<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MIDDLE BAY OIL COMPANY, INC.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No Fee required
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE> 2
PRELIMINARY COPY
MIDDLE BAY OIL COMPANY, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 30, 1997
To the Shareholders of Middle Bay Oil Company, Inc.
You are cordially invited to attend the Annual Meeting of Shareholders
of Middle Bay Oil Company, Inc., an Alabama corporation (the "Company"), to be
held at the offices of the Company, 115 South Dearborn Street, Mobile, Alabama
36602, on May 30, 1997 at 10:00 a.m. Central Daylight Time, for the purpose of
acting on the following matters:
1. The consideration of and voting upon the election of seven
directors to serve until the next Annual Shareholder Meeting;
2. The consideration of and voting upon a proposed amendment to the
Company's Articles of Incorporation to increase the authorized
capital stock of the Company from 5,000,000 shares to 10,000,000
shares of common stock and from 2,500,000 shares to 5,000,000
shares of preferred stock;
3. The consideration of and voting upon a proposed amendment to the
1995 Stock Option and Stock Appreciation Rights Plan increasing
to 500,000 shares the number of shares of common stock available
to option.
4. Consideration of and voting upon the approval and ratification of
the selection of Schultz, Watkins & Company as independent
accountants to audit the accounts of the Company for 1997; and
5. To transact such other business as may properly come before the
meeting or any adjournment.
All shareholders of record as of May 1, 1997 are entitled to notice of
and to vote at the Annual Meeting or any adjournments thereof.
Whether or not you plan to attend this meeting, we urge you to please
sign and date the accompanying form of proxy and return it promptly in the
enclosed, postage prepaid envelope. This will ensure that your shares will be
represented. If you attend the meeting, you may vote in person regardless of
whether you have given your proxy. Any proxy may be revoked at any time before
it is exercised, as indicated in the Proxy Statement.
By Order of the Board of Directors
John J. Bassett, President
May 10, 1997
Mobile, Alabama
<PAGE> 3
Annual Reports to shareholders, including financial statements,
are being mailed to shareholders, together with these proxy
materials, commencing on or about May 10, 1997.
Stockholders may obtain, without charge, a copy of the Company's Annual Report
on Form 10-KSB (without exhibits) for the year ended December 31, 1996 as filed
with the Securities and Exchange Commission, by writing to Middle Bay Oil
Company, 115 South Dearborn Street, Mobile, Alabama 36602. Copies of the
Company's Annual Report on Form 10-KSB may also be obtained directly from the
Securities and Exchange Commission web site at http://www.sec.gov/.
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE, SIGN AND RETURN THE ACCOMPANYING
PROXY FORM IN THE ENVELOPE PROVIDED, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 4
PRELIMINARY COPY
MIDDLE BAY OIL COMPANY, INC.
115 South Dearborn Street
Mobile, Alabama 36602
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 30, 1997
This Proxy Statement is furnished to shareholders of Middle Bay Oil
Company, Inc., an Alabama corporation (the "Company"), in connection with the
solicitation by the Board of Directors of the Company (the "Board") of proxies
to be used at an Annual Meeting of Shareholders of the Company to be held at
10:00 a.m. Central Daylight Time on May 30, 1997 and all adjournments thereof
(the "Annual Meeting"). This Proxy Statement and the enclosed form of proxy are
being mailed to shareholders on or about May 10, 1997.
The Annual Meeting will be held at the principal offices of the
Company at 115 South Dearborn Street, Mobile, Alabama 36602. Proxies in the
form enclosed will be voted as instructed on the proxy card at the Annual
Meeting provided the proxy card is properly executed, returned to the Company
before the meeting and not revoked. In the absence of voting instructions,
shares represented by a valid proxy card will be voted in accordance with the
recommendations of the Board of Directors. Any shareholder giving such proxy
may revoke it at any time before it is voted by written revocation delivered to
the Company's Secretary, by voting in person at the Annual Meeting or by giving
a later proxy.
OUTSTANDING VOTING STOCK
All voting rights are vested exclusively in the holders of the
Company's common stock. The record date for shareholders entitled to vote at
the Annual Meeting is the close of business on May 1, 1997. At the close of
business on that date, the Company had issued, outstanding and entitled to vote
at the meeting 2,497,916 shares of common stock, $.02 par value each of which
is entitled to one vote on all matters expected to be voted upon at the Annual
Meeting, except for 1,167,556 shares held by C. J. Lett, III, a nominee for
director whose voting power with respect to the election of directors is
restricted by agreement. (See "Security Ownership of Management.")
QUORUM AND VOTING
The presence, in person or by proxy, of the holders of shares of
common stock entitled to vote at the Annual Meeting representing a majority of
the votes entitled to be cast is necessary to constitute a quorum at the Annual
Meeting. Each holder of shares of common stock is entitled to one vote, in
person or by proxy, for
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<PAGE> 5
each share held in such shareholder's name on the record date. Assuming the
presence of a quorum, the affirmative votes equal to at least a majority of the
votes of holders of common stock entitled to vote at the Annual Meeting, in
person or by proxy, are required for the election of directors and for approval
of the selection of independent public accountants. As to any other matters
which may come before the meeting, a majority of the votes of holders of common
stock cast at the Annual Meeting generally is required for approval.
Abstentions will be included in vote totals and, as such, will have the same
effect on the matter voted upon as a negative vote. Where nominee recordholders
do not vote on directors or the other proposals because they did not receive
specific instructions on such proposal from the beneficial owners of such
shares ("broker nonvotes"), such broker nonvotes will not be included in vote
totals and, as such, will have no effect on the action taken at the Annual
Meeting.
The shares represented by proxies solicited by the Board of Directors
will be voted in accordance with the recommendations of the Board of Directors
unless otherwise specified in the proxy, and where the person solicited
specifies a choice with respect to any matter to be acted upon, the shares will
be voted in accordance with the specification so made.
The enclosed proxy is revocable at any time prior to its being voted
by filing an instrument of revocation or a duly executed proxy bearing a later
date. A proxy may also be revoked by attendance at the meeting and voting in
person. Attendance at the meeting will not by itself constitute a revocation.
Any such revocation or later dated proxy should be mailed or delivered to
Middle Bay Oil Company, Inc., 115 South Dearborn Street, Mobile, Alabama 36602,
Attention: Lynn M. Davis, Secretary.
The Company will bear the cost of soliciting proxies from
shareholders. In addition to the use of the mails, proxies may be solicited by
directors and officers of the Company by personal solicitation, telephone or
telegram. Such directors and officers will not be additionally compensated for
such solicitation but may be reimbursed for reasonable out-of-pocket expenses
incurred in connection therewith.
The Company has not and will not engage any investment banking or
brokerage firm or any professional proxy solicitation firm to solicit proxies.
No fees, commissions or other compensation will be paid to anyone for proxy
votes solicited by the Company.
Arrangements will be made with brokerage houses and other custodians,
nominees and fiduciaries for the forwarding of solicitation material to the
beneficial owners of the common stock. The Company may reimburse such
custodians, nominees and fiduciaries for reasonable out-of-pocket expenses
incurred in connection therewith.
The enclosed form of proxy allows shareholders to grant or withhold
discretionary authority to the persons named to vote on any other matters that
may properly come before the Annual Meeting. The Company is not aware of any
proposals planned to be made at the Annual Meeting other than the proposals
described in this Proxy Statement and has no current intention of making any
additional proposals. The chairman of the meeting shall determine the order of
business at the Annual Meeting and the voting and other procedures to be
observed. The chairman is authorized to declare whether any business is
properly brought before the meeting, and business not properly brought before
the meeting may not be transacted.
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<PAGE> 6
CORPORATE GOVERNANCE
The Board of Directors has the responsibility for establishing broad
corporate policies and for the overall performance of the Company, taking into
consideration the interests of all shareholders. Members of the Board are kept
informed of the Company's business by various reports sent or communicated to
them regularly, as well as by operating and financial reports made at Board and
Committee meetings by the President, the Chief Financial Officer and other
officers. During 1996, the full Board met five times. The Audit Committee met
one time and the Compensation Committee met two times in 1996.
The Audit Committee's duties include recommending to the Board the
selection of a firm of independent public accountants for approval by the
shareholders at the Annual Meeting. In addition, the Committee confers with the
Company's independent public accountants to review the plan and scope of their
proposed audit, as well as their findings and recommendations upon the
completion of the audit. The Committee meets with the independent public
accountants and with appropriate Company financial personnel regarding the
Company's internal controls and financial policies. The Audit Committee
currently consists of Frank C. Turner, II, Frank E. Bolling, Jr. and C. Noell
Rather. Neither Mr. Bolling nor Mr. Rather is an officer or employee of the
Company.
The Compensation Committee is responsible for establishing and
reviewing policies governing executive salaries, bonus and incentive
compensation and the terms and conditions of employment of executives of the
Company. In addition, the Committee is responsible for the oversight of the
Company's 1995 Stock Option and Stock Appreciation Rights Plan and similar or
other plans which may be maintained from time to time by the Company and has
authority to grant options and awards under the Company's 1995 Stock Option and
Stock Appreciation Rights Plan, and oversees the Company's SEP/IRA retirement
plan and the net profits interest incentive compensation plan recently
established by the Company (see "Corporate Governance - Executive
Compensation"). The Committee coordinates with the appropriate financial, legal
and administrative personnel of the Company, as well as outside experts
retained in connection with the administration of these plans. The Compensation
Committee currently consists of John J. Bassett, Edward P. Turner, Jr. and
Frank E. Bolling, Jr. Neither Mr. Turner nor Mr. Bolling is an officer or
employee of the Company.
During 1996, all incumbent directors attended all of the meetings of
the Board of Directors. Attendance at those meetings was 100%. Attendance at
the Committee meetings was 100%.
