January 24, 1997
Dear Stockholder:
The 1997 Annual Meeting of Stockholders of the Company will be held in
the Petroleum Room of the Ramada Inn in Laurel, Mississippi, at 10:00 A.M. on
Thursday, February 27, 1997. The purposes of the Annual Meeting are set forth
in the accompanying Notice and Proxy Statement.
The 1996 Annual Report, which is enclosed, contains financial and other
information concerning the Company and its business for the fiscal year ended
October 31, 1996. The Annual Report is not to be considered part of the proxy
solicitation materials.
We cordially invite you to attend the Annual Meeting. If you cannot
attend, please complete and return the enclosed Proxy so that your vote can be
recorded.
Cordially,
/s/Joe Frank Sanderson
Joe Frank Sanderson
Chairman of the Board
PAGE
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held February 27, 1997
To the Stockholders:
The Annual Meeting of Stockholders of Sanderson Farms, Inc. (the
"Company") will be held in the Petroleum Room of the Ramada Inn in Laurel,
Mississippi at 10:00 A.M. (local time) on Thursday, February 27, 1997, for the
following purposes:
(1) To elect three Class A Directors to serve until the 2000 annual
meeting;
(2) To consider and act upon a proposal to add a new Article FIFTEENTH
to the Company's Articles of Incorporation, which proposed Article is annexed
as Exhibit A to the accompanying Proxy Statement and pertains to the
indemnification of directors and officers of the Company;
(3) To consider and act upon a proposal to approve Article VI of the
Company's By-Laws, as amended, which Article is annexed as Exhibit C to the
accompanying Proxy Statement and pertains to the indemnification of directors,
officers and certain employees of the Company;
(4) To consider and act upon a proposal to ratify and approve the
selection of Ernst & Young LLP as the Company's independent auditors for the
fiscal year ending October 31, 1997; and
(5) To transact such other business as may properly come before the
meeting or any adjournments thereof.
The business to be transacted at the Annual Meeting is more fully
described in the accompanying Proxy Statement, to which reference is hereby
made.
The Board of Directors has fixed the close of business on January 13,
1997 as the record date for determining stockholders entitled to notice of and
to vote at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS:
/s/James A. Grimes, Secretary
Dated: January 24, 1997
PAGE
<PAGE>
PROXY STATEMENT
General
The accompanying Proxy is solicited by and on behalf of the Board of
Directors of Sanderson Farms, Inc. (the "Company"), P.O. Box 988, Laurel,
Mississippi 39441, in connection with the 1997 Annual Meeting of Stockholders
to be held February 27, 1997, and any adjournments of that meeting. Execution
of the Proxy will not in any way affect a stockholder's right to attend the
meeting and, upon revocation of the Proxy, to vote in person. Proxies may be
revoked at any time before they are voted by filing with the Secretary a
written notice of revocation or a duly executed Proxy bearing a later date.
Unless they are revoked, Proxies in the form enclosed, properly executed and
received by the Secretary of the Company prior to the Annual Meeting, will be
voted at the meeting as specified by the stockholder in the Proxy or, except
with respect to broker non-votes, if no specification is made in the Proxy,
then FOR each of the proposals set forth in the accompanying Notice of Annual
Meeting of Stockholders, and according to their discretion upon all other
matters which may properly come before the meeting. Broker non-votes will be
treated as not present for purposes of calculating the vote on a matter for
which no specification is made in the proxy, and will not be counted either as
a vote FOR or AGAINST a proposal or as an ABSTENTION with respect thereto.
Abstentions will not be counted either as a vote FOR or as a vote AGAINST a
proposal. The cost of soliciting Proxies is being paid by the Company.
The Company's 1996 Annual Report accompanies this Proxy Statement, but
is not to be considered a part of the proxy solicitation materials. The
record date for the Annual Meeting is January 13, 1997. These materials are
being mailed to stockholders on or about January 24, 1997.
PAGE
<PAGE>
Capital Stock
The authorized capital stock of the Company consists of 5,000,000 shares
of non-voting preferred stock, of which 500,000 shares have been designated
Series A Junior Participating Preferred Stock, par value $100.00 per share,
none of which shares have been issued, and 100,000,000 shares of Common Stock,
par value $1.00 per share, of which 14,363,080 shares had been issued and were
outstanding as of January 13, 1997, the record date for the Annual Meeting.
Only stockholders of record at the close of business on such date are entitled
to notice of and to vote at the Annual Meeting. Each such stockholder is
entitled to one vote for each share of common stock held at that date.
Beneficial Ownership
The following table sets forth information, as of January 13, 1997,
concerning (a) the only stockholders known by the Company to own beneficially
more than 5% of the common stock of the Company, which is the only class of
voting securities outstanding, (b) the beneficial ownership of common stock of
the executive officers named in the "Summary Compensation Table" below, and
(c) the beneficial ownership of common stock by all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
Amount
Beneficial Owner(s) Beneficially Percent
and Address Owned(1)(2) of Class
<S> <C> <C>
Joe Frank Sanderson (3) 3,255,380 shares 22.66%
Dewey R. Sanderson, Jr. (4) 3,268,482 shares 22.76%
Joe F. Sanderson, Jr. (5) 144,573 shares 1.01%
D. Michael Cockrell (6) 6,092 shares (11)
Trustmark National Bank (7) 1,750,331 shares 12.19%
Lampkin Butts (2) (8) 1,765,389 shares 12.29%
Robin Robinson (2) (9) 1,750,331 shares 12.19%
All Directors and executive
officers as a
group (12 persons) (10) 8,663,408 shares 60.32%
</TABLE>
(1) The shares are owned of record by the beneficial owners shown with
sole voting and investment power, except as set forth in the following notes.
(2) Lampkin Butts, Robin Robinson and Trustmark National Bank are the
trustees of the Employee Stock Ownership Plan and Trust of Sanderson Farms,
Inc. and Affiliates (the "ESOP"), which is the record owner of 1,750,331
shares of common stock of the Company. Trustmark National Bank and Mr. Butts
and Ms. Robinson, in their respective capacities as trustees of the ESOP,
share with each other investment power with respect to those shares of common
stock and therefore are each deemed to beneficially own, under applicable
regulations of the Securities and Exchange Commission, the 1,750,331 shares of
common stock owned of record by the ESOP. With respect to the voting power of
the 1,750,331 shares of common stock, the members of the Administrative
Committee of the ESOP share with each other voting power as to 877,150 shares,
which are the shares of common stock not allocated to participant accounts
under the ESOP, and the participants in the ESOP exercise sole voting power as
to the 873,181 shares allocated to their respective accounts under the ESOP.
(3) Address: P. O. Box 988, Laurel, Mississippi 39441. The amount in
the table includes 3,173,845 shares owned of record by Mr. Sanderson and
81,535 shares allocated to Mr. Sanderson's account under the ESOP, with
respect to each of which amount Mr. Sanderson has sole voting power. Mr.
