<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (as permitted by Rule 14a-6(e) (2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240-14a-12
Commission File Number 0-22349
Pan Western Energy Corporation
------------------------------
(Exact name of small business registrant as specified in its charter)
- --------------------------------------------------------------------------------
(Name of Person (s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box) :
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(1) and 0-11
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applied:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined) :
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a) (2) and identify the following for which the offsetting fee was
paid previously. Identify the previous filing by registration number, or the
Form or Schedule and the date of its filing.
<PAGE>
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
PAN WESTERN ENERGY CORPORATION
1850 South Boulder, Suite 300
Tulsa, Oklahoma 74119
(918-582-4957)
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held September 28, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Pan Western Energy Corporation (the "Company" or "Pan Western")
will be held at the offices of Woodrum, Wilson, Kemendo & Cuite , P.C., 9 East
4th Street, Suite 605, Tulsa, Oklahoma 74103, on Tuesday, September 28, 1999 at
10:00 a.m., local time. A Proxy and Proxy Statement for the Meet ing are
enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of four directors;
2. A proposal to ratify the selection of Deloitte & Touche LLP as
independent public accountants for 1999; and
3. Such other matters as may properly come before the Meeting or any
adjournments thereof.
The close of business on August 20, 1999, has been fixed as the record date
for determining Stockholders of the Company entitled to notice of and to vote at
the Meeting or any postponement or adjournment thereof. For a period of at least
ten days prior to the Meeting, a complete list of Stockholders entitled to vote
at the Meeting shall be open to examination by any Stockholder during ordinary
business hours at the offices of the Company, 1850 South Boulder Avenue, Suite
300, Tulsa, Oklahoma 74119.
Information concerning the matters to be acted upon at the Meeting is set
forth in the accompanying Proxy Statement.
We hope that you will use this opportunity to take an active part in the
affairs of your Company by voting on the business to come before the Meeting
either by executing and returning the enclosed Proxy or by casting your vote in
person at the Meeting. The granting of a proxy will not affect your right to
vote in person should you decide to attend the Meeting.
IF YOU DO NOT EXPECT TO ATTEND IN PERSON, PLEASE PROMPTLY DATE, SIGN AND
RETURN THE ENCLOSED PROXY, WHICH IS SOLICITED BY AND ON BEHALF OF THE BOARD OF
DIRECTORS. A PREPAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. IF A STOCKHOLDER
RECEIVES MORE THAN ONE PROXY BECAUSE HE OR SHE OWNS SHARES REGISTERED IN
DIFFERENT NAMES OR ADDRESSES, EACH PROXY SHOULD BE COMPLETED AND RETURNED.
By Order of the Board of Directors
/s/ Clayton E. Woodrum
----------------------------------
Clayton E. Woodrum, Secretary
Tulsa, Oklahoma
August 25, 1999
<PAGE>
PAN WESTERN ENERGY CORPORATION
1850 South Boulder, Suite 300
Tulsa, Oklahoma 74119
1(918-582-4957)
PROXY STATEMENT
For
ANNUAL MEETING OF STOCKHOLDERS
To Be Held September 28, 1999
This Proxy Statement is being first mailed on August 25, 1999 to
Stockholders of record on August 20, 1999 of Pan Western Energy Corporation, an
Oklahoma corporation (the "Company" or "Pan Western"), by the Board of Directors
to solicit proxies (the "Proxies") for use at the Annual Meeting of Stockholders
(the "Meeting") to be held at the offices of Woodrum, Wilson, Kemendo & Cuite,
P.C., 9 East 4th Street, Suite 605, Tulsa, Oklahoma 74103, on Tuesday, September
28, 1999 at 10:00 a.m., local time, or at such other time and place to which the
Meeting may be postponed of adjourned.
The purpose of the Meeting is to consider and act upon (i) the election of
four directors; (ii) a proposal to ratify the selection of Deloitte & Touche LLP
as independent public accountants for 1999; and (iii) such other matters as may
properly come before the Meeting or any adjournments thereof.
All shares represented by valid Proxies, unless the stockholder otherwise
specifies, will be voted FOR (i) the election of the four persons named under
"Proposal I - Election of Directors" as nominees for election as directors of
the Company; (ii) the proposal to ratify the selection of Deloitte & Touche, LLP
as the Company's independent public accountants for 1999; and (iii) at the
discretion of the Proxy holders with regard to any other matter that may
properly come before the Meeting or any postponements or adjournments thereof.
Where a stockholder has appropriately specified how a Proxy is to be voted, it
will be voted accordingly.
A proxy may be revoked at any time by providing written notice of such
revocation to the Company c/o American Stock Transfer & Trust Company, 40 Wall
Street, 46th Floor, New York, New York 10005, which notice must be received
prior to 5:00 p.m., local time, September 21, 1999. If notice of revocation is
not received by such date, a stockholder may nevertheless revoke a Proxy if he
attends the Meeting and desires to vote in person.
