjustments to Shares................................................. 7
8.2 Effect of Certain Transactions........................................ 7
8.3 No Adjustment Upon Certain Transactions............................... 8
8.4 Fractional Shares..................................................... 9
ARTICLE IX. COMPLIANCE WITH LAW AND REGULATORY APPROVAL
9.1 General............................................................... 9
9.2 Representations by Participants....................................... 9
ARTICLE X. GENERAL PROVISIONS
10.1 Unfunded Plan......................................................... 9
10.2 Rules of Construction................................................. 9
10.3 Governing Law.........................................................10
10.4 Compliance With Section 16 of the Exchange Act........................10
10.5 Amendment.............................................................10
10.6 Duration of Plan......................................................10
10.7 Effective Date of Plan................................................10
<PAGE> 1
BANCORPSOUTH, INC.
1995 NON-QUALIFIED STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
PREAMBLE
WHEREAS, effective January 24, 1995, BancorpSouth, Inc. (the "Company")
previously established the BancorpSouth, Inc. 1995 Non-Qualified Stock Option
Plan for Non-Employee Directors (the "Plan"), in order to provide for the award
of options to purchase the common stock of the Company ("Stock") to non-
employee directors of the Company; and
WHEREAS, the Company desires to amend and restate this Plan to conform with
changes to the Securities and Exchange Commission Rule 16b-3 and to provide for
certain administrative modifications;
NOW THEREFORE, the Company hereby amends and restates the Plan, effective
February 14, 1998.
Article I. Definitions
1.1 Affiliate. A "parent corporation," as defined in section 424(e) of
the Code, or "subsidiary corporation," as defined in section 424(f) of the
Code, of the Company.
1.2 Agreement. A written agreement (including any amendment or supplement
thereto) between the Company or Affiliate and a Participant specifying the
terms and conditions of an Option granted to such Participant.
1.3 Award. A right that is granted under the Plan to a Participant by the
Company, which may be in the form of Options or Restricted Stock.
1.4 Board. The board of directors of the Company.
1.5 Code. The Internal Revenue Code of 1986, as amended.
1.6 Committee. The Board or a committee of two or more Board members who
are designated by the Board to administer the Plan. In the absence of a
designation of a Committee by the Board, the Board shall be the Committee.
1.7 Company. BancorpSouth, Inc. and its successors.
1.8 Date of Exercise. The date that the Company accepts tender of the
exercise price of an Option.
1.9 Exchange Act. The Securities Exchange Act of 1934, as amended.
1.10 Fair Market Value. On any given date, Fair Market Value shall be the
applicable description below (unless, where appropriate, the Committee
determines in good faith the fair market value of the Stock to be otherwise):
(a) If the Stock is reported on the New York Stock Exchange or the
American Stock Exchange, then Fair Market Value shall be the closing price of
the Stock on such exchange on which such Stock is traded on the trading day as
of which Fair Market Value is being determined, or on the next preceding day on
which such Stock is traded if no Stock was traded on such trading day.
(b) If the Stock is not reported on the New York Stock Exchange or the
American Stock Exchange, but is reported on the Nasdaq National Market System
or another Nasdaq automated quotation system, and market information is
published on a regular basis, then Fair Market Value shall be the closing price
of the Stock, as so published, on the trading day as of which Fair Market Value
is being determined, or the closing price on the next preceding trading day on
which such prices were published if no Stock was traded on such trading day.
(c) If market information is not so published on a regular basis, then
Fair Market Value shall be the average of the high bid and low asked prices of
the Stock in the over-the-counter market over a period of trading days that is
reasonably representative of the normal trading of the Stock for the date on
which Fair Market Value is being determined, as reported by a generally
accepted reporting service.
(d) If the Stock is not publicly traded, Fair Market Value shall be the
value determined in good faith by the Committee or the Board. However, such
determination shall not take into account any restriction on the stock, except
for a restriction which by its terms will never lapse.
<PAGE> 2
1.11 Option. The right that is granted hereunder to a Participant to
purchase from the Company a stated number of shares of Stock at the price set
forth in an Agreement. As used herein, an Option includes only options not
qualified under Section 422 of the Code.
1.12 Participant. A person who has been granted an Award pursuant to
Article IV.
1.13 Plan. The BancorpSouth, Inc. 1995 Non-Qualified Stock Option Plan for
Non-Employee Directors.
1.14 Restricted Stock. A grant of Stock that is subject to forfeiture
and/or restrictions on transfer that are identified in an Agreement. Shares of
Stock that are subject to any such restrictions or risks of forfeiture shall
cease to be Restricted Stock at the time that such restrictions and risks of
forfeiture lapse in accordance with the terms of the Agreement or Plan.