Sanderson has sole investment power with respect to the 3,173,845 shares owned
of record by him. The trustees of the ESOP share investment power over the
81,535 shares allocated to Mr. Sanderson's account under the ESOP.
(4) Address: P. O. Box 988, Laurel, Mississippi 39441. Includes 223,257
shares owned of record by Mr. Sanderson's wife, as to which she exercises sole
voting and investment power, and as to which Mr. Sanderson, pursuant to Rule
13d-4, disclaims beneficial ownership.
(5) Address: P. O. Box 988, Laurel, Mississippi 39441. The amount shown
in the table includes 63,517 shares owned of record by Mr. Sanderson over
which he exercises sole voting and investment power, and 29,918 shares
allocated to Mr. Sanderson's account in the Company's ESOP, with respect to
which Mr. Sanderson has sole voting power. The trustees of the ESOP share
investment power over the 29,918 shares allocated to Mr. Sanderson's account
under the ESOP. The amount shown in the table also includes 6,539 shares
owned of record by Mr. Sanderson's wife, over which she exercises sole voting
and investment power and as to which Mr. Sanderson, pursuant to Rule 13d-4,
disclaims beneficial ownership. The amount in the table also includes 44,599
shares owned of record by a charitable private foundation established by Joe
Frank Sanderson, for which Mr. Sanderson serves as a director and as such,
shares voting and investment power with the other directors of the foundation
with respect to such shares.
(6) Address: P. O. Box 988, Laurel, Mississippi 39441. The amount
shown in the table includes 450 shares owned of record by Mr. Cockrell over
which he exercises sole voting and investment power, and 17 shares allocated
to Mr. Cockrell's account in the Company's ESOP, with respect to which Mr.
Cockrell has sole voting power. The trustees of the ESOP share investment
power over the 17 shares allocated to Mr. Cockrell's account under the ESOP.
The amount in the table also includes 5,625 options to purchase shares owned
by Mr. Cockrell under the Company's Stock Option Plan, which options to
purchase such shares were exercisable on the date of this Proxy, and which
exercisable options were in the money on the date hereof.
(7) Address: 415 North Magnolia, Laurel, Mississippi 39940. See note (2)
above for a description of the nature of Trustmark National Bank's beneficial
ownership of the 1,750,331 shares of common stock owned of record by the ESOP.
Trustmark National Bank, pursuant to Rule 13d-4, disclaims beneficial
ownership of all shares of common stock owned of record by the ESOP, which
constitute all shares reported as being beneficially owned by it.
(8) Address: P. O. Box 988, Laurel, Mississippi 39441. See Note (2)
for a description of the nature of Mr. Butts' beneficial ownership of the
1,750,331 shares of common stock owned of record by the ESOP. Mr. Butts,
pursuant to Rule 13d-4, disclaims beneficial ownership of all shares of common
stock owned of record by the ESOP, except the 13,396 shares allocated to his
individual account. The amount in the table also includes 3,773 shares owned
of record by Mr. Butts, and 35 shares held as custodian for a minor child,
over which he exercises sole voting and investment power. With respect to the
13,396 shares allocated to his account under the Company's ESOP, Mr. Butts has
sole voting power, but shares investment power with the other trustees of the
ESOP. The amount in the table also includes 11,250 options to purchase shares
owned by Mr. Butts under the Company's Stock Option Plan, which options to
purchase such shares were exercisable on the date of this Proxy, and which
exercisable options were in the money on the date hereof.
(9) Address: P. O. Box 988, Laurel, Mississippi 39441. See Note (2)
above for a description of the nature of Ms. Robinson's beneficial ownership
of the 1,750,331 shares of common stock owned of record by the ESOP. Ms.
Robinson, pursuant to Rule 13d-4, disclaims beneficial ownership of all shares
of common stock owned of record by the ESOP, except the 3,213 shares allocated
to her individual account. There are 3,213 shares allocated to Ms. Robinson's
account in the Company's ESOP, with respect to which Ms. Robinson has sole
voting power, but over which she shares investment power with the other
trustees of the ESOP.
(10) Includes an aggregate of 128,851 shares allocated to the accounts
of all Directors and executive officers as a group (12 persons, 5
participating) under the ESOP. See note (2) above.
(11) Less than 1%
PAGE
<PAGE>
ELECTION OF DIRECTORS
The amended Articles of Incorporation of the Company provide that the
Board of Directors shall be divided into three classes (Class A, Class B and
Class C), with each class containing one-third, or as close to one-third as
possible, of the total, and that the number of directors shall be fixed by the
Board of Directors in the By-laws. At the current time, the Board of
Directors has fixed the number of directors at nine, resulting in there being
three directors in each class. At each annual meeting of stockholders,
directors constituting one class are elected for a three-year term. At the
1997 Annual Meeting, stockholders will elect three Class B directors, whose
term will expire at the 2000 annual meeting.
Nominees for Class B Directors
The Board of Directors proposes the election as Class B Directors the
three nominees listed below, each to serve as a Class B Director until the
2000 annual meeting or until his successor is elected and has qualified. Any
vacancy on the Board of Directors may be filled either by the Board of
Directors or by the stockholders, and any person elected to fill a vacancy
will serve the remainder of the term of the director whose position has become
vacant.
Proxies in the enclosed form may also be voted for the election as Class
B Directors of substitute nominees who may be named by the Board of Directors
to replace any of the three nominees who become unavailable to serve for any
reason. (No such unavailability is presently known to the Board of
Directors.) In no event, however, will the Proxies be voted for more than
three persons. There are no arrangements or understandings relating to any
person's service or prospective service as a Class B Director of the Company.
No nominee listed below will be elected as a Class B Director unless such
nominee receives the affirmative vote of the holders of a majority of the
shares entitled to vote and represented (whether in person or by proxy) at the
Annual Meeting at which a quorum is present. If more nominees than the number
of Directors to be elected receive a majority vote, then those nominees, up to
three persons, receiving the highest number of votes will be elected.
Abstentions will not be counted either as a vote FOR or as a vote AGAINST the
nominees for Class B Directors. Broker non-votes will be treated as not
present for purposes of calculating the vote with respect to the election of
the Class B Directors, and will not be counted either as a vote FOR or AGAINST
or as an ABSTENTION with respect thereto.
The following table lists the nominees for Class B Director and shows,
as of January 13, 1997, their respective beneficial ownership of common stock
of the Company. Dewey R. Sanderson, Jr. is the father of Robert Buck Sanderson
(Class C Director), the brother of Joe Frank Sanderson (Class C Director) and
the uncle of Joe F. Sanderson, Jr. (Class A Director).
<TABLE>
<CAPTION>
Shares
Nominees for Director Beneficially Percent
Class B Director Age Since Owned (1) of Class
<S> <C> <C> <C> <C>
Class B (Term expiring in 2000)
Dewey R. Sanderson, Jr (2) 74 1955 3,268,482 22.76%
Rowan H. Taylor 71 1989 4,500 (4)
John H. Baker, III (3) 55 1994 60,000 (4)
</TABLE>
(1) The shares are owned of record by the beneficial owners shown with
sole voting and investment power, except as set forth in the notes below.
