UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
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Preliminary
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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MEXCO
ENERGY CORPORATION
(Name of
Registrant as Specified In Its Charter)
_________________________________________________________
(Name of
Person(s) Filing Proxy Statement, if other than the Registrant)
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of Filing Fee (Check the appropriate box):
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0-11.
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(1)
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of each class of securities to which transaction
applies:
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_____________________________________________________________________________
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(2)
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Aggregate
number of securities to which transaction
applies:
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_____________________________________________________________________________
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(3)
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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):
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(4)
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Proposed
maximum aggregate value of
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previously. Identify the previous filing by registration statement number,
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_____________________________________________________________________________
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MEXCO
ENERGY CORPORATION
214
W. Texas Ave., Suite 1101
Midland,
Texas 79701
American
Stock Exchange – MXC
July 15,
2009
Dear
Fellow Stockholder:
I would
like to extend a personal invitation for you to join us at our Annual Meeting of
Stockholders of Mexco Energy Corporation to be held on Tuesday, September 15,
2009, at 10:00 a.m., C.S.T., at the Petroleum Club of Midland, 501 West Wall,
Midland, Texas.
At this
year’s meeting, you will be asked to re-elect the Board of Directors, ratify the
appointment of Grant Thornton, LLP as our independent auditors and approve the
Mexco Energy Corporation 2009 Employee Incentive Stock Plan. Details
regarding each of the proposals are described in the accompanying Notice of
Annual Meeting of Shareholders and Proxy Statement.
Whether
or not you plan to attend the Annual Meeting of Stockholders, we hope you will
vote as soon as possible. You may vote by signing, dating and mailing
the enclosed proxy or voting instructions card. You may also vote by
internet or by telephone. Please review the instructions on the proxy
or voting instruction card regarding each of these voting options.
Your vote is very important to us and
our business. We value your opinions and encourage you to participate
in this year’s Annual Meeting by voting your proxy.
Thank you for your continued interest
in Mexco Energy Corporation.
Very truly yours,
Nicholas C. Taylor
President and Chief Executive
Officer
MEXCO
ENERGY CORPORATION
214
W. Texas Ave., Suite 1101
Midland,
Texas 79701
(432)
682-1119
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
be held September 15, 2009
TO THE
STOCKHOLDERS:
Notice is hereby given that the Annual
Meeting of the Stockholders of MEXCO ENERGY CORPORATION (“the Company”) will be
held at the Petroleum Club of Midland, 501 West Wall, Midland, Texas 79701, at
10:00 a.m. on September 15, 2009, for the following purposes:
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1.
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Electing
Directors of the Company.
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2.
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Considering
and voting upon a proposal to appoint Grant Thornton LLP as the
independent registered public accounting firm of the Company for the
fiscal year ending March 31, 2010.
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3.
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Considering
and voting upon a proposal to approve the Mexco Energy Corporation 2009
Employee Incentive Stock Plan.
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4.
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Considering
all other matters as may properly come before the
meeting.
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The Board of Directors has fixed the
close of business on July 24, 2009, as the record date for the determination of
stockholders entitled to notice of and to vote at the meeting and at any
adjournment or adjournments thereof.
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DATED
this 15th day of July 2009.
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BY
ORDER OF THE BOARD OF DIRECTORS
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DONNA
GAIL YANKO
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CORPORATE
SECRETARY
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To
be sure your shares are represented at the Annual Meeting of Stockholders,
please vote by completing, dating, signing and returning your pre-addressed
postage-paid Proxy Card as soon as possible. You may also vote by
internet or by telephone. See the enclosed proxy card for more
information. Any stockholder granting a proxy may revoke the same at
any time prior to its exercise by executing a subsequent proxy or by written
notice to the Secretary of the Company or by attending the meeting and by
withdrawing the proxy. You may vote in person at the Annual Meeting of
Stockholders even if you send in your Proxy Card. The ballot you
submit at the meeting will supersede any prior vote.
Important
Notice Regarding the Availability of Proxy Materials for the
Shareholder
Meeting to be Held on September 15, 2009:
Our
Annual Report on Form 10-K and this Proxy Statement are available
at
www.edocumentview.com/MXC
TABLE OF
CONTENTS
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Solicitation
of Proxy
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2
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Purpose
of Meeting
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2
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Voting
Rights
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2
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Proposal
1: Election of Directors
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3
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Mexco
Energy Corporation Board of Directors
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3
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Meetings
and Committees of Board of Directors
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4
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Corporate
Governance and Code of Business Conduct
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5
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Director
Compensation
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6
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Employee
Incentive Stock Option Plans
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6
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Named
Executive Officers Who Are Not Directors
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7
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Compensation
Discussion & Analysis
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7
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Defined
Benefit Plans and Other Arrangements
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9
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Potential
Payments upon a Change of Control or Termination
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9
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Executive
Compensation
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9
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Compensation
Committee Interlocks and Insider Participation
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10
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Compensation
Committee Report
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10
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Certain
Relationships and Related Transactions
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10
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Option
Grants for Fiscal 2009
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10
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Option
Exercises for Fiscal 2009
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11
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Outstanding
Equity Awards at Fiscal Year-End 2009
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11
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Security
Ownership of Certain Beneficial Owners and Management
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12
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Section
16(a) Beneficial Ownership Reporting Compliance
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12
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Proposal
2: Ratification of Selection of Independent Registered Public
Accounting Firm
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12
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Report
of the Audit Committee
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13
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Audit
Fees and Services
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13
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Proposal
3: Approval of the 2009 Employee Incentive Stock
Plan
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14
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Expenses
of Solicitation
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17
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Access
to Reports
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Stockholders
Proposals for Next Annual Meeting
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Householding
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Other
Matters
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MEXCO
ENERGY CORPORATION
214
W. Texas Ave., Suite 1101
Midland,
Texas 79701
PROXY
STATEMENT
ANNUAL
MEETING OF STOCKHOLDERS
To
Be Held Thursday, September 15, 2009
SOLICITATION
OF PROXY
The
accompanying proxy is solicited on behalf of the Board of Directors of Mexco
Energy Corporation (the "Company") for use at the Annual Meeting of Stockholders
to be held on Tuesday, September 15, 2009, and at any adjournment or
postponements thereof. In addition to the use of the mails, proxies
may be solicited by personal interview, telephone and telegraph by officers,
directors and other employees of the Company, who will not receive additional
compensation for such services. The Company may also request
brokerage houses, nominees, custodians and fiduciaries to forward the soliciting
material to the beneficial owners of stock held of record and will reimburse
such persons for forwarding such material. The Company will bear the
cost of this solicitation of proxies. Such costs are expected to be
nominal. Proxy solicitation will commence with the mailing of this
Proxy Statement on or about July 31, 2009.
Any
stockholder giving a proxy has the power to revoke the same at any time prior to
its exercise by executing a subsequent proxy or by written notice to the
Secretary of the Company or by attending the meeting and withdrawing the
proxy.
PURPOSE
OF MEETING
As stated in the Notice of Annual
Meeting of Stockholders accompanying this Proxy Statement, the business to be
conducted and the matters to be considered and acted upon at the annual meeting
are as follows:
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1.
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Electing
Directors of the Company;
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2.
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Considering
and voting upon a proposal to appoint Grant Thornton LLP as the
independent registered public accounting firm of the Company for the
fiscal year ending March 31, 2010;
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3.
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Considering
and voting upon a proposal to approve the Mexco Energy Corporation 2009
Employee Incentive Stock Plan; and
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4.
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Considering
all other matters as may properly come before the
meeting.
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VOTING
RIGHTS
The
voting securities of the Company consist solely of common stock, par value $0.50
per share ("Common Stock").
The
record date for stockholders entitled to notice of and to vote at the meeting is
the close of business on July 24, 2009, at which time there were 1,881,616
shares of Common Stock entitled to vote at the meeting. Stockholders
are entitled to one vote, in person or by proxy, for each share of Common Stock
held in their name on the record date.
Stockholders representing a majority of
the Common Stock outstanding and entitled to vote must be present or represented
by proxy to constitute a quorum.
All
proposals will require the affirmative vote of a majority of the Common Stock
present or represented by proxy at the meeting and entitled to vote
thereon. Cumulative voting for directors is not
authorized.
Abstentions
and broker non-votes (shares held by brokers or nominees as to which they have
no discretionary power to vote on a particular matter and have received no
instructions from the beneficial owners of such shares or persons entitled to
vote on the matter) will be counted for the purpose of determining whether a
quorum is present. For purposes of determining the outcome of any
matter to be voted upon as to which the broker has indicated on the proxy that
the broker does not have discretionary authority to vote, these shares will be
treated as not present at the meeting and not entitled to vote with respect to
that matter, even though those shares are considered to be present at the
meeting for quorum purposes and may be entitled to vote on other
matters. Abstentions, on the other hand, are considered to be present
at the meeting and entitled to vote on the matter from which
abstained.
With regard to the election of
directors, votes may be cast in favor of or withheld from each
nominee. Votes that are withheld will be excluded from the vote and
will have no effect. Broker non-votes and other limited proxies will
have no effect on the outcome of the election of directors.
With
regard to the proposal to ratify the appointment of Grant Thornton LLP as the
independent registered public accounting firm of the Company for the fiscal year
ending March 31, 2010, and the proposal to approve the Mexco Energy Corporation
2009 Employee Incentive Stock Plan, an abstention will have the same effect as a
vote against the proposal. Broker non-votes and other limited proxies will have
no effect on the outcome of the vote with respect to any of such
proposals.
If the
enclosed Proxy is properly executed and returned prior to the Annual Meeting,
the shares represented thereby will be voted as specified therein. IF
A SHAREHOLDER DOES NOT SPECIFY OTHERWISE ON THE RETURNED PROXY, THE SHARES
REPRESENTED BY THE SHAREHOLDER'S PROXY WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES LISTED BELOW UNDER "ELECTION OF DIRECTORS", FOR THE APPOINTMENT OF
GRANT THORNTON LLP, FOR THE APPROVAL OF THE MEXCO ENERGY COPORATION 2009
EMPLOYEE INCENTIVE STOCK PLAN AND ON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS THEREOF.
PROPOSAL
1: ELECTION OF DIRECTORS
At the
Annual Meeting to be held on September 15, 2009, five persons are to be elected
to serve on the Board of Directors for a term of one year and until their
successors are duly elected and qualified. All of the nominees have
announced that they are available for reelection to the Board of
Directors. The Company's nominees for the five directorships
are:
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Thomas
R. Craddick
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Arden
R. Grover
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Nicholas
C. Taylor
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Thomas
Graham, Jr.
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Jack
D. Ladd
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The
election of each nominee requires that the number of votes cast “FOR” the
nominee’s election exceed the votes cast “AGAINST” that nominee’s
election.
The Board of Directors recommends
that you vote “FOR” the election of each of the Director
nominees.
MEXCO
ENERGY CORPORATION BOARD OF DIRECTORS
The Board
of Directors currently consists of one person who is an employee of the Company
and four persons who are not employees of the Company (three of which are
outside directors). The Board of Directors has determined that each
of the three outside directors, namely Messrs. Graham, Ladd and Grover are
independent in accordance with American Stock Exchange rules and under the
Exchange Act. Set forth below are the names, ages and positions of
the Company's directors as of July 15, 2009.
The Board of Directors elects executive
officers annually. Executive officers hold office until their
successors are elected and have qualified.
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Name
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Age
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Position
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Thomas
R. Craddick
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65
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Director
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Thomas
Graham, Jr.
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75
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Chairman
of the Board of Directors
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Arden
R. Grover
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83
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Director
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Jack
D. Ladd
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59
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Director
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Nicholas
C. Taylor
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71
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President,
Chief Executive Officer and
Director
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Set forth
below are descriptions of the principal occupations during at least the past
five years of the Company's current directors.
NICHOLAS C. TAYLOR
was elected
President, Chief Executive Officer, Treasurer and Director of the Company in
April 1983 and continues to serve as President, Chief Executive Officer and
Director on a part time basis, as required. Mr. Taylor served as
Treasurer until March 1999. From July 1993 to the present, Mr. Taylor
has been involved in the independent practice of law and other business
activities including independent oil and gas exploration and
production. For more than the prior 19 years, he was a director and
shareholder of the law firm of Stubbeman, McRae, Sealy, Laughlin & Browder,
Inc., Midland, Texas, and a partner of the predecessor firm. In 1995
he was appointed by the Governor of Texas to the State Securities Board through
January 2001. In addition to serving as chairman for four years, he
continued to serve as a member until 2004. In November 2005 he was
appointed by the Speaker of the House to the Texas Ethics Commission for a term
of four years.
THOMAS R. CRADDICK
was elected
to the Board of Directors of the Company in March 1998. Since 1968 to
the present, Mr. Craddick has served as a State Representative and served as
Speaker of the House of Representatives of the State of Texas from 2003 through
2008. Throughout his tenure of the past 21 sessions of the
Legislature, Representative Craddick has served on various committees and
conferences. Mr. Craddick is the sales representative for Mustang Mud
as well as the owner of Craddick Properties and owner and President of Craddick,
Inc., both of which invest in oil and gas properties and real
estate.
