<PAGE> 1
As filed with the Securities and Exchange Commission on May 5, 1997
Registration No. 333-____________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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MIDLAND RESOURCES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Texas 16701 Greenspoint Park Drive 75-2286814
(State of Other Jurisdiction Suite 200 (I.R.S. Employer
of Incorporation or Organization) Houston, Texas 77060 Identification No.)
(Address of Principal
Executive Offices)
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MIDLAND RESOURCES, INC. 1997 BOARD OF DIRECTORS STOCK INCENTIVE PLAN
AND
BUSINESS CONSULTANT AGREEMENT
AND
1996 MIDLAND RESOURCES, INC. LONG-TERM INCENTIVE PLAN
(Full Title of the Plan)
----------------------------------
DEAS H. WARLEY III
President
Midland Resources, Inc.
16701 Greenspoint Park Drive
Suite 200
Houston, Texas 77060
(Name and Address of Agent for Service)
Telephone Number, Including Area Code
of Agent for Service:
(281) 873-4828
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================================
Title of Amount Proposed Maximum Proposed Maximum Amount
Securities to to be Offering Price Per Aggregate Offering Registration
be Registered Registered Share (1) Price(1) Fee(2)
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<S> <C> <C> <C> <C>
Common Stock,
$.001 1,685,000 $6.00 $10,110,000 $3,064
par value
===================================================================================================================================
</TABLE>
(1) Estimated in accordance with Rule 457(a) solely for the purpose of
calculating the registration fee and based upon weighted exercise prices
of the options and warrant covering the stock.
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<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTS
NOTE: The document(s) containing the employee benefit plan
information required by Item I of Form S-8 and the document of availability of
registrant information and any other information required by Item 2 of Form S-8
will be sent or given to employees as specified by Rule 428 under the
Securities Act of 1933, as amended (the "Securities Act"). In accordance with
Rule 428 and the requirements of Part I of Form S-8, such documents are not
being filed with the Securities and Exchange Commission (the "Commission")
either as part of this Registration Statement or as prospectuses or prospectus
supplements pursuant to Rule 424 under the Securities Act. The registrant shall
maintain a file of such documents in accordance with the provision of Rule 428.
Upon request, the registrant shall furnish to the Commission or its staff a
copy or copies of all of the documents included in such file.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
This Registration statement incorporates herein by reference the
following documents which have been filed (File No. 0-18836) with the
Commission by Midland Resources, Inc. (the "Company") pursuant to the
Securities Exchange Act of 1934, as amended ("Exchange Act"):
1. The Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996;
2. The Company's Quarterly Reports on Form 10-QSB for the quarter
ended March 31, 1996, June 30, 1996, and September 30, 1996.
Each document filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this registration statement
and prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
registration statement and to be a part hereof from the date of filing such
documents.
Any statement incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this registration statement to the extent that a
statement contained herein or in any subsequently filed document which also is
or is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this registration
statement.
ITEM 4. DESCRIPTION OF SECURITIES
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Legal opinion-- the validity of the shares of common stock to be
offered hereunder has been passed upon for Midland Resources, Inc. by Wayne M.
Whitaker of the law firm Michener Larimore Swindle Whitaker Flowers Sawyer
Reynolds & Chalk, L.L.P. Mr. Whitaker is on the Board of Directors of the
Company and its wholly-owned subsidiary Summit Petroleum Corporation, owns
options to purchase 260,000 shares of the Company's common stock, owns directly
500 shares of the Company's common stock and 7,800 shares of common stock
through the self directed IRA account of Wayne M. Whitaker.
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<PAGE> 4
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 2.02A.(16) and Article 2.02-1 of the Texas Business
Corporation Act and Article VII of the Company's Bylaws provide the Company
with broad powers and authority to indemnify its directors and officers and to
purchase and maintain insurance for such purposes.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
The Exhibit Index immediately preceding the exhibits is incorporated
herein by reference.
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the
registration statement (or the most recent
post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change
in the information set forth in the registration
statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered
(if the total dollar value of securities offered
would not exceed that which was registered) and any
deviation from the low or high end of the estimated
maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in
the "Calculation of Registration fee" table in the
effective registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the registration statement or any
material change to such information in the
registration statement;
provided, however, that the undertakings set forth in
paragraph (i) and (ii) above do not apply if the
information required to be included in a post-effective
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<PAGE> 5
amendment by those paragraphs is contained in periodic
reports filed by the registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act)
that is incorporated by reference in this registration
statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers, and controlling persons of the registrant pursuant to
the provisions described under Item 6 above, or otherwise, the
registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred
or paid by a director, officer, on controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its
counsel that matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Houston, State of Texas, on May 5, 1997.
MIDLAND RESOURCES, INC.
By: /s/ Deas H. Warley III
------------------------------
Deas H. Warley III
President
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed by the following persons in the
capacities and on the date indicated.
SIGNATURE TITLE DATE
/s/ Deas H. Warley III President, CEO & Director May 5, 1997
- ------------------------
Deas H. Warley III
/s/ Howard E. Ehler Chief Financial Officer May 5, 1997
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Howard E. Ehler
/s/ Robert R. Donnelly Director May 5, 1997
- ------------------------
Robert R. Donnelly
/s/ Darrell M. Dillard Director May 5, 1997
- ------------------------
Darrell M. Dillard
/s/ Sam R. Brock Director May 5, 1997
- ------------------------
Sam R. Brock
/s/ Wayne M. Whitaker Director May 5, 1997
- ------------------------
Wayne M. Whitaker
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<PAGE> 7
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C> <C>
*4.1- Articles of Incorporation of Midland Resources, Inc....................
*4.2- Bylaws of Midland Resources, Inc.......................................
*4.3- Form of Common Stock Certificate.......................................
4.4- Midland Resources, Inc. 1997 Board of Directors
Stock Incentive Plan...................................................
4.5- Business Consultant Agreement..........................................
4.6- 1996 Midland Resources, Inc. Long-Term Incentive Plan..................
5 - Opinion of Michener Larimore Swindle Whitaker
Flowers Sawyer Reynolds & Chalk, L.L.P.................................
24.1- Consent of Ernst & Young LLP...........................................
24.2- Consent of Michener Larimore Swindle Whitaker
Flowers Sawyer Reynolds & Chalk, L.L.P.
(incorporated in Exhibit 5)
24.3 Consent of Grant Thornton LLP..........................................
</TABLE>
* Previously filed as the same exhibit number with the Company's Registration
Statement on Form 10 and incorporated herein by reference.
<PAGE> 1
EXHIBIT 4.4
MIDLAND RESOURCES, INC.
1997 BOARD OF DIRECTORS STOCK INCENTIVE PLAN
Section 1. General Purpose of Plan; Definitions.
The name of this plan is the Midland Resources, Inc.1997 Board of
Directors Stock Incentive Plan (the "Plan"). The Plan was adopted by the Board
on February 25, 1997. The purpose of the Plan is to create an incentive to the
Board of Directors, key employees and advisors, that is linked directly to
increases in stockholder value as reflected in the trading price of the
Company's common stock and will therefore inure to the benefit of all
stockholders of the Company.
For purposes of the Plan, the following terms shall be defined as set
forth below:
(1) Administration" means the Board and the Committee in accordance
with Section 2.
(2) "Board" means the Board of Directors of the Company.
(3) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor thereto.
(4) "Committee" means the Board.
(5) "Company" means Midland Resources, Inc. a Texas corporation (or
any successor corporation).
(6) "Deferred Stock" means an award made pursuant to Section 7 below
of the right to receive Stock at the end of a specified deferral period.
(7) "Disability" means the inability of a Participant to perform
substantially his duties and responsibilities to the Company by reason of a
physical or mental disability or infirmity (i) for a continuous period of six
months, or (ii) at such earlier time as the Participant submits medical
evidence satisfactory to the Administrator that he has a physical or mental
disability or infirmity which will likely prevent him from returning to the
performance of his work duties for six months or longer. The date of such
Disability shall be on the last day of such six-month period or the day on
which the Participant submits such satisfactory medical evidence, as the case
may be.
(8) "Effective Date" shall mean the date provided pursuant to Section
11.
(10) "Eligible Employee" means an officer, director, employee,
consultant or advisor of the Company or any Subsidiary.
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(11) "Fair Market Value" means, as of any given date, with respect to
any awards granted hereunder, (A) if the Stock is publicly traded, the price of
the Stock on such date as reported in the Wall Street Journal, or the average
of the closing price of the Stock on each day on which the Stock was traded
over a period of up to twenty trading days immediately prior to such date, (B)
the fair market value of the Stock as determined in accordance with a method
prescribed in the agreement evidencing any award hereunder, or (C) the fair
market value of the Stock as otherwise determined by the Administrator in the
good faith exercise of its discretion.
(12) "Limited Stock Appreciation Right" means a Stock Appreciation
Right that can be exercised only in the event of a "Change of Control" (as
defined in the award evidencing such Limited Stock Appreciation Right).
(13) "Non-Qualified Stock Option" means any Stock Option that is not
an Incentive Stock Option, including any Stock Option that provides (as of the
time such option is granted) that it will not be treated as an Incentive Stock
Option.
(14) "Parent Corporation" means any corporation (other the Company) in
an unbroken chain of corporations ending with the Company, if each of the
corporations in the chain (other than the Company) owns stock possessing 50% or
more of the combined voting power of all classes of stock in one of the other
corporations in the chain.
(15) "Participant" means any Eligible Employee, consultant or advisor
to the Company selected by the Administrator, pursuant to the Administrator's
authority in Section 2 below, to receive grants of Stock Options, Stock
Appreciation Rights, Limited Stock Appreciation Rights, Restricted Stock
awards, Deferred Stock awards, Performance Shares or any combination of the
foregoing.
(16) "Performance Share " means an award of shares of Stock pursuant
to Section 7 that is subject to restrictions based upon the attainment of
specified performance objectives.
(17) "Restricted Stock" means an award granted pursuant to Section 7
of shares of Stock subject to certain restrictions.
(18) "Stock" means the common stock, $.001 par value, of the Company.
(19) "Stock Appreciation Right" means the right pursuant to an award
granted under Section 6 to receive an amount equal to the difference between
(A) the Fair Market Value, as of the date such Stock Appreciation Right or
portion thereof is surrendered, of the shares of Stock covered by such right or
such portion thereof, and (B) the aggregate exercise price of such right or
such portion thereof.
(20) "Stock Option " means any option to purchase shares of Stock
granted pursuant to Section 5.
(21) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of
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corporations beginning with the Company, if each of the corporations (other
than the last corporation) in the unbroken chain owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in the chain.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by the Board or the Committee.