(2) See note (4) to the table under the caption "Proxy Statement,
Beneficial Ownership" for a description of the nature of Mr. Sanderson's
beneficial ownership.
(3) The amount in the table includes 30,000 shares owned of record by
Mr. Baker's wife, as to which she exercises sole voting and investment power,
and 30,000 shares owned of record by a trust for the benefit of Mr. Baker's
daughter, as to which an institutional trustee exercises sole voting and
investment power, and as to all of which Mr. Baker, pursuant to Rule 13d-14,
disclaims beneficial ownership.
(4) Less than 1%.
Directors Continuing in Office
The following table lists the Class A and Class C Directors of the
Company, whose terms expire at the 1999 and 1998 annual meetings,
respectively, and shows, as of January 13, 1997, the beneficial ownership of
common stock by each of them. Joe Frank Sanderson (Class C Director) is the
father of Joe F. Sanderson, Jr. (Class A Director), the brother of Dewey R.
Sanderson, Jr. (Class B Director) and the uncle of Robert Buck Sanderson
(Class C Director). Joe F. Sanderson, Jr. is the cousin of Robert Buck
Sanderson (Class C Director), the son of Joe Frank Sanderson (Class C
Director) and the nephew of Dewey R. Sanderson, Jr. (Class B Director).
Robert Buck Sanderson is the son of Dewey R. Sanderson, Jr. (Class B
Director), the cousin of Joe F. Sanderson, Jr. (Class A Director) and the
nephew of Joe Frank Sanderson (Class C Director).
PAGE
<PAGE>
<TABLE>
<CAPTION>
Shares
Name of Director Beneficially Percent
Continuing Director Age Since Owned (1) of Class
<S> <C> <C> <C> <C>
Class A (Term expiring in 1997)
Joe F. Sanderson, Jr. (2) 49 1984 144,573 1.01%
Charles W. Ritter, Jr. 63 1988 12,000 (5)
Phil K. Livingston (3) 53 1989 4,200 (5)
Class C (Term expiring in 1998)
Joe Frank Sanderson (4) 71 1955 3,255,380 22.66%
Robert Buck Sanderson 43 1992 254,096 1.77%
Donald W. Zacharias 61 1988 150 (5)
</TABLE>__________________________
(1) The shares are owned of record by the beneficial owners shown with
sole voting and investment power, except as set forth in the following notes.
(2) See note (5) to the table under the caption "Proxy Statement,
Beneficial Ownership" for a description of the nature of Mr. Sanderson's
beneficial ownership.
(3) Mr. Livingston owns 2,955 shares of common stock of the Company
through an IRA, over which he exercises sole voting and investment power. A
retirement account belonging to Mr. Livingston's wife owns of record 1,245
shares, over which she exercises sole voting and investment power, and as to
which Mr. Livingston, pursuant to Rule 13d-4, disclaims beneficial ownership.
(4) See note (3) to the table under the caption "Proxy Statement,
Beneficial Ownership" for a description of the nature of Mr. Sanderson's
beneficial ownership.
(5) Less than 1%.
Principal Occupations and Certain Directorships
The following paragraphs identify the principal occupations of all
Directors of the Company and directorships they hold in other companies with
securities registered with the Securities and Exchange Commission. Except as
otherwise indicated, each Director has served for at least five years in the
position shown.
Joe F. Sanderson, Jr. has served as President and Chief Executive
Officer of the Company since November 1, 1989. From January 1984, through
October 1989, Mr. Sanderson served as Vice-President, Processing and
Marketing, of the Company.
Charles W. Ritter, Jr. has served, since 1967, as President and a
Director of the Attala Company, which is principally engaged in the business
of milling and selling feed and corn meal. He has also served as President of
JRS, Inc., a family owned real estate investment firm, since 1973. Mr. Ritter
is a director of First M & F Corp. and Merchants & Farmers Bank, Kosciusko,
Mississippi.
Phil K. Livingston served as President and Chief Executive Officer of
Citizens National Bancshares, Inc. in Hammond, Louisiana, from its
organization in 1983, until its merger into Deposit Guaranty Corporation on
May 19, 1995. Citizens National Bancshares, Inc., which was dissolved with
the merger, was the parent company of Citizens National Bank, which is now a
wholly owned subsidiary of Deposit Guaranty Corporation as a result of such
merger. In July 1996, the Citizens National Bank's charter was amended to
change its name to Deposit Guaranty National Bank of Louisiana. Mr.
Livingston continues to serve as Chief Executive Officer and Chairman of the
Deposit Guaranty National Bank of Louisiana.
Dewey R. Sanderson, Jr., a founder of the Company, has been retired for
more than the past five years.
Rowan H. Taylor served as President of Mississippi Valley Title
Insurance Company from 1975 until 1989, and as Chairman of the Board and Chief
Executive Officer of that company from 1989 until 1992. Mr. Taylor currently
serves as counsel for First American Title Insurance Company of Santa Anna,
California, and as counsel to the Jackson, Mississippi law firm of Alston,
Rutherford, Tardy & Van Slyke. Mr. Taylor served as an advisory director of
Trustmark Corporation and Trustmark National Bank located in Jackson,
Mississippi until his retirement from such position in 1995.
John H. Baker, III has been the sole proprietor of John H. Baker
Interests, a real estate and development company in Houston, Texas since 1968.
Joe Frank Sanderson, a founder of the Company, has been serving as
Chairman of the Board of Directors of the Company since November 1, 1989. For
more than five years prior to November 1, 1989, Mr. Sanderson served as
Chairman of the Board, Chief Executive Officer and Treasurer of the Company.
Donald W. Zacharias has served as President of Mississippi State
University since 1985.
Robert Buck Sanderson has been employed by the Company since January 1,
1993. From 1978 through 1992, Mr. Sanderson served as President of Pioneer
Hardware & Supply Co., Inc. in Laurel, Mississippi.
Committees of the Board of Directors; Attendance at Meetings
The Company's Board of Directors has not appointed any standing
committees as of the date of this proxy statement, except an Audit Committee.
The members of the Audit Committee are Messrs. Ritter, Livingston and
Zacharias. The function of the Audit Committee is, among other things, to
recommend the independent auditors to the Board of Directors, to review the
scope of the independent auditors' audit, to review the Company's major
accounting and financial reporting policies and practices and systems for
compliance with applicable statutes and regulations, and to review the
Company's internal auditing functions. During the fiscal year ended October
31, 1996, the Board of Directors met 6 times and the Audit Committee met 4
times. Each incumbent Director attended at least 75% of the aggregate of (i)
the total number of Board of Directors meetings held during the period for
which he was a director and (ii) the total number of meetings held by the
Audit Committee, as applicable.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, officers and persons who own more than 10% of the
outstanding common stock of the Company, to file with the Securities and
Exchange Commission reports of changes in ownership of the common stock of the
Company held by such persons. Officers, directors and greater than 10%
stockholders are also required to furnish the Company with copies of all forms
they file under this regulation. Based solely on a review of the copies of
the reports furnished to the Company, the officers and directors of the
Company are in full compliance with all Section 16(a) filing requirements.