THOMAS GRAHAM, JR.*
was
appointed Chairman of the Board of Directors of the Company in July 1997, having
served as a director from 1990 through 1994. From July 1994 through
July 1997, Mr. Graham served as a United States Ambassador. For
nearly fifteen years prior thereto, Mr. Graham served as the General Counsel,
United States Arms Control and Disarmament Agency, as well as Acting Director
and as Acting Deputy Director of such Agency successively, in 1993 and
1994. In these and prior positions he held a senior position in every
arms control negotiation in which the United States participated from 1970 –
1997. Mr. Graham currently serves as Chairman of the Board of Thorium
Power Ltd. and as Chairman of the Board of the Cypress Fund for Peace and
Security. He is a Fellow at the Eisenhower Institute. In
addition, Mr. Graham is a Board Member of the United States Industry Coalition
(helping U.S. business in Russia), Chairman of the Bi-partisan Security Group
(working with the U.S. Congress) and adjunct professor at Stanford University
and the University of Washington (Seattle). Mr. Graham is the author
of “Disarmament Sketches”, University of Washington Press, 2002 and “Common
Sense on Weapons of Mass Destruction”, University of Washington Press, 2004, as
well as, the co-author of “Cornerstones of Security”, University of Washington
Press, 2003 and “Spy Satellites and Other Intelligence Technologies that Changed
History”, University of Washington Press, 2007.
ARDEN R. GROVER
* was elected
to the Board of Directors of the Company in September 2001. Mr.
Grover has been an independent oil and gas producer for more than 40 years and
is the managing partner of Grover Family L.P., an oil and gas producing
company. He is a Director of Glencoe Resources Ltd., Calgary,
Alberta, Canada and an advisory Director of Caithness Resources Inc., a
geothermal energy company. Mr. Grover is a past President of the
Permian Basin Petroleum Association.
JACK D. LADD
* was elected to
the Board of Directors of the Company in March 1998. In July 2007 Mr.
Ladd began serving as Dean of the School of Business of the University of Texas
at Permian Basin. Prior to his appointment as Dean, Mr. Ladd served
for 2 ½ years as Director of the John Ben Shepherd Leadership Institute of the
UTPB. Previously, Mr. Ladd was a shareholder of the law firm of
Stubbeman, McRae, Sealy, Laughlin & Browder, Inc., Midland, Texas for 28
years. Mr. Ladd was a partner in various real estate partnerships and
is an arbitrator for the National Association of Securities Dealers, and a
mediator certified by the Attorney Mediation Institute. Mr. Ladd is a
director for four other for-profit corporations other than the
Company. These include Thorium Power, Ltd., Map Resources, Inc.,
Renovar Energy Corporation and Dawson Geophysical Company. Mr. Ladd
also serves on numerous philanthropic boards. In 2002, Mr. Ladd was appointed by
the Governor of Texas as a member of the State Securities Board to serve a six
year term and in 2004 to serve as Chairman thereof, and in 2003, the Select
Committee on Education of the State of Texas.
*Indicates
independence has been determined by the Board of Directors in accordance with
the American Stock Exchange rules.
The
Board of Directors recommends that you vote
FOR
the
election of each of the Director nominees.
MEETINGS
AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board
has responsibility for establishing broad corporate policies and for overall
performance and direction of the Company. The Board is elected by the
Stockholders to oversee their interest in the long-term health and the overall
success of the Company's business and its financial strength. The
Board serves as the ultimate decision-making body of the Company, except for
those matters reserved to or shared with the Stockholders. The Board
selects and oversees the members of senior management, who are charged by the
Board with conducting the business of the Company. Members of the
Board stay informed of the Company’s business by participating in Board and
committee meetings, by reviewing analyses and reports sent to them regularly,
and through discussions with the Chief Executive Officer and Chief Financial
Officer. During fiscal year ended March 31, 2009, the Board of
Directors held four meetings. No member of the board attended less
than 75% of the fiscal 2009 meetings held while serving as a
director.
The Board
of Directors has established the following standing
committees: audit, compensation and nominating. In
accordance with Section 121A of the American Stock Exchange rules and the
Exchange Act, the Board must affirmatively determine the independence of each
director. The Board of Directors has determined each of the following
directors to be an "independent director" as such term is defined in said
rules: Thomas Graham, Jr., Arden R. Grover and Jack D.
Ladd. In this proxy statement these three directors are referred to
individually as an "Independent Director" and collectively as the "Independent
Directors." The Board is comprised of a majority of Independent
Directors and the Audit Committee, the Compensation Committee and the Nominating
Committee are comprised entirely of Independent Directors.
The table
below shows the current membership of each committee of the Board and the number
of meetings each committee held in fiscal 2009:
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Director
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Audit
|
Compensation
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Nominating
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Thomas
R. Craddick
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Thomas
Graham, Jr.
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X
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X
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X
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Arden
R. Grover
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X
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Chair
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Chair
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Jack
D. Ladd
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Chair
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X
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X
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Nicholas
C. Taylor
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2009
Meetings
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4
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4
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1
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Audit
Committee
. The Audit Committee is a standing committee of the
Board of Directors and currently consists of Messrs. Ladd, Grover and Graham,
all of whom are Independent Directors. The Board of Directors has
determined that Mr. Ladd, who currently serves as the Chairman of the Audit
Committee, is an “audit committee financial expert” (as that term is defined
under the applicable SEC rules and regulations) based on the Board’s qualitative
assessment of Mr. Ladd's level of knowledge, experience (as described above) and
formal education. The functions of the Audit Committee are to
determine whether management has established internal controls which are sound,
adequate and working effectively; to ascertain whether the Company’s assets are
verified and safeguarded; to review and approve external audits; to review audit
fees and appointment of the Company’s independent public accountants; and to
review non-audit services provided by the independent public
accountants. The Audit Committee held four meetings during fiscal
year ended March 31, 2009. All members of the Audit Committee
attended these meetings in person or telephonically. The Audit
Committee operates under a written charter adopted by the Board of Directors in
fiscal 2004. The charter is posted on the Company’s website at
http://www.mexcoenergy.com
in the “Corporate Governance” area of the “Investor Relations”
section. The report of the Audit Committee for fiscal year 2009 is
included in this proxy statement on page 13.
Compensation
Committee
. The Compensation Committee is a standing committee
of the Board of Directors and currently consists of Messrs. Grover, Chairman,
Ladd, and Graham, all of whom are Independent Directors. The primary
function of the Compensation Committee is to determine compensation for the
officers of the Company that is competitive and enables the Company to motivate
and retain the talent needed to lead and grow the Company’s
business. The Compensation Committee held four meetings during the
fiscal year ended March 31, 2009. All members of the Compensation
Committee attended such meetings in person or telephonically. The
Compensation Committee currently operates under a written charter adopted and
approved by the Board of Directors as of June 15, 2005. The charter
is posted on the Company’s website at
http://www.mexcoenergy.com
in the “Corporate Governance” area of the “Investor Relations”
section. The report of the Compensation Committee for fiscal year
2009 is included in this proxy statement on page 10.
Nominating
Committee
. The Nominating Committee is a standing committee of
the Board of Directors and currently consists of Messrs. Grover, Chairman, Ladd
and Graham, all of whom are Independent Directors. The Nominating
Committee held one meeting during the fiscal year ended March 31, 2009, at which
all members of the Nominating Committee were present in person or
telephonically. The primary function of the Nominating Committee is
to determine the slate of Director nominees for election to the Company’s Board
of Directors. The Nominating Committee considers candidates
recommended by security holders, directors, officers and outside sources and
considers criteria such as business experience, ethical standards and personal
qualifications in evaluating all such nominees. Stockholders who wish
to have their nominees for election to the Board of Directors considered by the
Nominating Committee may submit such nomination to the Secretary of the Company
for receipt not less than 80 days prior to the date of the next Annual Meeting
of stockholders and include (i) the name and address of the stockholder making
the nomination, (ii) information regarding such nominee as would be required to
be included in the proxy statement, (iii) a representation of the stockholder,
and the stockholder’s intent to appear in person or by proxy at the meeting to
propose such nomination, and (iv) the written consent of the nominee to serve as
a director if so elected. The Nominating Committee currently operates
under a written charter adopted and approved by the Board of Directors as of
June 15, 2005. The charter is posted on the Company’s website at
http://www.mexcoenergy.com
in the “Corporate Governance” area of the “Investor Relations”
section.
Shareholders
may request a free printed copy of any of our committee charters by contacting
our Corporate Secretary at
mexco@sbcglobal.net
or by calling (432) 682-1119.
CORPORATE
GOVERNANCE AND CODE OF BUSINESS CONDUCT
Our Board
of Directors and management are dedicated to exemplary corporate governance and
high standards of conduct and ethics. The Board adopted our Code of
Ethics and Business Conduct to inspire continuing dedication to the fundamental
principles of honesty, loyalty, fairness and forthrightness. Our Code
of Ethics and Business Conduct can be found at
www.mexcoenergy.com
by clicking on “Investor Relations” then "Corporate
Governance". Shareholders may request a free printed copy of our Code
of Ethics and Business Conduct by contacting our Corporate Secretary at
mexco@sbcglobal.net
or by calling (432) 682-1119.
DIRECTOR
COMPENSATION
The following table sets forth the
total compensation paid or earned by each of the Company’s directors, who are
not executive officers, during fiscal year 2009.
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Director
|
Fees
Paid in Cash (1)
|
Stock
Option Awards (3)
|
All
Other Compensation
|
Total
|
||||||||||||
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Thomas
R. Craddick (4)
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$ | 6,000 | $ | - | $ | - | $ | 6,000 | ||||||||
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Thomas
Graham, Jr. (2)
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$ | 29,000 | $ | 2,333 | $ | - | $ | 31,333 | ||||||||
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Arden
R. Grover
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$ | 6,000 | $ | - | $ | - | $ | 6,000 | ||||||||
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Jack
D. Ladd
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$ | 6,000 | $ | - | $ | - | $ | 6,000 | ||||||||
|
(1)
|
Director’s
fees are paid at the rate of $1,500 per director
quarterly.
|
|
(2)
|
Thomas
Graham, Jr. is a non-executive Chairman of the Board for which, through
February 2009, he was paid a fee of $2,000 per month for his
services. As of March 2009, this fee was reduced to $1,000 per
month.
|
|
(3)
|
The
amounts in this column reflect the compensation cost recognized by the
Company for the fiscal year ended March 31, 2009, in accordance with SFAS
No. 123(R) for option awards granted pursuant to the 1997 and 2004
Employee Incentive Stock Plans and may include amounts from option awards
granted prior to fiscal 2009. For a discussion of valuation
assumptions, see Note 10 – Stock Options of the Notes to Consolidated
Financial Statements included in our Annual Report on Form 10-K for year
ended March 31, 2009.
|
|
(4)
|
A
family limited partnership of Thomas R. Craddick received from the Company
a finders fee in kind, equal to 2.5% of the total mineral interest
purchased in the Newark East Field in Johnson County,
Texas.
|
EMPLOYEE
INCENTIVE STOCK OPTION PLANS
The
Company currently has two equity compensation plans: the 1997 Employee Incentive
Stock Plan (the “1997 Plan”), the 2004 Employee Incentive Stock Plan (the “2004
Plan”) (collectively, the “Stock Plans”).
The 1997
Plan provides for distribution, 350,000 shares of authorized but unissued common
stock of the Company. Awards, granted at the discretion of the
Compensation Committee of the Board, included stock options and restricted
stock. Stock options were incentive stock options or non-qualified
stock options. The exercise price of each option was not to be less
than the market price of the Company's stock on the date of
grant. The maximum term of the options is ten years.
The 2004
Plan replaced, modified and extended the termination date of the 1997 Plan to
September 14, 2009. The 2004 Plan provides for the award of stock
options up to 375,000 shares of which 125,000 may be the subject of stock grants
without restrictions and without payment by the recipient and stock awards of up
to 125,000 shares with restrictions including payment for the shares and
employment of not less than three years from the date of the
award. The terms of the stock options are similar to those of the
1997 Plan except that the term of the options is five years from the date of
grant.
The
proposed Mexco Energy Corporation 2009 Employee Incentive Stock Plan is
described in detail below under “Proposal 3: Approval of the Mexco Energy
Corporation 2009 Employee Incentive Stock Plan”. Although shares are
available under the 2004 Plan and the 1997 Plan, we will not issue shares from
these plans in the future upon the adoption of the 2009 plan.
Restricted
stock was to be granted with a condition to attain a specified
goal. The purchase price was to be at least $5.00 per share of
restricted stock. The awards of restricted stock were to be accepted
within sixty days and vest as determined by agreement. Holders of
restricted stock were to have all rights of a shareholder of the
Company. At March 31, 2009, no restricted stock had been granted
under either plan.
The
Company does not have any employment contracts or change of control
agreements. However, the Stock Plans do permit accelerated vesting of
stock awards in the event of a change of control.
The
following table summarizes certain information, as of March 31, 2009, relating
to the Company’s Stock Plans. Both plans were approved by security
holders.
|
Number
of Shares Authorized for Issuance under plan
|
Number
of securities to be issued upon exercise of outstanding
options
|
Weighted
average exercise price of outstanding options
|
Number
of securities remaining available for future issuance under
plan
|
|||||||||||||
|
1997
Plan
|
350,000 | 95,750 | $ | 5.75 | - | |||||||||||
|
2004
Plan
|
375,000 | 53,000 | $ | 6.56 | 303,000 | (1) | ||||||||||
|
Total
|
725,000 | 148,750 | $ | 6.04 | 303,000 | |||||||||||
(1) These
shares will no longer be available for award after adoption of the 2009
Plan.