COMPENSATION OF DIRECTORS
Each director is paid an attendance fee of $500 for each meeting of
the Board and of each Committee of the Board, and the Company reimburses
directors' documented travel and lodging expenses.
Each nonemployee director is eligible for incentive awards under the
1995 Stock Option and Stock Appreciation Rights Plan. In February, 1997, the
Board of Directors approved the Compensation Committee's recommendation to
issue nonqualified stock options pursuant to the Plan to three nonemployee
directors, as follows (see "Executive Compensation"):
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<PAGE> 7
<TABLE>
<CAPTION>
Name of Director No. of Optioned Shares Exercise Price
---------------- ---------------------- --------------
<S> <C> <C>
Edward P. Turner, Jr. 21,400 $4.00/share
Frank E. Bolling, Jr. 21,400 $4.00/share
C. Noell Rather 21,400 $4.00/share
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the shares of the Company's common
stock beneficially owned by those persons known by the Company to be the
beneficial owner of more than five percent of the Company's issued and
outstanding common stock (excluding directors and officers) as of April 30,
1997:
<TABLE>
<CAPTION>
Title of Name and Address of Number Percent of
Class Beneficial Owner(1) of Shares Total
----- ------------------- --------- -----
<S> <C> <C> <C>
Common Bay City Energy Group, Inc. 374,203 15.00%
115 S. Dearborn Street
Mobile, Alabama 36602
</TABLE>
(1) Bay City Energy Group, Inc. ("BCEG") is controlled by Edward P. Turner,
Jr., a director of the Company, by virtue of his 28.4% equity ownership
in BCEG. Through such control, he can exercise effective voting and
dispositive powers over Shares held by BCEG.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the shares of the Company's common
stock beneficially owned by each director, nominee for director and executive
officer and all directors, nominees for director and executive officers as a
group, all as of April 30, 1997:
<TABLE>
<CAPTION>
Title of Name and Address of Number Percent of
Class Beneficial Owner Shares Total
----- ---------------- ------ -----
<S> <C> <C> <C>
Common John J. Bassett 30,756 1.2%
3400 Peyton Court
Mobile, AL 36609
Common Frank C. Turner, II 21,500 0.9%
6201 Laurelwood Drive
Satsuma, AL 36572
Common Robert W. Hammons 21,200 0.8%
1013 Fribourg
Mobile, AL 36608
</TABLE>
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<PAGE> 8
<TABLE>
<S> <C> <C> <C>
Common Lynn M. Davis 5,000 0.2%
121 Donna Circle
Daphne, AL 36526
Common Edward P. Turner, Jr. 402,575(1) 16.1%
100 Central Avenue
Chatom, AL 36518
Common C. J. Lett, III 1,167,556(2) 46.7%
9320 East Central
Wichita, KS 67206
Common Frank E. Bolling, Jr. 13,333 0.5%
3830 Kendale Drive
Gautier, MS 39553
Common C. Noell Rather 19,924 0.8%
3500 Oaklawn, Suite 380
Dallas, TX 75219
Common All executive officers and
directors as a group
(8 persons) 1,681,844(3) 67.3%
</TABLE>
(1) Includes 374,203 shares owned by BCEG over which Mr. Turner, through his
effective voting control of BCEG, exercises voting and dispositive
powers with regard to such shares but does not hold a direct beneficial
interest, and 15,038 shares over which Mr. Turner has sole voting and
dispositive powers.
(2) Mr. Lett has agreed for a period of one year from February 28, 1997
that, in connection with the election of directors, the aggregate voting
power of the shares of common stock beneficially owned by him shall not
exceed that number which is equal to 20% of the issued and outstanding
shares of common stock at the time the vote is taken. At the Annual
Meeting, Mr. Lett's shares shall have voting power equivalent to 499,583
shares. Mr. Lett's shares shall have full voting power with regard to
the other proposals for shareholder action described herein (see
"Certain Relationships and Related Transactions").
(3) Includes presently exercisable options as follows: John J. Bassett -
20,000; Frank C. Turner, II - 20,000; Robert W. Hammons - 20,000; Lynn
M. Davis - 5,000; Edward P. Turner, Jr. - 13,334; Frank E. Bolling, Jr.
- 13,333; and C. Noell Rather - 13,333.
CHANGES IN CONTROL
There are no arrangements known to management which may result in a
change in control of the Company.
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<PAGE> 9
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the
aggregate cash compensation earned by and paid to the Company's executive
officers for the fiscal years ended December 31, 1994 through December 31,
1996:
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------- ----------------------
Awards Payouts
------ -------
(g)
Securities
Underlying (i)
(a) (e) Options/ (h) All Other
Name and (b) (c) (d) Other Annual SARs LTIP Compensation
Principal Position Year Salary ($) Bonus ($) Compensation (#) Payouts ($) ($)
------------------ ---- ---------- --------- ------------ --- ----------- ---
<S> <C> <C> <C> <C> <C> <C> <C>
John J. Bassett 1996 $ 58,075 -- -- 20,000 -- $ 2,271
President & Chief 1995 56,250 -- -- -- -- 11,371
Executive Officer 1994 54,000 $200 -- -- -- --
Frank C. Turner, II 1996 54,458 -- -- 20,000 -- 2,174
Vice President & 1995 50,083 -- -- -- -- 10,775
CFO 1994 48,000 200 -- -- -- --
Robert W. Hammons 1996 58,075 -- -- 20,000 -- 2,271
Vice President - 1995 56,250 -- -- -- -- 11,360
Engineering 1994 54,000 200 -- -- -- --
Lynn M. Davis 1996 32,733 -- -- 5,000 -- 1,249
Secretary/Treasurer 1995 31,667 -- -- -- -- 6,238
1994 30,000 200 -- -- -- --
</TABLE>
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<PAGE> 10
Option Grants in Last Fiscal Year. The following table provides
certain information with respect to all options granted during the fiscal year
ended December 31, 1996 to any executive officer or director of the Company:
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of
Securities % of Total
Underlying Options/SARs
Options/ Granted to
SARS Employees in Exercise or Base Expiration
Name Granted (#) Fiscal Year Price ($/Sh) Date
---- ----------- ----------- ------------ ----
<S> <C> <C> <C> <C>
John J. Bassett 20,000 16.0% 2.50 5/31/2006
Frank C. Turner, II 20,000 16.0% 2.50 5/31/2006
Robert W. Hammons 20,000 16.0% 2.50 5/31/2006
Lynn M. Davis 5,000 4.0% 2.50 5/31/2006
Edward P. Turner, Jr.* 13,334 10.7% 2.50 5/31/2006
Frank E. Bolling, Jr.* 13,333 10.7% 2.50 5/31/2006
C. Noell Rather* 13,333 10.7% 2.50 5/31/2006
</TABLE>
*Nonemployee director
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<PAGE> 11
Aggregated Option Exercises in Last Fiscal Year and Option Value Table as
of December 31, 1996. The following table sets forth certain information
concerning each exercise of stock options during the year ended December 31,
1996 by each of the named executive officers and directors and the aggregated
fiscal year-end value of the unexercised options of each such named executive
officer and director:
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Options/SARs at
Shares FY End (#) FY End ($)
Acquired Value ---------- ----------
Name on Exercise (#) Realized ($) Exer. Unexer. Exer. Unexer.
---- --------------- ------------ ----- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C>
John J. Bassett -- -- -- 20,000 -- 70,000
Frank C. Turner, II -- -- -- 20,000 -- 70,000
Robert W. Hammons -- -- -- 20,000 -- 70,000
Lynn M. Davis -- -- -- 5,000 -- 17,500
Edward P. Turner, Jr.* -- -- -- 13,334 -- 46,669
Frank E. Bolling, Jr.* -- -- -- 13,333 -- 46,666
C. Noell Rather* -- -- -- 13,333 -- 46,666
</TABLE>
*Nonemployee director
Other Compensation Under Plans. The Company established a SEP/IRA
retirement plan (the "Plan") in 1993 which allows for a maximum discretionary
Company contribution of 15% of total wages paid to employees for the year. No
contribution was made to the Plan in 1994. For the years ended December 31,
1995 and 1996, the Company contributed a total of $30,000 and $5,000,
respectively, to the Plan, including $18,505 and $3,068 for all executive
officers as a group. Since the Plan's inception, the Company has contributed a
total of $80,980.
In March, 1995, the Board of Directors adopted an employee incentive
compensation plan whereby the proceeds equivalent to 1% net profits interest
(the "net profits interest") in all oil and gas properties, drilling prospects
and acquisitions and divestitures acquired or made after January 1, 1994 are
paid into a fund for incentive compensation awards to eligible employees.
The net profits interest on property acquisitions and drilling
prospects are calculated on the monthly gross profit which is defined as
revenues from oil and gas sales, less direct operating expenses, attributable
to the Company's working or royalty interest in an individual property. Direct
operating expenses include landowner's royalty, overriding royalty and all
costs of production, equipment, operating expenses and taxes. On drilling
prospects, the net profits interest will not include costs of drilling, testing
and completing the well, the costs of acreage and costs of geological or
geophysical work. For divestitures, the net profits interest will be calculated
on the gross sales price, less any direct costs of the sale of an individual
property.
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<PAGE> 12
To qualify for an award as an "eligible employee," as presently
established by the Compensation Committee, an employee must be employed by the
Company on October 1 and December 31 of the calendar year and have been
recommended by the Compensation Committee to receive an award. For the years
ended December 31, 1995 and 1996, a total of $30,000 and $6,916, respectively,
was paid to eligible employees under the 1% net profits interest incentive
compensation plan. The approximate number of eligible employees for 1996 was
eight.
The Company has no other retirement, pension/profit sharing or other
deferred compensation plan for its employees.