Pursuant to the terms of the Plan, the Administrator shall have the
power and authority to grant to Eligible Employees, consultants and advisors to
the Company, pursuant to the terms of the Plan: (a) Stock Options, (b) Stock
Appreciation Rights or Limited Stock Appreciation Rights, (c) Restricted Stock,
(d) Performance Shares, (e) Deferred Stock or (f) any combination of the
foregoing.
In particular, the Administrator shall have the authority:
(a) to select those Eligible Employees, consultants and
advisors of the Company who shall be Participants;
(b) to determine whether and to what extent Stock Options,
Stock Appreciation Rights, Limited Stock Appreciation Rights,
Restricted Stock, Deferred Stock, Performance Shares or a combination
of the foregoing, are to be granted hereunder to Participants;
(c) to determine the number of shares of Stock to be covered
by each such award granted hereunder;
(d) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder (including,
but not limited to, (x) the restrictions applicable to Restricted or
Deferred Stock awards and the conditions under which restrictions
applicable to such Restricted or Deferred Stock shall lapse, and (y)
the performance goals and periods applicable to the award of
Performance Shares); and
(e) to determine the terms and conditions, not inconsistent
with the terms of the Plan, which shall govern all written instruments
evidencing the Stock Options, Stock Appreciation Rights, Limited Stock
Appreciation Rights, Restricted Stock, Deferred Stock, Performance
Shares or any combination of the foregoing.
The Administrator shall have the authority, in its discretion, to
adopt, alter and repeal such administrative rules, guidelines and practices
governing the Plan as it shall from time to time deem advisable; to interpret
the terms and provisions of the Plan and any award issued under the Plan (and
any agreements relating thereto); and to otherwise supervise the administration
of the Plan.
All decisions made by the Administrator pursuant to the provisions of
the Plan shall be final and binding on all persons, including the Company and
the Participants.
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SECTION 3. STOCK SUBJECT TO PLAN.
The total number of shares of Stock reserved and available for
issuance under the Plan shall be 1,235,000. Such shares may consist, in whole
or in part, of authorized and unissued shares or treasury shares.
To the extent that (i) a Stock Option expires or is otherwise
terminated without being exercised, or (ii) any shares of Stock subject to any
Restricted Stock, Deferred Stock or Performance Share award granted hereunder
are forfeited, such shares shall again be available for issuance in connection
with future awards under the Plan. If any shares of Stock have been pledged as
collateral for indebtedness incurred by a Participant in connection with the
exercise of a Stock Option and such shares are returned to the Company in
satisfaction of such indebtedness, such shares shall again be available for
issuance in connection with future awards under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend or other change in corporate structure
affecting the Stock, a substitution or adjustment shall be made in (i) the
aggregate number of shares reserved for issuance under the Plan, (ii) the kind,
number and option price of shares subject to outstanding Stock Options granted
under the Plan, and (iii) the kind, number and purchase price of shares
issuable pursuant to awards of Restricted Stock, Deferred Stock and Performance
Shares, as may be determined by the Administrator, in its sole discretion. Such
other substitutions or adjustments shall be made as may be determined by the
Administrator, in its sole discretion. Am adjusted option price shall also be
used to determine the amount payable by the Company upon the exercise of any
Stock Appreciation Right or Limited Stock Appreciation Right associated with
any Stock Option. In connection with any event described in this paragraph, the
Administrator may provide, in its discretion, for the cancellation of any
outstanding awards and payment in cash or other property therefor.
SECTION 4. ELIGIBILITY.
Members of the Board of Directors, officers (including officers who
are directors of the Company), employees of the Company, and consultants and
advisors to the Company who are responsible for or are in a position to
contribute to the management, growth and/or profitability of the business of
the Company shall be eligible to be granted Stock Options, Stock Appreciation
Rights, Limited Stock Appreciation Rights, Restricted Stock awards, Deferred
Stock awards or Performance Shares hereunder. The Participants under the Plan
shall be selected from time to time by the Administrator, in its sole
discretion, from among the Eligible Employees, consultants and advisors to the
Company recommended by the senior management of the Company, and the
Administrator shall determine, in its sole discretion, the number of shares of
Stock covered by each award.
SECTION 5. STOCK OPTIONS.
Stock Options may be granted alone or in addition to other awards
granted under the Plan. Any Stock Option granted under the Plan shall be in
such form as the Administrator may from time to time
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approve, and the provisions of Stock Option awards need not be the same with
respect to each optionee. Recipients of Stock Options shall enter into a
subscription and/or award agreement with the Company, in such form as the
Administrator shall determine, which agreement shall set forth, among other
things, the exercise price of the option, the term of the option and provisions
regarding exercisability of the option granted thereunder.
The Stock Options granted under the Plan shall be Non-Qualified Stock
Options.
The Administrator shall have the authority to grant any Eligible
Employee Non-Qualified Stock Options,(with or without Stock Appreciation Rights
or Limited Stock Appreciation Rights). Consultants and advisors may only be
granted Non-Qualified Stock Options (with or without Stock Appreciation Rights
or Limited Stock Appreciation Rights). More than one option may be granted to
the same optionee and be outstanding concurrently hereunder.
Stock Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions,
not inconsistent with the terms of the Plan, as the Administrator shall deem
desirable:
(1.) Option Price. The option price per share of Stock purchasable
under a Stock Option shall be determined by the Administrator in its sole
discretion at the time of grant and shall not, in any event, be less than the
par value (if any) of the Stock.
(2) Option Term. The term of each Stock Option shall be fixed by the
Administrator, but no Stock Option shall be exercisable more than ten years
after the date such Stock Option is granted.
(3) Exercisability. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Administrator at or after grant. The Administrator may provide, in its
discretion, that any Stock Option shall be exercisable only in installments,
and the Administrator may waive such installment exercise provisions at any
time in whole or in part based on such factors as the Administrator may
determine, in its sole discretion, including but not limited to in connection
with any "change in control" of the Company, as defined in any stock option
agreement. Notwithstanding the foregoing, the exercisability of any Stock
Options granted hereunder, unless specifically stated otherwise, shall contain
the following limitations on exercise, and any grant of Stock Options
designated as Bonus Options shall become exercisable as stated in (iv) below:
(i) one-fourth (1/4) of the total Stock Options (excluding Bonus Options)
granted to any one individual at any one time shall become exercisable only
upon the price per share of the Company's common stock trading at $6.50 or more
during three out of five consecutive trading days. The term "trades" means a
transaction effected on NASDAQ or any recognized stock exchange on which the
Company's stock is authorized for trading.
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(ii) one-half (1/2) of the total Stock Options (excluding Bonus Options)
granted to any one individual at any one time shall become exercisable only
upon the price per share of the Company's common stock trading at $7.50 or more
during three out of five consecutive trading days.
(iii) one-fourth (1/4) of the total Stock Options (excluding Bonus Options)
granted to any one individual at any one time shall become exercisable only
upon the price per share of the Company's common stock trading at $8.50 or more
during three out of five consecutive trading days.
(iv) all (100%) Stock Options granted as Bonus Options to any one individual at
any one time shall become exercisable only upon the price per share of the
Company's common stock trading at $10.00 or more during three out of five
consecutive trading days.
(4) Vesting. Stock Options may contain provisions regarding the
vesting of any right to exercise such option as shall be determined by the
Adminstrator at grant.
(5) Method of Exercise. Subject to Sections 5(3) and (4) above, Stock
Options may be exercised in whole or in part at any time during the option
period, by giving written notice of exercise to the Company specifying the
number of shares to be purchased, accompanied by payment in full of the
purchase price in cash or its equivalent as determined by the Administrator. As
determined by the Administrator, in its sole discretion, payment in whole or in
part may also be made (i) by means of any cashless exercise procedure approved
by the Administrator, (ii) in the form of unrestricted Stock already owned by
the optionee, or (iii) in the case of the exercise of a Non-Qualified Stock
Option, in the form of Restricted Stock or Performance Shares subject to an
award hereunder (based, in each case, on the Fair Market Value of the Stock on
the date the option is exercised). If payment of the option exercise price of a
Non-Qualified Stock Option is made in whole or in part in the form of
Restricted Stock or Performance Shares, the shares received upon the exercise
of such Stock Option (to the extent of the number of shares of Restricted Stock
or Performance Shares surrendered upon exercise of such Stock Option) shall be
restricted in accordance with the original terms of the Restricted Stock or
Performance Share award in question, except that the Administrator may direct
that such restrictions shall apply only to that number of shares equal to the
number of shares surrendered upon the exercise of such option. An optionee
shall generally have the rights to dividends and any other rights of a
stockholder with respect to the Stock subject to the option only after the
optionee has given written notice of exercise, has paid in full for such
shares, and, if requested, has given the representation described in paragraph
(1) of Section 10.
The Administrator may require the voluntary surrender of all or a
portion of any Stock Option granted under the Plan as a condition precedent to
the grant of a new Stock Option. Subject to the provisions of the Plan, such
new Stock Option shall be exercisable at the price, during such period and on
such other terms and conditions as are specified by the Administrator at the
time the new Stock Option is granted. To the extent applicable, upon their
surrender, Stock Options shall be canceled and
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the shares previously subject to such canceled Stock Options shall again be
available for grants of Stock Options and other awards hereunder.
(6) Loans. The Company may not make loans available to Stock Option
holders in connection with the exercise of outstanding options granted under
the Plan.
(7) Non-Transferability of Options. Unless otherwise determined by the
Administrator no Stock Option shall be transferable by the optionee, and all
Stock Options shall be exercisable, during the optionee's lifetime, only by the
optionee.
(8) Termination of Employment or Service. If an optionee's employment
with or service as a consultant or advisor to the Company terminates by reason
of death, Disability or for any other reason, the Stock Option may thereafter
be exercised to the extent provided in the applicable option or award
agreement, or as otherwise determined by the Administrator.
SECTION 6. STOCK APPRECIATION RIGHTS AND LIMITED STOCK APPRECIATION RIGHTS.
(1) Grant and Exercise. Stock Appreciation Rights and Limited Stock
Appreciation Rights may be granted either alone ("Free Standing Rights") or in
conjunction with all or part of any Stock Option granted under the Plan
('Related Rights'). In the case of a Non-Qualified Stock Option, Related Rights
may be granted either at or after the time of the grant of such Stock Option.
A Related Right or applicable portion thereof granted in conjunction
with a given Stock Option shall terminate and no longer be exercisable upon the
termination or exercise of the related Stock Option, except that, unless
otherwise provided by the Administrator at the time of grant, a Related
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Right granted with respect to less than the full number of shares covered by a
related Stock Option shall only be reduced if and to the extent that the number
of shares covered by the exercise or termination of the related Stock Option
exceeds the number of shares not covered by the Related Right.