NAMED
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The Board
of Directors elects executive officers annually. Executive officers
hold office until their successors are elected and have
qualified. Set forth below is biographical information concerning the
executive officers of the Company. These individuals along with
Nicholas C. Taylor are referred to collectively in this Proxy Statement as the
“Named Executive Officers”. Biographical information concerning Mr.
Taylor is set forth above under the caption "Mexco Energy Corporation Board of
Directors."
TAMMY L. MCCOMIC,
age 40,
joined the Company in
2001 and was elected Executive Vice President and Chief Financial Officer in
2009. She served the Company as Vice President and Chief Financial Officer from
2003 to 2009. Prior thereto, Ms. McComic served as Controller, Treasurer and
Assistant Secretary. Ms. McComic is a Certified Public Accountant.
JEFFRY A. SMITH,
age 62, has
served as a Consulting Geologist since March 2005 and served as a director of
the Company from 2005 to 2008. For the past approximately 8 years,
Mr. Smith has been a geological consultant for several major and independent oil
companies. Previously, he had served as Vice President of Exploration
for two independent oil companies and served as an exploration geologist in the
early years of his career. Mr. Smith is a certified geologist of the
Texas Board of Professional Geoscientists and holds an M.S. in Geology from the
Rensselaer Polytechnic Institute. He is a member of AAPG, PBS-SEPM, WTGS and
SIPES. His publications include: “Development in West Texas and
Eastern New Mexico in 1975: AAPG Bull, V. 60, No. 8” and
“Introductory Paper to 1977 Gas Field Symposium – WTGS Publisher”.
DONNA GAIL YANKO, age 65,
has
served as Vice President part-time since 1990. She has also served as
Corporate Secretary of the Company since 1992 and from 1986 to 1992 was
Assistant Secretary of the Company. From 1986 to the present, on a
part-time basis, she has assisted the President of the Company in his personal
business activities. Ms. Yanko also served as a director of the
Company from 1990 to 2008.
COMPENSATION
DISCUSSION & ANALYSIS
Overview
of Compensation Program
The
Compensation Committee of the Board of Directors has responsibility for
establishing, implementing and monitoring adherence to our compensation
philosophy. The Compensation Committee seeks to provide total
compensation paid to our executive officers that is fair, reasonable and
competitive.
In this
compensation discussion and analysis, the “Named Executive Officers” are as
follows:
Compensation
Philosophy and Objectives
The
Compensation Committee believes that compensation for executive officers should
be based upon the principle that compensation must be competitive to enable the
Company to motivate and retain the talent needed to lead and make the Company
grow, reward successful performance and closely align the interests of our
executives with the Company. The ultimate objective of our compensation program
is to improve stockholder value.
In
setting compensation levels, the Compensation Committee evaluates both
performance and overall compensation. The review of executive
officers’ performance includes a mix of financial and non-financial measures. In
addition to business results, employees are expected to uphold a commitment to
integrity, maximize the development of each individual, and continue to improve
the environmental quality of the Company’s services and operations.
In order
to continue to attract and retain the best employees, the Compensation Committee
believes the executive compensation packages provided to the Named Executive
Officers should include both cash and stock-based compensation.
The
Compensation Committee has not retained a compensation consultant to review the
compensation practices of the Company’s peers or to advise the Compensation
Committee on compensation matters.
Competitive
Considerations
We
believe the competition for talented employees goes well beyond the industry to
include oil and gas exploration and development companies and oilfield service
companies. Many of the companies with whom we compete for top level
talent are larger and have more financial resources than we do. Both
our Compensation Committee and President and Chief Executive Officer (“CEO”)
consider known information regarding the compensation practices of likely
competitors when reviewing and setting the compensation of the Named Executive
Officers.
Role
of Chief Executive Officer in Compensation Decisions
On an
annual basis, our CEO reviews the performance of each of the other Named
Executive Officers and, based on this review, makes recommendations to the
Compensation Committee with respect to the compensation of the Named Executive
Officers. The CEO considers internal pay equity issues, individual contribution
and performance, competitive pressures and company performance in making his
recommendations to the Compensation Committee. The Compensation Committee may
accept or adjust such recommendations.
Establishing
Executive Compensation
Consistent
with our compensation objectives, the Compensation Committee has structured our
annual and long-term incentive-based executive compensation to attract and
retain the best talent, reward financial success and closely align executives’
interests with the Company’s interests. In setting the compensation, the
Compensation Committee reviews total direct compensation for the Named Executive
Officers, which includes salary, annual cash incentives and long-term equity
incentives. The appropriate level and mix of incentive compensation is not based
upon a formula, but is a subjective determination made by the Compensation
Committee.
We do not
have a policy of stock ownership requirements. In addition, we do not have any
employment contracts or change of control agreements.
The
Compensation Committee reviews compensation matters from time to time during the
year. The Compensation Committee usually performs its annual review of officer
salaries during the first quarter of each fiscal year.
Elements
of Compensation
|
Element
|
Form of
Compensation
|
Purpose
|
|
Base
Salary
|
Cash
|
Provide
competitive, fixed compensation to attract
and
retain executive talent.
|
|
Short-Term
Incentive
|
Cash
Bonus
|
Create
a strong financial incentive for achieving
financial
success and for the competitive retention
of
executives.
|
|
Long-Term
Incentive
|
Stock
Option and Restricted
Stock
Grants
|
Provide
incentives to strengthen alignment of executive
team
interests with Company interests, reward long-term
achievement
and promote executive retention.
|
|
Insurance
Benefits
|
Eligibility
to participate in the
plan
available to our employees,
including
major medical, dental,
life
and short-term disability plans.
|
Plan
is part of broad-based employee
benefits.
|
Insurance
Benefits
We offer
an insurance package to all eligible employees that includes major medical,
dental and life insurance. The life insurance benefit provides for a
maximum term payout of $30,000. This package also provides for a
short-term disability benefit with a maximum payout of $200 per week for a term
of up to 13 weeks.
DEFINED
BENEFIT PLANS AND OTHER ARRANGEMENTS
Long-term
incentive compensation for executive officers is not included in the Company
policy. Accordingly, no awards or payouts have been
made. The Company has no retirement or pension plan except for its
1997 and 2004 Employee Incentive Stock Plans described above and the proposed
2009 Employee Incentive Stock Plan described below in Proposal 3:
Approval of the Mexco Energy
Corporation 2009 Employee Incentive Stock Plan
.
POTENTIAL
PAYMENTS UPON A CHANGE OF CONTROL OR TERMINATION
The
Company does not have any employment contracts or change of control
agreements. However, the Stock Plans do permit accelerated vesting of
stock awards in the event of a change of control. Upon termination of
employment, stock options held may be exercised to the extent such option was
exercisable or in such accelerated basis as the Compensation Committee may
determine.
EXECUTIVE
COMPENSATION
The
compensation paid to the Named Executive Officers generally consists of base
salaries, annual incentive bonus payments and awards under the Stock
Plans. The following table summarizes the total compensation awarded
to, earned by or paid to the Named Executive Officers during fiscal years 2009,
2008 and 2007.
Summary
Compensation Table
|
Name
and Principal Position
|
Year
|
Salary
|
Bonus
|
Option
Awards
(1)
|
All
Other Compensation (2)
|
Total
|
|||||||||||||||
|
Nicholas
C. Taylor
|
2009
|
$ | - | $ | - | $ | - | $ | 6,000 | $ | 6,000 | ||||||||||
|
President
& CEO
|
2008
|
$ | - | $ | - | $ | - | $ | 6,000 | $ | 6,000 | ||||||||||
|
2007
|
$ | - | $ | - | $ | - | $ | 4,500 | $ | 4,500 | |||||||||||
|
Tamala
L. McComic (3)
|
2009
|
$ | 136,620 | $ | 33,000 | $ | 19,084 | $ | - | $ | 188,704 | ||||||||||
|
Executive
Vice President, CFO
|
2008
|
$ | 128,340 | $ | 8,000 | $ | 22,710 | $ | - | $ | 159,050 | ||||||||||
|
Treasurer
& Asst. Secretary
|
2007
|
$ | 109,176 | $ | 26,000 | $ | 27,924 | $ | - | $ | 163,100 | ||||||||||
|
Donna
Gail Yanko (4)
|
2009
|
$ | 26,204 | $ | 8,000 | $ | 4,650 | $ | 3,000 | $ | 41,854 | ||||||||||
|
Vice
President & Secretary
|
2008
|
$ | 25,440 | $ | 3,000 | $ | 9,185 | $ | 6,000 | $ | 43,625 | ||||||||||
|
2007
|
$ | 23,355 | $ | 3,000 | $ | 11,725 | $ | 4,500 | $ | 42,580 | |||||||||||
|
Jeffry
A. Smith (4) (5)
|
2009
|
$ | 109,724 | $ | 10,000 | $ | 19,084 | $ | 7,271 | $ | 146,079 | ||||||||||
|
Consulting
Geologist
|
2008
|
$ | 84,772 | $ | 10,000 | $ | 27,972 | $ | 6,000 | $ | 128,744 | ||||||||||
|
2007
|
$ | 18,000 | $ | 14,100 | (6) | $ | 38,123 | $ | 4,500 | $ | 74,723 | ||||||||||
|
(1)
|
Stock
Option grants to Ms. McComic and Mr. Smith for 2008 were made on December
10, 2007 with a strike price of $4.35 per share and a SFAS No. 123(R)
value of $2.20. Stock Option grants to Ms. McComic, Ms. Yanko
and Mr. Smith for 2007 were made on July 12, 2006 with a strike price of
$8.24 per share and a SFAS No. 123(R) value of $5.15. The
amounts in this column reflect the compensation cost recognized by the
Company for the fiscal year ended March 31, 2009, in accordance with SFAS
No. 123(R) for option awards granted pursuant to the 2004 Incentive Stock
Plan and include amounts from option awards granted prior to fiscal
2009. For a discussion of valuation assumptions, see Note 10 –
Stock Options of the Notes to Consolidated Financial Statements included
in our Annual Report on Form 10-K for year ended March 31,
2009.
|
|
(2)
|
All
other compensation is comprised of director’s fees only for Mr. Taylor and
Ms. Yanko. There are no employment agreements or retirement
benefit plans. Director’s fees are paid at the rate of $1,500
per director quarterly. The sole compensation received by the
President and CEO of the Company for such period consisted of director's
fees. All other compensation for Mr. Smith consisted of
director’s fees and overriding and working interest
revenues.
|
|
(3)
|
Salary
amounts for Ms. McComic include accrued vacation not taken and sold back
to the Company as follows: $5,566, $9,660 and $3,768 for fiscal
2009, 2008 and 2007, respectively.
|
|
(4)
|
Ms.
Yanko and Mr. Smith served on the board as directors of the Company
through September 11, 2008.
|
|
(5)
|
Salary
amounts for Mr. Smith are comprised of consulting
fees.
|
|
(6)
|
Mr.
Smith was granted a stock award of 2,000 shares as provided by the
Company’s 2004 Employee Incentive Stock
Plan.
|
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The
Compensation Committee was formed as of June 15, 2005 and Messrs. Ladd, Grover
and Graham are current members thereof. No member of the Compensation
Committee is an officer or employee of the Company. None of the
Company’s executive officers served on the Board of Directors or the
Compensation Committee of any other entity, for which any officers of such other
entity served either on our Board of Directors or the Compensation
Committee. The Company’s Compensation Committee makes recommendations
regarding compensation subject to approval of the entire Board of
Directors.
COMPENSATION
COMMITTEE REPORT
To the
Stockholders of Mexco Energy Corporation:
The Company’s Compensation Committee
makes recommendations regarding compensation of the Named Executive Officers,
subject to approval of the entire Board of Directors.
Compensation
for executive officers is based on the principle that compensation must be
competitive to enable the Company to motivate and retain the talent needed to
lead and grow the Company’s business, and to provide rewards which are closely
linked to the Company and individual performance.
Executive
compensation for all executive officers is based on the performance against a
combination of financial and non-financial measures. In addition to
business results, employees are expected to uphold a commitment to integrity,
maximize the development of each individual, and continue to improve the
environmental quality of the Company’s operations. In upholding these
financial and non-financial objectives, executives not only contribute to their
own success, but also help ensure that the business, employees, stockholders and
communities in which we live and work will prosper.
| July 15, 2009 | Compensation Committee |
|
Arden
R. Grover
|
|
|
Jack
D. Ladd
|
|
|
Thomas
Graham,
Jr.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions
with related persons are reviewed, approved or ratified in accordance with the
policies and procedures set forth in the Company's Code of Ethics and Business
Conduct. The Audit Committee, pursuant to the Audit Committee
Charter, has oversight for related person transaction and compliance with our
code.
A family
limited partnership of Thomas Craddick, a member of the Board of Directors and
Company employee, received from the Company a finders fee in kind, equal to 2.5%
of the total mineral interest purchased in the Newark East Field in Johnson
County, Texas. Mr. Craddick invested his personal funds in a working interest
(5.0% before payout and 3.75% after payout) in the Company’s well in Ward
County, Texas. This personal investment was made on the same basis as
an unrelated third party investor.