Executive Compensation
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
(a) (b) (c) (d) (e)
Name and All Other
Principal Position Year Salary($) Bonus($)(1) Compensation($)(3)
<S> <C> <C> <C> <C>
Joe F. Sanderson, Jr. 1996 383,260 -0- (3)
Chief Executive Officer 1995 305,000 -0- 2,560
and President 1994 300,000 12,973 4,712
D . Michael Cockrell 1996 144,116 -0- (3)
Treasurer and 1995 135,384 -0- 2,310
Chief Financial Officer 1994 121,120 3,670 (2)
Lampkin Butts
Vice President-Sales 1996 149,695 -0- (3)
1995 (2) (2) (2)
1994 (2) (2) (2)
</TABLE>
(1) The amounts in this column represent the bonuses paid to the named
individuals pursuant to the Company's Bonus Award Program, which covers all
salaried employees of the Company.
(2) Mr. Butts became an executive officer of the Company effective
November 1, 1996. Mr. Cockrell became an executive officer of the Company
during fiscal 1994.
(3) The amount in this column represent the value of the 1994
contribution made by the Company to the account of the named individual under
the General Employees' Profit Sharing Plan, and the 1995 contribution made by
the Company to the accounts of the named individuals under the Company's
Employee Stock Ownership Plan. With respect to the General Employees' Profit
Sharing Plan, the Company contributed $4,712 to Mr. Sanderson's account in
1994. Although all employees of the Company, including executive officers,
participate in the Company's ESOP, the Company made no contribution to the
ESOP in 1994. In 1995, the Company completed a merger of its General
Employees' Profit Sharing Plan into the ESOP. The amount in this column
represent the value of the 1995 contributions made by the Company to the
accounts of the named individuals under the ESOP Plan. Allocations to
participants under the ESOP are made in late January or early February of each
year and therefore, as of the date of this Proxy Statement, no amounts have
been allocated to the accounts of the named individuals under the ESOP with
respect to the fiscal year ended October 31, 1996. The ESOP covers all
employees of the Company, including executive officers, with one year of
service who have attained age 21.
Stock Options Granted During Fiscal 1996 to the Named Executives
<TABLE>
<CAPTION>
% of Total Potential Realizable
Number Options at Assumed
of Granted to Annual Rates
Name and Options Employees in Exercise Stock Appreication
Principal Position Granted Fiscal Year Price Exp. Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
D. Michael Cockrell
Treasurer and Chief
Financial Officer 7,500 6.05% $10.875 7/25/01 $22,548 $49,831
Lampkin Butts
Vice President-Sales 7,500 6.05% $10.875 7/25/01 $22,548 $49,831
</TABLE>
The following table sets forth the value at December 31, 1996 of
unexercised options for each of the named executive officers.
<TABLE>
<CAPTION>
Options at Value of Unexercised In-the-Money
Year-End(#) Options at December 31, 1996(3)
Name Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C>
D. Michael Cockrell(1) 5,625 16,875 $31,875 $ 96,557
Lampkin Butts(2) 11,250 18,750 $66,075 $107,957
</TABLE>
(1) Mr. Cockrell's options consist of the following:
- 7,500 shares granted on April 29, 1994, at $11.00 per share,
expiring April 29, 1999, of which 3,750 are exercisable.
- 7,500 shares granted on April 27, 1995, at $11.25 per share,
expiring April 27, 2000, of which 1,875 are exercisable.
- 7,500 shares granted on July 25, 1996, at $10.87 per share,
expiring July 25, 2001, of which none are exercisable.
(2) Mr. Butts' options consist of the following:
- 7,500 shares granted on July 12, 1993, at $10.67 per share,
expiring on July 12, 1998, of which 5,625 are exercisable.
- 7,500 shares granted on April 29, 1994, at $11.00 per share,
expiring April 29, 1999, of which 3,750 are exercisable.
- 7,500 shares granted on April 27, 1995, at $11.25 per share,
expiring April 27, 2000, of which 1,875 are exercisable.
- 7,500 shares granted on July 25, 1996, at $10.87 per share,
expiring July 25, 2001, of which none are exercisable.
(3) Amounts represent the excess of the market value over the exercise price
as of December 31, 1996.<PAGE>
Director's Fees
During fiscal 1996, Directors who were not also officers or employees
of the Company received a fee of $500 per meeting attended plus an annual
stipend of $7,500.
Board Report on Executive Compensation
The Company did not have a standing Compensation Committee for fiscal
year ended 1996, and therefore the Board of Directors prepared the following
Report.
Generally, executive officer compensation is not directly related to
factors such as profitability, sales growth, return on equity or market share,
except to the extent that such factors impact the Company's overall ability to
satisfy its compensation obligations to all employees.
Annual compensation for the Chief Executive Officer ("CEO") and
President, and the Chairman of the Board, is determined by the full Board of
Directors of the Company. The Stock Option Committee of the Company's Board of
Directors makes decisions relating to stock option awards to executive
officers and other key personnel pursuant to the Company's Stock Option Plan.
The annual compensation for the Treasurer and Chief Financial Officer ("CFO")
and the Vice President-Sales ("VP") is determined by the President. The
components of the annual compensation paid to the CEO, CFO and VP are as
follows: (i) base salary; (ii) a bonus calculated pursuant to the provisions
of the Company's Bonus Award Program; and (iii) allocation of contributions
made by the Company to the respective accounts of the CEO, CFO and VP under
the ESOP.
Base salaries for executive officers of the Company are originally
fixed using a comparison of similarly situated officers of other poultry
companies. Also taken into account are benefits, years of service,
responsibilities, Company growth, future plans and the Company's current
ability to pay. Periodic increases in base salary are based on evaluations of
past and current performance and current market conditions. In addition, in
accordance with the Company's Wage and Salary Administration manual in effect
since 1979, the base salary of each salaried employee of the Company,
including the executive officers, is increased on January 1 of each year to
reflect cost of living increases, provided that the Company is in a financial
position to make an increase. In January 1996, the base salary of all
salaried employees of the Company, including the executive officers, was
increased by 2.0%.
The CEO, CFO and VP are participants in the Company's Bonus Award
Program, which covers all salaried employees of the Company. The amounts
payable to all salaried employees, including the executive officers, are based
on the Company's financial performance. The bonus for the CEO, CFO and VP is
calculated by multiplying such person's average monthly salary by 12 and
multiplying that product by a percentage ranging from .5% to 25%, depending
on the performance of the Company. Bonuses paid in fiscal 1994 related to
performance in fiscal 1993. No bonuses were paid for fiscal 1995, and no
bonuses have been or will be paid for fiscal 1996.