A Related Right may be exercised by an optionee, in accordance with
paragraph (2) of this Section 6, by surrendering the applicable portion of the
related Stock Option. Upon such exercise and surrender, the optionee shall be
entitled to receive an amount determined in the manner prescribed in paragraph
(2) of this Section 6. Stock Options which have been so surrendered, in whole
or in part, shall no longer be exercisable to the extent the Related Rights
have been so exercised.
(2) Terms and Conditions. Stock Appreciation Rights shall be subject
to such terms and conditions, not inconsistent with the provisions of the Plan,
as shall be determined from time to time by the Administrator, including the
following:
(a) Stock Appreciation Rights that are Related Rights ("Related Stock
Appreciation Rights") shall be exercisable only at such time or times and to
the extent that the Stock Options to which they relate shall be exercisable in
accordance with the provisions of Section 5 and this Section 6 of the Plan;
provided, however, that no Related Stock Appreciation Right shall be
exercisable during the first six months of its term, except that this
additional limitation shall not apply in the event of death or Disability of
the optionee prior to the expiration of such six-month period.
(b) Upon the exercise of a Related Stock Appreciation Right, an
optionee shall be entitled to receive up to, but not more than, an amount in
cash or that number of shares of Stock (or in some combination of cash and
shares of Stock) equal in value to the excess of the Fair Market Value of one
share of Stock as of the date of exercise over the option price per share
specified in the related Stock Option multiplied by the number of shares of
Stock in respect of which the Related Stock Appreciation Plight is being
exercised, with the Administrator having the right to determine the form of
payment.
(c) Related Stock Appreciation Rights shall be transferable only when
and to the extent that the underlying Stock Option would be transferable under
paragraph (6) of Section 5 of the Plan.
(d) Upon the exercise of a Related Stock Appreciation Right, the Stock
Option or part thereof to which such Related Stock Appreciation Right is
related shall be deemed to have been exercised for the purpose of the
limitation set forth in Section 3 of the Plan on the number of shares of Stock
to be issued under the Plan, but only to the extent of the number of shares
issued under the Related Stock Appreciation Right.
(e)Stock Appreciation Plights that are Free Standing Rights ("Free
Standing Stock Appreciation Rights") shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Administrator at or after grant; provided, however, that no Free Standing Stock
Appreciation Right shall be exercisable during the first six months of its
term, except that this
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limitation shall not apply in the event of death or Disability of the recipient
of the Free Standing Stock Appreciation Right prior to the expiration of such
six-month period.
(f) The term of each Free Standing Stock Appreciation Right shall be
fixed by the Administrator, but no Free Standing Stock Appreciation Fight
shall be exercisable more than ten years after the date such right is granted.
(g) Upon the exercise of a Free Standing Stock Appreciation Right, a
recipient shall be entitled to receive up to, but not more than, an amount in
cash or that number of shares of Stock (or any combination of cash or shares of
Stock) equal in value to the excess of the Fair Market Value of one share of
Stock as of the date of exercise over the price per share specified in the Free
Standing Stock Appreciation Right (which price shall be no less than 100% of
the Fair Market Value of the Stock on the date of grant) multiplied by the
number of shares of Stock in respect to which the right is being exercised,
with the Administrator having the right to determine the form of payment.
(h) Free Standing Stock Appreciation Rights shall be transferable only
when and to the extent that a Stock Option would be transferable under
paragraph (6) of Section 5 of the Plan.
(i) In the event of the termination of employment or service of a
Participant who has been granted one or more Free Standing Stock Appreciation
Rights, such rights shall be exercisable at such time or times and subject to
such terms and conditions as shall be determined by the Administrator at or
after grant.
(j) Limited Stock Appreciation Rights may only be exercised within the
30-day period following a "Change of Control" (as defined by the Administrator
in the agreement evidencing such Limited Stock Appreciation Right) and, with
respect to Limited Stock Appreciation Rights that are Related Rights ("Related
Limited Stock Appreciation Rights"), only to the extent that the Stock Options
to which they relate shall be exercisable in accordance with the provisions of
Section 5 and this Section 6 of the Plan; provided, however, that no Related
limited Stock Appreciation Right shall be exercisable during the first six
months of its term, except that this additional limitation shall not apply in
the event of death or Disability of the optionee prior to the expiration of
such six-month period.
(k) Upon the exercise of a Limited Stock Appreciation Right, the
recipient shall be entitled to receive an amount in cash equal in value to the
excess of the "Change of Control Price" (as defined in the agreement evidencing
such Limited Stock Appreciation Right) of one share of Stock as of the date of
exercise over (A) the option price per share specified in the related Stock
Option, or (B) in the case of a Limited Stock Appreciation Right which is a
Free Standing Stock Appreciation Right, the price per share specified in the
Free Standing Stock Appreciation Right, such excess to be multiplied by the
number of shares in respect of which the Limited Stock Appreciation Right shall
have been exercised.
SECTION 7. RESTRICTED STOCK, DEFERRED STOCK AND PERFORMANCE SHARES.
(1) General. Restricted Stock, Deferred Stock or Performance Share
awards may be issued
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either alone or in addition to other awards granted under the Plan. The
Administrator shall determine the Eligible Employees, consultants and advisors
to whom, and the time or times at which, grants of Restricted Stock, Deferred
Stock or Performance Share awards shall be made; the number of shares to be
awarded; the price, if any, to be paid by the recipient of Restricted Stock,
Deferred Stock or Performance Share awards; the Restricted Period (as defined
in paragraph (3) hereof) applicable to Restricted Stock or Deferred Stock
awards; the performance objectives applicable to Performance Share or Deferred
Stock awards; the date or dates on which restrictions applicable to such
Restricted Stock or Deferred Stock awards shall lapse during such Restricted
Period; and all other conditions of the Restricted Stock, Deferred Stock and
Performance Share awards. The Administrator may also condition the grant of
Restricted Stock, Deferred Stock awards or Performance Shares upon the exercise
of Stock Options, or upon such other criteria as the Administrator may
determine, in its sole discretion. The provisions of Restricted Stock, Deferred
Stock or Performance Share awards need not be the same with respect to each
recipient. In the discretion of the Administrator, loans may be made to
Participants in connection with the purchase of Restricted Stock under
substantially the same terms and conditions as provided in Section 5(5) with
respect to the exercise of stock options.
(2) Awards and Certificates. The prospective recipient of a Restricted
Stock, Deferred Stock or Performance Share award shall not have any rights with
respect to such award, unless and until such recipient has executed an
agreement evidencing the award (a "Restricted Stock Award Agreement," "Deferred
Stock Award Agreement" or "Performance Share Award Agreement," as appropriate)
and delivered a fully executed copy thereof to the Company, within a period of
sixty days (or such other period as the Administrator may specify) after the
award date. Except as otherwise provided below in this Section 7(2), (i) each
Participant who is awarded Restricted Stock or Performance Shares shall be
issued a stock certificate in respect of such shares of Restricted Stock or
Performance Shares; and (ii) such certificate shall be registered in the name
of the Participant, and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such award.
The Company may require that the stock certificates evidencing
Restricted Stock or Performance Share awards hereunder be held in the custody
of the Company until the restrictions thereon shall have lapsed, and that, as a
condition of any Restricted Stock award or Performance Share award, the
Participant shall have delivered a stock power, endorsed in blank, relating to
the Stock covered by such award.
With respect to Deferred Stock awards, at the expiration of the
Restricted Period, stock certificates in respect of such shares of Deferred
Stock shall be delivered to the participant, or his legal representative, in a
number equal to the number of shares of Stock covered by the Deferred Stock
award.
(3) Restrictions and Conditions. The Restricted Stock, Deferred Stock
and Performance Share awards granted pursuant to this Section 7 shall be
subject to the following restrictions and conditions:
(a) Subject to the provisions of the Plan and the Restricted Stock
Award Agreement, Deferred Stock Award Agreement or Performance Share Award
Agreement, as appropriate, governing such
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award, during such period as may be set by the Administrator commencing on the
grant date (the "Restricted Period"), the Participant shall not be permitted to
sell, transfer, pledge or assign shares of Restricted Stock, Performance Shares
or Deferred Stock awarded under the Plan; provided, however; that the
Administrator may, in its sole discretion, provide for the lapse of such
restrictions in installments and may accelerate or waive such restrictions in
whole or in part based on such factors and such circumstances as the
Administrator may determine, in its sole discretion, including, but not limited
to, the attainment of certain performance related goals, the Participant's
termination of employment or service, death or Disability or the occurrence of
a "Change of Control" as defined in the agreement evidencing such award.
(b) Except as provided in paragraph (3)(a) of this Section 7, the
Participant shall generally have, with respect to the shares of Restricted
Stock or Performance Shares, all of the rights of a stockholder with respect to
such stock during the Restricted Period. The Participant shall generally not
have the rights of a stockholder with respect to stock subject to Deferred
Stock awards during the Restricted Period; provided, however; that dividends
declared during the Restricted Period with respect to the number of shares
covered by a Deferred Stock award shall be paid to the Participant.
Certificates for shares of unrestricted Stock shall be delivered to the
Participant promptly after, and only after, the Restricted Period shall expire
without forfeiture in respect of such shares of Restricted Stock, Performance
Shares or Deferred Stock, except as the Administrator, in its sole discretion,
shall otherwise determine.
(c) The rights of holders of Restricted Stock, Deferred Stock and
Performance Share awards upon termination of employment or service for any
reason during the Restricted Period shall be set forth in the Restricted Stock
Award Agreement, Deferred Stock Award Agreement or Performance Share Award
Agreement, as appropriate, governing such awards.
SECTION 8. AMENDMENT AND TERMINATION.
The Board may amend, alter or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made that would impair the rights of a
Participant under any award theretofore granted without such Participant's
consent.
The Administrator may amend the terms of any award theretofore
granted, prospectively or retroactively, but, subject to Section 3 above, no
such amendment shall impair the rights of any holder without his or her
consent.
SECTION 9. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments not yet made to a Participant by the
Company, nothing contained herein shall give any such Participant any rights
that are greater than those of a general creditor of the Company.
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SECTION 10. GENERAL PROVISIONS.
(1) The Administrator may require each person purchasing shares
pursuant to a Stock Option to represent to and agree with the Company in
writing that such person is acquiring the shares without a view to distribution
thereof. The certificates for such shares may include any legend which the
Administrator deems appropriate to reflect any restrictions on transfer.
All certificates for shares of Stock delivered under the Plan shall be
subject to such stop-transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations, and other
requirements of the Commission, any stock exchange upon which the Stock is then
listed, and any applicable federal or state securities law, and the
Administrator may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions.