On April
1, 2007, Jeff Smith, a member of the board of directors through September 11,
2008 and a geological consultant, entered into an agreement with the Company to
provide geological consulting services for a fee of approximately $10,000 per
month plus expenses. This agreement was amended to not to exceed $5,000 per
month plus a quarterly fee of $1,500 and expenses on March 1,
2009. Also as part of this agreement, Mr. Smith received from the
Company a 0.25% overriding interest in each of the two wells in Loving County,
Texas, a 1.0% overriding interest in the well in Ward County, Texas and a .5%
overriding interest in the well in Reeves County, Texas. Mr. Smith
invested his personal funds in a working interest in the Company’s wells in
Reeves County, Texas (2.5% before payout and 1.875% after payout) and Ward
County, Texas (2.0% before payout and 1.5% after payout), on a non-promoted
basis.
OPTION
GRANTS FOR FISCAL 2009
There were no stock options granted
during the year ended March 31, 2009.
OPTION
EXERCISES FOR FISCAL 2009
The following table provides
information with respect to the options exercised by our Named Executive
Officers and directors during fiscal 2009:
|
Name
|
Number
of Option Awards Acquired on Exercise
|
Value
Realized Upon Exercise (1)
|
|
Tamala
L. McComic
|
30,000
|
$ 1,093,000
|
|
Donna
Gail Yanko
|
25,250
|
$ 885,000
|
|
Jeffry
A. Smith
|
6,500
|
$ 181,300
|
|
Thomas
R. Craddick
|
10,000
|
$ 371,300
|
|
Thomas
Graham, Jr.
|
17,000
|
$ 617,800
|
|
Arden
R. Grover
|
10,000
|
$ 275,600
|
|
Jack
D. Ladd
|
10,000
|
$ 341,200
|
|
(1)
|
The
realized value is based on the difference between the market value of the
shares purchased on the date of
exercise
and the option exercise price multiplied by the number of shares covered
by the exercised option. Of these exercised shares, shares
retained are as follows: Ms. McComic, 12,000 shares; Mr. Smith,
110 shares; Mr. Craddick, 10,000 shares; Mr. Graham, 4,000; and Mr.
Grover, 10,000 shares.
|
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END 2009
The
following table sets forth certain information with respect to the vested and
unvested stock options held at March 31, 2009 by each of the Named Executive
Officers.
|
Name
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
|
Option
Exercise Price
($/sh)
|
Option
Expiration Date
|
||||||||||||
|
Nicholas
C. Taylor (1)
|
- | - | $ | - | - | |||||||||||
|
Tamala
L. McComic
|
5,000 | 5,000 | $ | 8.24 |
7/12/2011
|
|||||||||||
| 2,500 | 7,500 | $ | 4.35 |
12/10/2012
|
||||||||||||
|
Donna
Gail Yanko
|
4,750 | - | $ | 6.75 |
1/23/2011
|
|||||||||||
| 5,000 | - | $ | 6.00 |
7/10/2013
|
||||||||||||
| 2,500 | 2,500 | $ | 8.24 |
7/12/2011
|
||||||||||||
|
Jeffry
A. Smith
|
6,000 | - | $ | 7.00 |
11/20/2013
|
|||||||||||
| 5,000 | 5,000 | $ | 8.24 |
7/12/2011
|
||||||||||||
| - | 7,500 | $ | 4.35 |
12/10/2012
|
||||||||||||
|
(1)
|
At
March 31, 2009, Mr. Taylor did not hold any options to purchase shares of
the Company’s Common Stock.
|
The
following table sets forth certain information with respect to the vested and
unvested stock options held at March 31, 2009 by each of the Company’s current
directors, who are not executive officers.
|
Name
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
|
Option
Exercise Price
($/sh)
|
Option
Expiration Date
|
|||||||||
|
Thomas
R. Craddick
|
10,000 | - | $ | 5.25 |
3/21/2010
|
||||||||
| 10,000 | - | $ | 4.00 |
5/28/2012
|
|||||||||
|
Thomas
Graham, Jr.
|
10,000 | - | $ | 5.25 |
3/21/2010
|
||||||||
| 10,000 | - | $ | 6.75 |
1/23/2011
|
|||||||||
| 20,000 | - | $ | 6.70 |
7/2/2014
|
|||||||||
| 3,000 | - | $ | 6.17 |
9/14/2009
|
|||||||||
|
Arden
R. Grover (1)
|
- | - | $ | - | |||||||||
|
Jack
D. Ladd
|
10,000 | - | $ | 4.00 |
5/28/2012
|
||||||||
| 10,000 | - | $ | 6.00 |
7/10/2013
|
|||||||||
|
(1)
|
At
March 31, 2009, Mr. Grover did not hold any options to purchase shares of
the Company’s Common Stock.
|
SECURITY
OWNERSHIP OF CERTAIN
BENEFICIAL
OWNERS AND MANAGEMENT
The
following table sets forth certain information regarding beneficial ownership of
the Company's Common Stock, as of July 24, 2009, by each of the Company's
directors and executive officers, by all executive officers and directors of the
Company as a group, and by each person known to the Company to be the beneficial
owner of more than 5% of any class of the Company's outstanding Common
Stock.
|
Number of Shares of Common
Stock Beneficially Owned (1)
|
Percent of
Class
(2)
|
|||||||
|
BENEFICIAL
OWNERS OF MORE THAN 5% OF COMMON STOCK
|
||||||||
|
Howard
E. Cox, Jr., Box 2217, 800 Winter St., #300, Waltham,
MA 02451
|
213,400 | 11.34 | ||||||
|
SECURITY
OWNERSHIP OF MANAGEMENT
|
||||||||
|
Thomas
R. Craddick
|
30,000 | 1.58 | ||||||
|
Thomas
Graham, Jr. (4)
|
109,000 | (3) | 5.67 | |||||
|
Arden
R. Grover (4)
|
15,900 | - | * | |||||
|
Jack
D. Ladd (4)
|
20,440 | 1.07 | ||||||
|
Tamala
L. McComic
|
19,500 | 1.03 | ||||||
|
Jeffry
A. Smith
|
13,610 | - | * | |||||
|
Nicholas
C. Taylor
|
888,811 | 47.24 | ||||||
|
Donna
Gail Yanko
|
25,112 | (3) | 1.33 | |||||
|
Officers
and directors as a group (8 persons)
|
1,123,373 | 56.21 | % | |||||
_______________
*
Indicates less than 1% of the outstanding shares of the Company’s Common
Stock.
|
(1)
|
Included
in the number of shares of Common Stock Beneficially Owned are shares that
such persons have the right to acquire within 60 days of July 24, 2009,
pursuant to options to purchase such Common Stock (Mr. Craddick, 20,000;
Ms. McComic, 10,000; Mr. Smith, 13,500; Mr. Graham, 40,000; Mr. Ladd,
20,000; and Ms. Yanko, 13,500).
|
|
(2)
|
Securities
not outstanding, but included in the beneficial ownership of each such
person, are deemed to be outstanding for the purpose of computing the
percentage of outstanding securities of the class owned by such person,
but are not deemed to be outstanding for the purpose of computing the
percentage of the class owned by any other
person.
|
|
(3)
|
Includes
shares beneficially owned as follows: Mr. Graham’s spouse –
7,000; Ms. Yanko’s spouse – 944.
|
|
(4)
|
Denotes
a non-employee, “independent” director as defined in Section 121A of the
American Stock Exchange rules and the Exchange Act as of January 1,
2007.
|
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Exchange Act requires the Company’s directors and officers, and
persons who own more than 10 percent of the Company’s outstanding Common Stock,
to file with the SEC initial reports of ownership and reports of changes in
ownership of Common Stock held by such persons. These persons are
also required to furnish the Company with copies of all forms they file under
this regulation.
Based on
our records and other information, the Company believes that during the fiscal
year ended March 31, 2009 all applicable Section 16(a) filing requirements were
met.
PROPOSAL
2: RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The Board
of Directors has selected Grant Thornton LLP for appointment as the independent
registered public accounting firm for the Company for the fiscal year ending
March 31, 2010, subject to ratification by the stockholders. Grant
Thornton LLP served as the independent registered public accountants for the
Company for the fiscal year ended March 31, 2009. A representative of
that firm will not be present at the Annual Meeting, but will be available by
telephone, and have an opportunity to make a statement if they desire to do so
and respond to appropriate questions.
REPORT
OF THE AUDIT COMMITTEE
To the
Stockholders of Mexco Energy Corporation:
It is the
responsibility of the members of the Audit Committee to contribute to the
reliability of the Company’s Financial Statements. In keeping with
this goal, the Board of Directors adopted a written charter to govern the Audit
Committee. The Audit Committee is satisfied with the adequacy of the
charter based upon its evaluation of the charter during fiscal
2009. The Audit Committee met four times during fiscal
2009. The current members of the Audit Committee are independent
directors.
The Audit
Committee has reviewed and discussed the Company’s audited financial statements
with management. It has also discussed with the independent auditors
the matters required to be discussed by Statement on Accounting Standards No.
61, Communication with Audit Committees, as amended, by the Auditing Standards
Board of the American Institute of Certified Public
Accountants. Additionally, the Audit Committee has received the
written disclosures and the letter from the independent auditors at Grant
Thornton LLP, as required by Independent Standards Board Standard No. 1,
Independence Discussions with Audit Committees, and has discussed with the
independent auditors that firm’s independence from the Company and its
management. The Audit Committee has concluded that Grant Thornton LLP
does not provide any non-audit services.
Audit
fees billed to the Company by Grant Thornton LLP for the audit of the Company’s
annual financial statements and the review of those financial statements
included in the Company’s quarterly reports on Form 10-Q totaled $97,366 during
the Company’s 2009 fiscal year. The Company has obtained no other
services from Grant Thornton LLP.
Based on
reviews and discussions referred to above, the Audit Committee recommended to
the Board of Directors that the financial statements for fiscal 2009 be included
in the Company’s Annual Report on Form 10-K.
|
July
15, 2009
|
Audit
Committee
|
|
Jack
D. Ladd
|
|
|
Arden
R. Grover
|
|
|
Thomas
Graham, Jr.
|
AUDIT
FEES AND SERVICES
The table below sets forth the
aggregate fees billed by Grant Thornton LLP, the Company’s independent
registered public accounting firm, for the last two fiscal years:
|
2009
|
2008
|
|||||||
|
Audit
Fees (1)
|
||||||||
|
Audit
|
$ | 60,119 | $ | 57,184 | ||||
|
Quarterly
Reviews
|
$ | 37,247 | $ | 34,155 | ||||
|
Total
Audit Fees
|
$ | 97,366 | $ | 91,339 | ||||
|
Audit
Related Fees (2)
|
$ | - | $ | - | ||||
|
Tax
Service Fees (3)
|
$ | - | $ | - | ||||
|
Total
|
$ | 97,366 | $ | 91,339 | ||||
|
(1)
|
The
audit of the Company’s annual consolidated financial statements included
in its Annual Report on Form 10-K, review of the Company’s quarterly
financial statement included in its Quarterly Reports on Form 10-Q and
review of the Company’s other filings with the SEC, including consents and
other research work necessary to comply with generally accepted auditing
standards for the years ended March 31, 2009 and
2008.
|
|
(2)
|
There
were no fees billed for each of the last two fiscal years for assurance
and related services by Grant Thornton LLP that are reasonably related to
the performance of the audit or review of the Company’s financial
statements and are not reported “Audit Fees”
above.
|
|
(3)
|
There
were no fees billed for the fiscal years 2008 and 2009 for professional
services rendered by Grant Thornton LLP, for tax compliance, tax advice
and tax planning.
|
The Audit Committee’s policy on
pre-approval of audit and audit related fees requires the Chairman of the Audit
Committee to sign all engagement letters of the principal independent accountant
prior to commencement of any audit or audit related services, all of which was
performed in connection with the last two fiscal years of the Company by Grant
Thornton, LLP, full-time, permanent employees.
The
Board of Directors recommends that you vote
FOR
the
appointment of GRANT THORNTON LLP as the independent registered public
accounting firm for the Company for the fiscal year ending March 31,
2010.
PROPOSAL 3: APPROVAL
OF THE 2009 EMPLOYEE INCENTIVE STOCK PLAN
Introduction
On June
23, 2009, our Board adopted the Mexco Energy Corporation 2009 Employee Incentive
Stock Plan (“the 2009 Plan”). The proposed Plan replaces our current
2004 Employee Incentive Stock Plan and 1997 Incentive Stock Plan (which we refer
to as the “2004 Plan” and “1997 Plan,” respectively, throughout this Proxy
Statement). No further restricted stock or stock option grants will
be made under the 2004 Plan or the 1997 Plan, assuming approval of the proposed
2009 Plan. The stockholders are now being requested to approve the
2009 Plan.
The
purpose of the 2009 Plan is to further the interests of the Company, its
subsidiary, and its shareholders by providing incentives in the form of awards
to employees, consultants and nonemployee directors who can contribute
materially to the success and profitability of the Company and its
subsidiary. These awards will recognize and reward outstanding
performances and individual contributions and give participants in the 2009 Plan
an interest in the Company parallel to that of the shareholders, thus enhancing
the proprietary and personal interest of such participants in the Company’s
continued success and progress. The 2009 Plan will support the
Company’s and its subsidiary’s ongoing efforts to attract and retain such
employees, consultants and non-employee directors.
Summary
of the Plan
The
following general description of material features of the 2009 Plan is qualified
in its entirety by reference to the provisions of the 2009 Plan set forth in
Exhibit A.
General
Awards to
participants under the Plan may be made in the form of stock options; stock
awards in the form of Common Stock or Stock Units, including restricted stock or
restricted stock units; or cash awards based on objective performance goals
pre-established by the Committee (collectively “Awards”).