In addition, all executive officers participate in the Company's
Employee Stock Ownership Plan which covers all employees of the Company.
Allocations to the executive officers under this plan are made on the same
basis as allocations to all other participants.
<PAGE>
Joe F. Sanderson, Jr. Charles W. Ritter, Jr.
Joe Frank Sanderson Donald W. Zacharias
Dewey R. Sanderson, Jr. Rowan H. Taylor
Phil K. Livingston John H. Baker, III
Robert Buck Sanderson
Performance Graph
The following graph presents a comparison of the five year cumulative
total stockholder return* among the Company, the NASDAQ Composite Index, and a
self-constructed peer group index comprised of Cagles, Inc., Golden Poultry
Co., Hudson Foods, Inc., Pilgrim's Pride, Inc. and WLR Foods, Inc. (the "Peer
Group Index"). The Company selected the Peer Group Index because the return
reflected in the Peer Group Index presents stockholders with a comparison of
total stockholder return with companies of similar size, product and market
capitalization.
YEARS**
1991 1992 1993 1994 1995 1996
Sanderson Farms, Inc. 100 128 150 194 161 206
NASDAQ Composite Index 100 113 145 146 197 232
Peer Group 100 199 130 172 151 165
* Assumes $100 invested on November 1, 1991; total return assumes
reinvestement of dividends.
**Fiscal year ends October 31.
<PAGE>
CHARTER AND BY-LAW AMENDMENTS
Background
On January 1, 1997, amendments became effective to the provisions of
the Mississippi Business Corporation Act ("Mississippi Act") that govern
indemnification of directors and officers of Mississippi corporations like the
Company. As amended, these provisions now conform, without variation, to the
provisions of the Model Business Corporation Act ("Model Act"), as amended in
1994 by the American Bar Association's Committee on Corporate Laws, which
developed and from time to time proposes changes in the Model Act.
As they existed prior to the amendments (and as in most respects they
continue to exist) the Model Act and the Mississippi Act permitted a
corporation to indemnify a director, who meets a specified standard of
conduct, against liability (including expenses) incurred in any pending or
threatened lawsuit or other legal proceeding to which the director is a party
because of his or her status as a director. Except to the extent possibly
permitted by provisions of the Mississippi Act described in the last sentence
of the following paragraph, indemnification was not permitted if the director
was adjudged liable to the corporation in a proceeding by or on its behalf, or
in which the director was adjudged liable on the basis that personal benefit
was improperly received by him or her. To meet the standard of conduct, the
director was generally required to conduct himself or herself in good faith;
to reasonably believe that his or her conduct was in the corporation's best
interests or, when not acting in an official capacity as director, not opposed
to such interests; and, in the case of criminal proceedings, to have no
reasonable cause to believe his or her conduct was unlawful.
A corporation was also permitted to pay for or reimburse reasonable
expenses incurred by a director in a proceeding if the director furnished a
written affirmation that he or she met the applicable standard of conduct and
a written agreement to repay the corporation if it were ultimately determined
that he or she did not, and if the corporation determined, based on facts then
known, that indemnification was not prohibited. These and all other
determinations concerning indemnification were to be made either by the board
of directors by majority vote of a quorum consisting of directors not party to
the proceeding; or, if no such quorum was obtainable, by majority vote of a
committee designated by the board of directors and consisting solely of two or
more non-party directors; or by special legal counsel selected by the board of
directors or such a committee acting as described above; or by disinterested
shareholders; or by a court. Indemnification of officers, employees and
agents who were not also directors was permitted generally under the same
circumstances as indemnification to directors and to any further extent as was
consistent with public policy. The Model Act provided that any provision for
indemnification to directors contained in a corporation's articles of
incorporation or by-laws, or in a resolution of its shareholders or directors,
or in a contract, was valid only if and to the extent it was consistent with
the indemnification provision of the Model Act. The Mississippi Act, on the
other hand, generally permitted indemnification grants to directors, officers,
employees and agents beyond the indemnification provisions of the Mississippi
Act as long as such persons were not indemnified against their gross
negligence or willful misconduct.
As amended, the Model Act and the Mississippi Act continue to permit
indemnification as before, but with certain significant changes that are
described in this paragraph. First, indemnification is now permitted, if
authorized by the articles of incorporation, with respect to liability to any
person that results from the same type of conduct for which the Mississippi
Act permits the articles of incorporation to exculpate a director from
liability to the corporation or its shareholders. Such conduct is generally
all conduct by a director other than conduct resulting in a financial benefit
to which the director is not entitled; intentional infliction of harm on the
corporation or its shareholders; dividends, share repurchases or other
distributions that violate the Act; or an intentional violation of criminal
law. Second, the amendments change the manner in which indemnification
decisions may be made by expanding the powers of courts to grant
indemnification (including advancement of expenses); by providing that
directors who participate in such decisions not only must not be parties to
the proceeding from which the indemnification arises, but also must not have a
family, financial, professional or employment relationship with the person
seeking indemnification that would reasonably be expected to influence the
director's judgment on such a decision; and by providing that if there are
fewer than two such disinterested directors the full Board of Directors is
empowered (i) to make the permitted selection of special legal counsel to
determine whether a director who seeks indemnification has met the required
standard of conduct, and (ii) to authorize indemnification payments to be made
if it has been determined, by such special counsel or in any other manner
permitted by the Act, that the director has met the required standard of
conduct. Third, indemnification to an officer who is not also a director (or
if also a director, who was acting solely as an officer with respect to the
matter giving rise to indemnification), which was previously limited under the
Mississippi Act only by public policy considerations, is now limited generally
in the same manner as is indemnification to a director, except that such an
officer need not meet the standard of conduct required of a director. Fourth,
the Mississippi Act and Model Act, both as amended, now provide that a
corporation may provide indemnification (including advancing expenses) to a
director or officer only as permitted by the indemnification provisions of the
Act.
Existing Charter and By-Law Provisions
At the 1988 Annual Meeting, the Company's shareholders amended in its
entirety Article VI of the Company's By-Laws, which deals with indemnification
of directors, officers, employees and agents. Article VI, as then adopted,
generally provided for mandatory indemnification of such persons to the same
extent as the Mississippi Act then permitted directors to be indemnified and
in accordance with essentially the same procedures and standards by which
directors were permitted to be indemnified. Article VI also contained a
provision empowering (but not requiring) the corporation to make further
indemnification grants if it chose to do so, except that, as required by the
Mississippi Act as then in effect, no such further indemnification was allowed
for a person's gross negligence or wilful misconduct. Such mandatory
indemnification and such further indemnification were both permitted by the
Mississippi Act prior to the recent amendments, but only if authorized by the
articles of incorporation or any by-law or resolution adopted by the
shareholders. Consequently, the Company sought, and obtained, approval of
Article VI by its shareholders. The Company's articles of incorporation do
not presently address indemnification.