Mr. Bassett and Mr. Hammons in January, 1997, signed employment
agreements with the Company which extend through January 31, 2002 and January
31, 2000, respectively, with automatic one-year extensions upon each
anniversary date of the employment agreement thereafter unless either party
gives at least 30 days' notice of termination. Each employment agreement is
terminable by the Company before expiration of the term if such termination is
for cause (as specified in the employment agreement). The executive employment
agreements provide for an annual salary of not less than the base salaries of
$95,000 and $85,000, respectively, which amounts may be adjusted from time to
time by the Board of Directors upon the recommendation of the Compensation
Committee. They also provide for fringe benefits in accordance with the
Company's policies adopted from time to time for salaried executive employees
holding comparable positions.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers and any persons who own more than
10% of the Company's common stock to file with the Securities and Exchange
Commission reports of ownership and changes in ownership of such securities.
Based on representations from such persons, the Company believes that there was
no failure to file or delinquent filings under Section 16(a) of the Securities
Exchange Act of 1934 by any officer, director or beneficial owner of 10% or
more of the Company's common stock during 1996.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Edward P. Turner, Jr., a director of the Company, is managing partner
of the law firm of Turner, Onderdonk, Kimbrough & Howell, P.A., the Company's
general counsel for certain corporate and oil and gas matters. For years ended
December 31, 1994 through 1996, the Company paid legal fees to Mr. Turner's
firm of $1,454, $787 and $1,560, respectively, for legal services. Mr. Turner's
firm charges the Company for its services on the same basis as it charges other
business clients for similar services rendered. The Company intends to continue
to use Mr. Turner's firm as its primary legal counsel and will pay reasonable
fees for such future services.
Bay City Energy Group, Inc., is presently indebted to the Company in
the amount of $159,215 ($139,005 of principal and $20,210 of accrued interest).
The note payable was renegotiated on December 31, 1995 and is due in full on
January 1, 2001, plus interest at an annual fixed rate of 5%. The note payable
is secured by 75,000 shares of Company common stock.
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<PAGE> 13
On December 31, 1994, Bay City Minerals, Inc. contributed oil and gas
reserves valued at $186,938 to the Company as partial payment on the amount
owed. The value of the reserves were calculated by the Company's petroleum
engineer on a basis similar to the method used by Lee Keeling & Associates,
Inc. on the evaluation of the Company's reserves at year-end.
On September 4, 1996, the Company signed a stock purchase agreement
with Kaiser Francis Oil Company ("the Preferred Stock Agreement").
Kaiser-Francis agreed to purchase 1,666,667 shares of Series A Preferred Stock
("Preferred") at $6.00 per share, for a total investment of $10,000,000. The
parties agreed to a five-year purchase period, effective September 4, 1996,
with minimum incremental investments of $500,000 each. Each issuance of
Preferred is subject to approval by Kaiser-Francis of the use of proceeds. The
Preferred is nonvoting and accrues dividends at 8% per annum, payable quarterly
in cash. The Preferred is convertible at any time after issuance into shares of
common stock at the rate of two shares of common stock for each share of
Preferred before January 1, 1998. The conversion rate decreases thereafter at
8% per annum. The Company may redeem the Preferred, in whole or in part, at any
time after January 1, 2007 at a price of $6.00 per share. As of May 1, 1997,
1,166,667 shares of the Preferred had been issued. Gary R. Christopher, nominee
for director of the Company, serves as Acquisitions Coordinator of
Kaiser-Francis Oil Company.
In December, 1996, the Company entered into an Agreement and Plan of
Merger (the "NPC Merger") with NPC Energy Corporation ("NPC"), whereby NPC
would be merged into the Company in exchange for Company common stock and cash.
The Merger was approved by NPC's shareholders on December 31, 1996. NPC was a
privately-owned domestic exploration and production company with assets located
in Kansas, Michigan, Oklahoma, Texas and Wyoming. Pursuant to the Merger, the
Company issued 562,000 shares of its common stock and paid $1,226,400 to
certain of its shareholders. Preferred stock in the amount of $1.0 million
under the Preferred Stock Agreement was sold to finance the cash portion of the
purchase price.
In February, 1997, the Company entered into an Agreement and Plan of
Merger (the "Bison Merger") with Bison Energy Corporation ("Bison"), whereby
Bison was merged with a wholly-owned subsidiary of the Company in exchange for
Company common stock and cash. The Bison Merger was closed on February 28,
1997. Bison is a domestic exploration and production company with assets
located in Kansas and Oklahoma. Pursuant to the Bison Merger, the Company
issued 1,167,556 shares of its common stock and net cash consideration of
$5,900,000 to C. J. Lett, III in exchange for all of the stock of Bison.
562,000 shares of Company common stock owned by Bison (as a result of the NPC
Merger) were canceled at closing. The cash portion of the Bison Merger was
financed through the issuance of 1,000,000 shares of preferred stock under the
Preferred Stock Agreement for $6.0 million. Mr. Lett became Executive Vice
President of the Company on February 28, 1997 and is a nominee for director of
the Company.
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION AS DIRECTORS
The Company presently has a Board of Directors consisting of five
members. The Company proposes to expand the Board of Directors to seven members
and to elect the two nominees described below, in addition to the Company's
five present directors, as the new Board of Directors.
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<PAGE> 14
The Company's directors each serve for a one year term or until
replaced at the Annual Meeting or a special meeting called for that purpose.
John J. Bassett, Frank C. Turner, II, Edward P. Turner, Jr., Frank E. Bolling,
Jr., and C. Noell Rather, the existing members of the Board of Directors, are
nominated for reelection. C. J. Lett, III and Gary R. Christopher are
nominated for the two director positions to be created by the expansion of the
Board.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
NOMINEES TO THE BOARD OF DIRECTORS.
The following table sets forth information concerning the present
directors, nominees for director and executive officers of the Company. In
addition to the two new nominees indicated, all of the present directors are
nominees for election at the Annual Meeting. All directors serve for a one-year
term or until the Annual Meeting of shareholders of the Company held following
their election:
<TABLE>
<CAPTION>
Director
Name Age Position(s) Held Since
---- --- ---------------- -----
<S> <C> <C> <C>
John J. Bassett 38 Chairman, President and 1989
Chief Executive Officer
Frank C. Turner, II(1) 36 Vice President, Director and 1989
Chief Financial & Officer
Robert W. Hammons 43 Vice President N/A
Lynn M. Davis 47 Secretary and Treasurer N/A
Edward P. Turner, Jr.(1) 67 Director 1989
Frank E. Bolling, Jr. 37 Director 1992
C. Noell Rather 61 Director 1995
C. J. Lett, III 39 Executive Vice President(2) N/A
Gary R. Christopher 47 (2) N/A
</TABLE>
(1) Edward P. Turner, Jr. and Frank C. Turner, II, are father and son.
(2) Nominee for director.
John J. Bassett has served as President of the Company since 1992 and
was elected Chairman of the Board of Directors in 1992. He served as President
of the general partner of the Predecessor Partnership from 1987 to 1992. He
also serves as a director and President of Bay City Energy Group, Inc., a
principal shareholder of the Company.
- 11 -
<PAGE> 15
Frank C. Turner, II has served as Vice President and Chief Financial
Officer for the Company since its organization as a corporation in 1992. He had
previously served as Vice President of Finance for the general partner of the
Predecessor Partnership since 1990. From 1987 to 1990, Mr. Turner was employed
by Sonat, Inc. as a financial analyst. He also serves as a director and Vice
President of Bay City Energy Group, Inc.
Robert W. Hammons was hired by the Company in April, 1992 as a
reservoir engineer. Mr. Hammons was appointed Vice President of Engineering of
the Company in 1993. Prior to his employment with the Company, he had worked
with Bay City Minerals, Inc. as an independent petroleum engineering consultant
since 1987. Prior to 1987, Mr. Hammons was employed as manager of reservoir
engineering for Marion Corporation.
Lynn M. Davis has been Secretary and Treasurer for the Company since
1992. She has served as Secretary-Treasurer of the general partner of the
Predecessor Partnership since 1984 and as a director since 1988. Ms. Davis also
serves as a director and Secretary-Treasurer for Bay City Energy Group, Inc.
Edward P. Turner, Jr. served as President of Bay City Minerals, Inc.
from 1975 to 1987. He is a member of the Alabama State Bar and a managing
partner of the law firm of Turner, Onderdonk, Kimbrough & Howell, P.A., in
Chatom, Alabama for more than 25 years. A substantial amount of his practice is
devoted to oil and gas law. Mr. Turner also serves as a director of Bay City
Energy Group, Inc.
Frank E. Bolling, Jr. since February, 1995 has served as Vice
President of Midstream Fuel Services, Inc. and Manager of the Dantzler-Pepco
Division of Midstream. From 1989 to January, 1995, he served as General Manager
of Dantzler Bulk Plant, Inc., a distributor for Chevron U.S.A., Inc. with
annual sales in excess of $25 million.
C. Noell Rather was appointed a director of the Company in March, 1995
to serve the unexpired term of Robert W. Hammons, who resigned to allow a
nonemployee director to be appointed to the Board. Mr. Rather has been
President of Janex Oil Co., Inc. and Exexco, Inc., both independent oil and gas
companies based in Texas which Mr. Rather helped organize, since 1981.
C. J. Lett, III has served as Executive Vice President of the Company
since February 28, 1997. Mr. Lett is also President and a director of Bison
Energy Corporation, a position he has held since 1981.
Gary R. Christopher is Acquisitions Coordinator of Kaiser-Francis Oil
Company, a position he has held since February, 1996. From 1991 to 1996, Mr.
Christopher served as Senior Vice President and Manager of Equity Lending for
the Bank of Oklahoma. He continues to serve as a consultant to the Bank of
Oklahoma. Kaiser-Francis Oil Company owns 1,166,667 shares of the Company's
Series A Preferred stock; each of such preferred shares are convertible into
two shares of common stock.