Shares Subject
to Plan
The 2009
Plan provides for the award of up to 200,000 shares of the Company’s Common
Stock, including both shares of Common Stock issued plus shares covered by or
subject to awards then outstanding under the Plan. The aggregate
number of shares under the 2009 Plan, the number of shares covered by each
outstanding Award, the grant price or other price of such Awards, the Fair
Market Value (as defined below) or other price determinations of such Awards and
the Award limitations are subject to adjustment in the event of a stock split or
dividend, recapitalization or capital reorganization or certain other corporate
transactions. Shares of Common Stock underlying Awards that are
forfeited, terminated, settled in cash, exchanged for Awards that do not involve
Common Stock or expire unexercised become immediately available for additional
Awards under the Plan.
Administration
and Eligibility
Administration.
The Compensation Committee of the Board of Directors (the “Committee”) selects
the employees and consultants to whom Awards will be granted and determines the
number and type of Awards to be granted to such individual. The Board
selects the nonemployee directors eligible to whom Awards will be granted and
determines the number and type of Award to be granted to such
individual.
Eligibility.
All employees, nonemployee directors and consultants of the Company and its
subsidiary will be eligible to receive Awards under the Plan if it is approved
by stockholders. No determination has been made as to which of those
eligible employees, nonemployee directors and consultants will receive grants
under the 2009 Plan, and therefore, the benefits to be allocated to any
individual or to any group of employees, consultants and nonemployees are not
presently determinable.
Employee
Awards
Each
Award may be embodied in an agreement containing such terms, conditions and
limitations as determined by the Compensation Committee. Awards may
be granted singly, in combination or in tandem. Awards to
participants may also be made in combination or in tandem with, in replacement
of, or as alternatives to, grants or rights under the 2009 Plan or any other
employee benefit plan of the Company. All or part of an Award may be
subject to conditions established by the Compensation Committee, including
continuous service with the Company, achievement of specific business objectives
and other comparable measurements of performance.
The type
of Awards to employees that may be made under the 2009 Plan are as
follows:
Stock
Options.
The Committee may grant an Award in the form of a stock
option. In the case of an option granted to an employee, such option
may be either an incentive stock option under section 422 of the Internal
Revenue Code or a nonqualified stock option. The Committee determines
the exercise price, whether the stock option is intended to qualify as an
incentive stock option under the Internal Revenue Code or not and other
provisions not inconsistent with the Plan. The grant price of a stock
option shall not be less than the “Fair Market Value” of the Common Stock
subject to such option at the date of grant. “Fair Market Value” of a
share of Common Stock means, as of a particular date, if shares of Common Stock
are listed on a national securities exchange, the mean between the highest and
lowest sales price per share of the Common Stock on the consolidated transaction
reporting system for the principal national securities exchange on which shares
of Common Stock are listed on that date, or, if there shall have been no such
sale so reported on that date, on the last preceding date on which such a sale
was so reported, or, at the discretion of the Committee, the price prevailing on
the exchange at the time of exercise or other relevant time (as determined under
procedures established by the Committee). The term shall not exceed
ten years from the date of grant. Options may not be repriced and may
not include provisions that reload the option upon exercise
Stock
Awards.
The Committee may grant stock awards. Such awards may
be subject to such terms, conditions and limitations, not inconsistent with the
2009 Plan, as may be determined by the Committee.
Cash
Awards.
The Committee may grant cash awards. Such awards may
be subject to such terms, conditions and limitations, not inconsistent with the
2009 Plan, as may be determined by the Committee.
Award
Limits
.
No employee may
be granted, during any calendar year, options that are exercisable for more than
25,000 shares of Common Stock or stock awards covering more than
25,000 shares of Common Stock.
Consultant
Awards
The
Committee shall have the sole responsibility and authority to determine the type
or types of Awards to be made to a consultant under the 2009 Plan and the terms,
conditions and limitations applicable to such Awards.
Nonemployee
Director Awards
Each
Award may be embodied in an agreement containing such terms, conditions and
limitations as determined by the Board. Awards may be granted singly, in
combination or in tandem. Awards to nonemployee directors may be in the form of
options or stock awards. The Board may grant options to nonemployee directors,
provided that the options granted to nonemployee directors shall not be
incentive stock options. The Board may grant stock awards to
nonemployee directors. Any terms, conditions and limitations
applicable to any stock award granted to a nonemployee director pursuant to the
2009 Plan, including but not limited to rights to dividend equivalents shall be
determined by the Board. Nonemployee directors may not be granted,
during any fiscal year, options that are exercisable for more than
25,000 shares of Common Stock or stock awards covering or relating to more
than 25,000 shares of Common Stock.
Payment of
Awards
Payment
made to a participant pursuant to an Award may be made in the form of cash or
Common Stock, or a combination thereof. The Committee may provide for
the payment of dividends on shares of Common Stock granted in connection with
Awards or dividend equivalents with respect to any shares of Common Stock
subject to an award that have not actually been issued under the
Award.
Change of
Control
In the
event of a “change of control” of the Company as defined in the 2009 Plan, all
Awards automatically vest and become exercisable and any restrictions applicable
to the Award shall lapse.
Duration; Plan
Amendments
The 2009
Plan has a term of ten years from the date of shareholder
approval. The Board may at any time amend, modify, suspend or
terminate the 2009 Plan, but in doing so cannot adversely affect any outstanding
Award without the grantee’s written consent or make any amendment without
shareholder approval, to the extent such shareholder approval is required by
applicable law or the exchange upon which the shares are
traded.
Federal Income Tax
Consequences
Set forth
below is a brief summary of the federal income tax consequences of awards under
the 2009 Plan. This summary is not a complete description of the applicable tax
consequences, and it is subject to any changes in applicable tax
rules.
Stock
Awards.
A grant of shares of Common Stock or a cash equivalent
that is not subject to vesting restrictions will result in taxable income for
federal income tax purposes to the recipient at the time of grant in an amount
equal to the Fair Market Value of the shares or the amount of cash
awarded. The Company would be entitled to a corresponding deduction
at that time for the amount included in the recipient’s
income.
Generally,
a grant of shares of Common Stock under the 2009 Plan subject to vesting and
transfer restrictions will not result in taxable income to the recipient for
federal income tax purposes or a tax deduction to the Company in the year of the
grant. Instead, the value of the shares will generally be taxable to
the recipient as taxable income in the years in which the restrictions on the
shares lapse. Such value will be the Fair Market Value of the shares on the
dates the restrictions terminate. Any recipient, however, may elect
pursuant to Internal Revenue Code Section 83(b) to treat the Fair Market
Value of the shares on the date of such grant as taxable income in the year of
the grant of restricted shares, provided the recipient makes the election
pursuant to Internal Revenue Code Section 83(b) within 30 days after
the date of the grant. In any case, the Company will receive a deduction for
federal income tax purposes corresponding in amount to the amount of
compensation included in the recipient’s income in the year in which that amount
is so included.
Cash
Awards.
Cash awards are taxable income to the recipient for
federal income tax purposes at the time of payment. The recipient will have
taxable income equal to the amount of cash paid, and the Company will have a
corresponding deduction for federal income tax purposes.
Nonqualified
Stock Options.
Nonqualified stock options granted under the
2009 Plan will not be taxable to a recipient at the time of
grant. Upon the exercise of a nonqualified stock option, the amount
by which the Fair Market Value of the shares of Common Stock received,
determined as of the date of exercise, exceeds the exercise price will be
treated as taxable income received by the Participant in the year of
exercise. Generally, the Company will be entitled to a deduction for
compensation paid in the same amount treated as compensation received by the
Participant.
Incentive
Stock Options.
A recipient of an incentive stock option under
the plan will not generally recognize any taxable income for federal income tax
purposes upon receipt of an incentive stock option or, generally, at the time of
exercise of an incentive stock option, except possibly under the alternative
minimum income tax rules. If a Participant exercises an incentive
stock option and does not dispose of the shares received in a subsequent
“disqualifying disposition” (generally, a sale, gift or other transfer within
two years after the date of grant of the stock option or within one year after
the shares are transferred to the Participant), the recipient receives long-term
capital gains treatment on the difference between the price at which the
recipient of the incentive stock option sells the shares of Common Stock and his
or her tax basis in the shares (generally the amount paid upon exercise of such
options). In the event of a disqualifying disposition, the difference
between the Fair Market Value of the shares of Common Stock received on the date
of exercise and the exercise price will generally be treated as taxable income
in the year of disposition. The Company will not be entitled to a
deduction with respect to shares received by a recipient of an incentive stock
option upon exercise if the Common Stock received is not disposed of in a
disqualifying disposition. If, however, an amount is treated as
taxable income to the recipient of an incentive stock option due to a
disqualifying disposition, the Company will be entitled to a corresponding
deduction in the same amount for compensation paid.
Deductibility
of Awards.
Section 162(m) of the Internal Revenue Code
places a $1,000,000 annual limit on the compensation deductible by the Company
paid to certain of its executives. The limit, however, does not apply
to “qualified performance-based compensation.” The Company believes
that awards of stock options and certain other “performance-based compensation”
awards under the Plan will qualify for the performance-based compensation
exception to the deductibility limit.
Deferred
Compensation.
Any deferrals made under the 2009 Plan,
including awards granted under the 2009 Plan that are considered to be deferred
compensation, must satisfy the requirements of Section 409A of the Internal
Revenue Code to avoid adverse tax consequences to participating recipients.
These requirements include limitations on election timing, and acceleration of
payments and distributions. The Company intends to structure any
deferrals and awards under the 2009 Plan to meet the applicable tax law
requirements.
Other
Tax Consequences.
State tax consequences may in some cases
differ from those described above. Awards under the 2009 Plan will in
some instances be made to persons who are subject to tax in jurisdictions other
than the United States and may result in tax consequences differing from those
described above.
Recommendation
and Required Affirmative Vote
The
affirmative vote of the holders of a majority of our Common Stock entitled to
vote and who do vote (in person or by proxy) at the annual meeting is required
for approval of the proposal to approve the 2009 Plan. Our Board believes that
the 2009 Plan is in the best interests of the Company and our
stockholders.
The
Board of Directors recommends that you vote
FOR
the
approval of MEXCO ENERGY CORPORATION 2009 EMPLOYEE INCENTIVE STOCK
PLAN.
EXPENSES
OF SOLICITATION
We bear
all expenses incurred in connection with the solicitation of proxies. We have
engaged various firms to assist with the solicitation of proxies for estimated
fees of $12,300 plus expenses. We will reimburse brokers, fiduciaries
and custodians for their costs in forwarding proxy materials to beneficial
owners of Common Stock held in their names. Our Directors, officers
and employees may also solicit proxies by mail, telephone and personal contact.
They will not receive any additional compensation for these
activities.
ACCESS
TO REPORTS
The
Company’s refers you to the 2009 Annual Report to Shareholders enclosed with
these proxy materials, which includes the Annual Report on Form 10-K for the
year ended March 31, 2009, filed with the SEC. Stockholders may
obtain a copy of any materials filed by Mexco with the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549, by calling 1-800-SEC-0330 or visiting their
website at
www.sec.gov
which
contains reports, proxy and information statements and other information
regarding issuers that file electronically with the SEC. We also
employ the Public Register’s Annual Report Service which can provide you a copy
of our annual report at
www.prars.com
, free
of charge, as soon as practicable after providing such report to the
SEC.
We also
currently maintain an internet website at
www.mexcoenergy.com
. Our
website contains our annual report on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K, and all amendments to those reports as soon as
reasonably practicable after such material is electronically filed with or
furnished to the SEC. Additionally, our Code of Business Conduct and
Ethics and the charters of our Audit Committee, Compensation Committee and
Nominating Committee are posted on our website. Any of these
corporate documents as well as any of the SEC filed reports are available in
print free of charge to any stockholder and may be obtained by written request
in care of the Assistant Secretary, Mexco Energy Corporation, by mail to P.O.
Box 10502, Midland, Texas 79702 or by email to mexco@sbcglobal.net.
STOCKHOLDERS
PROPOSALS FOR NEXT ANNUAL MEETING
The next
Annual Meeting of the Company's stockholders is scheduled to be held on
September 14, 2010. Appropriate proposals of stockholders intended to
be presented at the 2010 Annual Meeting must be received by Ms. Donna Gail
Yanko, Secretary, no later than March 31, 2010, in order to be included in the
Company's Proxy Statement and form of Proxy relating to such
meeting.
In
addition, the Company’s policy has established advance notice procedures to
shareholders proposals not included in the Company’s proxy statement, to be
brought before an Annual Meeting. In general, the Secretary of the
Company must receive notice of any such proposal not less than 80 days prior to
the date of the Annual Meeting at the address of the Company’s principal
executive offices above. Such notice must include the information
which would be required to be included in the proxy statement filed pursuant to
the rules of the Securities and Exchange Commission had the proposal been made
by the Board of Directors.
HOUSEHOLDING
The SEC
permits a single set of annual reports and proxy statements to be sent to any
household at which two or more stockholders reside if they appear to be members
of the same family. Each stockholder continues to receive a separate
proxy card. This procedure, referred to as householding, reduces the
volume of duplicate information stockholders receive and reduces mailing and
printing expenses. A number of brokerage firms have instituted
householding.
