<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*
Middle Bay Oil Company, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.02 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
595673203
- --------------------------------------------------------------------------------
(CUSIP Number)
TAMARA R. WAGMAN
FREDERIC DORWART, LAWYERS
Old City Hall
124 East Fourth Street
Tulsa, OK 74103-5010
(918) 583-9922
(918) 583-8251 (Facsimile)
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
January 31, 1998
- --------------------------------------------------------------------------------
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement / /. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE> 2
SCHEDULE 13D
CUSIP NO. 595673203 PAGE 2 OF 7 PAGES
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Kaiser-Francis Oil Co. I.R.S. ID. #73-1006655
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
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3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES 3,333,334
BENEFICIALLY -----------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING None
PERSON -----------------------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
3,333,334
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,333,334
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
42.4%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 3
SCHEDULE 13D
Filed by Kaiser-Francis Oil Company In Connection with Transactions in the
Shares of Middle Bay Oil Company, Inc.
Item 1. Security and Issuer.
This statement relates to the common stock, par value $.02 per share
(the "Common Stock"), of Middle Bay Oil Company, an Alabama corporation
(the "Issuer"). The principal executive offices of the Issuer are
located at 1221 Lamar, Suite 1020, Houston, Texas 77010.
Item 2. Identity and Background.
(1) General. GBK Corporation owns all of the issued and outstanding capital
stock of Kaiser-Francis Oil Company ("Kaiser-Francis"). George B.
Kaiser ("Kaiser") owns 78.22% of the issued and outstanding capital
stock of GBK Corporation. Affiliates of Kaiser own 21.78% of the issued
and outstanding capital stock of GBK Corporation.
(2) GBK Corporation. GBK Corporation is a Delaware corporation, whose
principal business is a holding company. The address of the principal
business and principal office of GBK Corporation is:
6733 South Yale
Tulsa, Oklahoma 74136
With respect to paragraphs (d) and (e) of this Item 2, none.
(3) Kaiser-Francis Oil Company. Kaiser-Francis is a Delaware corporation,
whose principal business is the exploration for and production of oil
and gas, the acquisition and disposition of producing oil and gas
properties, and the acquisition, ownership and operation of retirement
communities. The address of the principal business and principal office
of Kaiser-Francis Oil Company is:
6733 South Yale
Tulsa, Oklahoma 74136
With respect to paragraphs (d) and (e) of this Item 2, none.
(4) The executive officers, directors, and each person who may be deemed to
be controlling GBK Corporation and Kaiser-Francis are as follows:
President: George B. Kaiser
Executive Vice President: H. G. Kleemeir
Chief Financial Officer: D. Joseph Graham
Secretary: Frederic Dorwart
Treasurer: Reece A. Hembree
Director: George B. Kaiser
Page 3 of 7 Pages
<PAGE> 4
(5) (a) George B. Kaiser
(b) 6733 South Yale
Tulsa, OK 74136
(c) Independent Oil and Gas Producer
KAISER-FRANCIS OIL COMPANY
6733 South Yale
Tulsa, OK 74136
(d) No
(e) No
(f) United States of America
(6) (a) H. G. Kleemeir
(b) 6733 South Yale
Tulsa, OK 74136
(c) Executive Vice President
KAISER-FRANCIS OIL COMPANY
6733 South Yale
Tulsa, OK 74136
(d) No
(e) No
(f) United States of America
(7) (a) D. Joseph Graham
(b) 6733 South Yale
Tulsa, OK 74136
(c) Chief Financial Officer
KAISER-FRANCIS OIL COMPANY
6733 South Yale
Tulsa, OK 74136
(d) No
(e) No
(f) United States of America
(8) (a) Frederic Dorwart
(b) Old City Hall
124 East Fourth Street
Tulsa, OK 74103-5010
Page 4 of 7 Pages
<PAGE> 5
(c) Law
Old City Hall
124 East Fourth Street
Tulsa, OK 74103-5010
(d) No
(e) No
(f) United States of America
(9) (a) Reece A. Hembree
(b) 6733 South Yale
Tulsa, OK 74136
(c) Treasurer
KAISER-FRANCIS OIL COMPANY
6733 South Yale
Tulsa, OK 74136
(d) No
(e) No
(f) United States of America
Item 3. Source or Amount of Funds or Other Consideration.
The consideration for the purchase of 1,666,667 shares of Series A
Preferred Stock of Issuer, which were converted on January 31, 1998
into 3,333,334 shares of Issuer's common stock, was $10,000,002 which
came from Kaiser-Francis working capital.
Item 4. Purpose of Transaction.
Kaiser-Francis has acquired its shares of Issuer Common Stock primarily
to hold for investment. Dependent upon market conditions, pricing, and
availability, Kaiser-Francis may acquire additional shares of Issuer.
Gary R. Christopher, Acquisitions Coordinator of Kaiser-Francis, is a
director of Issuer. Kaiser-Francis has no intention of attempting to
effect any change in the business plan, policies, officers or directors
of Issuer. Dependent upon market conditions, pricing, industry
conditions and company performance, Kaiser-Francis may determine to
sell all or part of its shareholdings.
Item 5. Interest in Securities of the Issuer.
Pursuant to a certain Stock Purchase Agreement between the Issuer and
Kaiser-Francis dated September 4, 1996, Kaiser-Francis received the
right to purchase up to 1,666,667 shares of Series A Preferred Stock of
Issuer for a purchase price of $6.00 per share. The Stock Purchase
Agreement granted to Kaiser-Francis a one-time, demand registration
right with regard to the Kaiser-Francis shares. Kaiser-Francis had the
sole power to vote or to direct the vote and the sole power to dispose
or to direct the disposition of all 1,666,667 shares of
Page 5 of 7 Pages
<PAGE> 6
Series A Preferred Stock and subsequently has the same power with
regard to all the shares of common stock into which the Series A
Preferred Stock was converted.
The following purchases of Series A Preferred Stock were made by Kaiser-Francis
for the purchase price of $6.00 per share:
<TABLE>
<CAPTION>
No. of Shares Date
------------- ----
<S> <C>
166,667 12/31/96
1,000,000 2/28/97
500,000 6/30/97
</TABLE>
Total: 1,666,667 shares Series A Preferred Stock
% of Series A Preferred Stock: 100%
% of Common Stock After Conversion: 42.4%
No other person identified in Item 2 beneficially owns shares, common or
preferred, of Issuer.
Item 6. Contracts, Arrangements, or Understandings with Respect to
Securities of Issuer.
None; except the Stock Purchase Agreement as described in Item 5.
Item 7. Material to be Filed as Exhibits.
Stock Purchase Agreement as described in Item 5.
Page 6 of 7 Pages
<PAGE> 7
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Kaiser-Francis Oil Co.
By: /s/ FREDERIC DORWART
--------------------------------
Frederic Dorwart
Secretary
TRW-25
<PAGE> 8
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------- ------- ------------
<S> <C> <C>
EX 10.1 Stock Purchase Agreement as described in Item 5.
</TABLE>
<PAGE> 1
EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
FOR SERIES A PREFERRED STOCK
OF
MIDDLE BAY OIL COMPANY, INC.