- 12 -
<PAGE> 16
PROPOSAL TO INCREASE AUTHORIZED CAPITAL STOCK
The Company's Articles of Incorporation authorize five million
(5,000,000) common shares with a par value of $.02 per share and 2,500,000
preferred shares, the preferences and rights with respect to which may be
designated from time to time by the Board of Directors.
Currently, there are two million four hundred ninety-seven thousand
nine hundred sixteen (2,497,916) common shares issued and outstanding. Shares
of common stock may be issued from time to time as may be determined by the
Board of Directors. Each share of common stock has one vote for each share of
common stock standing in the name of the holder thereof on the books of the
Company and entitled to vote. Cumulative voting is not allowed in the election
of directors or for any other purpose.
Currently, there are 1,666,667 shares of preferred stock which have
been designated as Series A Preferred by the Board of Directors, of which
1,166,667 shares are issued and outstanding. The Series A Preferred shares are
nonvoting but are convertible into two shares of common stock for each Series A
Preferred share outstanding. Shares of authorized preferred stock may be issued
from time to time by the Board of Directors in one or more series, with each
series having such designation rights (including voting rights or the absence
thereof) and preferences as may be determined by the directors.
The Board of Directors believes that it is in the best interests of
the Company to amend the Company's Articles of Incorporation to increase
authorized common stock to 10,000,000 shares of common stock, $.02 par value,
and to increase the authorized preferred stock to 5,000,000 shares to have
additional shares available for issuance should the Company determine to raise
equity capital and for purposes of facilitating future acquisitions. A copy of
the proposed Articles of Amendment to the Company's Articles of Incorporation
which has been approved by the Board of Directors is included herewith as
Exhibit "A".
APPROVAL OF AMENDMENT TO THE COMPANY'S
1995 STOCK OPTION AND STOCK APPRECIATION RIGHTS PLAN
At the Annual Meeting, the stockholders will be asked to approve an
amendment to the Company's 1995 Stock Option and Stock Appreciation Rights Plan
(the "Plan"). The Plan provides for the granting of "options" to acquire common
stock and/or the granting of rights to "receive cash or shares back upon the
appreciated value of the Company's shares relative to the date the option or
right was granted." The amendment, if approved, will increase the number of
shares of the Company's common stock available for the grant of options and
rights to purchase common stock under the Plan by 375,000 shares, from 125,000
shares to 500,000 shares.
Presently, an aggregate 125,000 shares of common stock are authorized
for issuance under the Plan. As of April 30, 1997, no shares of common stock
remained available for issuance under the Plan; however, the Compensation
Committee has recommended that options covering 210,000 additional shares be
issued to nine employees and three nonemployee directors, subject to the
proposed amendment to the Plan being approved at the Annual Meeting (see
"Executive Compensation").
- 13 -
<PAGE> 17
The Company has in the past used, and intends in the future to use,
stock options as an important incentive device to motivate and reward its
employees and believes that equity incentives represented by stock options
enhance the Company's ability to attract and retain needed personnel.
The primary features of the Plan are summarized below. A copy of the
Plan, with the proposed amendment, is included herewith as Exhibit "B".
SUMMARY OF THE PLAN
The Plan is administered by the Compensation Committee (the
"Committee") of the Board of Directors. At least two members of the Committee
must be disinterested nonemployee directors. The Committee is authorized to
determine the employees, including officers, to whom options or rights are
granted. Each option or right granted shall be on such terms and conditions
consistent with the Plan as the Committee may determine, but the duration of
any option or right shall be not greater than ten years or less than five years
from the date of grant.
Options or rights grants shall be made only to persons who are
officers or salaried employees of the Company or are nonemployee directors. The
aggregate number of shares of common stock of the Company which may be subject
to options or rights under the Plan is presently 125,000. Subject to
shareholder approval of the proposed amendment, this number would be increased
to 500,000. As of April 30, 1997, options covering 125,000 shares had been
issued under the Plan.
The option price of shares covered by options granted under the Plan
may not be less than the fair market value at the time the option is granted.
The option price must be paid in full in cash or cash equivalent at the time of
purchase or prior to delivery of the shares in accordance with cash payment
arrangements acceptable to the Committee. If the Committee so determines, the
option price may also be paid in shares of the Company's common stock already
owned by the optionee. The Committee has discretion to determine the time or
times when options become exercisable, within the limits set forth in the Plan.
All options and rights granted under the Plan will, however, become fully
exercisable if there is a change in control (as defined in the Plan) of the
Company.
No option is transferable by the optionee otherwise than by will or
by the laws of descent or distribution, and during an optionee's lifetime is
exercisable only by the optionee or the optionee's duly appointed legal
representative.
Each option granted under the Plan constitutes either an incentive
stock option, intended to qualify under Section 422 of the Code, or a
nonqualified stock option, not intended to qualify under Section 422, as
determined in each case by the Committee. Each incentive stock option
terminates not later than 15 years from the date of grant, and each
nonqualified option expires not later than five years from the date of grant.
The Committee may grant a stock appreciation right in connection with
any option granted under the Plan. Any such right will provide that the
Company, at the election of the optionee and subject to specified conditions,
will purchase all or any part of such option to the extent exercisable at the
date of such election, for an amount (in the form of cash, shares of the
Company's common stock or any combination thereof as the
- 14 -
<PAGE> 18
Committee in its discretion determines) equal to the excess of the fair market
value of the shares covered by the option or part thereof so purchased over the
option price of such shares. Shares covered by any option purchased are not
available for grant of further options. As of April 30, 1997, no stock
appreciation rights are outstanding under the Plan.
If an optionee ceases to be an employee of the Company for any reason
other than death or retirement, any option or right to the extent then
exercisable may be exercised within three months after cessation of employment.
Should an optionee die after ceasing to be an employee, any option or
stock appreciation right exercisable at the time of the optionee's death may be
exercised within 90 days after death by the optionee's estate or by the person
designated in the optionee's will.
In no case, however, may an option or stock appreciation right be
exercised following the termination date of the option.
The Company may establish procedures for ensuring payment or
withholding of income or other taxes in connection with the issuance of shares
under options. Such procedures may include provision for such payment or
withholding by retention of shares otherwise issuable to the optionee.
FEDERAL TAX CONSEQUENCES OF THE PLAN
Under present federal income tax laws, options under the Plan have
the following consequences:
(1) Upon the granting of an option or right under the Plan,
the optionee will have no taxable income, and the Company will have
no tax deduction.
(2) Upon exercise of a nonqualified option, the optionee will
realize ordinary taxable income inn an amount equal to the excess, if
any, of the fair market value of the shares at the time the option is
exercised over the option price of such shares. Gain or loss realized
by an optionee on disposition of the shares will generally be capital
gain or loss to the optionee and will not result in any additional
tax consequences to the Company.
(3) Exercise of an incentive stock option will not, by
itself, result in the recognition of taxable income to the optionee
or entitle the Company to a deduction at the time of such exercise.
However, the excess of the fair market value of the shares over the
option price on the date of exercise must be included as an
adjustment in computing alternative minimum taxable income. The
optionee will recognize capital gain or loss upon resale of the
shares received upon such exercise, provided that the optionee held
such shares for at least one year after the date of transfer to the
optionee and for at least two years after the grant of the option.
Generally, if the shares are not held for both of these periods, the
optionee will recognize ordinary income upon disposition in an amount
equal to the excess of the fair market value of the shares on the
date of such exercise over the option price of such shares. The
balance of any gain or any loss will be treated as a capital gain or
loss to the optionee.
- 15 -
<PAGE> 19
(4) The exercise of a stock appreciation right will result in
the recognition of ordinary income by the optionee on the date of
exercise in an amount equal to the amount of cash received.
(5) The Company will be allowed a deduction equal to the
amount of ordinary income realized by the optionee at the time the
optionee recognizes such income, provided applicable withholding
requirements are satisfied.
(6) Rights under the Plan conditioned on or accelerated by a
change in control or ownership of the Company may under federal
income tax laws result in "parachute payments" which may be
nondeductible by the Company and may subject the optionee to a 20%
excise tax.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
APPROVAL OF THE PROPOSED AMENDMENT TO THE 1995 STOCK OPTION AND STOCK
APPRECIATION RIGHTS PLAN.
APPROVAL OF THE SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has, subject to shareholder
approval, selected Schultz, Watkins & Company as the Company's independent
public accountants for the year 1997 and recommends approval of such selection
by the shareholders. Schultz, Watkins & Company served in this capacity for the
years 1995 and 1996. One or more representatives of Schultz, Watkins & Company
are expected to attend the Annual Meeting and will have the opportunity to make
a statement if they desire to do so and will be available to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
APPROVAL OF THE FIRM OF SCHULTZ, WATKINS & COMPANY AS INDEPENDENT PUBLIC
ACCOUNTANTS FOR 1997.
MISCELLANEOUS
SHAREHOLDER PROPOSALS
Any proposals from shareholders to be presented for consideration for
inclusion in the proxy material being prepared for the 1997 Annual Meeting of
shareholders of the Company must be submitted in accordance with applicable
Securities and Exchange Commission rules and received by the Company at its
principal offices, 115 South Dearborn Street, Mobile, Alabama 36602 no later
than January 31, 1998.
FINANCIAL STATEMENTS
Financial Statements, the Notes to Financial Statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations for 1996 with comparisons to 1995 and other relevant information are
included in the Company's 1996 Annual Report to Shareholders which accompanies
this Proxy Statement and are incorporated herein by reference.
- 16 -
<PAGE> 20
DISCRETIONARY AUTHORITY
At the time of mailing this Proxy Statement, the Board of Directors
was not aware of any other matters which might be presented at the meeting. If
any matter not described in this Proxy Statement should properly be presented,
the persons named in the accompanying form of proxy will vote such proxy in
accordance with their judgment.