(2) Nothing contained in the Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of the
Plan shall not confer upon any employee, consultant or advisor of the Company
any right to continued employment or service with the Company, as the case may
be, nor shall it interfere in any way with the right of the Company to
terminate the employment or service of any of its employees, consultants or
advisors at any time.
(3) Each Participant shall, no later than the date as of which the
value of an award first becomes includible in the gross income of the
Participant for federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Administrator regarding payment of, any
federal, state, or local taxes of any kind required by law to be withheld with
respect to the award. The obligations of the Company under the Plan shall be
conditional on the making of such payments or arrangements, and the Company
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the Participant.
(4) No member of the Board or the Administrator, nor any officer or
employee of the Company acting on behalf of the Board or the Administrator,
shall be personally liable for any action, determination, or interpretation
taken or made in good faith with respect to the Plan, and all members of the
Board or the Administrator and each and any officer or employee of the Company
acting on their behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Company in respect of any such action,
determination or interpretation.
SECTION 11. EFFECTIVE DATE OF PLAN.
The Plan became effective (the "Effective Date") on February 25, 1997.
SECTION 12. TERMINATION OF PLAN.
No Stock Option, Stock Appreciation Fight, Limited Stock Appreciation
Right, Restricted
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Stock, Deferred Stock or Performance Share award shall be granted pursuant to
the Plan on or after the tenth anniversary of the Effective Date, but awards
theretofore granted may extend beyond that date.
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EXHIBIT 4.5
BUSINESS CONSULTANT AGREEMENT
AGREEMENT made effective the 25th day of February, 1997, at Houston, Texas,
between Midland Resources, Inc., a Texas Corporation (the "Company"), and
Edward Kennard Andrew, (the "Consultant").
In consideration of the mutual promises contained in this contract, the
parties agree as follows:
RECITALS
WHEREAS, the Company has called upon Consultant in the past for advice on
various matters to which the Consultant has expended a significant amount of
time and effort;
WHEREAS, the Company anticipates that it will call upon Consultant in the
future for similar services which it has found to be of benefit;
WHEREAS, the Company and Consultant realize that the demands upon Consultant to
provide the time and attention to respond to Company's requests will extend
beyond those historically given by Consultant and currently assumed or
expected by the Company to be given without compensation;
WHEREAS, the Company and Consultant wish to formalize a consulting arrangement
providing for reasonable compensation to Consultant;
WHEREAS, the Company and Consultant each believe that compensation in the form
of a warrant to purchase stock will allow each to achieve certain objectives;
WHEREAS, it is the desire of the Company to engage the services of the
Consultant to perform for the Company consulting services, including but not
limited to those regarding general financial advice and consulting, due
diligence services including checking and investigating with respect in
individuals, other consultants and businesses, market and marketing research,
analyzing financial strategies both long term and short term, arranging for
introductions of the Company and its representatives to individuals,
consultants, and companies with respect to which Consultant has contacts, and
providing advice to Company personnel in charge of shareholder relations
("Services");
WHEREAS, it is the intent of the Company and Consultant that Consultant act as
an independent contractor and not as an employee; and
Edward Kennard Andrew Consulting Agreement Page 1
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WHEREAS, It is the desire of the Consultant to consult with the Board of
Directors and the officers of the Corporation.
AGREEMENT
Term
1. The respective duties and obligations of the parties to this agreement
shall be for a period of two (2) years, commencing on February 25, 1997 and may
be terminated by either party giving ninety (90) days' written notice to the
other party. If Consultant terminates this agreement for any reason, he shall
forfeit 1/24 th of the compensation provided for herein for each whole month
remaining in the term hereof. If such compensation in the form of a warrant to
purchase common stock has been exercised, such stock shall be returned to the
Company, or if Consultant has sold such stock then Consultant shall purchase
such number of forfeited shares in the market and deliver those shares to the
Company. Termination of this agreement by Consultant due to disability or
death shall not require the forfeiture of any compensation.
Consultations
2. The Consultant shall make himself available to consult with the Board of
Directors and the officers of the Company, at reasonable times, concerning
matters pertaining to Services.
Employment of Assistants
3. The Consultant may, from time to time, retain the aid of assistants or
the services of other persons, companies, or firms that the Consultant deems
reasonably necessary in order to properly perform his duties and obligations
under this agreement. All costs to the Consultant for such services shall be
born by Consultant and not without prior written agreement chargeable to the
Company.
Limited Liability
4. The Consultant shall not be liable to the Company, or to anyone who may
claim any right due to his relationship with the Company, for any acts or
omissions on the part of the Consultant or the agents or employees of the
Consultant in the performance of the Consultant's services under this
agreement, except when such acts or omissions are due to willful misconduct or
culpable negligence. The Company shall hold the Consultant free and harmless
from any obligations, costs, claims, judgments, attorney's fees, or attachments
Edward Kennard Andrew Consulting Agreement Page 2
<PAGE> 3
arising from or growing out of the services rendered to the Company pursuant to
the terms of this agreement or in any way connected with the rendering of such
services, except when the same shall arise due to the willful misconduct or
culpable negligence of the Consultant and the Consultant is adjudged to be
guilty of or liable due to willful misconduct or culpable negligence by a court
of competent jurisdiction.
Compensation
5. For services rendered under this agreement, the Consultant shall receive
a warrant to purchase fifty thousand shares (50,000) of Company common stock
at per share price of $3.00, for four (4) years substantially in the form of
Exhibit A hereto. Consultant shall at all times be an independent contractor
to the Company.
Minimum Amount of Service
6. The Consultant shall not be required to devote a minimum number of hours
per month to the affairs of the Company. The Consultant shall devote only so
much time to the affairs of the Company as he and the Company mutually
determine. By way of guidance and not in limitation or requirement, Consultant
and Company estimate that over the course of this agreement Consultant will
expend approximately six hundred (600) hours. Consultant may, but shall not
be required to maintain a log of hours expended pursuant to this agreement.
The Consultant may represent, perform services for, and be employed by such
additional clients, persons, or companies as the Consultant, in his sole
discretion, sees fit.
Arbitration
7. Any controversy between the parties involving the construction or
application of any of the terms, covenants, or conditions of this agreement
shall, on the written request of one party served on the other, be submitted to
arbitration, which shall comply with and be governed by the provisions of the
Texas General Arbitration Act, Texas Revised Civil Statutes, Articles 224
through 238-6. Each of the parties to this agreement shall appoint one person
as an arbitrator to hear and determine the dispute, and each party shall
attempt in good faith to agree with the other as to a third arbitrator; if the
parties should prove unable to agree in this way, then the two arbitrators
already chosen shall select a third impartial arbitrator whose decision shall
be final and conclusive. The expenses of arbitration shall be borne by the
losing party or in such proportion as the arbitrators shall decide.
Confidentiality
8. Consultant understands the Company has public shareholders and
therefore he shall maintain the confidence of and not disclose to any other
person all information provided to
Edward Kennard Andrew Consulting Agreement Page 3
<PAGE> 4
Consultant that is of a non-public, confidential, or proprietary nature without
the express written consent of Company. Consultant shall undertake to require
any agents he may engage or employ to comply with this provision as though they
were a party hereto. Upon the termination of this agreement Consultant shall
return any such information to Company. Consultant shall not personally trade
based upon any material non-public information that he becomes aware of as a
result directly or indirectly of this agreement.
Remedies
9. If any action at law or in equity is necessary to enforce or interpret
the terms of this agreement, the prevailing party shall be entitled to
reasonable attorney's fees, costs, and necessary disbursements in addition to
any other relief to which it may be entitled.
Texas Law to Apply
10. This agreement shall be construed under and in accordance with the laws
of the State of Texas, and all obligations of the parties created under this
agreement are performable in Harris County, Texas.
Parties Bound
11. This agreement shall be binding on and inure to the benefit of the
parties to it and their respective heirs, executors, administrators, legal
representatives, successors, and assigns when permitted by this agreement. The
Consultant shall not assign its obligations hereunder without the prior written
consent of the Company, which it may withhold for any reason. The Company's
rights hereunder shall inure to any successor whether by merger, reorganization
or otherwise.
Legal Construction
12. In the event that any one or more of the provisions contained in this
agreement shall for any reason be held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality, or unenforceability shall not
affect any other provisions, and the agreement shall be construed as if such
invalid, illegal, or unenforceable provision had never been contained in it.
Prior Agreements Superseded
13. This agreement constitutes the sole and only agreement of the parties to
it and supersedes any prior understandings or written or oral agreements
between the parties respecting this subject matter.
Edward Kennard Andrew Consulting Agreement Page 4
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Special Representations by Consultant
14. Consultant understands that the warrant to be given as compensation and
the shares issuable upon the exercise thereof may not be registered under the
federal or state securities laws and therefore maynot be sold or transferred
without registration or an available exemption from registration. Consultant
understands that a legend may be placed upon such warrant and any shares issued
upon its exercise evidencing such restrictions and stop transfer orders may be
placed against such shares. Consultant is sophisticated in business matters
and knowledgeable in securities matters and understands the merits and risks
associated with receipt of such warrant and shares. Consultant is
knowledgeable of the Company and has asked such questions of the Company and
received such answers and other information as he deems necessary to accept the
warrant as compensation.
Special Representation by Company
15. Company will use its best efforts to register the shares issuable upon
the exercise of the Warrant on a Registration Statement on Form S-8, subject in
all respects to the availability of such form for such purpose and such filing
not, in the sole opinion of the Company, being unduly burdensome or expensive.
Executed at Houston, Texas, on the day and year first above written.
COMPANY
Midland Resources, Inc.
By:
-----------------------------------
Deas H. Warley III, President
CONSULTANT
Edward Kennard Andrew
- --------------------------------------
(Signature)
Edward Kennard Andrew Consulting Agreement Page 5
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Exhibit A
WARRANT CERTIFICATE
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND NEITHER THE SECURITIES NOR ANY
INTEREST THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION UNDER SUCH ACT AND THE RULES
AND REGULATIONS THEREUNDER; PROVIDED FURTHER, THE SECURITIES REPRESENTED BY
THIS CERTIFICATE ARE NOT TRANSFERABLE BY OR FROM THE WARRANT HOLDER NAMED
HEREIN WITHOUT THE EXPRESS WRITTEN CONSENT OF MIDLAND RESOURCES, INC.
Issue Date: FEBRUARY 25, 1997 50,000 Warrants to
Purchase Common Stock
Void after 5:00 P.M.
FEBRUARY 24, 2001 Certificate No. KA-1
WARRANTS TO PURCHASE COMMON STOCK OF
MIDLAND RESOURCES, INC.