* * * *
DATED SEPTEMBER 4, 1996
<PAGE> 2
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is entered into on
September 4, 1996 (the "Effective Date"), between:
(i) MIDDLE BAY OIL COMPANY, INC. ("Middle Bay");
and,
(ii) KAISER-FRANCIS OIL COMPANY ("Kaiser-Francis").
In consideration of the mutual covenants contained herein, the
adequacy of which is hereby expressly acknowledged, and intending to be legally
bound hereby, Middle and Kaiser-Francis agree as follows:
(1) PURPOSE OF THIS STOCK PURCHASE AGREEMENT. The purpose of this
Agreement is to set forth the terms and conditions on which Middle
Bay shall issue to Kaiser-Francis shares of preferred capital stock
of Middle Bay (the "Preferred Stock").
(2) DESCRIPTION OF PREFERRED STOCK. The Preferred Stock shall be known
as the Series A Preferred Stock. The certificate of designation,
preferences and rights of the Middle Bay Preferred Stock shall be in
the form and content of Exhibit A attached hereto and by this
reference made a part hereof (the "Designation").
(3) AGREEMENT TO ISSUE AND PURCHASE PREFERRED STOCK. Middle Bay hereby
agrees to issue to Kaiser-Francis, and Kaiser-Francis hereby agrees
to purchase from Middle Bay, on and subject to the terms and
conditions hereafter set forth, one million six
<PAGE> 3
hundred sixty six thousand six hundred sixty seven (1,666,667) shares
of Middle Bay Preferred Stock.
(4) CONDITIONS ON WHICH PREFERRED STOCK SHALL BE ISSUED. The Preferred
Stock shall be issued by Middle Bay and purchased by Kaiser-Francis
on the following terms and conditions:
(a) The purchase price (hereafter, the "Purchase Price") for
each share of Preferred Stock shall be six United States
dollars (US$6.00).
(b) The Purchase Price shall be paid by Kaiser-Francis to
Middle Bay at a bank in the United States by wire-transfer
on each Issuance Date (as hereafter defined) in accordance
with such wire-transfer instructions as Middle Bay shall
give to Kaiser-Francis not later than the business day next
preceding the Issuance Date.
(c) The maximum number of shares of Preferred Stock which shall
be issued pursuant to this Agreement shall be one million
six hundred sixty six thousand six hundred sixty seven
(1,666,667).
(d) The shares of Preferred Stock shall be issued on or before
five years from the Effective Date and from time to time
and on such Issuance Dates as are determined in the manner
hereafter set forth.
(e) Not less than 83,333 shares of Preferred Stock shall be
issued on any one Issuance Date.
(f) Each Issuance Date and the number of shares of Preferred
Stock to be issued on each Issuance
<PAGE> 4
Date shall be determined in accordance with the following
paragraph of this Agreement.
(5) DETERMINATION OF ISSUANCE DATE. Each Issuance Date shall be
determined as follows:
(a) Kaiser-Francis may designate an Issuance Date by giving
Middle Bay notice of the number of shares of Preferred
Stock Kaiser-Francis desires to have issued and the date on
which Kaiser-Francis desires to have such shares issued
which date shall be not earlier than the tenth (10th)
business day following the effective date of the notice (an
"Issuance Date Notice").
(b) Middle Bay may designate an Issuance Date by:
(i) Giving Kaiser-Francis notice of the number of
shares of Preferred Stock Middle Bay desires to
issue and the date on which Middle Bay desires
the shares to be issued which date shall be not
earlier than the twentieth (20th) business day
following the effective date of the notice (an
"Issuance Date Notice:); and,
(ii) Delivering to Kaiser-Francis together with the
notice of the Issuance Date a statement of the
intended use by Middle Bay of the proceeds of
the issuance of the
<PAGE> 5
Preferred Stock ( the "Intended Use Statement".
(c) Middle Bay shall designate an Issuance Date in the manner
provided in the preceding subparagraph whenever (i) Middle
Bay has determined to proceed with one or more Projects (as
hereafter defined), (ii) Middle Bay has insufficient funds
to proceed with the Project or Projects without obtaining
additional capital by borrowing, issuing capital stock, or
obtaining additional funds from third parties by other
means (including joint ventures, participations, or sales),
and (iii) the funds required for the Project or Projects
exceed Five Hundred Thousand dollars ($500,000).
(6) CONTENT OF MIDDLE BAY INTENDED USE STATEMENT. Each Intended Use
Statement shall include the following information:
(a) An identification and executive summary of the oil and gas
property acquisition, the oil and gas exploration and
drilling prospect, or other intended use of the proceeds of
the purchase of the Preferred Stock by Kaiser-Francis (the
"Project").
(b) Such underlying geological, engineering, reserve, land,
legal, production and other engineering, financial,
geological, scientific, or other information as Middle Bay
has in its possession related to the Project.
<PAGE> 6
(7) REPRESENTATIONS AND WARRANTIES OF MIDDLE BAY. Middle Bay hereby
represents and warrants to Kaiser-Francis that:
(a) INCORPORATION AND CORPORATE POWER. Middle Bay is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Alabama. Middle
Bay is duly qualified to do business in each state in which
Middle Bay is so required to be qualified.
(b) MIDDLE BAY AUTHORITY. Middle Bay has all the corporate
power and authority necessary and required to own its
properties and to conduct its business as such business is
now being conducted. Middle Bay has fully complied with all
the provisions of the Alabama General Corporation Code in
effect at the Effective Date and will have so complied at
each Issuance Date.
(c) ABSENCE OF RESTRICTIONS ON PREFERRED STOCK. Kaiser-Francis
will acquire at each Issuance Date good and merchantable
title to the Preferred Stock, free and clear of all liens,
claims, options, liabilities, voting trusts, or voting
agreement, charges, encumbrances or other restrictions of
whatsoever nature, except those set forth in this
Agreement.
(d) LAWFUL ISSUANCE OF PREFERRED STOCK. Middle Bay will have
at each Issuance Date full legal power and authorization to
issue and deliver the
<PAGE> 7
Preferred Stock in accordance with this Stock Purchase
Agreement.
(e) CAPITALIZATION OF MIDDLE BAY. The authorized capital stock
of Middle Bay at the Effective Date consists of 7,500,000
shares of capital stock, inclusive of 5,000,000 shares of
common stock, $0.02 par value ("Common Stock"), of which
1,318,917 shares are outstanding and 2,500,000 shares of
undesignated Preferred Stock, $0.02 par value, no shares of
which are outstanding. The shares of Middle Bay Common
Stock which have been issued are validly issued and
outstanding, fully paid and non-assessable. There are no
outstanding subscriptions, conversion privileges, calls,
warrants, options or agreements obligating Middle Bay to
issue, sell or dispose of, or to purchase, redeem or
otherwise acquire any shares of its capital stock except
(i) that certain contingent obligation to repurchase
112,995 shares at $6.00 per share more particularly
described in Footnote (5) to the Middle Bay Financial
Statements as of December 31, 1995 and (ii) 125,000 shares
reserved for issuance under the Middle Bay 1995 Stock
Option and Stock Appreciation Rights Plan.