Proposed Charter and By-Law Amendments
The Board of Directors has recommended, for reasons described below,
the adoption of a new Article FIFTEENTH to the Company's Articles of
Incorporation. This new article would permit the Company to indemnify its
directors and officers for liability to any person (including related
expenses) for any action taken, or for failure to take action, as a director
or officer except liability for receipt of a financial benefit to which such
director or officer is not entitled; intentional infliction of harm on the
Company or its shareholders; dividends, share repurchases or other
distributions that violate the Mississippi Act; or an intentional violation of
criminal law. The Company's shareholders adopted, at the 1992 Annual Meeting,
a corresponding provision that exculpates directors from liability to the
Company or its shareholders for any such action or failure to act, with the
same exceptions described in the preceding sentence. The adoption of Article
FIFTEENTH would implement indemnification provisions that are permitted by the
recent amendments to the Mississippi Act (and the Model Act) and that apply to
directors only if so provided in the Articles of Incorporation. Approval by
the shareholders is required to amend the Articles of Incorporation, and the
required vote for approval is a majority of the votes cast thereon.
Effective January 1, 1997, the Board of Directors amended in its
entirety Article VI of the Company's By-Laws, dealing with indemnification.
As so amended, Article VI now provides for mandatory indemnification of the
Company's directors and officers, and those of its employees (if any) who are
appointed by its President to serve on the Company's Executive Committee or
are appointed by such Committee to be Division Managers ("covered employees"),
to the fullest extent that directors and officers are permitted to be
indemnified by law, except in an action brought directly by the Company
against such a person, and except that such employees shall be indemnified
only to the same extent to which officers are permitted by law to be
indemnified. The mandatory indemnification includes advancement of expenses
to those persons who meet the requirements, described above, for such
advances. To the extent permitted by law, the right to indemnification
applies to acts or omissions occurring prior to or after the adoption of the
new by-law, continues as to a person who ceases to be a director, officer or
covered employee, and applies to the person's heirs. Article VI may be
amended or repealed at any time by the Board of Directors with or without
approval by the shareholders, but no such action will affect the right to
indemnification for acts or omissions which occurred prior to such amendment
or repeal.
Shareholder approval of the amended Article VI of the By-Laws is not
required by the Mississippi Act or by the Company's Articles of Incorporation
or By-Laws. It is nevertheless sought in this one instance for historical
reasons. As noted above, the prior Mississippi statute had permitted
indemnities broader than those specified in the statute but only if approved
by the shareholders. Accordingly, the former Article VI of the Company's By-
Laws, permitting the broader indemnity, was approved by the shareholders.
Since shareholders approved the prior By-Law, the Directors deemed it
appropriate to seek shareholder ratification of the repeal of the old Article
VI (including the adoption of the new Article VI), while reserving the
statutory right to make this and further By-Law amendments with or without
shareholder approval. Accordingly, the Board of Directors will not be bound
by the vote of shareholders on the new Article VI of the By-Laws, will not be
required (and does not intend) to repeal new Article VI if there is an
unfavorable vote of shareholders, and will not necessarily seek shareholder
approval with respect to any amendment or repeal of Article VI. Because there
is no requirement for any particular vote to approve the new By-Law, it will
be approved by the shareholders if it receives the favorable vote of a
majority of the votes cast on the proposal at the Annual Meeting.
The principal substantive changes in indemnification that will result
from the adoption of proposed Article FIFTEENTH of the Articles of
Incorporation and new Article VI of the By-Laws are that the Company would
thereafter be permitted (by the Articles of Incorporation) and required (by
the By-Laws) to indemnify directors against the conduct described in Article
FIFTEENTH (officers are permitted to be indemnified against such conduct
without special charter provisions); that the Company would be required,
rather than just permitted, to advance expenses to directors, officers and
covered employees who meet the requirements of the Mississippi Act for such
advances, as described above; that the mandatory indemnification of officers
(including directors acting solely in the capacity of an officer) would no
longer depend on such persons meeting a specified standard of conduct as long
as the indemnified liability did not arise out of the receipt by such person
of a financial benefit to which he or she was not entitled, an intentional
infliction of harm on the Company or its shareholders, or an intentional
violation of criminal law; and that employees and agents, other than the
covered employees, will not be entitled to mandatory indemnification under
Article VI, although the Company will still be permitted to indemnify them.
The proposed amendment to the Articles of Incorporation and the
amendment to Article VI of the By-Laws are intended to apply to conduct of
directors, officers and covered employees that precedes the adoption of those
amendments. The mandatory indemnification under former Article VI of the By-
Laws continues to apply to conduct that preceded the amendment to that
Article. The Company is not aware of any pending or threatened proceedings in
which it is likely that indemnification of directors, officers or covered
employees would be sought, other than routine litigation in which any
liability of such persons (or the Company) would be covered by the Company's
general liability insurance, subject to the deductible thereunder.
Copies of proposed Article FIFTEENTH to the Articles of Incorporation,
Article VI of the By-Laws as it existed prior to the recent amendments adopted
by the Board of Directors, and Article VI of the By-Laws as so amended, are
annexed to this Proxy Statement as Exhibits A, B and C, respectively.
Board of Directors' Recommendation and Reasons
FOR REASONS SET FORTH BELOW, THE BOARD OF DIRECTORS RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE PROPOSAL TO ADOPT NEW ARTICLE FIFTEENTH OF THE
ARTICLES OF INCORPORATION AND "FOR" THE PROPOSAL TO APPROVE ARTICLE VI OF THE
BY-LAWS, AS AMENDED. PROXIES IN THE ENCLOSED FORM WILL BE VOTED "FOR" BOTH
PROPOSALS UNLESS MARKED BY THE SHAREHOLDER TO THE CONTRARY.
The foregoing recommendation of the Board of Directors is based on its
belief that the Company's ability to attract and retain qualified persons to
serve as directors and officers, and in positions held by covered employees,
is enhanced by providing mandatory indemnification, although the Company is
not aware of qualified persons declining to serve in such capacities due to
the risks or uncertainties of litigation. In addition, the Board of Directors
believes that it is appropriate and customary for public companies to protect
such persons through mandatory indemnification to the maximum extent
indemnification of officers and directors is permitted by law, which was the
intended effect of Article VI of the By-Laws prior to the recent amendments
and is the effect of the proposed Article FIFTEENTH of the Articles of
Incorporation and new Article VI of the By-Laws. The Board believes that
effective corporate management is hampered when such persons are not afforded
traditional protections, like indemnification, against lawsuits.
INDEPENDENT AUDITORS
Ernst & Young LLP, Independent Auditors, Jackson, Mississippi, were the
independent auditors for the Company during the fiscal year ended October 31,
1996. A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting. The representative will have the opportunity to make a
statement at the meeting if he desires to do so, and will be available to
respond to any appropriate questions.