Midland Resources, Inc., a Texas corporation (the "Company") ,
hereby certifies that, for value received, EDWARD KENNARD ANDREW, the holder of
these Warrants (the"Warrants," and each right to purchase a share of Common
Stock, a "Warrant" ) is entitled, subject to the terms set forth below, at any
time, or from time to time, to purchase from the Company 50,000 fully paid and
nonassessable shares of Common Stock of the Company. These Warrants and all
rights hereunder, to the extent such rights shall not have been exercised, shall
terminate and become null and void at 5:00 p.m., Houston, Texas time, on
FEBRUARY 24, 2001 (the "Expiration Date"). For purpose of these Warrants, the
term "Common Stock" shall mean the common stock, par value $0.001 per share of
Midland Resources, Inc. having such rights and privileges as exist on the date
hereof.
These Warrants shall be subject to the following terms and
conditions:
SECTION 1. EXERCISE OF WARRANT; RESERVATION OF COMMON STOCK; EXERCISE PRICE;
ADJUSTMENTS RELATIVE TO EXERCISE OF WARRANT.
A. EXERCISE OF WARRANTS. Subject to the conditions set forth in
this Section 1, the holder of any warrant may, at such holder's option,
exercise such holder's rights under all or any part of the Warrants to purchase
one share of Common Stock in exchange for one Warrant ( the "Warrant Shares")
at a price per share (the "Exercise Price") equal to $3.00, payable in cash, at
any time and from time to time prior to the Expiration Date. The Warrant
Shares and the Exercise Price are subject to certain adjustments set forth in
this Section 1, and the terms "Warrant Shares" and "Exercise Price" as used
herein shall as of any time be deemed to include all such adjustments to be
given effect as of such time in accordance with the terms hereof.
B. RESERVATION OF COMMON STOCK. The Company covenants that,
while these Warrants are exercisable, it shall reserve from its authorized and
unissued Common Stock a
Edward Kennard Andrew Warrant Page 1
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sufficient number of shares to provide for the delivery of stock pursuant to an
exercise of these Warrants. The Company further covenants that all shares of
Common Stock that may be issued upon the exercise of these Warrants shall, upon
issuance, be duly and validly issued, fully paid and nonassessable, and free
from all taxes, liens, and charges with respect to the purchase and issuance
of the shares.
C. RECAPITALIZATION. (1) The existence of these Warrants shall
not affect in any way the right or power of the Company or its shareholders to
make or authorize any or all adjustments, recapitalization, reorganizations, or
other changes in the Company's capital structure or its business, or any merger
or consolidation of the Company or any issue of bonds, debentures, preferred or
prior preference stocks ahead of or affecting the Common Stock or the rights
thereof, or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.
(2). The consideration payable per share upon exercise shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a subdivision or consolidation of shares
or other capital adjustment, or the payment of a stock dividend or other
increase or decrease in such shares, effected without receipt of consideration
by the Company; provided, however, that any fractional shares resulting from
any such adjustment shall be eliminated for the purposes of such adjustments.
(3). Subject to any required action by the shareholders, if the
Company shall be the surviving or resulting corporation in any merger or
consolidation, the Warrant granted hereunder shall pertain to and apply to the
securities or rights to which a holder of the number of shares of Common Stock
subject to the Warrants would have been entitled. In the event of any merger
or consolidation pursuant to which the Company is not the surviving or
resulting corporation, there shall be substituted for the shares of Common
Stock subject to any unexercised portions of the Warrants, an appropriate
number of shares of each class of stock or other securities of the surviving or
consolidated corporation which were distributed to the shareholders of the
Company in respect of such shares of Common Stock. Provided, however, that the
Warrants may be canceled by the Company as of the effective date of any such
reorganization, merger or consolidation or of any dissolution or liquidation of
the Company by giving notice to the holder hereof of its intention to do so and
by permitting the purchase during the thirty (30) day period next preceding
such effective date of all or any portion of the shares subject to the
Warrants.
(4). No adjustment of the Exercise Price shall be made in an
amount that is less than 1% of the Exercise Price, but any such lesser
adjustment shall be carried forward and made at the time of and together with
the next subsequent adjustment.
SECTION 2. METHOD OF EXERCISE OF WARRANTS.
These Warrants may be exercised by the delivery of this
Certificate, along with the Warrant Exercise Form attached hereto as Exhibit
"A" duly executed by the holder, to the Company at its principal office,
accompanied by payment of the Exercise Price for the number of shares of Common
Stock specified. The Warrants may be exercised for less than the full number
of shares of Common Stock called for hereby by delivery of this Certificate in
the manner and at the place provided above, accompanied by payment for the
number of shares of Common Stock being purchased. If the Warrants should be
exercised in part only, the Company shall, upon surrender of this Certificate
for cancellation, execute and deliver a new Certificate evidencing the right of
the
Edward Kennard Andrew Warrant Page 2
<PAGE> 8
holder to purchase the balance of the shares purchasable hereunder. Upon
receipt by the Company of this Certificate at the principal office of the
Company, in proper form for exercise, accompanied by the full Exercise Price in
cash or certified or bank cashier's check, the holder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such Common Stock shall not then be
actually delivered to the holder.
As soon as practicable after the exercise of these Warrants in
whole or in part and, in any event, within ten days thereafter, the Company at
its expense will cause to be issued in the name of and delivered to the holder
a certificate or certificates for the number of fully paid and nonassessable
shares of Common Sock (and a certificate representing the balance of any
unexercised Warrants) to which the holder shall be entitled upon such exercise.
Each certificate for shares of Common Stock so delivered shall be in such
denominations as may be requested by the holder and shall be registered in the
name of the holder or such other name as the holder may designate.
SECTION 3. RIGHTS OF HOLDER.
These Warrants do not entitle the holder to any voting rights, to
any other rights of a stockholder of the Company, or to any other rights
whatsoever, except for the rights specified in this Certificate. No dividends
are or shall be payable, or shall accrue, on or with respect to these Warrants
or any interest represented by these Warrants or on the shares that may be
purchased upon the exercise hereof until or unless, and except to the extent
that, these Warrants are exercised.
SECTION 4. NOTICE.
Any and all notices concerning these Warrants shall be given to
the holder of this Warrant by publication and/or by written notice to the
address of the holder on the warrant register for the Warrants maintained by
the Company. No notice or notices concerning these Warrants are required
except as specified in this Certificate.
SECTION 5. MUTILATED OR MISSING WARRANT CERTIFICATES.
Upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant
Certificate, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification and upon surrender and cancellation of this
Warrant Certificate (if mutilated) the Company will execute and deliver a new
Warrant Certificate of like tenor and date.
SECTION 6. MISCELLANEOUS.
A. GOVERNING LAW. These Warrants shall be performable in,
subject to and construed in accordance with the laws of the State of Texas.
B. RESTRICTIVE LEGEND. The Holder hereof, upon exercise of
these Warrants, understands and agrees that the share(s) certificate(s) to be
issued will bear a restrictive legend similar to the legend contained hereon
and stop transfer restrictions will be placed against such shares until
compliance with the legend is determined to the satisfaction of the Company.
Edward Kennard Andrew Warrant Page 3
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IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed, as of the day and year first above written.
MIDLAND RESOURCES, INC.
By:
---------------------------------
Deas H. Warley III,
President
Edward Kennard Andrew Warrant Page 4
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EXHIBIT "A"
WARRANT EXERCISE FORM
DATE: _______________, 19__
TO: MIDLAND RESOURCES, INC.
The undersigned, the holder of the attached Warrants, hereby irrevocably
elects to exercise all or part of the purchase right represented by such
Warrants for, and to purchase thereunder, ________________________ shares of
Common Stock, Par Value $0.001 Per Share of Midland Resources, Inc. (the
"Company") and herewith makes payment of $__________________ to the Company,
evidenced by delivery of _________________________________________, and
requests that the certificate of such shares be issued in the name of, and be
delivered to, _______________________________________________________________ ,
whose address is _____________________________________________________________
______________________________________________________________________________.
------------------------------------------
(Name of Holder)
------------------------------------------
(Authorized Signatory)
------------------------------------------
(Address)
------------------------------------------
Edward Kennard Andrew Warrant Page 5
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EXHIBIT 4.6
1996 MIDLAND RESOURCES, INC. LONG-TERM INCENTIVE PLAN
ARTICLE 1. - PURPOSE
1.1 PURPOSE. The purpose of the 1996 Midland Resources, Inc.,
Long-Term Incentive Plan (the "Plan") is to further the growth and financial
success of Midland Resources, Inc., a Texas corporation (the "Company") and its
Subsidiaries by aligning the personal interests of key employees, through the
ownership of shares of the Company's Common Stock and through their incentives,
to those of the Company's shareholders. The Plan is further intended to
provide flexibility to the Company in its ability to compensate key employees
and to motivate, attract and retain the services of such key employees. The
Plan permits the granting of Options, Stock Appreciation Rights, Restricted
Stock and other Stock-based Awards.
ARTICLE 2. - DEFINITIONS
2.1 AGREEMENT. Agreement shall mean the agreement as described
in Section 4.4 of the Plan between the Company and the Participant under which
such Participant receives an Award pursuant to this Plan.
2.2 AWARD. Award shall mean an incentive award granted under
the Plan, whether in the form of Options, Stock Appreciation Rights, Restricted
Stock or any other form of Stock-Based consideration (which may provide for
settlement in shares of Stock, cash and/or a combination thereof) determined by
the Committee to be consistent with the purposes of the Plan, including but not
limited to, restricted units, phantom stock, performance awards, performance
units, performance shares, stock appreciation shares, stock acquisition rights,
valuation protection rights or any other type of stock-based award or
combination or derivative of various types of awards.
2.3 BOARD OF DIRECTORS. Board or Board of Directors shall mean
the Board of Directors of the Company.
2.4 CODE. Code shall mean the Internal Revenue Code of 1986,
as amended, unless otherwise specifically provided herein.
2.5 COMMITTEE. Committee shall mean the Compensation Committee
of the Board. No member of the Committee, during the one year prior to which
membership or during such membership, shall be granted or awarded equity
securities pursuant to the Plan or any other plan of the Company or any of its
Subsidiaries, except as permitted by Rule 16b-3 as promulgated under the
Exchange Act.
2.6 COMPANY. Company shall mean Midland Resources, Inc., a
Texas corporation, and any successor thereof.
2.7 COVERED EMPLOYEE. Covered Employee means, for any Plan
Year, the Company's Chief Executive Officer (or any individual acting in such
capacity) and any employee of the Company or its Subsidiaries who, in the
discretion of the Committee for purposes of determining those employees who are
"covered employees" under Section 162(m) of the Code, is likely to be among the
four other highest compensated officers of the Company for such plan year.