By Order of the Board of Directors
----------------------------------------
Lynn M. Davis, Secretary
DATED this _______ day of May, 1997
===============================================================================
A copy of the Company's 1996 Annual Report to the Securities and Exchange
Commission on Form 10-KSB referred to above may be obtained without charge by
any beneficial owner of the Company's common stock upon written request
addressed to Lynn M. Davis, Secretary, Middle Bay Oil Company, Inc., P.O. Box
390, Mobile, Alabama 36601. Requests can be made by telephone by calling (334)
432-7540.
===============================================================================
- 17 -
<PAGE> 21
EXHIBIT "A"
ARTICLES OF AMENDMENT
TO THE
AMENDED ARTICLES OF INCORPORATION
OF
MIDDLE BAY OIL COMPANY, INC.
I.
The name of the corporation is MIDDLE BAY OIL COMPANY, INC.
II.
As of the Effective Time set forth in Article IV hereof, Article III
of the Amended Articles of Incorporation of MIDDLE BAY OIL COMPANY, INC. is
amended to read as follows:
"III.
The Corporation has authority to issue not more than
15,000,000 shares of capital stock which are divided into classes as
follows:
(a) Ten million (10,000,000) shares of common stock with $.02 par
value, designated "Common Stock" which, except as specifically granted
to the preferred stock as set forth below, are entitled to the entire
stock voting power in regard to the Corporation, to all dividends
declared and to all assets of the Corporation upon liquidation.
(b) Five million (5,000,000) shares of preferred stock with $.02
par value, designated "Preferred Stock."
(c) The designations and the powers, preferences and rights and
the qualifications, limitations or restrictions of the preferred stock
shall be as follows:
The Board of Directors is expressly authorized at any time and
from time to time to provide for the issuance of shares from the
authorized preferred stock which may be issued in one or more series,
with such designations, preferences and relative participating optional
or other special rights, qualifications, limitations or restrictions
thereof, as shall be stated and expressed in the resolution or
resolutions providing for the issuance thereof adopted by the Board of
Directors
- 1 -
<PAGE> 22
and as are not stated or expressed in Articles of Incorporation or any
Amendment thereto, including (but without limiting the generality of
the foregoing) the following:
(1) the distinctive designation of a series, if
any, and the number of shares which shall
constitute such series, which number may be
increased (except where otherwise provided
by the Board of Directors in creating such
series) or de creased (but not below the
number of shares thereof then outstanding)
from time to time by like action of the
Board of Directors;
(2) the annual rate of dividends payable on
preferred shares or on the shares of any
series created, whether the dividends shall
be cumulative, noncumulative or partially
cumulative dividends and the date from which
dividends shall be accumulated, if dividends
are to be cumulative;
(3) the time or times when and the price or
prices at which preferred shares or shares
of any series created, shall be redeemable
and the sinking fund provisions, if any, for
the purchase or redemption of such shares;
(4) the amount payable on preferred shares or
shares of any series created and the rights
of holders of such shares in the event of
any liquidation, dissolution or winding up
of the affairs of the Corporation;
(5) the rights, if any, of the holders of
preferred shares or shares of any series
created to convert such shares into, or
exchange such shares for, shares of common
stock or shares of any other series of
preferred stock, if any, and the terms and
conditions of such conversions or exchange;
and
(6) the voting rights, if any which holders of
such shares may exercise.
The Board of Directors is expressly authorized to vary the
provisions relating to the foregoing matters between the various
series of Preferred Shares, but in all other respects the shares
of each series of Preferred Shares, shall be of equal rank with
each other, regardless of series. All of the Preferred Shares of
any one series shall be identical with each other in all
respects.
- 2 -
<PAGE> 23
(d) Dividend Rights. The holders of the Preferred Shares of
any series shall be entitled to receive, as and when declared by the
Board of Directors, out of funds legally available for that purpose
under the laws of the State of Alabama, preferential dividends which
may be either cumulative or noncumulative at the rate per annum fixed
by the Board of Directors for such series. Such dividends shall be
payable at the time determined by the Board of Directors. If Preferred
Shares of more than one series are outstanding, and the stated
dividend is not paid in full, all series of Preferred Shares shall
share ratably in the payment of dividends including accumulations, if
any, in accordance with the sum which would be payable on such shares
if all dividends were declared and paid in full. Accumulations of
dividends shall not bear interest. So long as any Preferred Shares
shall remain outstanding, no dividends shall be declared or paid to
any distributions made on the Common Shares or on any other class of
shares junior to the Preferred Shares, and no share of common or of
any other class junior to the Preferred Shares shall be purchased or
retired, and no monies shall be made available for a sinking fund for
such purpose unless dividends for all past dividend periods shall have
been paid on all outstanding Preferred Shares of all series. Subject
to the above provisions, and not otherwise, dividends may be paid from
time to time on the Common Shares or other junior issues out of funds
legally available for the purpose as and when declared by the Board of
Directors.
(e) Redemption.
(1) The Corporation, on the sole authority of
the board of Directors, may at its option
redeem all or any part of any series of the
Preferred Shares on the terms, including
redemption price, and to the extent, if
any, therefor affixed by the Board of
Directors. Such redemption may be ef fected
only after dividends which have been
declared or accrued on any series of
Preferred Shares have been paid. If less
than all of the Preferred Shares of any
series is to be redeemed, the redemption
shall be in such amount and by such method,
whether by lot or pro rata, or by such
other method as may then be required by law
or by the rules and regulations of any
stock exchange upon which the Preferred
Shares may at that time be listed, as may
from time to time be determined by the
Board of Directors. Written notice of
redemption stating the date and place of
redemption shall be mailed by the
Corporation, not less than thirty (30) days
nor more than forty-five (45) days prior to
the redemption date, to the record holders
of the shares to be redeemed, directed to
their last noted addresses as shown by the
corporate records.
- 3 -
<PAGE> 24
(2) If notice of redemption is given as
provided above, and if on the redemption
date the Corporation has set apart in trust
for the purpose, sufficient funds for such
redemption, then from and after the
redemption date, notwithstanding that any
certificate for such shares has not been
surrendered for cancellation, the Preferred
Shares called for redemption shall no
longer be deemed outstanding and all rights
with respect to such shares shall forthwith
cease and terminate, except on the right of
the holders thereof to receive the
redemption price, without interest, upon
surrender of certificates of the shares
called for redemption.
(3) Any funds so set apart or deposited which,
at the end of one (1) year after the
redemption date, remain unclaimed by the
holder(s) of Preferred Shares called for
redemption, shall be released and returned
to the Corporation upon demand, and shall
thereafter be available for general
corporate purposes, and the depository, if
any, shall thereupon be relieved of all
responsibility therefor to such holders.
Any interest accrued on funds so deposited
shall be paid to the Corporation from time
to time.
(4) Preferred Shares which are redeemed as
provided in this section, or are reacquired
for retirement pursuant to any sinking fund
which may be established therefor, may be
held as Treasury Shares or may be canceled
and retired in the manner provided by law,
and appropriate proceedings to effect the
corresponding reduction in the stated
capital of the Corporation shall be taken.
(f) Rights on Liquidation. In the event of the liquidation,
dissolution, or winding up of the Corporation, whether voluntary or
involuntary, resulting in any distribution of its assets to its
shareholders, the holders of the Preferred Shares then outstanding
shall be entitled to receive the amount per share theretofore affixed
by the Board of Directors of the various series, plus any accrued
interest, and no more, before any payment or distribution of the
assets of the Corporation is made to or set apart for the holders of
Common Shares or any other class junior to the Preferred Shares. If
the assets of the Corporation distributable to the holders of all the
Preferred Shares are insufficient for the payment to them of the full
preferential amount described above, such assets shall be distributed
ratably among the holders of all Preferred Shares of all series in
accordance with the amounts which would be payable on such
distribution of all sums payable were discharge in full. After payment
for the preferential amounts required to be paid to
- 4 -
<PAGE> 25
the holders of all Preferred Shares then outstanding, the holders of
Preferred Shares and/or any other class junior to the Preferred Shares
shall be entitled, to the exclusion of the holders of any of the
Preferred Shares, to share in all remaining assets of the Corporation
in accordance with their respective interests.
For the purposes of this Section and any certificate filed
pursuant to law and setting forth the designation, description, and
terms of any series of Preferred Shares, a consolidation or merger of
the Corporation with any other corporation or corporations shall not
be deemed a liquidation, or winding up of the Corporation."
All other provisions of the Amended Articles of Incorporation shall
remain in full force and effect.
III.
This amendment was duly approved by the shareholders at the Annual
Meeting of Shareholders held in accordance with the provisions of Section
10-2B-7.01 of the Alabama Business Corporation Act on May 30, 1997. At such
Annual Meeting, there were a total of 2,497,916 shares of common stock issued
and outstanding and eligible to vote on the amendment. ____________ shares were
voted in favor of the amendment, and _________ shares were voted against the
amendment.
IN WITNESS WHEREOF, the Corporation has caused these Articles of
Amendment to be executed and attested by its duly authorized officers this
__________ day of ____________________, 1997.
MIDDLE BAY OIL COMPANY, INC.
ATTEST:
By:
------------------------------------
John J. Bassett, President
- --------------------------
Secretary
[CORPORATE SEAL]
- 5 -
<PAGE> 26
EXHIBIT "B"
MIDDLE BAY OIL COMPANY, INC.