(f) LAWFUL ISSUANCE OF COMMON STOCK. None of the Middle Bay
Common Stock has been issued or
<PAGE> 8
disposed of in violation of any preemptive rights of any
shareholder nor in violation of any agreement to which
Middle Bay was or is a party.
(g) NO SUBSIDIARIES. Middle Bay has no subsidiaries and does
not own, nor have the right or obligation to acquire, any
shares of equity securities of any corporation.
(h) NON-VIOLATION OF OTHER AGREEMENTS. The execution and
delivery of this Stock Purchase Agreement, and compliance
with its terms and provisions by Middle Bay, will not
breach any agreement by which Middle Bay is bound or any
judicial or administrative order or proceeding by which
Middle Bay is bound.
(i) FINANCIAL STATEMENTS AND OTHER MIDDLE BAY INFORMATION.
Middle Bay has delivered to Kaiser- Francis copies of the
following financial statements and other information
(collectively, the "Financial Statements"):
(i) Middle Bay Financial Statements as of December
31, 1995 and 1994, and Independent Auditor's
Report thereon dated February 23, 1996;
(ii) Middle Bay 1995 Report to Shareholders;
(iii) Middle Bay Proxy Statement for Annual Meeting
held May 31, 1996;
<PAGE> 9
(j) AUDITED FINANCIAL STATEMENTS. The Financial Statements
described in paragraph (i) above (A) have been prepared in
accordance with generally accepted accounting principles,
consistently applied and (B) fairly reflect the financial
condition and results of operations for the indicated
periods.
(k) ALL FINANCIAL STATEMENTS. All of the Financial Statements
are materially correct and materially complete and fairly
reflect the financial condition and results of operations
for the period indicated (except only for such usual
year-end adjustments and footnotes as are omitted).
(l) BOOKS AND RECORDS. The books of account, minute books,
stock record books, and other records of Middle Bay are
materially complete and correct and have been maintained in
accordance with sound business practices and the
requirements of Section 13(b)(2) of the Securities Exchange
Act of 1934, as amended (whether or not Middle Bay is
subject to that Section including the maintenance of an
adequate system of internal control).
(m) MATERIAL LIABILITIES. Middle Bay has no material
liabilities except:
(i) Those reflected or reserved against in the
Financial Statements;
<PAGE> 10
(ii) Those incurred since December 31, 1995 in the
normal course of business consistent with past
practices;
(iii) Those specifically disclosed in the exhibits to
this Stock Purchase Agreement (hereafter, the
"Exhibits").
(n) CONDUCT OF BUSINESS. Since December 31, 1995, and until
the expiration date of this Agreement ("Expiration Date"),
Middle Bay has carried on and will carry on its business
only in the ordinary and normal course, and has not and
will not, without the prior consent of Kaiser-Francis:
(i) Incur any liabilities, commitments or
obligations, contingent or otherwise, or
dispose of any of its assets, except in the
ordinary course of its business and for the
purpose of carrying on the business as a going
concern;
(ii) Except as may result from its normal
operations, make or allow any material adverse
change in its financial position;
(iii) Incur any bank or other institutional debt, or
enter into
<PAGE> 11
any agreement contemplating the borrowing of
money, except pursuant to the credit facilities
described in Exhibit A to this Agreement.
(o) TAX RETURNS/REPORTS. Middle Bay has duly filed all tax
reports and returns required to be filed by it and has duly
paid all taxes and other charges claimed to be due from it
by federal, state and local taxing authorities. Middle Bay
has issued no waivers of the statute of limitation with
respect to unaudited years. No material deficiencies are
expected to arise with respect to unaudited tax returns.
(p) CONTRACTS. Middle Bay has in all material respects
performed and is performing all contractual and other
obligations required to be performed by it.
(q) LITIGATION. There is no pending, or, to the best knowledge
and belief of Middle Bay, threatened claim, litigation,
proceeding, order of any court or governmental agency, or
governmental investigation or inquiry to which Middle Bay
is a party or which involves its business operations, any
of its property or any property leased by it which,
individually or in the aggregate:
(i) Might result in any material adverse change in
the financial
<PAGE> 12
condition, business, prospects, assets,
properties or operations of Middle Bay; or,
(ii) Alleges violation of any law, rule or
regulation;
except that certain litigation described in Exhibit B.
(r) REQUIRED CORPORATE ACTION. The execution, delivery and
consummation of this Agreement has been, or will have been
at the time of the first Issuance Date and at all times
thereafter, duly and validly authorized by the board of
directors of Middle Bay and, to the extent so required, by
the shareholders of Middle Bay.
(s) AUTHORIZED EXECUTION. This Agreement has been duly
authorized, executed and delivered by Middle Bay. The
individual signing this Agreement on behalf of Middle Bay
hereby represents and warrants that such he or she is duly
authorized to sign, execute and deliver this Agreement to
Kaiser-Francis.
(t) ENFORCEABILITY. This Agreement constitutes the legal,
valid, and binding agreement and obligation of Middle Bay
enforceable against it in accordance with its terms, except
as may be limited by applicable bankruptcy, insolvency,
moratorium, receivership, and other similar laws affecting
the rights of creditors generally.
<PAGE> 13
(u) TITLE TO ASSETS; ENCUMBRANCES. Middle Bay has good and
valid title (with respect to fee real estate, good and
valid title shall mean such title as may be insured on
standard title insurance forms with no exceptions
materially and adversely affecting the value or use of the
fee real estate) to its assets, and in each case subject to
no mortgage, pledge, lien, security interest, conditional
sale agreement, or other encumbrance of any nature whether
similar or dissimilar, except:
(i) Such encumbrances which are purchase money
security interests entered into in the ordinary
course of business consistent with past
practice reflected on its books and records;
(ii) Lessors' interests in leased tangible real and
personal property reflected on its books and
records;
(iii) Such encumbrances for taxes and assessments not
yet due and payable;
(iv) Encumbrances as do not materially detract from
the value or interfere with the use or
operation of the asset subject thereto; and,
<PAGE> 14
(v) Encumbrances described on Exhibit C attached
hereto.
(v) ENVIRONMENTAL LAWS. The existence, use and operation of
the assets of are in material compliance with all
applicable statutes, rules and regulations including,
without limiting the generality of the foregoing, all
environmental and zoning laws and the Americans With
Disabilities Act.
(w) COMPLIANCE WITH FINANCIAL COVENANTS. Middle Bay is in
compliance with all material covenants of all loan
agreements or credit facilities to which it is a party.
(x) BROKERAGE FEES. Middle Bay has not incurred nor will it
incur, directly or indirectly, any liability for brokerage,
finder's, financial advisor's or agent's fees for
commissions by virtue of any commitment made by Middle Bay
in connection with this Stock Purchase Agreement or any
transaction contemplated hereby. Middle Bay has no
knowledge that any party has asserted any claim of such
nature.
(y) USE OF PROCEEDS. Middle Bay shall use the proceeds of the
purchase of the Preferred Stock only for the purposes
identified in the Intended Use Statement.