2.8 EFFECTIVE DATE. Effective Date shall have the meaning
assigned to such term in Section 14.01 hereof.
2.9 EXCHANGE ACT. Exchange Act shall mean the Securities
Exchange Act of 1934, as amended.
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2.10 FAIR MARKET VALUE. Fair Market Value of the Stock shall
mean the last sale price at which Stock is traded on any given date, or if no
Stock is traded on such date, the most recent prior date on which Stock was
traded, as reported in The Wall Street Journal for the NASDAQ Small-Cap Issues
or such other reporting system as may be selected by the Committee from time to
time.
2.11 INCENTIVE STOCK OPTION. Incentive Stock Option shall have
the meaning given to it by Section 422(b) of the Code and as further defined in
Article VI hereof.
2.12 NONSTATUTORY STOCK OPTION. Nonstatutory Stock Option shall
mean any Option granted by the Company pursuant to this Plan which is not an
Incentive Stock Option.
2.13 OPTION. Option shall mean an option granted by the Company
to purchase Stock pursuant to the provisions of this Plan and the Agreement
executed pursuant hereto.
2.14 OPTION PRICE. Option Price shall mean the price per share
of Stock purchasable under an Option. The Option Price shall not be less than
the Fair Market Value on the date of grant.
2.15 PARTICIPANT. Participant shall mean an employee or former
employee of the Company or one of its Subsidiaries (or a member of the Board
under terms permitted under Rule 16b-3 of the Securities & Exchange Act) who
has received an Award granted by the Committee hereunder.
2.16 RESTRICTED STOCK AWARDS. A Restricted Stock Award shall
mean a grant made by the Committee entitling the Participant to acquire, either
at no cost or for a purchase price determined by the Committee at the time of
grant, shares of Stock subject to such restrictions and conditions as the
Committee may determine at the time of grant ("Restricted Stock").
2.17 STOCK. Stock shall mean common stock, par value $.001 per
share, of the Company.
2.18 STOCK APPRECIATION RIGHTS. A Stock Appreciation Right
shall mean a grant entitling the Participant to receive an amount in cash, or
shares of Stock, or a combination thereof, having a value equal to (or if the
Committee shall so determine at the time of grant, less than) the excess of the
fair Market Value of a share of Stock on the date of exercise over the Fair
Market Value of a share of Stock on the date of grant (or over the Option
Price, if the Stock Appreciation Right was granted in tandem with an Option)
multiplied by the number of shares with respect to which the Stock Appreciation
Right shall have been exercised, with the Committee having sole discretion to
determine the form for payment. A Stock Appreciation Right is further defined
in Article 7 hereof.
2.19 SUBSIDIARY. Subsidiary shall have the same meaning as
defined in Section 424 of the Code.
ARTICLE 3. - PARTICIPATION
3.1 PARTICIPATION. Subject to the provisions of the Plan, the
Committee may grant Awards under this Plan to any officer or other key employee
of the Company or Subsidiary who, in its sole discretion, is expected to
contribute to its success and to members of the Board under terms permitted
under Rule 16b-3 of the Securities Act that do not result in any such grant
preventing a disinterested Director from continuing to be such. Awards may be
granted to the same individual on more than one occasion.
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ARTICLE 4. - SHARES SUBJECT TO THE PLAN
4.1 LIMITATIONS.
4.2 Subject to adjustments pursuant to the provisions of
Section 4.3 hereof, the number of shares of Stock or Stock equivalents which
may be granted to Participants under all forms of Awards shall not exceed
400,000 shares. These shares may consist in whole or in part of authorized and
unissued Stock or Treasury Stock.
(a) For purposes of this Section 4.1, the shares of Stock that
shall be counted toward such limitation shall include all Stock:
4.2.1.1 issued or issuable pursuant to Options that have
been or may be exercised;
4.2.1.2 subject to Stock Appreciation Rights that have
been or may be exercised (other than Stock
Appreciation Rights granted in tandem with
outstanding Options);
4.2.1.3 issued as, or subject to issuance as, Restricted
Stock;
4.2.1.4 used to calculate payments of dividends and
dividend equivalents in conjunction with any
outstanding Awards; and
4.2.1.5 to the extent that an Award is settled in cash or
any form other than in Stock, the appropriate
shares of Stock represented by such settlement of
the Awards, as determined by the Committee.
4.3 AVAILABILITY OF SHARES ONCE ISSUED UNDER PLAN. Once grants
of Awards have lapsed, terminated or are forfeited, the Committee shall have
the sole discretion to issue a new grant to any Participant, covering the
number of shares to which such lapsed, terminated or forfeited grant related;
provided, however, that the Participant has received no monetary benefits of
ownership therefrom, such as dividends.
4.4 ANTI-DILUTION ADJUSTMENTS. In the event that the
outstanding shares of Stock are changed into or exchanged for a different
number or kind of share or other securities of the Company or of another
corporation by reason of merger, consolidation, other reorganization,
recapitalization, reclassification, combination of shares, stock split-up, or
stock dividend, the Committee shall make such corresponding adjustment, if any,
as is appropriate, adjusting the number and kind of shares which may be granted
under the Plan, the maximum number and kind of shares which may be granted to
any one eligible Participant, and the number, the Option Price, and the kind of
shares or property subject to each outstanding grant.
4.5 GRANTS AND AGREEMENTS. Each grant of an Award under this
Plan shall be evidenced by a written Agreement dated as of the date of the
grant and executed by the Company and the Participant. This Agreement shall set
forth the terms and conditions of such Award, as may be determined by the
Committee consistent with this Plan, and if such Agreement related to the grant
of an Option, shall indicate whether the Option is intended to be an Incentive
Stock Option or a Nonstatutory Stock Option.
ARTICLE 5. - OPTIONS
5.1 OPTION EXERCISE. Subject to Federal and state statutes
then applicable, the terms and procedures by which an Option may be exercised
shall be set forth in the Participant's Agreement or in procedures established
by the Committee; provided, however, that no Option shall be exercisable later
than ten (10) years (or five (5) years as required by Section 422(b)(6) of the
Code) after date granted if an Incentive Stock Option. The Committee may permit
payment of the Option Price to be made through the tender of cash
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or securities, the withholding of Stock or cash to be received through Awards,
or any other arrangement satisfactory to the Committee.
5.2 NONSTATUTORY STOCK OPTIONS. The Committee may grant
Nonstatutory Stock Options under this Plan. Such Nonstatutory Stock Options
must comply with all requirements of this Plan except for those contained in
Article 6, Article 7, and Article 8 hereof.
5.3 VESTING OF OPTIONS. The Agreement shall specify the date
or dates on which the Participant may begin to exercise all or a portion of his
Option. Notwithstanding the terms of any Agreement, the Committee may, at any
time, accelerate such date or dates and otherwise waive or amend any conditions
of the Option; provided, however, that with respect to an Incentive Stock
Option, the Committee shall not take any action which would constitute a
modification, extension or renewal (within the meaning of Section 424(h) of the
Code) of such Incentive Stock Option.
ARTICLE 6. - INCENTIVE STOCK OPTIONS
6.1 GENERAL. All Incentive Stock Options shall comply with all
the restrictions and limitations set forth in Section 422 of the Code and this
Plan. No Incentive Stock Option shall be granted to an individual if, at the
time the Option is granted, such individual owns stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company or of
its parent or subsidiary corporation, within the meaning of Section 422(b)(6)
of the Code, unless (i) at the time such Incentive Stock Option is granted the
Option Price is at least 110% of the Fair Market Value of the Stock subject to
the Option and (ii) such Incentive Stock Option by its terms is not exercisable
after the expiration of five years from the date of grant. To the extent that
the aggregate Fair Market Value (determined at the time the respective
Incentive Stock Option is granted) of stock with respect to which Incentive
Stock Options are exercisable for the first time by any individual during any
calendar year under all incentive stock option plans of the Company and its
parent and Subsidiaries exceeds $100,000, such excess Incentive Stock Options
shall be treated as Options which do not constitute Incentive Stock Options.
The Committee shall determine, in accordance with applicable provisions of the
Code, Treasury Regulations and other administrative pronouncements, which of an
Optionee's Incentive Stock Options will not constitute Incentive Stock Options
because of such limitation and shall notify the Optionee of such determination
as soon as practicable after such determination.
ARTICLE 7. - STOCK APPRECIATION RIGHTS
7.1 GRANT AND EXERCISE OF STOCK APPRECIATION RIGHTS. Stock
Appreciation Rights may be granted to Participants by the Committee in tandem
with, or independently of, any Option granted pursuant to Article 5 or Article
6 of this Plan. In the case of a Stock Appreciation Right granted in tandem
with a Nonstatutory Stock Option, such Stock Appreciation Right may be granted
either at or after the time of the grant of such Nonstatutory Stock Option. In
the case of a Stock Appreciation Right granted in tandem with an Incentive
Stock Option, such Stock Appreciation Right may be granted only at the time of
the grant of such Incentive Stock Option.
A Stock Appreciation Right, or the applicable portion thereof granted
in tandem with an Option, shall terminate and no longer be exercisable upon the
termination or exercise of the related Option. However, if a Stock Appreciation
Right is granted with respect to less than the full number of shares covered by
a related option, such Stock Appreciation Right shall terminate only if and to
the extent that the number of shares covered by the exercise or termination of
the related Option exceeds the number of shares not covered by such Stock
Appreciation Right.
7.2 TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS. Stock
Appreciation Rights shall be subject to such terms and conditions as shall be
determined from time to time by the Committee and embodied in the Agreements
and in procedures established by the Committee. The Committee may, at any time,
accelerate the exercisability of any Stock Appreciation Right and otherwise
waive or amend any conditions of the grant of a Stock Appreciation Right;
provided, however, that with respect to any Stock
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Appreciation Right granted in tandem of an Incentive Stock Option, the
Committee shall not take any action which would constitute a modification,
extension or renewal (within the meaning of Section 424(h) of the Code) of such
Incentive Stock Option.
ARTICLE 8. - RESTRICTED STOCK AWARDS
8.1 AGREEMENT. (a) If the purchase of Restricted Stock is
required by the Agreement, a Participant who is granted a Restricted Stock
Award shall have rights with respect to such grant provided the Participant
shall have accepted the grant within sixty (60) days (or such shorter date as
the Committee may specify) following the date of the grant, by making payment
to the Company by certified bank check or other instrument acceptable to the
Committee in an amount equal to the specified purchase price, if any, of the
shares covered by the grant and by executing and delivering to the Company an
Agreement in such form as the Committee shall determine.