RECORD DATE AND VOTING SECURITIES
The record date for determining stockholders entitled to vote at the
Meeting was the close of business on August 20, 1999 (the "Record Date"), at
which time the Company had issued and outstanding approximately 3,621,873 shares
of Common Stock, $.01 par value (" Common Stock"), each share of which is
entitled to one vote per share with respect to each matter to be acted upon at
the Meeting. The Common Stock constitutes the only outstanding voting securities
of the Company entitled to vote at the Meeting.
QUORUM AND VOTING
The presence at the Meeting, in person or by Proxy, of the holders of one
third of the outstanding Common Stock is necessary to constitute a quorum. Each
share of Common Stock represented at the Meeting, in person or by Proxy, will be
counted toward a quorum. Each share of Common Stock is entitled to one vote with
respect to each matter to be voted on at the Meeting. The affirmative vote of a
majority of the issued and outstanding shares of Common Stock present in person
or by proxy at the Meeting is required for the election of
<PAGE>
directors and for the ratification of the appointment of the independent public
accountants. Abstentions from voting will be treated as shares that are present
for purposes of determining a quorum and for purposes of determining whether the
requisite number of affirmative votes are received on any matters submitted to
the stockholders for a vote. If a broker indicates on the Proxy that it does not
have discretionary authority as to certain shares to vote on a particular
matter, those shares will not be considered as present with respect to that
matter, however, they will be treated as shares that are present for purposes of
determining a quorum.
PROPOSAL I - ELECTION OF DIRECTORS
There are four directors to be elected for one-year terms expiring at the
Company's Annual Meeting of Stockholders in 2000 or at such time as their
successors have been elected and qualified. It is intended that the names of the
persons indicated below will be placed in nomination at the Annual Meeting. Each
of the nominees has indicated his willingness to serve on the Board of Directors
if elected. However, in case any nominee shall become unavailable for election
to the Board of Directors for any reason not presently known or contemplated,
the Proxy holders will have discretionary authority in that instance to vote the
Proxy for a substitute.
Approval of the proposal to elect the four nominees to serve as directors
requires the affirmative vote of the holders of a majority of the shares of
Common Stock present, in person or by Proxy, at the Meeting. The Board of
Directors recommends a vote "FOR" the following nominees.
The nominees (the "Nominees") are as follows:
Sid L. Anderson, age 52, has been a director and has served as Chairman of
----------------
the Board of Directors and President of the Company since its organization in
1981. From 1977 to 1981, Mr. Anderson was engaged in the private practice of
law, specializing in taxation. From 1972 to 1977 Mr. Anderson was employed as a
tax manager with Peat, Marwick, Mitchell & Co. in Tulsa, Oklahoma. Mr. Anderson
received his Bachelor of Business Administration in Accounting and his Juris
Doctor degrees from the University of Oklahoma in 1969 and 1972, respectively.
Mr. Anderson was admitted to the Oklahoma Bar Association in 1972 and became a
Certified Public Accountant in Oklahoma in 1974. Mr. Anderson is currently a
member of the Natural Gas Committee and is a former Director of the Oklahoma
Independent Petroleum Association. He is also a member of the Executive Advisory
Board for the College of Business Administration at the University of Tulsa and
is Chairman of the Board of Regents of Rogers University. Mr. Anderson is a
Trustee and former Chairman of the Tulsa Industrial Authority.
Clayton E. Woodrum, age 59, has been a principal in the financial
-------------------
consulting firm of Woodrum, Wilson, Kemendo & Cuite, P.C. and its predecessors,
located in Tulsa, Oklahoma since 1986. Mr. Woodrum has been a director of the
Company since 1985 and also serves as Executive Vice President and as Secretary
of the Company. Mr. Woodrum received his Bachelor of Science degree in
Accounting in 1963 from Kansas State University and became a Certified Public
Accountant in Oklahoma in 1965.
B. E. (Bud) Livingston, age 72, was elected a Director of the Company in
-----------------------
June, 1996. Since 1979, Mr. Livingston has been President of his own oil and gas
production companies, KATO Operating Company and Livingston Oil Company, and has
performed independent consulting services for other oil and gas companies. From
1948 through 1978, Mr. Livingston was employed by Sunray Oil Corporation in a
number of positions the most recent of which was Manager of Operations - Mid-
Continent Region. Mr. Livingston is the father of Buddie E. Livingston, II, the
Vice President - Operations for the Company.
Frederick A. Bendana, age 48, has been nominated to serve as a Director
--------------------
beginning immediately after the Meeting. Mr. Bendana has been Chairman of
Ben-Trei, Ltd since 1987. Ben-Trei, Ltd. is a global chemical fertilizer
marketing, production and investment company. From April, 1981 to 1987 Mr.