AMENDED AND RESTATED 1995 STOCK OPTION AND
STOCK APPRECIATION RIGHTS PLAN
1. PURPOSE. The purpose of this Stock Option and Stock Appreciation
Rights Plan is to advance the interests of Middle Bay Oil Company, Inc. (the
"Corporation") by encouraging and enabling the acquisition of a larger personal
proprietary interest in the Corporation by key employees and Directors of the
Corporation upon whose judgment and keen interest the Corporation is largely
dependent for the successful conduct of its operations, and by providing such
key employees and Directors with incentives to put forth maximum efforts for
the success of the Corporation's business. It is anticipated that the
acquisition of such proprietary interest in the Corporation and such incentives
will strengthen the desire of such key employees and Directors to remain with
the Corporation as well as that such incentives and the opportunity to acquire
such a proprietary interest will enable the Corporation and its Subsidiaries to
attract desirable personnel and Directors.
2. DEFINITIONS. When used in this Plan, unless the context otherwise
requires:
(a) "Act" shall mean the Securities Exchange Act of 1934, as
amended.
(b) "Applicable Price Percentage" shall mean: (i) 100% with
respect to any employee of the Corporation other than a
Shareholder/Employee; or (ii) 110% with respect to a
Shareholder/Employee.
(c) "Board of Directors" shall mean the Board of Directors of
the Corporation as constituted at any time.
(d) "Chairman of the Board" shall mean the person who at the
time shall be Chairman of the Board of Directors of the Corporation.
(e) "Change of Control" means the occurrence of any of the
following events: (i) the Company shall not be the surviving entity in
any merger, consolidation or other reorganization (or survives only as
a subsidiary of an entity other than a previously wholly-owned
subsidiary of the Company); (ii) the Company sells, leases or
exchanges all or substantially all of its assets to any other person
or entity (other than a wholly-owned subsidiary of the Company); (iii)
the Company is to be dissolved and liquidated; (iv) any person or
entity, including a "group," as contemplated by Section 13(d)(3) of
the Act, acquires or gains ownership or control (including, without
limitation, power to vote) of more than 50% of the outstanding Shares
of the Company's voting stock (based upon voting power); or (v) as a
result of or in connection with a contested election of directors, the
persons who were directors of the Company before such election shall
cease to constitute a majority of the Board.
- 1 -
<PAGE> 27
(f) "Change of Control Value" shall mean (i) the per-Share
price offered to shareholders of the Company in any such merger,
consolidation, reorganization, sale of assets or dissolution
transaction, (ii) the price per Share offered to shareholders of the
Company in any tender offer or exchange offer whereby a Change of
Control takes place or (iii) if such Change of Control occurs other
than pursuant to a tender or exchange offer, the Fair Market Value per
Share of the Shares into which awards are exercisable, as determined
by the Committee. In the event that the consideration offered to
shareholders of the Company consists of anything other than cash, the
Committee shall determine the fair cash equivalent of the portion of
the consideration offered that is other than cash.
(g) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(h) "Committee" shall mean the Compensation Committee of the
Board of Directors hereinafter described in Section 4.
(i) "Corporation" shall mean Middle Bay Oil Company, Inc.
(j) "Fair Market Value" shall mean the average of the high
and low sales prices on the stock exchange or market on which the
Shares are primarily traded on the date as of which such value is
being determined or, if there shall be no sale on that date, then on
the last previous day on which a sale was reported or, if the above is
not applicable, the value of a Share as established by the Committee
for such date using any reasonable method of valuation.
(k) "Incentive Award" shall mean an Option or Rights granted
pursuant to the Plan.
(l) "Non-Employee Director" shall mean a Director of the
Corporation and/or its Subsidiaries who is not also an employee of the
Corporation and/or its Subsidiaries.
(m) "Options" shall mean the stock options granted pursuant
to the Plan, which shall entitle the holder thereof to purchase Shares
from the Corporation for such price and at such times as the Committee
shall determine at the time the Options are granted, subject to the
terms and conditions of the Plan.
(n) "Plan" shall mean the Middle Bay Oil Company, Inc. 1995
Stock Option and Stock Appreciation Rights Plan, as such Plan from
time to time may be amended.
(o) "Rights" shall mean stock appreciation rights granted
pursuant to the Plan, which shall entitle the holder thereof to
receive from the Corporation cash or Shares or a combination of cash
and Shares based upon the excess of the Fair Market Value of Shares at
the time of exercise over the Fair Market Value of Shares on the date
the Rights were granted, subject to the terms and conditions of the
Plan.
(p) "Share" shall mean a share of common stock of the
Corporation.
- 2 -
<PAGE> 28
(q) "Shareholder/Employee" shall mean an employee of the
Corporation possessing more than ten percent (10%) of the total
combined voting power of all classes of Corporation stock, or of its
parent or subsidiary corporation (if any), within the meaning of Code
Section 422 and the regulations prescribed thereunder. For this
purpose, the rules of Code Section 425(d) (relating to attribution of
stock ownership because of certain family and business relationships)
shall apply in determining the stock ownership of the employee, and
stock that the employee may purchase under outstanding Options shall
not be treated as stock owned by the employee.
(r) "Subsidiary" shall mean any corporation more than 50% of
whose stock having general voting power is owned by the Corporation,
or by another Subsidiary as herein defined of the Corporation. Such
term is intended further to include within its meaning only
corporations included within the meaning of the term "subsidiary
corporation," as defined in Code Section 425(f).
3. SHARES SUBJECT TO THE PLAN. Subject to the provisions of Section 15
hereof, the aggregate number of Shares that may be subject to Options or Rights
shall not exceed 500,000, which Shares may be either Treasury Shares or
authorized but unissued Shares. If the Shares that would be issued or
transferred pursuant to any such Incentive Award are not issued or transferred
and cease to be issuable or transferable for any reason, the number of Shares
subject to such Incentive Award will no longer be charged against the
limitation provided for herein and may again be made subject to Incentive
Awards.
4. COMMITTEE. The Plan shall be administered by a Committee which
shall consist of at least two Non-Employee Directors, none of whom shall have
been participants in the Plan or in any other plan of the Corporation or any of
its Subsidiaries entitling the participants therein to acquire stock, stock
options or stock appreciation rights of the Corporation or any of its
Subsidiaries at any time within one year prior to appointment. The members of
the Committee shall be selected by the Board of Directors. If a member of the
Committee, for any reason, shall cease to serve, the vacancy may be filled by
the Board of Directors. Any member of the Committee may be removed at any time,
with or without cause, by the Board of Directors. Until further action by the
Board of Directors, the Committee shall be the same as the Compensation
Committee of the Board of Directors.
5. PARTICIPANTS. All key employees of the Corporation and any
Subsidiaries, and, subject to the provisions of Section 4 hereof, all
Non-Employee Directors, shall be eligible to receive Incentive Awards under the
Plan. The persons to whom Incentive Awards are to be offered under the Plan and
the number of Shares with respect to which Incentive Awards are to be granted
to each such person shall be determined by the Committee in its sole
discretion, subject, however, to the terms and conditions of the Plan.
6. GRANT OF OPTIONS. The number of Options to be granted to any
eligible person shall be determined by the Committee in its sole discretion.
However, nothing herein contained shall be construed to prohibit the granting
of Options at different times to the same person. A certificate of Option
signed by the Chairman of the Board, the Chief Executive Officer, or the
President or a Vice President, attested by the Treasurer or an Assistant
Treasurer, or Secretary or an Assistant Secretary, of the Corporation and
having the seal of the Corporation affixed thereto, shall be delivered to each
person to whom an Option is granted.
- 3 -
<PAGE> 29
7. GRANT OF RIGHTS.
(a) The Committee shall have the authority in its discretion
to grant to any eligible person Rights which shall be granted
separately from an Option.
(b) Rights shall entitle the holder, upon the exercise
thereof, to receive payment from the Corporation of an amount equal to
the product obtained by multiplying (i) the excess of the Fair Market
Value of one Share on the date of such exercise over the Fair Market
Value of one Share on the date the Rights were granted (the "Spread"),
or a portion of the Spread determined by the Committee at the time of
grant, by (ii) the number of Shares in respect of which the Rights
shall have then been so exercised.
(c) Notwithstanding anything contained herein, the Committee
may, in its sole discretion, limit the amount payable upon the
exercise of Rights. Any such limitation shall be determined as of the
date of grant and noted on the certificate evidencing the grant of the
Rights.
(d) In the Committee's discretion, payment of the amount
determined hereunder upon the exercise of Rights may be made solely in
cash, or solely in Shares valued at their Fair Market Value on the
date of exercise of the Rights, or in a combination of cash and
Shares.
(e) Notwithstanding any other provision of the Plan or of the
Rights, for purposes of determining the amount of the Spread in the
case of a holder of Rights who is a Director or officer subject to
Section 16(b) of the Act, the Committee, in its sole discretion, may
designate a single Fair Market Value per Share with respect to all
such holders who exercise Rights during any single ten-day period
specified in Rule 16b-3(e)(3) under the Act; provided, however, that
the Fair Market Value per Share designated by the Committee during any
such period shall in no event be greater than the highest Fair Market
Value per Share on any day during such period or less than the lowest
Fair Market Value per Share on any day during such period.
(f) A certificate of Rights signed by the Chairman of the
Board, the Chief Executive Officer, or the President or a Vice
President, attested by the Treasurer or an Assistant Treasurer, or
Secretary or an Assistant Secretary, of the Corporation and having the
seal of the Corporation affixed thereto, shall be delivered to each
person to whom Rights are granted.
8. DURATION OF INCENTIVE AWARDS. The duration of any Incentive
Award shall be fixed by the Committee in its sole discretion; provided,
however, that (i) no Incentive Award shall remain in effect for a period of
more than ten years from the date on which it is granted (or such shorter
duration as may be required pursuant to subsection 16(b)), and (ii) subject to
Section 11, the duration of an Incentive Award shall not be less than five
years from the date on which it is granted.