(b) RIGHTS AS A SHAREHOLDER. After the issuance of the
Restricted Stock has been recorded in the stock ledger of the Company and
8.1.2.1 upon complying with Section 8.1(a) above, if the
purchase of Restricted Stock is required by the
Agreement; or
8.1.2.2 immediately, if no purchase of Restricted Stock is
required by the Agreement,
a Participant shall have all the rights of a shareholder with respect to such
Restricted Stock including voting and dividend rights, subject to
non-transferability restrictions and Company purchase or forfeiture rights
described in this Section and Section 8.1(c), and subject to such other
conditions (including but not limited to, any conditions on voting and dividend
rights) as are contained in the Agreement. Unless the Committee shall otherwise
determine, certificates evidencing shares of Restricted Stock shall remain in
the possession of the Company until such shares are vested as provided in
Section 8.1(d) below and the Agreement.
(c) RESTRICTIONS. Shares of Restricted Stock may not be sold,
assigned, transferred, pledged, or otherwise encumbered or disposed of except
as specifically provided herein. Restrictions on shares of Restricted Stock
shall be set forth in an Agreement and may include such vesting restrictions as
the Committee shall determine, including but not limited to, restrictions
related to timing, profitability of the Company, and growth of the share price.
In the event of a Participant's termination of employment with the Company and
its Subsidiaries for any reason (including death) prior to the date shares of
Restricted Stock awarded to such Participant become vested, the Company shall
have the right, at the discretion of the Committee, to repurchase such shares
at their purchase price, or to require forfeiture of such shares to the Company
if acquired at no cost, from such Participant or the Participant's legal
representative.
(d) VESTING OF RESTRICTED STOCK. The Committee at the time of
grant shall specify the date or dates (which may depend upon or be related to
the attainment of performance goals and other conditions) on which the
restrictions imposed upon the Restricted Stock and the Company's right of
repurchase or forfeiture shall lapse. The Committee at any time may accelerate
such date or dates and otherwise waive or amend any conditions of the grant. A
Participant may transfer or dispose of any Restricted Stock that has vested,
subject to any Federal and state laws then applicable, specifically securities
laws.
8.2 PERFORMANCE UNITS. A performance unit is a promise by the
Company to make a payment to, or on behalf of, the Participant, which may be
contingent upon the achievement of one or more performance targets specified by
the Committee. A performance unit is a right to receive or be credited with an
amount that may be determined by reference to Common Stock, other securities of
the Company or an Affiliate, or by reference to dollar amounts. Performance
units shall be subject to such conditions with respect to vesting, timing,
amount and payment as the Committee shall determine at the time of the Award.
Performance units shall be payable in cash. Performance unit Awards may be
made without cash payment by, or other out-of-pocket consideration from, the
Participant, either on the date of grant or the date of
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payment. By way of example, but not limitation, performance units, called "EPS
Units," may be granted in tandem with Awards of stock options and the credited
amount with respect to an EPS Unit shall be determined with reference to the
difference between (i) the Company's annual earnings per share of Common Stock,
as adjusted to exclude items that the Committee determines to be appropriate
for purposes of the Award, and (ii) an amount specified by the Committee that
reflects the level of such earnings at the time of the Award and the principal
manner of payment shall be by application toward the option price upon the
Participant's exercise of the stock option.
8.3 PERFORMANCE SHARES. A performance share is a promise by
the Company to make a payment to the Participant, which may be contingent upon
the achievement of one or more performance targets specified by the Committee
at the time of the award. A performance share is a right to receive an amount
that may be determined by reference to Common Stock, other securities of the
Company or an Affiliate, or by reference to dollar amounts. Performance shares
shall be subject to such conditions with respect to vesting, timing, and amount
of payments as the Committee shall determine at the time of the Award.
Performance shares shall be payable in Common Stock, or other securities of the
Company or an Affiliate. Performance share Awards may be made without cash
payment by, or other out-of-pocket consideration from the Participant, either
on the date of grant or the date of payment.
8.4 DIVIDEND EQUIVALENTS. A dividend equivalent is the right
to receive an amount equal to the dividends paid on a specified number of
shares of Common Stock. A dividend equivalent shall be payable in cash.
8.5 OTHER AWARDS. The Committee may, from time to time, grant
such other Awards as the Committee may determine, provided that no such Award
shall be inconsistent with the terms of this Plan.
Amounts received pursuant to cash-only Awards granted under Sections
7.1 and 8.2 through 8.5 of this Plan, or any combination thereof, if intending
to comply with Rule 16a-1(c)(3)(i) under the Exchange Act or any successor
provision, for each plan year to any Participant who is subject to Section 16
of the Exchange Act shall be limited to a maximum value of 500% of the
Participant's annual salary at the rate in effect on the first day of such plan
year. For purposes of the preceding sentence, if a Participant who is not a
Covered Employee, but is subject to Section 16 of the Exchange Act, does not
receive a salary, the Participant shall be deemed to have an annual salary of
$250,000.
ARTICLE 9. - STOCK CERTIFICATES
9.1 STOCK CERTIFICATES. The Company shall not be required to
issue or deliver any certificate for shares of Stock under this Plan prior to
fulfillment of all of the following conditions:
(a) the admission of such shares to listing on all stock
exchanges on which the Stock is then listed, if any;
(b) the completion of any registration or other qualification
of such shares under any Federal or state law, under the rules or regulations
of the Securities and Exchange Commission, or under any other governmental
regulatory agency which the Committee shall in its sole discretion determine to
be necessary or advisable;
(c) the obtaining of any approval or other clearance from any
Federal or state governmental agency which the Committee shall in its sole
discretion determine to be necessary or advisable; and
(d) the lapse of such reasonable period of time following the
exercise of the grant as the Committee from time to time may establish for
reasons of administrative convenience.
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If these conditions are not satisfied, the employee may lose his
rights to such Stock as determined by the Committee.
Separate stock certificates shall be issued by the Company for those
shares acquired pursuant to the exercise of an Incentive Stock Option and for
those shares acquired pursuant to the exercise of a Nonstatutory Stock Option.
ARTICLE 10. - DIVIDENDS
10.1 DIVIDENDS. At the time of each grant of an Award (other
than an Option Stock Appreciation Right or Restricted Stock) the Committee may,
in its sole discretion, determine whether the grant shall provide a dividend or
a dividend equivalent and the terms and conditions under which any such
dividend or dividend equivalent is to be provided, including but not limited
to, permitting or requiring immediate payment, deferral or investment of
dividends or dividend equivalents.
ARTICLE 11. - PLAN ADMINISTRATION
11.1 PLAN ADMINISTRATION. The Plan and all Agreements shall be
administered, and all grants under this Plan shall be awarded, by the
Committee. The Committee shall have full authority and absolute sole discretion
to:
(a) determine, consistent with provisions of the Plan, which of
the employees shall be granted Awards; the form and terms of such Awards; the
timing of such grants; the number of shares subject to each Award and the
Option Price of Stock covered by each Option (if applicable); and the period
over which the Awards shall become and remain exercisable (if applicable);
(b) construe and interpret the Plan and any Agreement or
instrument entered into under the Plan;
(c) determine the terms and provisions of each respective
Agreement, which need not be identical;
(d) make all other determinations and take all other actions
deemed necessary or advisable for the proper administration of the Plan; and
(e) adopt, alter, and repeal such rules, guidelines, and
practices for administration of the Plan and for its own acts and proceedings
as it shall deem advisable; to interpret the terms and provisions of the Plan
and any grant (including related Agreements); to decide all disputes arising in
connection with the Plan; and to otherwise supervise the administration of the
Plan.
11.2 PERFORMANCE. The Committee may establish minimum
performance targets with respect to each Award. Performance targets may be
based on financial criteria, such as the Fair Market Value of Common Stock or
other measures of financial performance of the Company, or may be based on the
performance of a division or Subsidiary of the Company, or the performance of
an individual Participant. Notwithstanding anything in this Plan to the
contrary, any Awards of stock options or similar rights, stock appreciation
rights, performance units, or performance shares shall contain the restrictions
on assignability to the extent required by Rule 16b-3 under the Exchange Act or
any successor provision.
11.3 DECISIONS BINDING. All determinations and decisions by the
Committee pursuant to the Plan and all related orders or resolutions of the
Board of Directors shall be final, conclusive and binding on all persons,
including the Company, its Subsidiaries, its shareholders, Participants and
their estates and beneficiaries.
ARTICLE 12. - MISCELLANEOUS PROVISIONS
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12.1 APPLICABLE LAW. To the extent not preempted by any laws of
the United States, the Plan shall be construed, regulated, interpreted and
administered according to the laws of the State of Texas.
12.2 EXPENSES. The cost of Awards and the expenses of
administering the Plan shall be borne by the Company.
12.3 GENDER AND NUMBER. Unless the context clearly requires
otherwise, the masculine pronoun whenever used shall include the feminine and
neuter pronoun, the singular shall include the plural, and vice versa.
12.4 HEADINGS NOT PART OF PLAN. Headings of Articles and
Sections are inserted for convenience of reference only.
12.5 INDEMNIFICATION. No member of the Board of Directors or the
Committee shall be liable for any action or determination taken or made in good
faith with respect to this Plan nor shall any member of the Board of Directors
or the Committee be liable for any Agreement issued pursuant to this Plan or
any grants under it. Each member of the Board of Directors and the Committee
shall be indemnified by the Company against any losses incurred in such
administration of the Plan, unless his action constitutes gross negligence or
willful misconduct.
12.6 LIMITATION OF RIGHTS. Neither the adoption and maintenance
of the Plan or any Agreement nor anything contained herein shall, with respect
to any Participant, be deemed to:
(a) limit the right of the Company or any Subsidiary to
discharge or discipline any such person, or otherwise terminate or modify the
terms of his employment; or
(b) create any contract or other right or interest under the
Plan other than as specifically provided in the Plan and an Agreement.
12.7 NONTRANSFERABILITY. An Award shall not be transferable by
the Participant otherwise than by will or the laws of descent and distribution.
During the lifetime of the Participant, such Award shall be exercisable or
perfected only by the Participant or his guardian or legal representative in
accordance with the terms of this Plan and the Agreement.
12.8 OTHER COMPENSATION PLANS. The adoption of the Plan shall
not affect any other existing or future incentive or compensation plans for
directors, officers or employees of the Company or its Subsidiaries. Moreover,
the adoption of this Plan shall not preclude the Company or its Subsidiaries
from:
(a) establishing any other forms of incentive or other
compensation for directors, officers or employees of the Company or its
Subsidiaries; or
(b) assuming any forms of incentive or other compensation of
any person or entity in connection with the acquisition or the business or
assets, in whole or in part, of any person or entity.