The Board of Directors of the Company has selected the firm of Ernst &
Young LLP as the Company's independent auditors for the fiscal year ending
October 31, 1997. Stockholder approval and ratification of this selection is
not required by law or by the By-Laws of the Company. Nevertheless, the Board
has chosen to submit it to the stockholders for their approval and
ratification. Of the shares represented and entitled to vote at the Annual
Meeting (whether in person or by proxy), more votes must be cast in favor of
than votes cast against the proposal to ratify and approve the selection of
Ernst & Young LLP as the Company's independent auditors for the fiscal year
ending October 31, 1997, in order for this proposal to be adopted. The
Proxyholders named in the accompanying proxy card will vote FOR the foregoing
proposal unless otherwise directed therein. Abstentions will not be counted
either as a vote FOR or as a vote AGAINST the proposal to ratify and approve
the selection of Ernst & Young LLP as the Company's independent auditors for
the fiscal year ending October 31, 1997. Broker non-votes will be treated as
not present for purposes of calculating the vote with respect to the foregoing
proposal, and will not be counted either as a vote FOR or AGAINST or as an
ABSTENTION with respect thereto.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of
no matters likely to be brought before the Annual Meeting other than those set
forth in the Notice of the Meeting. If other matters properly come before the
Meeting, each Proxy will be voted in accordance with the discretion of the
Proxyholders named therein.
STOCKHOLDER PROPOSALS
Procedure
The Company's By-laws provide that stockholders may nominate
individuals for election as directors from the floor at any annual or special
meeting of stockholders called for the election of directors only if timely
written notice of such nomination has been given to the Secretary of the
Company. To be timely, such notice must be received at the principal office
of the Company no later than the close of business on the 15th day following
the day on which notice of the date of the meeting is given or made to
stockholders in accordance with the By-laws. The By-laws specify what such a
notice of such nomination must include. In addition, the By-laws set forth
the procedure that must be followed by stockholders to properly bring a matter
before a stockholders' meeting. If a stockholder wishes to bring a matter
before the meeting that has not been specified in the notice of the meeting,
the stockholder must deliver written notice of said stockholder's intent to
bring the matter before the meeting of stockholders so that the notice is
received by the Secretary of the Company no later than the close of business
on the 15th day following the date on which notice of the day of the meeting
is given or made to stockholders in accordance with the By-laws. The By-
laws also specify what such a notice must include.
1998 Annual Meeting
A stockholder who intends to present a proposal, which relates to a
proper subject for stockholder action, at the 1998 Annual Meeting of
Stockholders and who wishes such proposal to be considered for inclusion in
the Company's proxy materials for such meeting must cause such proposal to be
received, in proper form, at the Company's principal executive offices no
later than September 22, 1997. Any such proposals, as well as any questions
relating thereto, should be directed to the Company to the attention of its
President.
METHODS AND COST OF SOLICITING PROXIES
The Proxy card enclosed with this Proxy Statement is solicited by and
on behalf of the Board of Directors of the Company. In addition to
solicitation of stockholders of record by mail, telephone or personal contact,
arrangements will be made with brokerage houses to furnish proxy materials to
their principals, and the Company will reimburse them for their mailing
expenses. Custodians and fiduciaries will be supplied with proxy materials to
forward to beneficial owners of common stock. Whether or not you expect to be
present at the Annual Meeting, please sign, date and return the enclosed Proxy
card promptly. No postage is necessary if mailed in the United States. The
cost of solicitation, including the preparation, printing and mailing, is
being paid by the Company.
BY ORDER OF THE BOARD OF DIRECTORS:
/s/James A. Grimes, Secretary
Dated: January 24, 1997
<PAGE>
APPENDIX "A"
SANDERSON FARMS, INC.
The undersigned hereby appoints D. Michael Cockrell and James A. Grimes
and each of them, as proxies for the undersigned, with full power of
substitution, to vote all of the undersigned's shares of common stock, $1.00
per share par value, of Sanderson Farms, Inc. at the Annual Meeting on
February 27, 1997 (and any adjournments thereof), as instructed herein with
respect to the matters herein set forth (and, to the extent not so instructed,
as set forth in the related Proxy Statement), and according to their
discretion upon all other matters which may properly come before such Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED UPON THE
MATTERS SET FORTH ON THE REVERSE. IF NO DIRECTION IS INDICATED, THIS PROXY
WILL BE VOTED "FOR" PROPOSALS 1, 2, 3 and 4. THIS PROXY CONFERS DISCRETIONARY
VOTING AUTHORITY AS TO ALL OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE
ANNUAL MEETING. SEE ACCOMPANYING PROXY STATEMENT.
Dated: , 1997
Signature(s)
Executors, Administrators,
Trustees, etc. should give full
title. This proxy should be
signed as name appears on
certificate(s).
THIS PROXY IS SOLICITED BY THE BOARD OF
DIRECTORS OF SANDERSON FARMS, INC.
(SEE BALLOT ON REVERSE)
<PAGE>
BALLOT
MANAGEMENT RECOMMENDS A VOTE
"FOR" THE FOLLOWING PROPOSALS
1. To elect three Class B Directors to serve until the 2000 annual
meeting:
____ ____
/ / FOR all nominees / / WITHHOLD AUTHORITY
listed below (except (to vote for all
as indicated to the nominees listed below)
contrary below)
Dewey R. Sanderson, Jr. Rowan H. Taylor and John H. Baker, III
INSTRUCTIONS: To withhold authority to vote for any individual
nominee, write the nominee's name here:
_______________________ ________________________
2. To consider and act upon a proposal to add a new Article FIFTEENTH to
the Company's Articles of Incorporation, which proposed Article is
attached as Exhibit A to the accompanying Proxy Statement and pertains
to the indemnification of directors and officers of the Company:
____ ____ ____
/ / FOR / / AGAINST / / ABSTAIN
3. To consider and act upon a proposal to approve Article VI of the
Company's By-Laws, as amended, which Article is attached as Exhibit C
to the accompanying Proxy Statement and pertains to the indemnification
of directors, officers and certain employees of the Company:
____ ____ ____
/ / FOR / / AGAINST / / ABSTAIN
4. To consider and act upon a proposal to ratify and approve the selection
of Ernst & Young LLP as the Company's independent auditors for the
fiscal year ending October 31, 1997:
____ ____ ____
/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
SANDERSON FARMS, INC.