1.15 Stock. The common stock of the Company, $2.50 par value.
ARTICLE II. PURPOSE OF PLAN
The purpose of the Plan is to maintain the Company's ability to attract and
retain the services of experienced and highly-qualified non-employee directors
and to encourage stock ownership by such directors, and to align the interests
of such individuals with those of the Company, its Affiliates and its
shareholders. It is intended that Participants may acquire or increase their
proprietary interests in the Company and be encouraged to remain in the
directorship of the Company. The proceeds received by the Company from the
sale of Stock pursuant to this Plan may be used for general corporate purposes.
<PAGE> 3
ARTICLE III. ADMINISTRATION
3.1 Administration of Plan. The Plan shall be administered by the
Committee. The express grant in the Plan of any specific power to the
Committee shall not be construed as limiting any power or authority of the
Committee. Any decision made or action taken by the Committee to administer
the Plan shall be final and conclusive. No member of the Committee shall be
liable for any act done in good faith with respect to this Plan or any
Agreement or Option. The Company shall bear all expenses of Plan
administration. In addition to all other authority vested with the Committee
under the Plan, the Committee shall have complete authority to:
(a) Interpret all provisions of this Plan;
(b) Prescribe the form of any Agreement and notice and manner for
executing or giving the same;
(c) Make amendments to all Agreements;
(d) Adopt, amend and rescind rules for Plan administration; and
(e) Make all determinations it deems advisable for the administration of
this Plan.
3.2. Authority to Grant Options. The Committee shall have authority to
grant Options upon such terms the Committee deems appropriate and that are not
inconsistent with the provisions of this Plan. Such terms may include
conditions on the exercise of all or any part of an Option.
ARTICLE IV. ELIGIBILITY AND LIMITATIONS ON GRANTS
4.1 Participation. Options shall be granted initially as of May 1, 1995
to each non-employee director serving the Company as a director on such date
(i.e., a "Participant"). Thereafter on each May 1 during the term of the Plan,
Options shall be granted automatically to each individual who is a director of
the Company on such date but is not an employee of the Company or an Affiliate.
The date of grant of an Option pursuant to the Plan shall be referred to
hereinafter as the "Grant Date" of such Option. Notwithstanding anything
herein to the contrary, the Board may revoke, on or prior to each Grant Date,
the next automatic grant of Options otherwise provided for by the Plan if no
options have been granted to employees since the preceding Grant Date under
the Company's 1994 Stock Incentive Plan or any other employee stock option plan
that the Company might adopt hereafter.
(a) Number. On each Grant Date prior to May 1, 1998, each Participant
shall be granted an Option to purchase the number of shares of Stock rounded
down to the nearest number of whole shares equal to 24,000 shares divided by
the number of Participants on such Grant Date. On the Grant Date that occurs
on May 1, 1998, each Participant shall receive an Option to purchase 600 shares
of Stock. On each Grant Date that occurs after May 1, 1998, each Participant
shall receive an Option to purchase 1,800 shares of Stock. The formula set
forth above will not be affected by any decision of the Board to revoke an
automatic grant. If, on any Grant Date during the term of the Plan, there are
not sufficient shares of Stock that remain available pursuant to Section 5.2 to
provide this automatic grant on such date, then the number of shares that can
be purchased under the Option that is granted on that date shall be determined
by dividing the number of shares of Stock which remain available pursuant to
Section 5.2 by the number of Participants who are eligible to receive an Option
on such Grant Date, with fractional shares rounded down to the nearest number
of whole shares. All references to numbers of shares in this Section are
subject to adjustment in accordance with Article VIII.
(b) Price. The price at which each share of Stock covered by an Option
shall be the Fair Market Value of Stock on the Grant Date of such Option.
(c) Option Period. The period within which each Option may be exercised
shall commence upon the date of the first annual shareholders meeting of the
Company that follows the Grant Date by at least six months (the "Annual
Meeting") and shall expire, in all cases, ten years from the Grant Date of such
Option (the "Option Period"), unless terminated sooner pursuant to Section
4.1(d).
(d) Termination of Service, Death, Etc. Notwithstanding the term of an
Option stated under Section 4.1(c), each Agreement shall provide for earlier
termination of an Option under the following conditions:
(1) If the directorship of the Participant is terminated within the Option
Period on account of fraud, dishonesty or other acts detrimental to the
interests of the Company or any direct or indirect majority-owned subsidiary of
the Company, the Option shall automatically terminate as of the date of such
termination.