- 4 -
<PAGE> 30
9. EXERCISE OF INCENTIVE AWARDS.
(a) Except as otherwise provided herein, an Incentive Award,
after the grant thereof, shall be exercisable by the holder at such
rate and times as may be fixed by the Committee, in its sole
discretion, at the time the Incentive Award is granted. Unless
otherwise determined by the Committee, (i) no Option or Rights may be
exercised until the second anniversary of the date on which the Option
or Rights were granted, (ii) twenty-five percent (25%) of the Rights
may be exercised, or the Shares subject to an Option may be purchased,
on or after the second anniversary of the date of grant, and (iii) an
additional twenty-five percent (25%) of the Rights may be exercised,
or the Shares subject to the Option may be purchased, on or after each
of the third, fourth and fifth anniversaries, respectively, of the
date of grant, but prior to the expiration date of the Option or
Rights. Notwithstanding the foregoing, all or any part of any
remaining unexercised Options or Rights granted to any person may be
exercised upon (A) the occurrence of such special circumstance or
event as in the opinion of the Committee merits special consideration
(but such exercise shall in no event occur during the six-month period
commencing on the later of the date of grant of the Incentive Award or
the date of shareholder approval of the Plan) or (B) the sale or other
disposition of all or substantially all the assets of the Corporation
or the merger or consolidation of the Corporation into another company
in which the Corporation is not the surviving entity.
(b) An Option shall be exercised by the delivery of a duly
signed notice in writing to such effect, together with the Option
certificate and the full purchase price of the Shares purchased
pursuant to the exercise of the Option, to the Treasurer or an officer
of the Corporation appointed by the Chief Executive Officer or the
Chairman of the Board for the purpose of receiving the same. The
notice of exercise may be delivered on, before or after the first date
on which the Option may be exercised with respect to the Shares
purchased (but no later than the last date on which the Option is
exercisable according to other provisions of this Plan). If the notice
is delivered before such first date, then the Option shall be deemed
to have been exercised on such first date (regardless of whether or
not such first date is a business day). Payment of the full purchase
price shall be made as follows: in cash, or by check payable to the
order of the Corporation, or by delivery to the Corporation of Shares
which shall be valued at their Fair Market Value on the date of
exercise of the Option, or by such other methods as the Committee may
permit from time to time; provided, however, that a holder may not use
any Shares acquired pursuant to the exercise of an Option granted
under this Plan or any other stock option plan maintained by the
Corporation or any Subsidiary unless the holder has beneficially owned
such Shares for at least six months.
(c) Within a reasonable time after the exercise of an Option,
the Corporation shall cause to be issued and delivered, to the person
entitled thereto, a certificate for the Shares purchased pursuant to
the exercise of the Option. If the Option shall have been exercised
with respect to less than all of the Shares subject to the Option, the
Corporation shall also cause to be delivered to the person entitled
thereto an Option certificate with respect to the number of Shares
equal to the difference between the number of Shares of the Option
certificate surrendered at the time of the exercise of the
- 5 -
<PAGE> 31
Option and the number of Shares with respect to which the Option was
so exercised, or the original Option certificate shall be endorsed to
give effect to the partial exercise thereof.
(d) Rights shall be exercised by the delivery of a duly
signed notice in writing to such effect, together with the Rights
certificate, and a specification of the percentage of the Rights which
the holder desires to exercise. Within a reasonable time thereafter,
the Corporation shall cause to be delivered and/or issued to the
person entitled thereto, the amount of cash and/or a certificate for
the number of Shares determined in accordance with Section 7 hereof.
If the Rights shall have been exercised with respect to less than all
of the Shares subject thereto, the Corporation shall also cause to be
delivered to the person entitled thereto a Rights certificate with
respect to the difference between the number of Shares of the Rights
certificate surrendered at the time of the exercise of the Rights and
the number of Shares with respect to which the Rights were so
exercised, or the original Rights certificate shall be endorsed to
give effect to the partial exercise thereof.
(e) Notwithstanding any other provision of the Plan or of any
Option or Rights, no Option or Rights granted pursuant to the Plan may
be exercised at any time when the Option or Rights or the granting or
exercise thereof violates any law or governmental order or regulation.
10. PURCHASE PRICE. The purchase price per Share for the Shares to be
purchased pursuant to the exercise of an Option shall be fixed by the Committee
at the time of the grant of the Option.
11. TERMINATION OF EMPLOYMENT OR SERVICE.
(a) If a holder of an Option and/or Rights shall voluntarily
or involuntarily leave the employ or service of the Corporation and
its Subsidiaries, the Option and Rights of such holder shall terminate
forthwith, and a holder whose employment with, or service as a
Director of, the Corporation or a Subsidiary is so terminated shall
have no right after such termination to exercise any unexercised
Option or Rights he might have exercised prior to the termination of
his employment or service with the Corporation or a Subsidiary.
Notwithstanding the foregoing, if the cessation of employment or
service is due to retirement on or after attaining the age of
sixty-five years, or to disability (to an extent and in a manner as
shall be determined in each case by the Committee in its sole
discretion) or to death, the holder or the representatives of the
estate of the holder shall have the privilege of exercising the
unexercised Options and/or Rights which the holder or the deceased
could have exercised at the time of his retirement, disability or
death, provided that such exercise must be accomplished prior to the
expiration of such Options and Rights and within 90 days of the
holder's retirement, disability or death.
(b) Nothing contained herein or in an Option or Rights
certificate shall be construed to confer on any employee or Director
any right to be continued in the employ of the Corporation or any
Subsidiary or as a Director of the Corporation or a Subsidiary or
derogate from any right of the Corporation and any Subsidiary to
request the resignation of or discharge of such employee or Director
(without or with pay), at any time, with or without cause.
- 6 -
<PAGE> 32
12. CONSIDERATION FOR INCENTIVE AWARDS. The Corporation shall obtain
such consideration for the grant of an Incentive Award as the Committee in its
discretion may request.
13. NONTRANSFERABILITY OF INCENTIVE AWARDS. Incentive Awards shall not
be transferable by the holder thereof otherwise than by will or the laws of
descent and distribution to the extent provided herein, and Incentive Awards
may be exercised or surrendered during the holder's lifetime only by the holder
thereof.
14. TAX WITHHOLDING. The Corporation or Subsidiary shall deduct and
withhold such amounts under any federal, state or local tax rules or
regulations as it deems appropriate with respect to the issuance of Shares
and/or the payment of cash to the holder of any Incentive Award from any cash
or other payments to be made to the holder. In any event, the holder shall make
available to the Corporation or Subsidiary, promptly when required, sufficient
funds to meet the requirements of such withholding; and the Committee shall be
entitled to take and authorize such steps as it may deem advisable in order to
have such funds available to the Corporation or Subsidiary when required.
15. ADJUSTMENT PROVISION.
(a) If prior to the complete exercise of any Option there
shall be declared and paid a stock dividend upon the Shares or if the
Shares shall be split up, converted, exchanged, reclassified, or in
any way substituted for, then the Option, to the extent that it has
not been exercised, shall entitle the holder thereof upon the future
exercise of the Option to such number and kind of securities or cash
or other property subject to the terms of the Option to which he would
have been entitled had he actually owned the Shares subject to the
unexercised portion of the Option at the time of the occurrence of
such stock dividend, split-up, conversion, exchange, reclassification
or substitution, and the aggregate purchase price upon the future
exercise of the Option shall be the same as if the originally optioned
Shares were being purchased thereunder.
(b) Any fractional shares or securities payable upon the
exercise of the Option as a result of such adjustment shall be payable
in cash based upon the Fair Market Value of such shares or securities
at the time of such exercise. If any such event should occur, the
number of Shares with respect to which Incentive Awards remain to be
issued, or with respect to which Incentive Awards may be reissued,
shall be adjusted in a similar manner.
(c) In addition to the adjustments provided for in the
preceding paragraph, upon the occurrence of any of the events referred
to in said paragraph prior to the complete exercise of any Rights, the
Committee, in its sole discretion, shall determine the amount of cash
and/or number of Shares or other property to which the holder of the
Rights shall be entitled upon their exercise, so that there shall be
no increase or dilution in the cash and/or value of the Shares or
other property to which the holder of Rights shall be entitled by
reason of such events.
(d) In the event of a Change of Control, the Committee, in
its discretion, may act to effect one or more of the following
alternatives with respect to outstanding Options and Rights which may
- 7 -
<PAGE> 33
vary among individual holders and which may vary among Options and
Rights held by any individual holder: (i) accelerate the time at which
Options and Rights then outstanding may be exercised so that such
Options and Rights may be exercised in full for a limited period of
time on or before a specified date (before or after such Change of
Control) fixed by the Committee, after which specified date all
unexercised Options and Rights and all rights of holders thereunder
shall terminate, (ii) require the mandatory surrender to the Company
by selected holders of some or all of the outstanding Options and
Rights held by such holders (irrespective of whether such Options and
Rights are then exercisable under the provisions of the Plan) as of a
date, before or after such Change of Control, specified by the
Committee, in which event the Committee shall thereupon cancel such
Options and Rights and the Company shall pay to each holder an amount
of cash per Share equal to the excess, if any, of the Change of
Control Value of the Shares subject to such Options and Rights over
the exercise price(s) under such Options and Rights for such Shares,
(iii) make such adjustments to Options and Rights then outstanding as
the Committee deems appropriate to reflect such Change of Control
(provided, however, that the Committee may determine in its sole
discretion that no adjustment is necessary to Options and Rights then
outstanding) or (iv) provide that thereafter, upon any exercise of
Options or Rights theretofore granted, the holder shall be entitled to
purchase under such Options and Rights, in lieu of the number of
Shares then covered by such Option or Right, the number and class of
Shares of stock or other securities or property (including, without
limitation, cash) to which the holder would have been entitled
pursuant to the terms of the agreement of merger, consolidation or
sale of assets and dissolution if, immediately prior to such merger,
consolidation or sale of assets and dissolution the holder had been
the holder of record of the number of Shares then covered by such
Option or Right. The provisions contained in this subparagraph (d)
shall not terminate any rights of the holder to further payments
pursuant to any other agreement with the Company following a Change of
Control.