As a result, if you hold your shares
through a broker and you reside at an address at which two or more stockholders
reside, you will likely be receiving only one annual report and proxy statement
unless any stockholder at that address has given the broker contrary
instructions. However, if any such beneficial stockholder residing at
such an address wishes to receive a separate annual report or proxy statement in
the future, or if any such beneficial stockholder that elected to continue to
receive separate annual reports or proxy statements wishes to receive a single
annual report or proxy statement in the future, that stockholder should contact
their broker or send a request to our corporate secretary at our principal
executive office mailing address, P.O. Box 10502, Midland, Texas 79702,
telephone number (432) 682-1119. We will deliver, promptly upon
written or oral request to the corporate secretary, a separate copy of the 2009
Annual Report and this proxy statement to a beneficial stockholder at a shared
address to which a single copy of the documents was delivered.
OTHER
MATTERS
Management
knows of no other business which will be presented at the Annual Meeting other
than as explained herein. The Board of Directors of the Company has
approved a process for collecting, organizing and delivering all stockholder
communications to each of its members. To contact all directors on
the Board, all directors on a Board committee or an individual member or members
of the Board of Directors, a stockholder may mail a written communication
to: Mexco Energy Corporation, Attention: Assistant Secretary, P.O.
Box 10502, Midland, Texas 79702. All communications received in the
mail will be opened by the Company’s Assistant Secretary for the purpose of
determining whether the contents represent a message to the Board of
Directors. The contents of stockholder communications to the Board of
Directors will be promptly relayed to the appropriate members. The
Company encourages all members of the Board of Directors to attend the Annual
Meeting of stockholders.
|
BY
ORDER OF THE BOARD OF DIRECTORS
|
|
|
Donna
Gail Yanko, Secretary
|
EXHIBIT
A
MEXCO
ENERGY CORPORATION
2009 EMPLOYEE INCENTIVE STOCK
PLAN
|
Table
of Contents
|
|
|
ARTICLE I
Introduction
|
A-3
|
|
ARTICLE II
Objectives
|
A-3
|
|
ARTICLE III
Definitions
|
A-3
|
|
ARTICLE IV
Eligibility
|
A-6
|
|
Section
4.1
Employees
|
A-6
|
|
Section
4.2
Directors
|
A-6
|
|
Section
4.3
Consultants
|
A-6
|
|
ARTICLE V
Common Stock Available for Awards
|
A-6
|
|
Section
5.1
A
ward
Limitations
|
A-6
|
|
Section
5.2
Unissued
Awards
|
A-6
|
|
ARTICLE VI
Administration
|
A-7
|
|
Section
6.1
Administration by the
Committee
|
A-7
|
|
Section
6.2
Liability of the
Committee
|
A-8
|
|
Section
6.3
Authority of the
Board
|
A-8
|
|
Section
6.4
Delegation of
Authority
|
A-8
|
|
ARTICLE VII
Employee Awards and Consultant Awards
|
A-8
|
|
Section
7.1
Employee
Awards
|
A-8
|
|
Section
7.2
Limitations
|
A-9
|
|
Section
7.3
C
onsultant
Awards
|
A-9
|
|
ARTICLE VIII
Director Awards
|
A-9
|
|
Section
8.1
Grant of Director
Awards
|
A-9
|
|
Section
8.2
Options
|
A-9
|
|
Section
8.3
Stock
Awards
|
A-9
|
|
Section
8.4
Limitations
|
A-9
|
|
ARTICLE IX
Change of Control
|
A-10
|
|
Section
9.1
Acceleration of
Vesting
|
A-10
|
|
Section
9.2
Exercise Period for
Options
|
A-10
|
|
ARTICLE X
Non-United States Participants
|
A-10
|
|
ARTICLE XI
Payment of Awards
|
A-10
|
|
Section
11.1
General
|
A-10
|
|
Section
11.2
Dividends, Earnings and
Interest
|
A-10
|
|
Section
11.3
Cash-out of
Awards
|
A-10
|
|
ARTICLE XII
Option Exercise
|
A-11
|
|
Section
12.1
Exercise in
General
|
A-11
|
|
Section
12.2
Exercise through
Attestation
|
A-11
|
|
ARTICLE XIII
Taxes
|
A-11
|
|
ARTICLE XIV
Amendment, Modification, Suspension, or Termination of the
Plan
|
A-11
|
|
Section
14.1
In
General
|
A-11
|
|
Section
14.2
Exceptions
|
A-12
|
|
ARTICLE XV
Assignability
|
A-12
|
|
ARTICLE XVI
Adjustments
|
A-12
|
|
Section
16.1
Adjustments in
General
|
A-12
|
|
Section
16.2
Proportionate
Adjustments
|
A-12
|
|
ARTICLE XVII
Restrictions
|
A-13
|
|
ARTICLE XVIII
Unfunded Plan
|
A-13
|
|
ARTICLE XIX
Right to Employment
|
A-14
|
|
ARTICLE XX
Successors
|
A-14
|
|
ARTICLE XXI
Governing Law
|
A-14
|
|
ARTICLE XXII
Effectiveness and Term
|
A-14
|
ARTICLE I
INTRODUCTION
Subject
to shareholder approval, effective as of September 15, 2009, Mexco Energy
Corporation (“Company”) established the Mexco Energy Corporation 2009 Incentive
Stock Plan (the “Plan”) in order to reward certain corporate officers and
employees, certain consultants and nonemployee directors of the Company and its
Subsidiaries by providing for certain cash benefits and by enabling such persons
to acquire shares of Common Stock of the Company.
ARTICLE II
OBJECTIVES
The
purpose of the Plan is to further the interests of the Company, its Subsidiary
and its shareholders by providing incentives in the form of Awards to employees,
consultants and nonemployee directors who can contribute materially to the
success and profitability of the Company and its Subsidiary. Such Awards will
recognize and reward outstanding performance and individual contributions and
give Participants in the Plan an interest in the Company that is parallel to
that of the shareholders, thus enhancing the proprietary and personal interest
of such Participants in the Company’s continued success and progress. This Plan
will also enable the Company and its Subsidiary to attract and retain such
employees, consultants and nonemployee directors.
ARTICLE III
DEFINITIONS
As used
herein, the terms set forth below shall have the following respective
definitions:
“Award”
means an Employee
Award, a Director Award or a Consultant Award.
“Award Agreement”
means one
or more Employee Award Agreement, Director Award Agreement or Consultant Award
Agreement.
“Board”
means the Board of
Directors of the Company.
“Cash Award”
means an award
denominated in cash.
“Change of Control”
means one
or more events reflected in an Award Agreement, which:
(a) impact
the control of:
(i) the
Company, or
(ii) the
Board, or
(b) reflect
a significant change in the ownership of:
(i) the
Company or its Subsidiaries, or
(ii) the
assets of the Company.
Notwithstanding
the paragraph above or the definition contained in an Award Agreement, in the
event an Award is or becomes subject to section 409A of the Code, if the
payment associated with such Award is permitted upon the occurrence of a Change
of Control, the events that constitute a Change of Control shall be limited to
the extent necessary to comply with the requirements of section 409A of the
Code.
“Committee”
means the
Compensation Committee of the Board or such other committee of the Board as is
designated by the Board to administer certain portions of the
Plan.
“Common Stock”
means Mexco
Energy Corporation common stock, par value $0.50 per
share.
“Company”
means Mexco Energy
Corporation, a Colorado corporation.
“Consultant”
means a person
other than an Employee or a Nonemployee Director providing bona fide services to
the Company or any of its Subsidiaries as a consultant or advisor, as
applicable, provided that such person is a natural person and that such services
are not in connection with the offer or sale of securities in a capital-raising
transaction and do not directly or indirectly promote or maintain a market for
any securities of the Company.
“Consultant Award”
means the
grant of any Nonqualified Stock Option, Stock Award or Cash Award, whether
granted singly, in combination, or in tandem, to a Consultant pursuant to such
applicable terms, conditions and limitations as may be established in order to
fulfill the objectives of the Plan.
“Consultant Award Agreement”
means one or more agreements between the Company and a Consultant setting forth
the terms, conditions and limitations applicable to a Consultant
Award.
“Director”
means an
individual serving as a member of the Board.
“Director Award”
means the
grant of any Nonqualified Stock Option, Stock Award or Cash Award, whether
granted singly, in combination, or in tandem, to a Participant who is a
Nonemployee Director pursuant to such applicable terms, conditions and
limitations as may be established in order to fulfill the objectives of the
Plan.
“Director Award Agreement”
means one or more agreements between the Company and a Nonemployee Director
setting forth the terms, conditions and limitations applicable to a Director
Award.
“Effective Date”
means the
date described in ARTICLE XXII.
“Employee”
means an employee
of the Company or any of its Subsidiaries and an individual who has agreed to
become an employee of the Company or any of its Subsidiaries and is expected to
become such an employee within the following six months.
“Employee Award”
means the
grant of any Option, Stock Award or Cash Award, whether granted singly, in
combination, or in tandem, to an Employee pursuant to such applicable terms,
conditions and limitations as may be established in order to fulfill the
objectives of the Plan.
“Employee Award Agreement”
means one or more agreements between the Company and an Employee setting forth
the terms, conditions and limitations applicable to an Employee
Award.
“Exchange Act”
means the
Securities Exchange Act of 1934, as amended.
“Fair Market Value”
of a
share of Common Stock means, as of a particular date:
(a) if
shares of Common Stock are listed on a national securities exchange, the mean
between the highest and lowest sales price per share of the Common Stock on the
consolidated transaction reporting system for the principal national securities
exchange on which shares of Common Stock are listed on that date, or, if there
shall have been no such sale so reported on that date, on the last preceding
date on which such a sale was so reported, or, at the discretion of the
Committee, the price prevailing on the exchange at the time of exercise or other
relevant time (as determined under procedures established by the
Committee),
(b) if
shares of Common Stock are not so listed but are quoted by The American Stock
Exchange, the mean between the highest and lowest sales price per share of
Common Stock reported on the consolidated transaction reporting system for The
American Stock Exchange, or, if there shall have been no such sale so reported
on that date, on the last preceding date on which such a sale was so reported,
or, at the discretion of the Committee, the price prevailing as quoted by The
American Stock Exchange at the time of exercise,
(c) if
the Common Stock is not so listed or quoted, the mean between the closing bid
and asked price on that date, or, if there are no quotations available for such
date, on the last preceding date on which such quotations shall be available, as
reported by The American Stock Exchange, or, if not reported by The American
Stock Exchange, by the National Quotation Bureau Incorporated,
or
(d) if
shares of Common Stock are not publicly traded, the most recent value determined
by an independent appraiser appointed by the Company for such
purpose.
“Grant Date”
means the date
an Award is granted to a Participant pursuant to the Plan. The Grant Date for a
substituted award is the grant date of the original award.
“Grant Price”
means the price
at which a Participant may exercise his or her right to receive cash or Common
Stock, as applicable, under the terms of an Award.
“Incentive Stock Option”
means an Option that is intended to comply with the requirements set forth in
Section 422 of the Code.
“Nonemployee Director”
means
an individual serving as a member of the Board who is not an
Employee.
“Nonqualified Stock Option”
means an Option that is not an Incentive Stock Option.
“Option”
means a right to
purchase a specified number of shares of Common Stock at a specified Grant
Price, which right may be an Incentive Stock Option or a Nonqualified Stock
Option.
“Participant”
means an
Employee, Director or Consultant to whom an Award has been granted under this
Plan.
“Plan”
means the Mexco Energy
Corporation 2009 Incentive Stock Plan.
“Reload”
means the automatic
grant of a new Option upon the exercise of an existing
Option.
“Restricted Stock”
means any
shares of Common Stock that are restricted or subject to forfeiture
provisions.
“Restricted Stock Unit”
means
a Stock Unit that is restricted or subject to forfeiture
provisions.
“Restriction Period”
means a
period of time beginning as of the Grant Date of an Award of Restricted Stock or
Restricted Stock Units and ending as of the date upon which the Common Stock
subject to such Award is no longer restricted or subject to forfeiture
provisions.
“Stock Award”
means an Award
in the form of shares of Common Stock or Stock Units, including an award of
Restricted Stock or Restricted Stock Units.
“Stock Based Awards
Limitations”
means the limitations set forth in Section 7.2(a) and
Section 7.2(b) below.
“Subsidiary”
means in the
case of a corporation, any corporation of which the Company directly or
indirectly owns shares representing 50% or more of the combined voting power of
the shares of all classes or series of capital stock of such corporation which
have the right to vote generally on matters submitted to a vote of the
stockholders of such corporation, in the case of a partnership or other business
entity not organized as a corporation, any such business entity of which the
Company directly or indirectly owns 50% or more of the voting, capital or
profits interests (whether in the form of partnership interests, membership
interests or otherwise), and any other corporation, partnership or other entity
that is a “subsidiary” of the Company within the meaning of Rule 405
promulgated by the Securities and Exchange Commission under the Securities Act
of 1933, as amended.
ARTICLE IV
ELIGIBILITY
Section
4.1
Employees
.
All Employees
are eligible for the grant of Employee Awards under this Plan in the discretion
of the Committee.
Section
4.2
Directors
.
Nonemployee
Directors are eligible for the grant of Director Awards under this
Plan.
Section
4.3
Consultants
.
All Consultants
are eligible for the grant of Consultant Awards under this
Plan.
ARTICLE V
COMMON
STOCK AVAILABLE FOR AWARDS
Section
5.1
Award
Limitations
.