12.9 PLAN BINDING ON SUCCESSORS. This Plan shall be binding upon
the successors of the Company.
12.10 TAX WITHHOLDING. Each Participant shall, no later than the
date as of which the value of a grant or of any Stock or other amount received
thereunder first becomes includable in the gross income of the Participant for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of any Federal, state, or local
taxes of any kind required by law to be withheld with respect to such income.
The Committee may permit or require payment of such taxes to be made through
the tender of cash or Stock, the withholding of Stock or cash to be received
through Awards
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or any other arrangement satisfactory to the Committee. The Company and its
Subsidiaries shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment of any kind otherwise due to the Participant.
12.11 SECURITIES LAWS. Notwithstanding anything to the contrary
expressed in the Plan, any provisions that vary from or conflict with any
applicable Federal or state securities laws (including any regulations
promulgated thereunder) shall be deemed to be modified to conform to and comply
with such laws. Without limiting the generality of the foregoing, it is the
intention of the Company that the Plan shall comply in all respect with Rule
16b-3 under the Exchange Act and, if any Plan provision is later found not to
be in compliance with Section 16 of the Exchange Act, the provision shall be
deemed null and void, and in all events the Plan shall be construed in favor of
its meeting the requirements of Rule 16b-3. Notwithstanding anything in the
Plan to the Contrary, the Board, 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 of the Exchange Act
without so restricting, limiting or conditioning the Plan with respect to other
Participants.
12.12 SEVERABILITY. In the event any provision of the Plan shall
be held illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining provisions of the Plan, and the Plan shall be
construed and enforced as though the illegal or invalid provision had not been
included.
12.13 UNFUNDED STATUS OF THE PLAN. The Plan is intended to be
unfunded. With respect to any payments as to which a Participant has a fixed
and vested interest but which are not yet made to a Participant by the Company,
nothing contained herein shall give any Participant any rights that are greater
than those of a general creditor of the Company. The adoption of this Plan and
any setting aside of amounts by the Company with which to discharge its
obligations hereunder shall not be deemed to create a trust.
12.14 FRACTIONAL SHARES. No Option may at any time be exercised
with respect to a fractional share. In the event shares of Stock are issued
pursuant to exercise of a Stock Appreciation Right, no fractional shares shall
be issued; however, a fractional Stock Appreciation Right may be exercised for
cash.
12.15 RIGHT OF DISCHARGE RESERVED. Nothing in this Plan or in
any Award shall confer upon any employee or other individual the right to
continue in the employment or service of the Company or any Subsidiary or
affect any right that the Company or any Subsidiary may have to terminate the
employment or service of any such employee or other individual at any time for
any reason.
ARTICLE 13. - CHANGE OF CONTROL
13.1 CHANGE IN CONTROL. In the event of a Change in Control of
the Company, all Awards granted under the Plan that are still outstanding and
not yet exercisable or are subject to restrictions, shall, unless otherwise
provided for in the related Agreements, become immediately exercisable, and all
restrictions shall be removed, as of the first date that the Change in Control
has been deemed to have occurred, and shall remain as such for the remaining
life of the Award as provided herein and within the provisions of the related
Agreements.
For purposes of this Section 13.1, a Change in Control of the Company
shall be deemed to have occurred if the conditions set forth in any one or more
of the following shall have been satisfied:
(a) any "person", other than Deas H. Warley III, as such term
is used in Sections 13(d) and 14(d) of the Exchange Act (other than the
Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any corporation owned, directly or indirectly,
by the shareholders of the Company in substantially the same proportions as
their ownership of stock of the Company), is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing thirty percent (30%) or more of the
combined voting power of the Company's then outstanding securities;
PAGE 9
<PAGE> 10
(b) during any period of two consecutive years (not including
any period prior to the Effective Date of the Plan), individuals who at the
beginning of such period constitute the Board of Directors, and any new
director (other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in paragraph (A),
(B) or (C) of this Section 13.01) whose election by the Board of Directors or
nomination for election by the Company's shareholders was approved by a vote of
a least two-thirds (2/3) of the directors then still in office who either were
director, at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute at
least a majority thereof; or
(c) the shareholders of the Company approve a merger or
consolidation of the Company with any other person, other than (i) 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 for the
surviving entity) more than fifty percent (50%) of the combined voting power of
the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or (ii) a merger in which no
"person" (as defined above) acquires more than thirty percent (30%) of the
combined voting power of the Company's then outstanding securities; or
(d) 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 the Company's assets (or any transaction
having a similar effect).
ARTICLE 14. - EFFECTIVE DATE AND PLAN AMENDMENTS, TERMINATION
14.1 EFFECTIVE DATE. This Plan shall become effective upon the
approval of the shareholders. The date of such approval is herein called the
"Effective Date". All Awards granted under the Plan shall be granted on or
before the tenth anniversary of the Effective Date.
14.2 TERMINATION, AMENDMENT AND MODIFICATION OF PLAN. The Board
of Directors may at any time terminate or suspend, and may at any time and from
time to time and in any respect amend or modify, the Plan; provided, however,
that no such action of the Board of Directors shall be taken without approval
of the Company's shareholders if such approval is required to comply with Rule
16b-3 under the Exchange Act or Section 422 of the Code, or any successor
provision.
[EFFECTIVE AS OF THE 1996 ANNUAL MEETING OF SHAREHOLDERS OF MIDLAND
RESOURCES, INC., HELD ON MAY 31, 1996].
MIDLAND RESOURCES, INC.
By: /s/ Deas H. Warley III
-------------------------------------
Chairman of the Board of Directors
PAGE 10
<PAGE> 1
EXHIBIT 5
MICHENER, LARIMORE, SWINDLE, WHITAKER, FLOWERS,
SAWYER, REYNOLDS & CHALK, L.L.P.
ATTORNEYS & COUNSELORS
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
3500 CITY CENTER TOWER II
301 COMMERCE STREET
FORT WORTH, TEXAS 76102-4135
(817) 335-4417
SENDER'S DIRECT DIAL NUMBER TELECOPY (817) 878-0706
(817) 817-878-0530
March 26, 1997
Midland Resources, Inc.
16701 Greenspoint Park Drive
Suite 200
Houston, Texas 77060
Re: Midland Resources, Inc. 1997 Board of Directors
Stock Incentive Plan (the "Directors Plan");
Business Consultant Agreement (the "Consultant Agreement"), and
1996 Midland Resources, Inc. Long-Term Incentive Plan (the
"1996 Plan") (collectively, the "Plans")
Gentlemen:
As set forth in the Registration Statement on Form S-8 (the
"Registration Statement") to be filed by Midland Resources, Inc., a Texas
corporation (the "Company"), with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"),
relating to 1,685,000 shares of common stock, $.001 par value, of the Company
(the "Common Stock"), to be issued from time to time pursuant to the
above-referenced plans (collectively the "Plans"), certain legal matters in
connection with the Common Stock are being passed upon for you by us. At your
request, this opinion is being furnished to you for filing as Exhibit 5 to the
Registration Statement.
The Plans provide for the grant to certain directors of the
Company and its subsidiaries of (i) nonstatutory stock options ("Nonstatutory
Options"), (ii) stock appreciation rights ("SARs"), (iii) stock awards,
including restricted stock and deferred stock, (iv) the right to purchase
common stock of the Company pursuant to the ESOP, and (v) such other
stock-based awards established pursuant to the Plans, as the case may be, and
(vii) the right to exercise rights to acquire common stock of the Company by
Edward Kennard Andrew in the case of the Consultant Agreement. As used herein,
the term "Options" shall mean Nonstatutory Options and the Warrant issuable
pursuant to the Consultant Agreement, and the term "Option Shares" shall mean
the Shares issuable upon the exercise of Nonstatutory Options and such Warrant.
In our capacity as your counsel in connection referred to above,
we have examined the Plans, the Company's Articles of Incorporation, and its
Bylaws, each as amended to date, and have examined the originals, or copies
certified or otherwise identified, of corporate records of the Company,
including minute books of the Company as furnished to us by the Company,
certificates of public officials and of representatives of the Company,
statutes and other instruments or documents, a basis for the opinions
hereinafter expressed.
We have assumed that all signatures on all documents examined by
us are genuine, that all documents submitted to us as originals are accurate
and complete, that all documents submitted to us as copies are true and correct
copies of the originals thereof and that all information submitted to us was
accurate and complete.
<PAGE> 2
Based upon our examination as aforesaid and subject to
assumptions, limitations and qualifications set forth herein, we are of the
opinion that:
1. The Company is a corporation duly organized and
validly existing in good standing under the laws of the State of
Texas.
2. Upon the issuance and delivery of such Option Shares
upon the exercise of Options in accordance with the Plans and the
receipt of the consideration fixed by the Options, such Option
Shares will be validly issued, fully paid and nonassessable.
We do not express any opinion herein on any other respect of the
Options or the Option Shares, the effect of any equitable principles or
fiduciary considerations relating to the adoption of the Plans or the issuance
of the Options or Option Shares, the enforceability of any particular
provisions of the Plans or the Options, or the provisions of the Plans or
Options which discriminate or create unequal voting power among shareholders.
The opinions set forth above are limited in all respects to
matters of Texas law as in effect on the date hereof.
We consent to the inclusion in the Registration Statement (Form
S-8) pertaining to the Midland Resources, Inc. 1997 Board of Directors Stock
Incentive Plan, the Business Consultant Agreement, and the 1996 Midland
Resources, Inc. Long-Term Incentive Plan, of this opinion.
Very truly yours,
/s/ Wayne M. Whitaker, Partner
WMW/jj
<PAGE> 1
EXHIBIT 24.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the Midland Resources, Inc. 1997 Board of Directors Stock
Incentive Plan and Business Consultant Agreement and 1996 Midland Resources,
Inc. Long-Term Incentive Plan, of our report dated March 5, 1996, with respect
to the consolidated financial statements of Midland Resources, Inc. included in
its Annual Report (Form 10-KSB) for the year ended December 31, 1996, filed
with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Fort Worth, Texas
May 2, 1997
<PAGE> 1
EXHIBIT 24.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporated by reference in the Registration Statement (Form
S-8) pertaining to the Midland Resources, Inc. 1997 Board of Directors Stock
Incentive Plan, Business Consultant Agreement, and the 1996 Midland Resources,
Inc. Long-Term Incentive Plan of our report dated March 21, 1997, with respect
to the consolidated financial statements of Midland Resources, Inc. included in
its Annual Report (Form 10-KSB) for the year ended December 31, 1996, filed
with the Securities and Exchange Commission.
/s/ Grant Thornton LLP
Houston, Texas
May 5, 1997