(z) TIME AT WHICH REPRESENTATIONS AND WARRANTIES ARE MADE. The
representations and warranties made
<PAGE> 15
by Middle Bay in this Agreement shall be deemed made at the
Effective Date and at each Issuance Date.
(aa) SURVIVAL AND INDEPENDENCE OF REPRESENTATIONS AND
WARRANTIES. The representations and warranties of Middle
Bay made in this Agreement shall survive each Issuance Date
notwithstanding any investigation or knowledge of
Kaiser-Francis. Each of the representations and warranties
of Middle Bay set forth in this Agreement is a separate and
independent representation and warranty, shall be
cumulative of and in addition to all other warranties and
representations, and shall not limit any other
representation or warranty made herein.
(ab) MIDDLE BAY INDEMNIFICATION. Middle Bay shall indemnify
Kaiser-Francis against, and hold Kaiser-Francis harmless
from, all loss, cost and expense (including interest at the
judgment rate and attorney's fees) arising out of any
material breach by Middle Bay of any representation or
warranty made in this Agreement.
(8) REPRESENTATIONS AND WARRANTIES OF KAISER-FRANCIS. Kaiser-Francis
represents and warrants that:
(a) INCORPORATION AND CORPORATE POWER. Kaiser-Francis is a
corporation duly organized, validly existing and in good
standing under the laws of Delaware. Kaiser-Francis has
all the corporate
<PAGE> 16
power and authority necessary and required to consummate
the transactions contemplated by this Stock Purchase
Agreement.
(b) NON-VIOLATION OF OTHER AGREEMENTS. The execution and
delivery of this Stock Purchase Agreement, and compliance
with its terms and provisions by Kaiser-Francis, will not
breach any agreement by which Kaiser-Francis is bound or
any judicial or administrative order or proceeding by which
Middle Bay is bound.
(c) REQUIRED CORPORATE ACTION. The execution, delivery and
consummation of this Agreement has been, or will have been
at the time of the first Issuance Date and at all times
thereafter, duly and validly authorized by the board of
directors of Kaiser-Francis and, to the extent so required,
by the shareholders of Kaiser-Francis.
(d) AUTHORIZED EXECUTION. This Agreement has been duly
authorized, executed and delivered by Kaiser-Francis. The
individual signing this Agreement on behalf of
Kaiser-Francis hereby represents and warrants that he or
she is duly authorized to sign, execute and deliver this
Agreement to Middle Bay.
(e) ENFORCEABILITY. This Agreement constitutes the legal,
valid, and binding agreement and obligation of
Kaiser-Francis enforceable against it in accordance with
its terms, except as may
<PAGE> 17
be limited by applicable bankruptcy, insolvency,
moratorium, receivership, and other similar laws affecting
the rights of creditors generally.
(f) TIME AT WHICH REPRESENTATIONS AND WARRANTIES ARE MADE. The
representations and warranties made by Kaiser-Francis in
this Agreement shall be deemed made at the Effective Date
and at each Issuance Date.
(g) SURVIVAL AND INDEPENDENCE OF REPRESENTATIONS AND
WARRANTIES. The representations and warranties of
Kaiser-Francis made in this Agreement shall survive each
issuance Date notwithstanding any investigation or
knowledge of Middle Bay. Each of the representations and
warranties of Kaiser-Francis set forth in this Agreement is
a separate and independent representation and warranty,
shall be cumulative of and in addition to all other
warranties and representations, and shall not limit any
other representation or warranty made herein.
(h) KAISER-FRANCIS INDEMNIFICATION. Kaiser-Francis shall
indemnify Middle Bay against, and hold Middle Bay harmless
from, all loss, cost and expense (including interest at the
judgment rate and attorney's fees) arising out of any
material breach by Kaiser-Francis of any representation or
warranty made in this Agreement.
<PAGE> 18
(9) CONDUCT OF BUSINESS PRIOR TO THE EXPIRATION DATE. From the Effective
Date until the Expiration Date Middle Bay shall:
(a) Maintain its corporate existence in good standing;
(b) Maintain the general character of its business and conduct
its business in its ordinary and usual manner;
(c) Maintain proper business and accounting records;
(d) Maintain its properties in normal repair and condition,
normal wear and tear and damage due to fire or other
unavoidable casualty excepted;
(e) Preserve its business organization intact, use its best
efforts to maintain satisfactory relationships with
suppliers, customers and others having business relations
with them, and use its best efforts to procure the
willingness of all of the personnel employed by them
immediately prior to the execution of this Stock Purchase
Agreement who are material to the success of its business
to continue in its employ on substantially the same terms
and conditions as those on which such personnel were
employed immediately prior to the execution of this Stock
Purchase Agreement;
(f) Maintain in full force and effect insurance comparable in
amount and in scope of coverage to that now maintained by
it;
<PAGE> 19
(g) Perform all of its obligations under contracts, leases and
documents relating to or affecting its assets, properties
and businesses; and,
(h) Comply with and perform all obligations and duties imposed
upon it by federal, state and local laws, and all rules,
regulations and orders imposed by federal, state or local
governmental authorities, except as may be contested by
them in good faith by appropriate proceedings.
(i) Except as may be first approved in writing by
Kaiser-Francis or as is otherwise permitted or contemplated
in this Stock Purchase Agreement, conduct the business of,
and all transactions by Middle Bay, only in the usual and
ordinary course.
(j) Make any change in its Articles of Incorporation or Bylaws;
(k) Deliver to Kaiser-Francis, within the times required for
the filing of SEC Forms 10K and 10Q, true and correct
copies of the annual and quarterly financial statements of
Middle Bay which statements shall be prepared in compliance
with the Rules and Regulations of the Securities and
Exchange Commission.
(l) Deliver to Kaiser-Francis annual reports of reserves of oil
and gas and all revisions
<PAGE> 20
thereto, within twenty business days of the completion of
the preparation thereof.
(10) CONDITIONS PRECEDENT TO OBLIGATION OF KAISER-FRANCIS TO PURCHASE AT
ANY GIVEN ISSUANCE DATE. The obligation of Kaiser-Francis to
purchase Preferred Stock at any given Issuance Date (other than an
Issuance Date designated by Kaiser-Francis) shall be subject to each
and all of the following conditions precedent:
(a) The representations, warranties and covenants of Middle Bay
shall be true at the Issuance Date as though such
representations, warranties and covenants were also made at
the Issuance Date.
(b) Middle Bay shall have delivered to Kaiser-Francis and
Kaiser-Francis shall have accepted (which acceptance
Kaiser-Francis may grant or withhold in its sole
discretion) the Intended Use Statement.
(c) Middle Bay shall not then be in breach of any material
obligation of Middle Bay arising under this Agreement or
under the Designation.
(d) Middle Bay shall have not suffered any materially adverse
change in assets, operations or financial results of
operations.
(e) Middle Bay shall have preserved its business organization
and senior management substantially intact.
(f) No litigation, proceeding, investigation or inquiry shall
be pending or threatened to enjoin
<PAGE> 21
or prevent the consummation of the transactions
contemplated by this Stock Purchase Agreement.