(2) If the Participant shall die prior to the end of the Option period
while a director of the Company, or during the additional three-month period
provided by Section 4.1(d)(3), the Option may be exercised, to the extent that
the Participant was entitled to exercise it at the date of the Participant's
death, within one year after such date (if otherwise within the Option
Period), but not thereafter, by the executor or administrator of the estate of
the Participant, or by person or persons who shall have acquired the Option
directly from the Participant by bequest or inheritance.
(3) If the directorship of a Participant is terminated for any reason
(other than because of normal retirement or the circumstances otherwise
specified by this Section 4.1(d) within the Option Period, the Option may be
exercised, to the extent the Participant was able to do so at the date of
termination of the directorship, within three months after such termination
(if otherwise within the Option Period), but not thereafter. Upon a
Participant's retirement in accordance with the Company's normal retirement
policies, all Options and Rights then outstanding shall remain in effect in
accordance with their terms.
<PAGE> 5
4.2 Restricted Stock. On the Grant Date that occurs on May 1, 1998, each
Participant shall be awarded 400 shares of Restricted Stock (subject to
adjustment in accordance with Article VIII). Thereafter, no further awards of
Restricted Stock will be made. Except for the restrictions described in this
Section or in an Agreement, a Participant who receives Restricted Stock shall
be treated as a shareholder of the Company with respect to such shares for all
purposes. Unless otherwise specified in an Agreement, Participants shall be
entitled to receive dividends on and exercise voting rights with respect to
shares of Restricted Stock.
(a) Vesting of Restricted Stock. Except as otherwise expressly provided
herein, Restricted Stock awarded hereunder shall be forfeited to the Company to
the extent that it is not vested on the date that the directorship of a
Participant is terminated. For this purpose, the shares of the Restricted
Stock awarded to each Participant on May 1, 1998, shall become vested on the
following dates:
(1) 133 shares on May 1, 1999.
(2) An additional 133 shares on May 1, 2000.
(3) An additional 134 shares on May 1, 2001.
(b) Retirement, Death, Etc. Prior to the occurrence of a forfeiture
described in Section 4.2(a), all shares of Restricted Stock shall become fully
vested if the Participant dies while a director of the Company or retires in
accordance with the Company's normal retirement policies.
4.3 Agreements. All Awards granted under this Plan shall be evidenced by
Agreements which shall be subject to applicable provisions of this Plan and
such other provisions as the Committee may adopt that are not inconsistent with
the Plan.
ARTICLE V. STOCK SUBJECT TO PLAN
5.1 Source of Shares. Upon the exercise of an Option or the grant of
Restricted Stock, the Company shall transfer to the Participant authorized but
previously unissued Stock or, if determined by the Board, shares of Stock that
are held in treasury.
5.2 Maximum Number of Shares. The maximum aggregate number of shares of
Stock that may be issued pursuant to this Plan is 192,000 shares. From this
limit, no more than 4,000 shares of Stock may be issued as Restricted Stock.
The numerical limits specified in this Section are subject to increases and
adjustments as provided in Article VIII.
<PAGE> 6
5.3 Forfeitures. If any Award granted hereunder is forfeited, expires or
terminates for any reason, in part or whole, the shares of Stock subject
thereto which are not issued pursuant to that Award shall again be available
for issuance of an Award under this Plan.
ARTICLE VI. EXERCISE OF OPTIONS
6.1 Restriction on Exercise. Options shall not be exerciseable and
Restricted Stock shall not be transferable until at least six months after an
Award is granted.
6.2 Maximum Exercise Period. The maximum period in which an Option may be
exercised shall be 10 years after the date it is granted.
6.3 Transferability. An Option granted under this Plan may be
transferable to the extent provided in an Agreement. Provided, however, that
no right or interest of a Participant in any Option or Restricted Stock shall
be liable for, or subject to, any lien, obligation or liability of such
Participant.
ARTICLE VII. METHOD OF EXERCISE
7.1 Exercise. An Option granted hereunder shall be deemed to have been
exercised on the Date of Exercise. Subject to the provisions of Articles VI
and IX, an Option may be exercised in whole or in part at such times and in
compliance with such requirements as the Committee shall determine, but in no
event sooner than six months from the date of grant.
7.2 Payment. Unless otherwise provided by the Agreement, payment of the
Option price shall be made in cash (including an exercise involving the pledge
of shares and a loan through a broker described in Securities Exchange
Commission Regulation T) or, to the extent approved by the Committee, Stock
that was acquired prior to the exercise of the Option, other consideration
acceptable to the Committee, or a combination thereof.