(e) Notwithstanding any other provision of the Plan, in the
event of a recapitalization, merger, consolidation, rights offering,
separation, reorganization or liquidation, or any other change in the
corporate structure or outstanding Shares, the Committee may make such
equitable adjustments to the number of Shares and the class of shares
available hereunder or to any outstanding Incentive Awards as it shall
deem appropriate to prevent dilution or enlargement of rights.
16. INCENTIVE STOCK OPTIONS.
(a) Each Option granted pursuant to this Agreement is
intended to constitute an incentive stock option, within the meaning
of Code Section 422, unless:
(i) the Option is granted to a Non-Employee
Director; or
(ii) the purchase price per Share for the Shares to
be purchased pursuant to the exercise of an Option is fixed
by the Committee at an amount less than the Applicable Price
Percentage of the Fair Market Value per Share at the time the
Option is granted; or
- 8 -
<PAGE> 34
(iii) the aggregate Fair Market Value of Shares with
respect to which Options are exercisable for the first time
by any Participant during any calendar year (under all plans
of the Corporation and its parent and subsidiary
corporations) exceeds $100,000 (in which case this exception
to intention regarding incentive stock option treatment shall
apply only to the extent of whole Shares constituting such
excess); or
(iv) the Committee determines, in exercising its
discretion with respect to grant of Option, that the Option
should not be treated as an incentive stock option.
The Committee shall cause an appropriate statement, including whether
or not the Option is intended to constitute an incentive stock option,
to be included within each certificate of Option delivered pursuant to
Section 6. Only key employees of the Corporation or its Subsidiary are
eligible to receive incentive stock options.
(b) No Option intended to constitute an incentive stock
option and granted to a Shareholder/Employee shall remain in effect
for a period of more than five years from the date on which it is
granted. (Accordingly, and in accordance with Section 8, the duration
of any such Option granted to a Shareholder/Employee shall be exactly
five years, subject to Section 11.)
(c) The Committee shall not exercise its discretion, in
determining the rate and times at which an Incentive Award may be
exercised pursuant to subsection 9(a), in a manner such that the
exercise of Rights or Options which are not incentive stock options
affects the exercise of incentive stock options.
17. ISSUANCE OF SHARES AND COMPLIANCE WITH SECURITIES ACT. The
Corporation may postpone the issuance and delivery of Shares pursuant to the
exercise of any Incentive Award until (a) the admission of such Shares to
listing on any stock exchange on which Shares of the Corporation of the same
class are then listed and (b) the completion of such registration or other
qualification of such Shares under any state or federal law, rule or regulation
as the Corporation shall determine to be necessary or advisable. As a condition
precedent to the issuance of Shares pursuant to the exercise of an Incentive
Award, the Corporation may require the recipient thereof to make such
representations and furnish such information as may, in the opinion of counsel
for the Corporation, be appropriate to permit the Corporation, in the light of
the then existence or non-existence with respect to such Shares of an effective
Registration Statement under the Securities Act of 1933, as from time to time
amended, to issue the Shares in compliance with the provisions of that or any
comparable act.
18. ADMINISTRATION AND AMENDMENT OF THE PLAN.
(a) Except as hereinafter provided, the Board of Directors or
the Committee may at any time withdraw or from time to time amend the
Plan and the terms and conditions of any Incentive Award not
theretofore granted, and the Board of Directors or the Committee, with
the consent of the affected holder of an Incentive Award, may at any
time withdraw or from time to time amend the Plan
- 9 -
<PAGE> 35
and the terms and conditions of such Incentive Awards as have been
theretofore granted. Notwithstanding the foregoing, any amendment by
the Board of Directors or Committee which would increase the number of
Shares issuable under the Plan or change the class of persons to whom
Incentive Awards may be granted shall be subject to the approval of
the stockholders of the Corporation within one year of such amendment.
(b) A determination of the Committee as to any questions
which may arise with respect to the interpretation of the provisions
of the Plan and Incentive Awards shall be final.
(c) The Committee may authorize and establish such rules,
regulations and revisions thereof not inconsistent with the provisions
of the Plan, as it may determine to be advisable to make the Plan and
Incentive Awards effective or provide for their administration, and
may take such other action with regard to the Plan and Incentive
Awards as it shall deem desirable to effectuate their purpose.
19. GOVERNING LAW. The Plan shall be governed by and construed in
accordance with the laws of the State of Alabama, without giving effect to
principles of conflict of laws.
20. EFFECTIVE DATE OF THE PLAN. This Plan is conditioned upon its
approval (i) at any duly held meeting of the shareholders of the Corporation by
the vote of the holders of a majority of the stock of the Corporation present,
or represented, and entitled to vote at such meeting, or (ii) by the written
consent of the holders of a majority of the stock of the Corporation entitled
to vote; except that this Plan may be adopted and approved by the Board of
Directors to permit the grant of Incentive Awards prior to the approval of the
Plan by the shareholders of the Corporation as aforesaid. In the event that
this Plan is not approved by the shareholders of the Corporation as aforesaid,
this Plan and any Incentive Awards granted hereunder shall be void and of no
force or effect.
21. FINAL ISSUANCE DATE. No Incentive Award shall be granted under the
Plan after May 1, 2005.
IN WITNESS WHEREOF, the Corporation has caused its duly authorized
officers to affix their signatures and the seal of the Corporation to this Plan
on this the ________ day of May, 1997.
MIDDLE BAY OIL COMPANY, INC.
ATTEST:
By:
-------------------------------------
John J. Bassett, President
- -------------------------------
Secretary
[CORPORATE SEAL]
- 10 -
<PAGE> 36
APPENDIX
PRELIMINARY COPY
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
MIDDLE BAY OIL COMPANY, INC.
The undersigned, a shareholder of record of Middle Bay Oil Company,
Inc. (the "Company"), hereby appoints John J. Bassett and Frank C. Turner, II,
and each of them, with power of substitution, to represent and to vote all of
the shares of the Company which the undersigned is entitled to vote at the
Annual Meeting of Shareholders of the Company to be held at the offices of the
Company located at 115 South Dearborn Street, Mobile, Alabama, on Friday, May
30, 1997 at 10:00 a.m. Central Daylight Time, and at any adjournment or
adjournments thereof, hereby revoking all proxies heretofore given with respect
to such shares; and the undersigned hereby instructs said proxy to vote all
such shares of stock at the Annual Meeting in accordance with the following
instructions: (INDICATE BY CHECK MARK)
<TABLE>
<S> <C> <C>
I. ELECTION OF DIRECTORS
FOR all nominees listed below (except WITHHOLD AUTHORITY
as marked to the contrary below) / / to vote for all nominees listed below / /
John J. Bassett - Frank C. Turner, II - Edward P. Turner, Jr. - Frank E. Bolling, Jr.
C. Noell Rather - C. J. Lett, III - Gary R. Christopher
(INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee's name on
the line provided hereinafter: ( )
---------------------------------------------------------------------
II. PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION TO INCREASE THE COMPANY'S AUTHORIZED CAPITAL STOCK FROM
5,000,000 SHARES TO 10,000,000 SHARES OF COMMON STOCK AND FROM 2,500,000 SHARES TO 5,000,000 SHARES OF
PREFERRED STOCK
/ / FOR / / AGAINST / / ABSTAIN
III. PROPOSAL TO AMEND THE 1995 STOCK OPTION AND STOCK APPRECIATION RIGHTS PLAN TO INCREASE TO 500,000 THE
NUMBER OF SHARES OF COMMON STOCK AVAILABLE TO OPTION
/ / FOR / / AGAINST / / ABSTAIN
IV. PROPOSAL TO APPROVE THE APPOINTMENT OF SCHULTZ, WATKINS & COMPANY AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS FOR 1997
/ / FOR / / AGAINST / / ABSTAIN
V. OTHER MATTERS
WITH discretionary authority to WITHOUT AUTHORITY
vote upon any other matters / / to vote upon any other matters / /
</TABLE>
Shareholders approving the proposals set forth herein should mark the
"For" box herein; those opposing such action should register their position by
marking the appropriate "Against" or "Abstain" box herein or by not returning
this Proxy Form. SIGNED BUT UNMARKED PROXY FORMS WILL BE DEEMED TO AUTHORIZE A
VOTE "FOR" THE PROPOSALS SET FORTH HEREIN.
[Continued on the reverse side hereof]
<PAGE> 37
The invalidity, illegality or unenforceability of any particular
provision of this Proxy Form shall be construed in all respects as if such
invalid, illegal or unenforceable provision were omitted without affecting the
validity, legality or enforceability of the remaining provisions hereof.
YOUR VOTE IS IMPORTANT. IF YOU ARE UNABLE TO ATTEND THE
ANNUAL MEETING, PLEASE COMPLETE, SIGN, DATE AND RETURN
THIS PROXY FORM, USING THE ENCLOSED ENVELOPE.
Please sign below exactly as name appears on this Proxy Form. If
shares are registered in more than one name, the signatures of all such persons
are required. A corporation should sign in its full corporate name by a duly
authorized officer, stating his title. Trustees, guardians, executors and
administrators should sign in their official capacity, giving their full title
as such. If a partnership, please sign in the partnership name by authorized
persons.
The undersigned acknowledges receipt of the Notice of said Annual
Meeting and the Proxy Statement dated May 10, 1997 by signing this Proxy.
- -- -- ------------------------
(Number of Shares)
(Paste mailing label from
Transfer Agent here) ----------------------------------------
(Signature of Shareholder)
----------------------------------------
- -- -- (Additional Signatures, if held jointly)
Dated: , 1997
---------------------- ----------------------------------------
(Title or Authority, if applicable)