(g) Middle Bay shall have delivered to Kaiser-Francis, as of
each such Issuance Date, an opinion of outside counsel
regularly engaged by Middle Bay, in form and substance
acceptable to Kaiser-Francis (provided such acceptance is
not unreasonably withheld or delayed), opining to the
matters set forth in paragraphs 7(a) through 7(f).
In the event any one or more of these conditions shall not have been
fulfilled prior to or at the Issuance Date, Kaiser-Francis may (at
its option exercised in its sole discretion without any obligation to
offer an explanation therefor) decline to purchase the preferred on
that given Issuance Date, without prejudice to the right of both
Middle Bay and Kaiser-Francis to designate additional Issuance Dates.
Kaiser-Francis shall be entitled to waive compliance with any one or
more of the conditions, representations, warranties or covenants in
whole or in part and any such waiver shall be without prejudice to
the rights of Kaiser-Francis arising under Paragraph 7.
(11) CLOSING. The Closing ("Closing") at each Issuance Date shall take
place during regular business hours at a time mutually agreeable to
Middle Bay and Kaiser-Francis. At the Closing Middle Bay and
Kaiser-Francis shall execute and deliver all documents and take all
other actions reasonably necessary to
<PAGE> 22
effect the issuance and purchase of the preferred Stock. Without
limiting the generality of the foregoing, the following actions shall
be taken at the Closing concurrently.
(i) Middle Bay shall deliver a certificate in usual
and customary form evidencing the Preferred
Stock.
(a) Middle Bay shall deliver to Kaiser-Francis a certificate
executed by the chief executive officer of Middle Bay
certifying that the representations and warranties of
Middle Bayset forth herein are true and correct as of the
Issuance Date.
(b) Middle Bay shall deliver the opinion of Middle Bay Counsel
contemplated by paragraph.
(c) Kaiser-Francis shall deliver to Middle Bay an opinion of
outside counsel regularly engaged by Kaiser-Francis, in
form and substance acceptable to Middle Bay (provided such
acceptance is not unreasonably withheld or delayed),
opining to the matters set forth in Paragraphs 8(a) through
(e).
(d) Kaiser-Francis shall make payment for the Preferred Stock
as heretofore provided in this Agreement.
(12) DEFINITION OF EXPIRATION DATE. As used herein the Expiration Date
shall be the first business day following the Closing on the last
Issuance Date.
<PAGE> 23
(13) PROVISIONS RESPECTING PREFERRED STOCK AND COMMON STOCK. The
following provisions apply to the Preferred Stock issued pursuant to
this Agreement and to the shares of Middle Bay Common Stock into
which Kaiser-Francis may from time to time convert the Common Stock
(collectively, the "KF Shares").
(a) The KF Shares, when delivered, will not be registered
pursuant to the Securities Act of 1933 or any securities
laws of any state. The KF Shares will be "restricted
securities" as that term is defined in Securities and
Exchange Commission Rule 144.
(b) The certificates representing the KF Shares will bear the
following restrictive legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, OR THE SECURITIES LAWS OF ANY
STATE. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED
FOR VALUE IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION OF THEM UNDER THE SECURITIES ACT
OF 1933 AND/OR THE SECURITIES ACT OF ANY STATE
HAVING JURISDICTION, OR AN OPINION OF COUNSEL
TO THE CORPORATION THAT SUCH REGISTRATION IS
NOT REQUIRED UNDER SUCH ACT OR ACTS."
(c) Kaiser-Francis represents and warrants to Middle Bay that:
(i) Kaiser-Francis is acquiring the KF Shares for
investment and not with a view to further
distribution.
(ii) Kaiser-Francis is acquiring the KF Shares for
its own account.
<PAGE> 24
(iii) Kaiser-Francis has reviewed the most recent SEC
Form 10K and Form 10Q filed by Middle Bay and
all information respecting Middle Bay which
Kaiser-Francis deem relevant or material to a
decision whether to acquire the KF Shares.
(iv) Middle Bay has made available to Kaiser-Francis
all information which Kaiser-Francis has
requested all information which Kaiser- Francis
deems relevant or material to a decision
whether to acquire the KF Shares.
(v) Kaiser-Francis has the knowledge and experience
necessary to analyze the business and affairs
of Middle Bay and to determine whether to
acquire the KF Shares.
(d) Middle Bay shall on one occasion only, upon ninety (90)
days prior written notice to Middle Bay, file a
registration statement with the Securities and Exchange
Commission and the applicable state securities commissions
of California, Florida, Illinois, New York, Oklahoma,
Texas, and five (5) additional states selected by
Kaiser-Francis, such registration statements, applications
for approval, notices,
<PAGE> 25
or other filings as shall be reasonably necessary to permit
the lawful sale by Kaiser-Francis of the KF Shares under
federal law and under the laws of such states (hereafter
individually and collectively called the "registration" or
"registration statement").
(e) The registration statement shall be filed in compliance
with the Securities Act of 1933, Rule 415 of the Securities
and Exchange Commission, and the laws of each state in
which the registration is filed.
(f) Middle Bay shall use Middle Bay's best efforts to cause the
registration statement to become effective permitting the
resale of the KF Shares without restriction as soon as
possible following the filing of the registration.
(g) Middle Bay shall pay all costs of the registration
(including filing fees, legal, accounting, printing and
transfer agent costs), excluding Kaiser-Francis.
(h) Middle Bay shall submit all registration documents to
Kaiser-Francis reasonably in advance of filing or
finalizing such documents and shall receive, consider and
accept or reject (in Middle Bay's reasonable discretion)
such comments as Kaiser-Francis shall timely make. Middle
Bay shall file the registration statement in accordance
with all applicable laws.
<PAGE> 26
(i) Middle Bay represents and warrants that the registration
statement (including any prospectus) will (i) contain all
statements which are required to be stated therein,
including all such statements respecting Middle Bay (and
its subsidiaries) and the sale by Middle Bay of the KF
Shares, by the Securities Act of 1933 and any applicable
state securities law, (ii) conform in all material respects
with the applicable requirements of such acts, and (iii)
will not contain any untrue statement of a material fact or
fail to state any material fact necessary to make the
statements therein not misleading.
(j) Kaiser-Francis shall advise, cooperate and consult with
Middle Bay in the registration as may be appropriate.
(k) Middle Bay shall keep Kaiser-Francis reasonably advised of
the status of the registration.
(l) If at anytime, Middle Bay has material information not
publicly disclosed which, under the applicable regulations
of the Securities and Exchange Commission precludes the
sale of KF Shares without an effective amendment thereto:
(i) Middle Bay shall promptly advise Kaiser-Francis
and Kaiser-Francis shall cease effecting sales
of the
<PAGE> 27
Shares until an appropriate amendment becomes
effective;
(ii) Middle Bay shall withhold such information from
the public for only so long as the shortest
reasonable period of time a valid reason for
such non-disclosure exists; and,
(iii) Middle Bay shall promptly file an appropriate
amendment and use its best efforts to cause the
amendment to become effective on the same terms
and conditions as provided above for the
registration statement.