BALLOT
1. (A) To elect three Class A Directors to serve until the 1999 annual
meeting:
____ ____
/ / FOR all nominees / / WITHHOLD AUTHORITY
listed below (except (to vote for all
as indicated to the nominees listed below)
contrary below)
Dewey R. Sanderson, Jr. Rowan H. Taylor and John H. Baker, III
INSTRUCTIONS: To withhold authority to vote for any individual
nominee, write the nominee's name here:
2. To consider and act upon a proposal to add a new Article FIFTEENTH to
the Company's Articles of Incorporation, which proposed Article is
attached as Exhibit A to the accompanying Proxy Statement and pertains
to the indemnification of directors and officers of the Company:
____ ____ ____
/ / FOR / / AGAINST / / ABSTAIN
3. To consider and act upon a proposal to approve Article VI of the
Company's By-Laws, as amended, which Article is attached as Exhibit C
to the accompanying Proxy Statement and pertains to the indemnification
of directors, officers and certain employees of the Company:
____ ____ ____
/ / FOR / / AGAINST / / ABSTAIN
4. To consider and act upon a proposal to ratify and approve the selection
of Ernst & Young LLP as the Company's independent auditors for the
fiscal year ending October 31, 1997:
____ ____ ____
/ / FOR / / AGAINST / / ABSTAIN
Dated:_____________________, 1997 ______________________
Participant
______________________
(Print Name)
PLEASE DATE, SIGN AND RETURN THIS BALLOT IN THE ENCLOSED ADDRESSED AND POSTAGE
PREPAID ENVELOPE TO THE ADMINISTRATIVE COMMITTEE OF THE ESOP NO LATER THAN
FEBRUARY 21, 1997, THROUGH COMPANY MAIL OR BY UNITED STATES MAIL.
<PAGE>
Exhibit A
Article FIFTEENTH:
The Corporation may indemnify its directors and officers for
liability (as defined in Section 79-4-8.50(5) of the Mississippi
Code of 1972, as amended) to any person for any action taken, or
any failure to take any action, as a director or officer, as the
case may be, except liability for (a) receipt of a financial
benefit to which he is not entitled, (b) an intentional
infliction of harm on the Corporation or its shareholders, (c)
violation of Section 79-4-8.33 of the Mississippi Code of 1972,
as amended, or (d) an intentional violation of criminal law.
<PAGE>
Exhibit B
Article VI. Indemnification of Directors,
Officers Employees and Agents.
Section 1. The corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
Section 2. The corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred
by him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and except that no indem-
nification shall be made in respect of any claim, issue or matter as to which
such person shall have been adjudged to be liable for gross negligence or
willful misconduct in the performance of his duty to the corporation unless
and only to the extent that the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability
but in view of all circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which such court shall deem
proper.
Section 3. To the extent that a director, officer, employee or
agent of a corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Sections 1. and 2.,
or in defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred
by him in connection therewith.
Section 4. Any indemnification under Sections 1. and 2. (unless
ordered by a court) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in Sections 1. and 2. Such
determination shall be made (a) by the Board of Directors by a majority vote
of a quorum consisting of directors not at the time parties to such action,
suit or proceeding; or (b) if a quorum cannot be obtained under subsection
(a), by majority vote of a committee duly designated by the Board of
Directors (in which designation the directors who are parties may
participate), consisting solely of two (2) or more directors not at the time
parties to such action, suit or proceeding; (c) by special legal counsel (i)
selected by the Board of Directors or its committee in the manner prescribed
in subsection (a) or (b); or (ii) if a quorum of the Board of Directors cannot
be obtained under subsection (a) and a committee cannot be designated under
subsection (b), selected by a majority vote of the full Board of Directors (in
which selection directors who are parties may participate); or (d) by the
stockholders, but shares owned by or voted under the control of directors who
are at the time parties to such action, suit or proceeding may not be voted on
the determination.
Authorization of indemnification and evaluation as to reasonableness of
expenses shall be made in the same manner as the determination that
indemnification is permissible, except that if the determination is made by
special legal counsel, authorization of indemnification and evaluation as to
reasonableness of expenses shall be made by those entitled under subsection
(c) to select counsel.
Section 5. Expenses (including attorneys' fees) incurred in
defending a civil or criminal action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding as authorized in the manner provided in Section 4. Upon receipt of
an undertaking by or on behalf of the director, officer, employee or agent to
repay such amount unless it shall ultimately be determined that he is entitled
to be indemnified by the corporation as authorized in this Article.
Section 6. The corporation may purchase and maintain insurance on
behalf of an individual who is or was a director, officer, employee or agent
of the corporation, or who, while a director, officer, employee or agent of
the corporation, is or was serving at the request of the corporation as a
director, officer, partner, trustee, employee or agent of another foreign or
domestic corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise, against liability asserted against or incurred by him in
that capacity or arising from his status as a director, officer, employee or
agent, whether or not the corporation would have power to indemnify him
against the same liability under the preceding provisions of this Article.
Section 7. The corporation shall have power to make any further
indemnity, including advance of expenses to and to enter contracts of
indemnity with any director, officer, employee or agent, before or after the
event, except an indemnity against his gross negligence or willful misconduct.
Any determination as to any further indemnity shall be made in accordance with
Section 4. of this Article. Each such indemnity may continue as to a person
who has ceased to have the capacity referred to above and may inure to the
benefit of the heirs, executors and administrators of such person.
Section 8. The corporation shall have power to pay or reimburse
expenses incurred by a director, officer, employee or agent in connection with
his appearance as a witness in a proceeding at a time when he has not been
made a named defendant or respondent to the proceeding.
Section 9. The right to indemnification and the payment of
expenses incurred in defending a proceeding in advance of its disposition
conferred in this Article (a) shall apply to acts or omissions antedating
their adoption of this by-law; (b) shall be severable; (c) shall not be
exclusive of any other rights to which those indemnified or to whom expenses
are paid may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office; (d)
shall continue as to a person who has ceased to be such director, officer,
employee or agent; and (e) shall inure to the benefit of the heirs, executors
and administrators of such a person.
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Exhibit C
Article VI. Indemnification of Directors, Officers and Other Persons
Section 1. The Corporation shall indemnify its directors, officers,
those employees of the Corporation appointed by the President to serve on the
Corporation's Executive Committee and those employees selected by the
Executive Committee to be the Division Managers, to the fullest extent
permitted by law, except in an action brought directly by the Corporation
against such person, and except that such employees shall be indemnified only
to the same extent to which officers are permitted by law to be indemnified..
Section 2. To the extent permitted by law, the right to indemnification
conferred in this Article (a)shall apply to acts or omissions antedating the
adoption of this Article; (b)shall be severable; (c)shall continue as to a
person who has ceased to be such director, officer or employee; and (d) shall
inure to the benefit of the heirs, executors and administrators of such
person.
Section 3. This article may be repealed or amended from time to time by
the Board of Directors with or without shareholder approval; provided however,
that no such repeal or amendment shall limit the right to indemnification
conferred in this Article for liability for acts or omissions which occurred
prior to the time of such repeal or amendment.
Section 4. If the Corporation indemnifies or advances expenses to a
director under this Article, the Corporation shall, if required by Section 79-
4-16.21(a) of the Mississippi Code of 1972, as amended, report the
indemnification or advance in writing to the shareholders with or before the
notice of the next shareholder meeting.