7.3 Federal Withholding Tax Requirements. Upon exercise of an Option, the
Participant shall, upon notification of the amount due and prior to or
concurrently with the delivery of the certificates representing the shares, pay
to the Company amounts necessary to satisfy applicable federal, state and local
withholding tax requirements or shall otherwise make arrangements satisfactory
to the Company for such requirements.
7.4 Shareholder Rights. No Participant shall have any rights as a
shareholder with respect to shares subject to Options prior to the Date of
Exercise of such Option.
7.5 Issuance and Delivery of Shares. Shares of Stock issued pursuant to
the exercise of Options hereunder shall be delivered to Participants by the
Company (or its transfer agent) as soon as administratively feasible after a
Participant exercises an Option hereunder and executes any applicable
shareholder agreement or agreement described in Section 9.2 that the Company
requires at the time of exercise.
<PAGE> 8
ARTICLE VIII. ADJUSTMENT UPON CORPORATE CHANGES
8.1 Adjustments to Shares. The maximum number of shares of stock with
respect to which Awards hereunder may be granted and which are the subject of
outstanding Options, and the exercise price thereof, shall be adjusted as the
Committee determines (in its sole discretion) to be appropriate, in the event
that:
(a) the Company or an Affiliate effects one or more stock dividends, stock
splits, reverse stock splits, subdivisions, consolidations or other similar
events;
(b) the Company or an Affiliate engages in a transaction to which Section
424 of the Code applies; or
(c) there occurs any other event which in the judgment of the Committee
necessitates such action;
Provided, however, that if an event described in paragraph (a) or (b) occurs,
the Committee shall make adjustments to the limits on Options specified in
Section 5.2 that are proportionate to the modifications of the Stock that are
on account of such corporate changes. Notwithstanding the foregoing, the
Committee may not modify the Plan or the terms of any Options then outstanding
or to be granted hereunder to provide for the issuance under the Plan of a
different class of stock or kind of securities.
8.2 Effect of Certain Transactions. The provisions of this Section 8.2
shall apply to the extent that an Agreement does not otherwise expressly
address the matters contained herein. If the Company experiences an event
which results in a "Change in Control," as defined in Section 8.2(a), then,
whether or not the vesting requirements set forth in any Agreement have been
satisfied, (i) all shares of Restricted Stock that are outstanding at the
time of the Change in Control shall become fully vested immediately prior to
the Change in Control event, and (ii) all Options that are outstanding at
the time of the Change in Control shall become fully vested and exercisable
immediately prior to the Change in Control event.
(a) A Change in Control will be deemed to have occurred for purposes
hereof, if:
(1) any "person" as such term is used in Sections 13(d) and 14(d) of the
Exchange Act, other than a trustee or other fiduciary holding securities under
an employee benefit plan of the Company or a corporation controlling the
Company or owned directly or indirectly by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the Company,
becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing more than 25%
of the total voting power represented by the Company's then outstanding Voting
Securities (as defined below), or
(2) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board and any new director whose
election by the Board or nomination for election by the Company's shareholders
was approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or
(3) the shareholders of the Company approve a merger or consolidation of
the Company with any other corporation, other than a merger or consolidation
which would result in the Voting Securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into Voting Securities of the surviving
entity) more than 65% of the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation, or
(4) the shareholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the Company of
all or substantially all of its assets.
For purposes of this Section 8.2(a), "Voting Securities" of an entity shall
mean any securities of the entity which vote generally in the election of its
directors.
(b) If, as a result of the Change in Control, the Company is not the
surviving entity after the transaction, or survives only as a subsidiary that
is controlled by another entity, all Options that are held by the Participant
immediately after the Change in Control shall be assumed by the entity which is
the survivor of the transaction, or converted into options to purchase the
common stock of the surviving entity, in a transaction to which section 424(a)
of the Code applies.
(c) Notwithstanding the foregoing, a portion of the acceleration of
vesting described in this Section shall not occur with respect to an Award to
the extent such acceleration of vesting would cause the Participant or holder
of such Award to realize less income, net of taxes, after deducting the amount
of excise taxes that would be imposed pursuant to section 4999 of the Code,
than if accelerated vesting of that portion of the Award did not occur. This
Section 8.2(c) shall not apply to Awards that were granted prior to the
February 14, 1998 amendment and restatement of this Plan.
8.3 No Adjustment Upon Certain Transactions. The issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, for cash or property, or for labor or services rendered, either
upon direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company convertible
into such shares or other securities, shall not affect, and no adjustment by
reason thereof shall be made with respect to, outstanding Options.