(m) Middle Bay shall use its best efforts to maintain the
effectiveness of the registration statement for two years
following the last Issuance Date designated by Middle Bay
or Kaiser-Francis.
(n) Middle Bay hereby represents and warrants to Kaiser-Francis
that Middle Bay shall, from and after the Effective Date
for so long as Kaiser-Francis owns any of the KF Shares
comply with the reporting requirements set forth in
Securities and Exchange Commission Rule 144.
<PAGE> 28
(o) The representations and warranties made in this Paragraph
shall survive for the maximum periods permitted by
applicable law.
(14) MISCELLANEOUS PROVISIONS. The following miscellaneous provisions
shall apply to this Agreement:
(a) All notices or advices required or permitted to be given by
or pursuant to this Agreement, shall be given in writing.
All such notices and advices shall be (i) delivered
personally, (ii) delivered by facsimile or delivered by
U.S. Registered or Certified Mail, Return Receipt Requested
mail, or (iii) delivered for overnight delivery by a
nationally recognized overnight courier service. Such
notices and advices shall be deemed to have been given (i)
the first business day following the date of delivery if
delivered personally or by facsimile, (ii) on the third
business day following the date of mailing if mailed by
U.S. Registered or Certified Mail, Return Receipt
Requested, or (iii) on the date of receipt if delivered for
overnight delivery by a nationally recognized overnight
courier service. All such notices and advices and all
other communications related to this Agreement shall be
given as follows:
If to Middle Bay: John J. Bassett, President
Middle Bay Oil Company, Inc.
115 South Dearborn Street
Mobile, Alabama, 36602
(334) 432-7540 - Telephone
(334) 433-7802 - Facsimile
<PAGE> 29
With Copy to: H. Grady Thrasher, III
Five Concourse Parkway
Suite 2150
Atlanta, Georgia 30328
(770) 804-8000 - Telephone
(770) 804-5555 - Facsimile
If to Kaiser-Francis: Gary R. Christopher
Acquisitions Coordinator
6733 South Yale
Tulsa, Oklahoma 74136
(918) 491-4576 Telephone
(918) 491-4694 Facsimile
With Copy to: Frederic Dorwart
Old City Hall
124 East Fourth Street
Tulsa,OK 74103-5010
(918) 583-9945 - Telephone
(918) 583-8251 - Facsimile
or to such other address as the party may have furnished to
the other parties in accordance herewith, except that
notice of change of addresses shall be effective only upon
receipt.
(b) This Agreement is made and executed in Tulsa County,
Oklahoma.
(c) This Agreement shall be subject to, and interpreted by and
in accordance with, the laws (excluding conflict of law
provisions) of the State of Oklahoma.
(d) This Agreement is the entire Agreement of the parties
respecting the subject matter hereof. There are no other
agreements, representations or warranties, whether oral or
written, respecting the subject matter hereof.
(e) No course of prior dealings involving any of the parties
hereto and no usage of trade shall be
<PAGE> 30
relevant or advisable to interpret, supplement, explain or
vary any of the terms of this Agreement, except as
expressly provided herein.
(f) This Agreement, and all the provisions of this Agreement,
shall be deemed drafted by all of the parties hereto.
(g) This Agreement shall not be interpreted strictly for or
against any party, but solely in accordance with the fair
meaning of the provisions hereof to effectuate the purposes
and interest of this Agreement.
(h) Each party hereto has entered into this Agreement based
solely upon the agreements, representations and warranties
expressly set forth herein and upon his own knowledge and
investigation. Neither party has relied upon any
representation or warranty of any other party hereto except
any such representations or warranties as are expressly set
forth herein.
(i) Each of the persons signing below on behalf of a party
hereto represents and warrants that he or she has full
requisite power and authority to execute and deliver this
Agreement on behalf of the parties for whom he or she is
signing and to bind such party to the terms and conditions
of this Agreement.
(j) This Agreement may be executed in counterparts, each of
which shall be deemed an original. This
<PAGE> 31
Agreement shall become effective only when all of the
parties hereto shall have executed the original or
counterpart hereof. This agreement may be executed and
delivered by a facsimile transmission of a counterpart
signature page hereof.
(k) In any action brought by a party hereto to enforce the
obligations of any other party hereto, the prevailing party
shall be entitled to collect from the opposing party to
such action such party's reasonable litigation costs and
attorneys fees and expenses (including court costs,
reasonable fees of accountants and experts, and other
expenses incidental to the litigation).
(l) This Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective successors and
assigns.
(m) This is not a third party beneficiary contract. No person
or entity other than a party signing this Agreement shall
have any rights under this Agreement.
(n) This Agreement may be amended or modified only in a writing
which specifically references this Agreement.
(o) This Agreement may not be assigned (including performance
by subcontract) by any party hereto.
<PAGE> 32
(p) Nothing in this Agreement shall be construed to create a
partnership or joint venture, nor to authorize any party
hereto to act as agent for or representative of any other
party hereto. Each party hereto shall be deemed an
independent contractor and no party hereto shall act as, or
hold itself out as acting as, agent for any other party
hereto.
(q) A party to this Agreement may decide or fail to require
full or timely performance of any obligation arising under
this Agreement. The decision or failure of a party hereto
to require full or timely performance of any obligation
arising under this Agreement (whether on a single occasion
or on multiple occasions) shall not be deemed a waiver of
any such obligation. No such decisions or failures shall
give rise to any claim of estoppel, laches, course of
dealing, amendment of this Agreement by course of dealing,
or other defense of any nature to any obligation arising
hereunder.
(r) Time is of the essence with respect to each obligation
arising under this Agreement. The failure to timely perform
an obligation arising hereunder shall be deemed a failure
to perform the obligation.
(s) In the event any provision of this Agreement, or the
application of such provision to any person
<PAGE> 33
or set of circumstances, shall be determined to be invalid,
unlawful, or unenforceable to any extent for any reason,
the remainder of this Agreement, and the application of
such provision to persons or circumstances other than those
as to which it is determined to be invalid, unlawful, or
unenforceable, shall not be affected and shall continue to
be enforceable to the fullest extent permitted by law.
(t) Any cause of action for a breach or enforcement of, or a
declaratory judgment respecting, this Agreement shall be
commenced and maintained only in the United States District
Court for the Northern District of Oklahoma or the
applicable Oklahoma state trial court sitting in Tulsa,
Oklahoma and having subject matter jurisdiction.
Dated and effective the date first set forth above.
"Middle Bay"
Middle Bay Oil Company, Inc.
by /s/ John J. Bassett
------------------------------
John J. Bassett
"Kaiser-Francis"
Kaiser-Francis Oil Company
by /s/ Gary R. Christopher
------------------------------
Gary R. Christopher
<PAGE> 34
Exhibit "A"
CERTIFICATE OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION OF
MIDDLE BAY OIL COMPANY, INC.
I.
The name of the corporation is MIDDLE BAY OIL COMPANY, INC., a
corporation organized and existing under and by virtue of the Alabama Business
Corporation Act (the "Corporation").
II.