Subject to the
provisions of ARTICLE XVI hereof, no Award shall be granted if it shall
result in the aggregate number of shares of Common Stock issued under the Plan
plus the number of shares of Common Stock covered by or subject to Awards then
outstanding under this Plan (after giving effect to the grant of the Award in
question) to exceed 200,000.
Section
5.2
Unissued
Awards
(a) The
number of shares of Common Stock that are the subject of Awards under this Plan
that are forfeited or terminated, expire unexercised, are settled in cash in
lieu of Common Stock or in a manner such that all or some of the shares covered
by an Award are not issued to a Participant or are exchanged for Awards that do
not involve Common Stock, shall again immediately become available for Awards
hereunder. If the Grant Price or other purchase price of any Option or other
Award granted under the Plan is satisfied by tendering shares of Common Stock to
the Company, or if the tax withholding obligation resulting from the settlement
of any such Option or other Award is satisfied by tendering or withholding
shares of Common Stock, only the number of shares of Common Stock issued net of
the shares of Common Stock tendered or withheld shall be deemed delivered for
purposes of determining usage of shares against the maximum number of shares of
Common Stock available for delivery under the Plan or any sublimit set forth
above.
(b) Shares of Common Stock delivered under the Plan as an Award or in settlement of an Award issued or made:
(i) upon
the assumption, substitution, conversion or replacement of outstanding awards
under a plan or arrangement of an entity acquired in a merger or other
acquisition; or
(ii) as
a post-transaction grant under such a plan or arrangement of an acquired entity
shall, in each case, not reduce or be counted against the maximum number of
shares of Common Stock available for delivery under the Plan, to the extent that
the exemption for transactions in connection with mergers and acquisitions from
the shareholder approval requirements of the stock exchange on which the Common
Stock is listed for equity compensation plans applies.
(c) The
Committee may from time to time adopt and observe such rules and procedures
concerning the counting of shares against the Plan maximum or any sublimit as it
may deem appropriate, including rules more restrictive than those set forth
above to the extent necessary to satisfy the requirements of any stock exchange
on which the Common Stock is listed or any applicable regulatory requirement.
The Board and the appropriate officers of the Company are authorized to take
from time to time whatever actions are necessary, and to file any required
documents with governmental authorities, stock exchanges and transaction
reporting systems to ensure that shares of Common Stock are available for
issuance pursuant to Awards.
ARTICLE VI
ADMINISTRATION.
Section
6.1
Administration
by the Committee
.
(a) This
Plan shall be administered by the Committee, except as otherwise provided
herein. Subject to the provisions hereof, the Committee shall have full and
exclusive power and authority to administer this Plan and to take all actions
that are specifically contemplated hereby or are necessary or appropriate in
connection with the administration hereof. The Committee shall also have full
and exclusive power to interpret this Plan and to adopt such rules, regulations
and guidelines for carrying out this Plan, as it may deem necessary or proper.
Any decision of the Committee in the interpretation and administration of this
Plan shall lie within its sole and absolute discretion and shall be final,
conclusive and binding on all parties concerned.
(b) The
Committee, in its discretion, may:
(i) provide
for the extension of the exercisability of an Employee Award or Consultant
Award,
(ii) accelerate
the vesting or exercisability of an Employee Award or Consultant
Award,
(iii) eliminate
or make less restrictive any restrictions applicable to an Employee Award or
Consultant Award,
(iv) waive
any restriction or other provision of this Plan (insofar as such provision
relates to Employee Awards or to Consultant Awards) or an Employee Award or
Consultant Award,
(v) otherwise
amend or modify an Employee Award or Consultant Award in any
manner, or
(vi) correct
any defect or supply any omission or reconcile any inconsistency in this Plan or
in any Award in the manner and to the extent the Committee deems necessary or
desirable to further the Plan purposes.
(c) The
Committee may do the preceding actions in any manner that is
either:
(i) not
adverse to the Participant to whom such Employee Award or Consultant Award was
granted or
(ii) consented
to by such Participant.
(d) Notwithstanding
anything herein to the contrary, the Committee shall not be considered to have
any discretion to amend or modify an Employee Award or Consultant Award in any
manner that would cause the Award or the Participant who holds the Award to be
subject to, or violate, the provisions of section 409A of the Code with
respect to such Award, unless otherwise agreed to by the
Participant.
Section
6.2
Liability
of the Committee
.
No member of the
Committee shall be liable for anything done or omitted to be done by him or her,
by any member of the Committee or by any officer of the Company in connection
with the performance of any duties under this Plan, except for his or her own
willful misconduct or as expressly provided by statute.
Section
6.3
Authority
of the Board
.
The Board shall
have the same powers, duties, and authority to administer the Plan with respect
to Director Awards as the Committee retains with respect to Employee Awards and
Consultant Awards.
Section
6.4
Delegation
of Authority
.
The Committee
may engage or authorize the engagement of a third party administrator to carry
out administrative functions under the Plan.
ARTICLE VII
EMPLOYEE
AWARDS AND CONSULTANT AWARDS
Section
7.1
Employee
Awards
.
The Committee
shall determine the type or types of Employee Awards to be made under this Plan
and shall designate from time to time the Employees who are to be the recipients
of such Awards. Each Employee Award may, in the discretion of the Committee, be
embodied in an Employee Award Agreement, which shall contain such terms,
conditions and limitations as shall be determined by the Committee in its sole
discretion and, if required by the Committee, shall be signed by the Participant
to whom the Employee Award is granted and signed for and on behalf of the
Company. Employee Awards may consist of those Awards listed in this
ARTICLE VII and may be granted singly, in combination or in tandem.
Employee Awards may also be granted in combination or in tandem with, in
replacement of (subject to the last sentence of ARTICLE XIV), or as
alternatives to, grants or rights under this Plan or any other employee plan of
the Company or any of its Subsidiaries, including the plan of any acquired
entity. An Employee Award may provide for the grant or issuance of additional,
replacement or alternative Employee Awards upon the occurrence of specified
events, including the exercise of the original Employee Award granted to a
Participant. All or part of an Employee Award may be subject to conditions
established by the Committee, which may include, but are not limited to,
continuous service with the Company and its Subsidiary. Upon the termination of
employment by a Participant who is an Employee, any unexercised, deferred,
unvested, or unpaid Employee Awards shall be treated as set forth in the
applicable Employee Award Agreement or as otherwise specified by the
Committee.
(a)
Options
.
An Employee
Award may be in the form of an Option, which may be an Incentive Stock Option or
a Nonqualified Stock Option. The Grant Price of an Option shall be not less than
the Fair Market Value of the Common Stock subject to such Option on the Grant
Date. The term of the Option shall extend no more than 10 years after the
Grant Date. Options may not include provisions that Reload the Option upon
exercise. Similarly, Options may not be repriced or otherwise modified in any
way that would constitute a reduction in the Grant Price associated with such
Options. Subject to the foregoing provisions, the terms, conditions and
limitations applicable to any Options awarded to Employees pursuant to this
Plan, including the Grant Price, the term of the Options, the number of shares
subject to the Option and the date or dates upon which they become exercisable,
shall be determined by the Committee.
(b)
Stock
Awards
.
An Employee
Award may be in the form of a Stock Award. The terms, conditions and limitations
applicable to any Stock Awards granted pursuant to this Plan shall be determined
by the Committee, subject to the limitations set forth below.
(c)
Cash
Awards
.
An Employee
Award may be in the form of a Cash Award. The terms, conditions and limitations
applicable to any Cash Awards granted pursuant to this Plan shall be determined
by the Committee.
Section
7.2
Limitations
.
Notwithstanding
anything to the contrary contained in this Plan, the following limitations shall
apply to any Employee Awards made hereunder:
(a) no
Participant may be granted, during any calendar year, Employee Awards consisting
of Options that are exercisable for more than 25,000 shares of Common
Stock;
(b) no
Participant may be granted, during any calendar year, Stock Awards covering or
relating to more than 25,000 shares of Common Stock; and
Section
7.3
Consultant
Awards
.
Subject to the
limitations described in this ARTICLE VII, the Committee shall have the
sole responsibility and authority to determine the type or types of Consultant
Awards to be made under this Plan and the terms, conditions and limitations
applicable to such Awards.
ARTICLE VIII
DIRECTOR
AWARDS
Section
8.1
Grant of
Director Awards
.
The Board may
grant Director Awards to Nonemployee Directors of the Company from time to time
in accordance with this ARTICLE VIII. Director Awards may consist of those
Awards listed in this ARTICLE VIII and may be granted singly, in
combination, or in tandem. Each Director Award may, in the discretion of the
Board, be embodied in a Director Award Agreement, which shall contain such
terms, conditions and limitations as shall be determined by the Board in its
sole discretion and, if required by the Board, shall be signed by the
Participant to whom the Director Award is granted and signed for and on behalf
of the Company.
Section
8.2
Options
.
A Director Award
may be in the form of an Option; provided that Options granted as Director
Awards shall not be Incentive Stock Options. The Grant Price of an Option shall
be not less than the Fair Market Value of the Common Stock subject to such
Option on the Grant Date. In no event shall the term of the Option extend more
than ten (10) years after the Grant Date. Options may not include
provisions that Reload the Option upon exercise. Similarly, Options may not be
repriced or otherwise modified in any way that would constitute a reduction in
the Grant Price associated with such Options. Subject to the foregoing
provisions, the terms, conditions and limitations applicable to any Options
awarded to Directors pursuant to this ARTICLE VIII, including the Grant
Price, the term of the Options, the number of shares subject to the Option and
the date or dates upon which they become exercisable, shall be determined by the
Board.
Section
8.3
Stock
Awards
.
A Director Award
may be in the form of a Stock Award. Any terms, conditions and limitations
applicable to any Stock Awards granted to a Nonemployee Director pursuant to
this Plan, including but not limited to rights to Dividend Equivalents, shall be
determined by the Board.
Section
8.4
Limitations
.
Notwithstanding
anything to the contrary contained in this Plan the following limitations shall
apply to any Director Awards made hereunder:
(a) no
Participant may be granted, during any fiscal year, Director Awards consisting
of Options that are exercisable for more than 25,000 shares of Common
Stock and
(b) no
Participant may be granted, during any fiscal year, Director Awards consisting
of Stock Awards covering or relating to more than 25,000 shares of Common
Stock.
ARTICLE IX
CHANGE OF
CONTROL
Section
9.1
Acceleration
of Vesting
.
Except as
provided in ARTICLE XVI, notwithstanding any other provisions of the Plan,
including ARTICLE VII and ARTICLE VIII hereof, unless otherwise
expressly provided in the applicable Award Agreement, in the event of a Change
of Control during a Participant’s employment (or service as a Nonemployee
Director or Consultant) with the Company or one of its Subsidiary, each Award
granted under this Plan to the Participant shall become immediately vested and
fully exercisable and any restrictions applicable to the Award shall lapse
(regardless of the otherwise applicable vesting or exercise schedules or
performance goals provided for under the Award Agreement).
Section
9.2
Exercise
Period for Options
.
In the event of
a Change of Control, outstanding Options shall remain exercisable
until:
(a) the
expiration of the term of the Award or,
(b) if
the Participant should die before the expiration of the term of the Award, until
the earlier of:
(i) the
expiration of the term of the Award or
(ii) two
(2) years following the date of the Participant’s death.
ARTICLE X
NON-UNITED
STATES PARTICIPANTS
The
Committee may grant Awards to persons outside the United States under such terms
and conditions as, in the judgment of the Committee, may be necessary or
advisable to comply with the laws of the applicable foreign jurisdictions and,
to that end, may establish sub-plans, modified option exercise procedures and
other terms and procedures. Notwithstanding the above, no actions may be taken
by the Committee, and no Awards shall be granted, that would violate the
Exchange Act, the Code, any securities law, any governing statute, or any other
applicable law.
ARTICLE XI
PAYMENT
OF AWARDS
Section
11.1
General
.
Payment made to
a Participant pursuant to an Award may be made in the form of cash or Common
Stock, or a combination thereof.
Section
11.2
Dividends,
Earnings and Interest
.
Rights to
dividends or Dividend Equivalents may be extended to and made part of any Stock
Award, subject to such terms, conditions and restrictions as the Committee may
establish, including such terms, conditions and restrictions as may be necessary
to ensure that the Stock Awards do not provide for the deferral of compensation
within the meaning of section 409A of the Code.
Section
11.3
Cash-out
of Awards
.
At the
discretion of the Committee, an Award that is an Option may be settled by a cash
payment equal to the difference between the Fair Market Value per share of
Common Stock on the date of exercise and the Grant Price of the Award,
multiplied by the number of shares with respect to which the Award is exercised.
With respect to all Awards other than Options, at the discretion of the Board or
the Committee, as applicable, such Awards may be settled by a cash payment in an
amount that the Board or the Committee, as applicable, shall determine in its
sole discretion is equal to the fair market value of such Awards.
ARTICLE XII
OPTION
EXERCISE
Section
12.1
Exercise
in General
.