<PAGE> 9
8.4 Fractional Shares. Only whole shares of Stock may be acquired through
the exercise of an Option. Any amounts tendered in the exercise of an Option
remaining after the maximum number of whole shares have been purchased will be
returned to the Participant in the form of cash.
ARTICLE IX. COMPLIANCE WITH LAW AND REGULATORY APPROVAL
9.1 General. No Option shall be exercisable, no Stock shall be issued, no
certificates for shares of Stock shall be delivered and no payment shall be
made under this Plan except in compliance with all federal or state laws and
regulations (including, without limitation, withholding tax requirements),
federal and state securities laws and regulations and the rules of all
securities exchanges or self-regulatory organizations on which the Company's
shares may be listed. The Company shall have the right to rely on an opinion
of its counsel as to such compliance. Any certificate issued to evidence
shares of Stock for which an Option is exercised may bear such legends and
statements as the Committee upon advice of counsel may deem advisable to assure
compliance with federal or state laws and regulations.
9.2 Representations by Participants. As a condition to the exercise of
an Option, the Company may require a Participant to represent and warrant at
the time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares,
if, in the opinion of counsel for the Company, such representation is
required by any relevant provision of the laws referred to in Section 9.1. At
the option of the Company, a stop transfer order against any shares of stock
may be placed on the official stock books and records of the Company, and a
legend indicating that the stock may not be pledged, sold or otherwise
transferred unless an opinion of counsel was provided (concurred in by counsel
for the Company) and stating that such transfer is not in violation of any
applicable law or regulation may be stamped on the stock certificate in order
to assure exemption from registration. The Committee may also require such
other action or agreement by the Participants as may from time to time be
necessary to comply with federal or state securities laws. This provision
shall not obligate the Company or any Affiliate to undertake registration of
options or stock hereunder.
ARTICLE X. GENERAL PROVISIONS
10.1 Unfunded Plan. The Plan, insofar as it provides for grants, shall be
unfunded, and the Company shall not be required to segregate any assets that
may at any time be represented by grants under this Plan. Any liability of the
Company to any person with respect to any grant under this Plan shall be based
solely upon contractual obligations that may be created hereunder. No such
obligation of the Company shall be deemed to be secured by any pledge of, or
other encumbrance on, any property of the Company.
10.2 Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
masculine gender when used herein refers to both masculine and feminine. The
reference to any statute, regulation or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
<PAGE> 10
10.3 Governing Law. The internal laws of the State of Mississippi shall
apply to all matters arising under this Plan, except to the extent that federal
law does not otherwise apply or preempt Mississippi law.
10.4 Compliance With Section 16 of the Exchange Act. Transactions under
this Plan are intended to comply with all applicable conditions of Rule 16b-3
(or successor provisions) under the Exchange Act. To the extent any provision
of this Plan or action by Committee fails to so comply, it shall be deemed null
and void to the extent permitted by law and deemed advisable by the Committee.
10.5 Amendment. The Board may amend or terminate this Plan at any time;
provided, however, an amendment that would have a material adverse effect on
the rights of a Participant under an outstanding Option is not valid with
respect to such Option without the Participant's consent; and provided,
further, that the shareholders of the Company must approve, in general meeting,
before the effective date thereof, any amendment that changes the number of
shares in the aggregate which may be issued pursuant to Options granted under
the Plan.
10.6 Duration of Plan. This Plan shall continue until it is terminated by
the Board pursuant to Section 10.5.
10.7 Effective Date of Plan. This Plan was first adopted by the Board on
January 24, 1995, and was thereafter approved by the shareholders of the
Company. Effective February 14, 1998, all Awards granted hereunder shall be
governed by the terms of this amended and restated Plan; provided, however,
that the terms of the Plan prior to this amendment shall apply to the extent
that the terms of this restated Plan would have a material adverse effect on
the rights of a Participant under an outstanding Award, unless the Participant
has given consent to the change, or would modify the vesting rights and rights
to exercise an outstanding Award.
IN WITNESS WHEREOF, the undersigned officer has executed this restated and
amended Plan on this the _____ day of ___________, 1998, but to be effective as
of the dates specified in Section 10.7.
BANCORPSOUTH, INC.
By: _________________________
Its: _________________________
<TABLE> <S> <C>
<ARTICLE> 9
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> MAR-31-1998
<CASH> 122,571
<INT-BEARING-DEPOSITS> 4,914
<FED-FUNDS-SOLD> 53,000
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