In accordance with the provisions of Article Ill of the Articles of
Incorporation of the Corporation, the Corporation has the authority to issue
not more than 2,500,000 shares of Preferred Stack of the Corporation with a
$0.02 par value. The Corporation hereby designates a new series of Preferred
Stock. The distinctive designation of such series shall be "Series A Preferred
Stock," and the number of shares constituting such series shall be 1,666,667
shares having a stated value of $6.00 per share. The rights and preferences of
the holders of the Series A Preferred Stock shall be as set forth in the
following paragraphs A through I of this Article.
A. Certain Definitions.
"Common Stock" means, collectively, the Corporation's
Common Stock, par value $.0.02 per share, and any capital stock of
any class of the Corporation hereafter authorized which is not
limited to a fixed sum or percentage of par or stated value in
respect to the rights of the holders thereof to participate in
dividends or in the dissolution of assets upon any liquidation,
dissolution or winding up of the Corporation.
"Dividend Payment Date" shall mean the first day of
January, April, July and October in each year, commencing October
1,1996.
"Dividend Period" shall mean the period beginning on any
Dividend Payment Date and ending on the day before the succeeding
Dividend Payment Date; provided, however, that the first Dividend
Period for each share of Series A Preferred Stock shall commence on
the date of issuance of such share, and the last Dividend Period for
each share of Series A Preferred Stock shall end on the date such
share is converted into Common Stock
"Jun for Securities" means any of the Corporation's equity
securities other than the Series A Shares.
"Liquidation Value" of any Series A Share as of any
particular date will be equal to the sum of $6.00 plus, in the event
of any liquidation, dissolution or winding up of the Corporation,
unpaid dividends on such Series A Share shall be
<PAGE> 35
added to the Liquidation Value of such Share on the payment date in
any liquidation, dissolution or winding up accrued to the close of
business on such payment date.
"ABCA" means the Alabama Business Corporation Act, as
amended from time to time.
"Person" means an individual, a partnership, a corporation,
an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Share" or "Series A Share" means a share of the Series A
Preferred Stock.
B. Dividends: Capital.
1. General Obligation. When and as declared by the
Corporation's Board of Directors and to the
extent permitted under the ABCA, the
Corporation will pay preferential dividends to
the holders of its Series A Preferred Stock as
provided in this paragraph B. Except as
otherwise provided herein, dividends on each
Share will accrue cumulatively on a daily basis
at the rate of eight percent (8%) per annum of
the ('Liquidation Value" thereof from and
including the date of issuance of such Share to
and including the date on which such Share is
converted (without compounding, except insofar
as accrued but unpaid dividends are added to
the Liquidation Value upon any liquidation,
dissolution or winding up in accordance with
the terms hereof). Such dividends will accrue
whether or not they have been declared and
whether or not there are profits, surplus or
other funds of the Corporation legally
available for the payment of dividends. The
date on which the Corporation initially issues
any Share will be deemed to be its "date of
issuance," regardless of the number of times
transfer of such Share is made on the stock
records maintained by or for the Corporation
and regardless of the number of certificates
which may be issued to evidence such Share.
2. Distribution of Partial Dividend Payments. If
at any time the Corporation pays less than the
total amount of dividends then accrued with
respect to the Shares, such payment will be
distributed ratably among the holders of Shares
based upon the aggregate accrued but unpaid
dividends on the Shares held by each such
holder.
3. Capital. Upon issuance of any Series A
Preferred Stock, the entire consideration
received therefor shall be allocated to the
"capital~ of the Corporation, and the
Corporation shalT take no action to reduce its
capital in respect of the Series A Preferred
Stock below the Liquidation Value of all
outstanding Series a Preferred Stock.
<PAGE> 36
C. Liquidation. Upon any liquidation, dissolution or winding
up of the Corporation, the holders of Shares will be
entitled to be paid, before any distribution or payment is
made upon any Junior Securities, an amount in cash equal to
the aggregate Liquidation Value (including the amount of
any accrued but unpaid dividends) of all Shares
outstanding. If, upon any such liquidation, dissolution or
winding up of the Corporation, the Corporation's assets to
be distributed among the holders of the Shares are
insufficient to permit payment to such holders of the
aggregate amount which they are entitled to be paid, then
the entire assets to be distributed will be distributed
ratably among such holders based upon the aggregate
Liquidation Value of the Shares held by each such holder.
The Corporation will mail written notice of such
liquidation, dissolution or winding up not less than 60
days prior to the payment date stated therein, to each
record holder of Shares. Neither the consolidation or
merger of the Corporation into or with any other
corporation or corporations, the sale or transfer by the
Corporation of all or any part of its assets nor the
reduction of the capital stock of the Corporation will be
deemed to be a liquidation, dissolution or winding up of
the Corporation within the meaning of this paragraph C.
D. Voting Rights. Except as provided otherwise by law, the
Series A Preferred Stock will have no voting rights.
E. Conversion.
1. Conversion by Holder. At any time after
issuance of the Shares, any holder of Shares
may convert all or any portion of the Shares
held by such holder into shares of Common
Stock, at a ratio (i) at any time on or before
January 1, 1998, two shares of Common Stock for
each Share of Preferred Stock and (ii) at any
time on or after January 1, 1998, at a ratio of
two shares of Common Stock for each Series A
Preferred Share times 1.08 times the number of
full years (excluding partial years) which have
elapsed since January 1(1998 to the date of
conversion. Any such conversion will be deemed
effected at the close of business on the date
which the certificate or certificates
representing the Shares to be converted have
been delivered by the holder to the Corporation
at its principal office, together with a
request for conversion of such Shares.
2. Conversion Procedures.
a. At such time as a conversion has
been effected, the rights of the
holder of such Shares as such holder
will cease and the Person or Persons
in whose name or names any
certificate or certificates for
shares of Common Stock are to be
issued upon such conversion will be
deemed to have become the holder or
holders of record of the shares of
Common Stock represented thereby.
<PAGE> 37
b. As soon as possible after a
conversion has been effected, the
Corporation will deliver to the
holder of Shares being converted:
(1) A certificate or certificates
representing the number of
shares of Common Stock
issuable by reason of such
conversion in such name or
names and such denomination
or denominations as the
converting holder has
specified;
(2) Payment in an amount equal to
all accrued dividends through
the date of conversion with
respect to each Share
converted, which have not
been paid prior thereto; and
(3) A certificate representing
any Shares which were
represented by the
certificate or certificates
delivered to the Corporation
in connection with such
conversion but which were not
converted.
c. If for any reason the Corporation is
unable to pay any accrued dividends
payable on the Shares being
converted, the Corporation will pay
such dividends to the converting
holder as soon thereafter as funds
of the Corporation are legally
available for such payment. At the
request of any such converting
holder, the Corporation will provide
such holder with written evidence of
its obligation to such holder.
d. The issuance of certificates for
shares of Common Stock upon
conversion of Shares will be made
without charge to the holders of
such Shares for any issuance tax in
respect thereof or other cost
incurred by the Corporation in
connection with such conversion and
the related issuance of shares of
Common Stock. Upon conversion of
each Share, the Corporation will
take all such actions as are
necessary in order to insure that
the Common Stock issuable with
respect to such conversion will be
validly issued, fully paid and
nonassessable.
e. The Corporation will not close its
books against the transfer of Shares
or of Common Stock issued or
issuable upon conversion of Shares
in any manner which interferes with
the timely conversion of Shares.