The Grant Price
shall be paid in full at the time of exercise in cash or, if permitted by the
Committee and elected by the optionee, the optionee may purchase such shares by
means of tendering Common Stock or surrendering another Award, including
Restricted Stock, valued at Fair Market Value on the date of exercise, or any
combination thereof. The Committee shall determine acceptable methods for
Participants who are Employees or Consultants to tender Common Stock or other
Employee Awards or Consultant Awards; provided that any Common Stock that is or
was the subject of an Employee Award or Consultant Award may be so tendered only
if it has been held by the Participant for six months unless otherwise
determined by the Committee. The Committee may provide for procedures to permit
the exercise or purchase of such Awards by use of the proceeds to be received
from the sale of Common Stock issuable pursuant to an Award. Unless otherwise
provided in the applicable Award Agreement, in the event shares of Restricted
Stock are tendered as consideration for the exercise of an Option, a number of
the shares issued upon the exercise of the Option, equal to the number of shares
of Restricted Stock used as consideration therefor, shall be subject to the same
restrictions as the Restricted Stock so submitted as well as any additional
restrictions that may be imposed by the Committee. The Committee may adopt
additional rules and procedures regarding the exercise of Options from time to
time, provided that such rules and procedures are not inconsistent with the
provisions of this ARTICLE XII.
Section
12.2
Exercise
through Attestation
.
An optionee
desiring to pay the Grant Price of an Option by tendering Common Stock using the
method of attestation may, subject to any such conditions and in compliance with
any such procedures as the Committee may adopt, do so by attesting to the
ownership of Common Stock of the requisite value in which case the Company shall
issue or otherwise deliver to the optionee upon such exercise a number of shares
of Common Stock subject to the Option equal to the result obtained by dividing
(a) the excess of the aggregate Fair Market Value of the shares of Common
Stock subject to the Option for which the Option (or portion thereof) is being
exercised over the Grant Price payable in respect of such exercise by
(b) the Fair Market Value per share of Common Stock subject to the Option,
and the optionee may retain the shares of Common Stock the ownership of which is
attested.
ARTICLE XIII
TAXES
The
Company or its designated third party administrator shall have the right to
deduct applicable taxes from any Employee Award payment and withhold, at the
time of delivery or vesting of cash or shares of Common Stock under this Plan,
an appropriate amount of cash or number of shares of Common Stock or a
combination thereof for payment of taxes or other amounts required by law or to
take such other action as may be necessary in the opinion of the Company to
satisfy all obligations for withholding of such taxes. The Committee may also
permit withholding to be satisfied by the transfer to the Company of shares of
Common Stock theretofore owned by the holder of the Employee Award with respect
to which withholding is required. If shares of Common Stock are used to satisfy
tax withholding, such shares shall be valued based on the Fair Market Value when
the tax withholding is required to be made. The Committee may provide for loans,
to the extent not otherwise prohibited by law, on either a short term or demand
basis, from the Company to a Participant who is an Employee or Consultant to
permit the payment of taxes required by law.
ARTICLE XIV
AMENDMENT,
MODIFICATION, SUSPENSION, OR TERMINATION OF THE PLAN
Section
14.1
In
General
.
The Board may
amend, modify, suspend, or terminate this Plan for the purpose of meeting or
addressing any changes in legal requirements or for any other purpose permitted
by law, except that:
(a) no
amendment or alteration that would adversely affect the rights of any
Participant under any Award previously granted to such Participant shall be made
without the consent of such Participant, and
(b) no
amendment or alteration shall be effective prior to its approval by the
stockholders of the Company to the extent such approval is required by
applicable legal requirements or the applicable requirements of the securities
exchange on which the Company’s Common Stock is listed.
Section
14.2
Exceptions
.
Notwithstanding
anything herein to the contrary, Options issued under the Plan will not be
repriced, replaced, or regranted through cancellation or by decreasing the
exercise price of a previously granted Option except as expressly provided by
the adjustment provisions of ARTICLE XVI.
ARTICLE XV
ASSIGNABILITY
Unless
otherwise determined by the Committee and provided in the Award Agreement or the
terms of the Award, no Award or any other benefit under this Plan shall be
assignable or otherwise transferable except by will, by beneficiary designation,
or by the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined by the Code or Title I of the Employee
Retirement Income Security Act of 1974, as amended, or the rules thereunder. In
the event that a beneficiary designation conflicts with an assignment by will or
the laws of descent and distribution, the beneficiary designation will prevail.
The Committee may prescribe and include in applicable Award Agreements or the
terms of the Award other restrictions on transfer. Any attempted assignment of
an Award or any other benefit under this Plan in violation of this
ARTICLE XV shall be null and void.
ARTICLE XVI
ADJUSTMENTS
Section
16.1
Adjustments
in General
.
The existence of
outstanding Awards shall not affect in any manner the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations, or other changes in the capital stock of the
Company or its business or any merger or consolidation of the Company, or any
issue of bonds, debentures, preferred or prior preference stock (whether or not
such issue is prior to, on a parity with or junior to the existing Common Stock)
or the dissolution or liquidation of the Company, or any sale or transfer of all
or any part of its assets or business, or any other corporate act or proceeding
of any kind, whether or not of a character similar to that of the acts or
proceedings enumerated above.
Section
16.2
Proportionate
Adjustments
(a) In
the event of any subdivision or consolidation of outstanding shares of Common
Stock, declaration of a dividend payable in shares of Common Stock or other
stock split, each of the following shall be proportionately adjusted by the
Board as appropriate to reflect such transaction:
(i) the
number of shares of Common Stock reserved under this Plan and the number of
shares of Common Stock available for issuance pursuant to specific types of
Awards as described in ARTICLE V,
(ii) the
number of shares of Common Stock covered by outstanding
Awards,
(iii) the
Grant Price or other price in respect of such Awards,
(iv) the
appropriate Fair Market Value and other price determinations for such
Awards, and
(v) the
Stock Based Awards Limitations.
(b) In
the event of any other recapitalization or capital reorganization of the
Company, any consolidation or merger of the Company with another corporation or
entity, the adoption by the Company of any plan of exchange affecting Common
Stock or any distribution to holders of Common Stock of securities or property
(including cash dividends that the Board determines are not in the ordinary
course of business but excluding normal cash dividends or dividends payable in
Common Stock), the Board shall make appropriate adjustments
to:
(i) the
number of shares of Common Stock reserved under this Plan and the number of
shares of Common Stock available for issuance pursuant to specific types of
Awards as described in ARTICLE V,
(ii) the
number of shares of Common Stock covered by Awards,
(iii) the
Grant Price or other price in respect of such Awards,
(iv) the
appropriate Fair Market Value and other price determinations for such
Awards, and
(v) the
Stock Based Awards Limitations to reflect such transaction; provided that such
adjustments shall only be such as are necessary to maintain the proportionate
interest of the holders of the Awards and preserve, without increasing, the
value of such Awards.
(c) In
the event of a corporate merger, consolidation, acquisition of assets or stock,
separation, reorganization, or liquidation, the Board shall be
authorized:
(i) to
assume under the Plan previously issued compensatory awards, or to substitute
Awards for previously issued compensatory awards as part of such adjustment; if
such event constitutes a Change of Control,
(ii) to
cancel Awards that are Options and give the Participants who are the holders of
such Awards notice and opportunity to exercise for 15 days prior to such
cancellation, or
(iii) to
cancel any such Awards and to deliver to the Participants cash in an amount that
the Board shall determine in its sole discretion is equal to the fair market
value of such Awards on the date of such event, which in the case of Options
shall be the excess of the Fair Market Value of Common Stock on such date over
the exercise or strike price of such Award.
ARTICLE XVII
RESTRICTIONS
No Common
Stock or other form of payment shall be issued with respect to any Award unless
the Company shall be satisfied based on the advice of its counsel that such
issuance will be in compliance with applicable federal and state securities
laws. Certificates evidencing shares of Common Stock delivered under this Plan
(to the extent that such shares are so evidenced) may be subject to such stop
transfer orders and other restrictions as the Committee may deem advisable under
the rules, regulations and other requirements of the Securities and Exchange
Commission, any securities exchange or transaction reporting system upon which
the Common Stock is then listed or to which it is admitted for quotation and any
applicable federal or state securities law. The Committee may cause a legend or
legends to be placed upon such certificates (if any) to make appropriate
reference to such restrictions.
ARTICLE XVIII
UNFUNDED
PLAN
This Plan
shall be unfunded. Although bookkeeping accounts may be established with respect
to Participants under this Plan, any such accounts shall be used merely as a
bookkeeping convenience, including bookkeeping accounts established by a third
party administrator retained by the Company to administer the Plan. The Company
shall not be required to segregate any assets for purposes of this Plan or
Awards hereunder, nor shall the Company, the Board or the Committee be deemed to
be a trustee of any benefit to be granted under this Plan. Any liability or
obligation of the Company to any Participant with respect to an Award under this
Plan shall be based solely upon any contractual obligations that may be created
by this Plan and any Award Agreement or the terms of the Award, and no such
liability or obligation of the Company shall be deemed to be secured by any
pledge or other encumbrance on any property of the Company. Neither the Company
nor the Board nor the Committee shall be required to give any security or bond
for the performance of any obligation that may be created by this
Plan.
ARTICLE XIX
RIGHT TO
EMPLOYMENT
Nothing
in the Plan or an Award Agreement shall interfere with or limit in any way the
right of the Company or its Subsidiaries to terminate any Participant’s
employment or other service relationship at any time, or confer upon any
Participant any right to continue in the capacity in which he or she is employed
or otherwise serves the Company or its Subsidiaries.
ARTICLE XX
SUCCESSORS
All
obligations of the Company under the Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
ARTICLE XXI
GOVERNING
LAW
This Plan
and all determinations made and actions taken pursuant hereto, to the extent not
otherwise governed by mandatory provisions of the Code or the securities laws of
the United States, shall be governed by and construed in accordance with the
laws of the State of Colorado.
ARTICLE XXII
EFFECTIVENESS
AND TERM
The Plan
will be submitted to the stockholders of the Company for approval at the 2009
Annual Meeting of the Stockholders and, if approved, shall be effective as of
the date first written above. No Award shall be made under the Plan ten years or
more after such date.
ANNUAL
MEETING
September
15, 2009
10:00
A.M.
Petroleum
Club of Midland
501
West Wall, Midland, TX 79701
THIS
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
VOTE
BY INTERNET —
www.envisionreports.com/MXC
Use the
Internet to transmit your voting instructions and for electronic delivery of
information up until 1:00 A.M. Central Standard Time the day of the
meeting. Have your proxy card in hand when you access the web site and follow
the instructions to obtain your records and to create an electronic voting
instruction form.
VOTE
BY PHONE — 1-800-652-VOTE (8683)
Use any
touch-tone telephone to transmit your voting instructions up until
1:00 A.M. Central Standard Time the day of the meeting. Have
your proxy card in hand when you call and then follow the
instructions.
VOTE
BY MAIL
Mark,
sign and date your proxy card and return it to Mexco Energy
Corporation. Mailing of this proxy card requires no postage if mailed
in the U.S.A.
ELECTRONIC
DELIVERY OF FUTURE SHAREHOLDER COMMUNICATIONS
If you
would like to reduce the costs incurred by Mexco Energy Corporation in mailing
proxy materials, you can consent to receiving all future proxy statements, proxy
cards and annual reports electronically via e-mail or the Internet. To sign up
for electronic delivery, please follow the instructions above to vote using the
Internet and, when prompted, indicate that you agree to receive or access
shareholder communications electronically in future years.
The
undersigned stockholder of Mexco Energy Corporation hereby appoints and
instructs Nicholas C. Taylor, Thomas Graham, Jr. and Jack D. Ladd or each or any
of them, with power of substitution, proxies to act and vote shares of common
stock of the undersigned at the 2009 Annual Meeting of Stockholders to be held
September 15, 2009, and at any adjournment or adjournments thereof, with all the
powers the undersigned would possess if personally present and voting thereat,
(A) as instructed on the reverse side with respect to the stated matter
described in the proxy statement for the meeting and (B) at their discretion,
upon other matters that may properly come before the meeting.
UNLESS
A CONTRARY INSTRUCTION IS SPECIFIED BELOW, THIS PROXY WILL BE VOTED FOR ALL
ITEMS.
1. Election
of Directors
The Board of Directors recommends a
vote
FOR
the following
nominees:
|
[ ]
FOR
all nominees -or- individually as follows:
|
FOR
|
WITHHOLD
|
|
|
THOMAS
R. CRADDICK
|
[ ]
|
[ ]
|
|
|
[ ]
WITHHOLD
all nominees
|
|||
|
THOMAS
GRAHAM, JR.
|
[ ]
|
[ ]
|
|
|
ARDEN
R. GROVER
|
[ ]
|
[ ]
|
|
|
JACK
D. LADD
|
[ ]
|
[ ]
|
|
|
NICHOLAS
C. TAYLOR
|
[ ]
|
[ ]
|
The
Board of Directors recommends a vote
FOR
the following
proposals:
|
FOR
|
AGAINST
|
ABSTAIN
|
|
|
2. Ratification
of Selection of Independent Registered Public Accounting
Firm
|
[ ]
|
[ ]
|
[ ]
|
|
FOR
|
AGAINST
|
ABSTAIN
|
|
|
3. Approval
of the 2009 Employee Incentive Stock Plan
|
[ ]
|
[ ]
|
[ ]
|
Authorized
Signatures - Sign Here - This section must be completed for your vote to be
counted.
The
undersigned acknowledges receipt of the Notice of Annual Meeting of Stockholders
and Proxy Statement of the Company dated July 15, 2009.Please date and sign
exactly as name appears on this proxy. Joint owners should each
sign. If the signer is a corporation, please sign full corporate name
by duly authorized officer. Executors, administrators, trustees,
etc., should give full title as such.
Dated
______________________ Signature 1
_______________________ Signature 2
_______________________