F. Optional Redemption.
1. The Series A Preferred Stock may be redeemed,
in whole or in part, upon notice given as
provided in paragraph F.2 (but subject to the
terms and conditions hereinafter set forth), at
the option of
<PAGE> 38
the Corporation, at any time and from time to
time after January 1, 2007, at a redemption
price of $6.00 per Share, together with
dividends accrued and unpaid thereon to the
date of redemption (the "Redemption Price~), so
long as funds are legally available for such
redemption.
2. If pursuant to paragraph F.2 the Corporation
shall redeem any shares of Series A Preferred
Stock, the Corporation shall give written
notice of such redemption to each holder of
record of Series A Shares to be redeemed not
less than thirty (30) nor more than ninety (90)
days prior to the date fixed for redemption, by
certified mail enclosed in a postage-paid
envelope addressed to such holder at such
holder's address as the same shall appear on
the books of the Corporation. Such notice shall
(i) state that the Corporation has elected to
redeem such Shares, (ii) state the date fixed
for redemption, (iii) state the Redemption
Price and (iv) call upon such holder to
surrender to the Corporation on or after said
date at its principal place of business
designated in such notice a certificate or
certificates representing the number of Series
A Shares to be redeemed in accordance with such
notice. On or after the date fixed in such
notice for redemption, each holder of shares of
Series A Preferred Stock to be so redeemed
shall present and surrender the certificate or
certificates for such Shares to the Corporation
at the place designated in said notice, and
thereupon the Redemption Price of such Shares
shall be paid to, or to the order of the Person
whose name appears on such certificate or
certificates as the owner thereof. From and
after the date fixed in any such notice as the
date for redemption, unless default shall be
made by the Corporation in providing for the
payment of the Redemption Price pursuant to
such notice, all rights of the holders of the
Series A Shares so redeemed, except the right
to receive the Redemption Price (but without
interest thereon), shall cease and terminate.
If less than all of the outstanding Series A
Shares are to be redeemed, the Shares to be
redeemed shall be allocated among the holders
thereof in proportion to the respective number
of Shares held by them.
3. My Series A Shares redeemed by the Corporation
shall be retired but may be reissued by the
Corporation from time to time by action of its
Board of Directors.
G. Covenants of Corporation. So long as any of the Shares are
outstanding, the Corporation shall do all of the following
(the "Covenants"):
1. Maintain its corporate existence in good
standing;
2. Maintain the general character of its business
and conduct its business in its ordinary and
usual manner;
3. Maintain proper business and accounting
records;
<PAGE> 39
4. Comply with and perform all material
obligations and duties imposed upon it by
federal, state and local laws and all rules,
regulations and orders imposed by federal,
state or local governmental authorities, except
as may be contested by them in good faith by
appropriate proceedings;
5. Make any change in its Articles of
Incorporation or Bylaws;
6. Deliver to the holders of the Series A
Preferred Shares, within the times required for
the filing of SEC Forms 10-K and 1 0-Q, true
and correct copies of the annual and quarterly
financial statements of the Corporation, which
statements shall be prepared in compliance with
the Rules and Regulations of the Securities and
Exchange Commission;
7. Deliver to the holders of the Series A
Preferred Shares annual reports of reserves of
oil and gas and all revisions thereto within
twenty (20) business days of the completion of
the preparation thereof
8. Comply with all financial covenants in all loan
agreements or credit facilities to which the
Corporation is a party; and
9. Timely make all filings and submit all reports
required by the Rules and Regulations of the
Securities and Exchange Commission.
H. Voting. The holders of the Series A Preferred Stock shall
have the sole and exclusive right to vote, in lieu of the
vote of holders of Common Stock or any other capital stock
of the Corporation, in the event of any Event of Default.
An Event of Default shall be deemed to have occurred in the
event (i) the Corporation shall fail to declare or timely
pay any dividend on the Series A Preferred Stock or (ii)
there is a breach of any of the Covenants which remains
uncured thirty (30) calendar days after the Corporation
shall have received notice of such breach from any holder
of any of the Shares.
Notices. Except as otherwise expressly provided, all
notices referred to herein will be in writing and will be
deemed to have been given either when delivered personally
or three business days after having been mailed by
registered or certified mail, return receipt requested,
postage prepaid (i) to the Corporation, at its principal
executive offices, and (ii) to any stockholder at such
holder's address as it appears in the stock records of the
Corporation (unless otherwise indicated by any such
holder).
J. Remedies. The remedies afforded the holders of Shares in
this paragraph are cumulative and not sole or exclusive.
K Conflict With Other Provisions. In the event of any
conflict between the provisions of this Section and any
other provisions of this Certificate of
<PAGE> 40
Amendment to the Articles of Incorporation, then the
provisions of this Section shall govern and control.
IN WITNESS WHEREOF, Middle Bay Oil Company, Inc. has caused this
Certificate of Amendment to be signed by its President and attested by its
Secretary this _________ day of August, 1996.
MIDDLE BAY OIL COMPANY, INC.
ATTEST: By:
---------------------------
President
- ------------------------------
Secretary
STATE OF ALABAMA MOBILE COUNTY
I, ___________________________________________ the undersigned
authority in and for said County and State, do hereby certify that JOHN J.
BASSETT and LYNN M. DAVIS, whose names as President and Secretary,
respectively, of Middle Bay Oil Company, Inc., an Alabama corporation, are
signed to the foregoing instrument and who are known to me, acknowledged before
me on this day that, being informed of the contents of this instrument, they,
as such officers and with full authority, executed the same voluntarily for and
as an act of the corporation.
Given under my hand and official seal on this the _________ day of August, 1996.
----------------------------
Notary Public
My Commission
Expires:
--------------------------
<PAGE> 41
Exhibit "B"
Pursuant to Section 7(q) of the Agreement:
(q) Litigation.
The only lawsuit or litigation to which Middle Bay is a party is a
lawsuit styled Shade & Company, et al vs. Seagull Mid-South, Inc.,
et al, case no. 0-94-837 in the District Court in and for
Pittsburg County, Oklahoma. This case is an action to quiet title
and to establish ownership by plaintiffs of an undivided 1/6 of
8/8ths of production as an overriding royalty interest in certain oil
and gas leases in Pittsburg County, Oklahoma. Middle Bay is a
defendant because it is a minor working interest owner in one or
more of the leases. The litigation is not expected to have a
material adverse effect on Middle Bay's business or financial
circumstances.
<PAGE> 42
Exhibit "C"
Pursuant to Section 7(u) (v) of the Agreement:
(u) Title to ASSETS; ENCUMBRANCES.
Sank of Oklahoma, N.A., pursuant to a Revolving Credit and Term Loan
Agreement dated March 31, 1996, has a first mortgage lien and
security interest in and to substantially all of Middle Bay's assets,
securing a $6,000,000 loan.