Bendana was associated with International Chemical Company where he held several
positions before resigning as senior vice president and a member of the
executive committee. Prior to this, Mr. Bendana held positions in both U.S. and
Nicaraguan chemical companies. Mr. Bendana graduated from Rutgers University in
1973 with a Bachelor of Science in
2
<PAGE>
Agricultural Economics. Mr. Bendana is a member and has a board member of
numerous educational and civic organizations including, Rogers University
Board of Regents, The University Center at Tulsa Trust Authority, The
Hispanic-American Foundation, and Tulsa Global Alliance.
Each director is elected for a period of one year at the Company's Annual
Meeting of Stockholders and serves until his successor is duly elected.
Directors who are not officers of the Company receive no cash compensation for
their services. Officers are elected by and serve at the will of the Board of
Directors. Mr. B. E. (Bud) Livingston is the father of Mr. Buddie E. Livingston,
II who is Vice President of Operations for the Company. Other than the
aforementioned relationship, there are no other family relationships between any
other director, officer or person nominated or chosen to become a director or
officer and any other such person.
The business of the Company is managed under the direction of the Board of
Directors. The Board meets from time to time during the year as necessary to
review significant developments affecting the Company and to act on matters
requiring Board approval. The Board of Directors met two times during 1998 with
all members present and attending either in person or via telephone. The Board
of Directors also acted by unanimous written consent one time during the year
ended December 31, 1998.
The Board of Directors has established a Compensation Committee whose
current members are Messrs. Anderson, Livingston and Woodrum whose terms on the
Board will end at the Annual Meeting. The Compensation Committee reviews the
Company's executive compensation policies and practices and administers the
Company's employee stock option plan. The Compensation Committee did not meet
during 1998. The Board of Directors has also established an Audit Committee and
an Executive Committee. Current members of the Audit Committee include Messrs.
Woodrum and Bendana. The Audit Committee did not meet during 1998. The Executive
Committee currently consists of Messrs. Anderson, Woodrum and Livingston. The
Executive Committee met two times during 1998.
PROPOSAL II - RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR
At the recommendation of the Audit Committee, the Board of Directors has
appointed Deloitte & Touche LLP as the independent auditor of the Company for
the year ended December 31, 1999. Deloitte & Touche LLP has been the independent
auditor of the Compan y for each of the last five years. A proposal will be
presented at the Meeting asking the Stockholders to ratify the appointment of
Deloitte & Touche LLP as the Company's independent auditors.
The affirmative vote of a majority of the shares present in person or by
proxy at the Meeting and entitled to vote is required for the adoption of the
proposal to ratify the selection of Deloitte & Touche LLP as the Company's
independent auditors for 1999. The Board of Directors recommends a vote "FOR"
the ratification of Deloitte & Touche LLP as the Company's independent auditor
for 1998.
PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP
As of June 30, 1999, the Company had 3,621,873 issued and outstanding
shares of Common Stock, the Company's only class of equity securities issued and
outstanding. The following table sets forth, as of June 30, 1999, the number and
percentage of shares of Common Stock of the Company owned beneficially by (i)
each director and nominee of the Company, (ii) each Named Officer of the Company
named in the Summary Compensation Table set forth in this Proxy Statement, (iii)
all directors and executive officers of the Company as a group, and (iv) each
person known to the Company to own of record or beneficially more than five
percent of the Company's Common Stock. Except as otherwise indicated, the
persons named in the table have sole voting and investment power with respect to
the shares indicated. As of June 30, 1998, the Company had approximately 305
holders of Common Stock of record.
3
<PAGE>
Number of Shares
Name of Beneficial Owner Beneficially Owned Percent of Class(1)
- ------------------------ ------------------ ------------------
Sid L. Anderson(2)(5) 1,647,468 42.7%
Clayton E. Woodrum(3) 91,350 2.5%
Buddie E. Livingston, II(2)(5) 56,000 1.5%
Vincent R. Kemendo(2)(5) 118,500 3.2%
B.E. (Bud) Livingston(2)(6) 15,000 *
Frederick A. Bendana(7) 500 *
Pangloss International, S.A. (4) 481,250 11.7%
All Executive Officers and 1,973,023 48.2%
Directors as a group (6 persons)(2)(3)
* less than one percent
(1) Based upon 3,621,873 issued and outstanding shares of Common Stock at June
30, 1999. Shares of Common Stock which an individual or group has the
right to acquire within 60 days pursuant to the exercise of options,
warrants, or other convertible securities are deemed to be outstanding for
the purpose of computing the percentage ownership of such individual or
group, but are not deemed to be outstanding for the purpose of computing
the percentage ownership of any other individual or group shown in the
table.
(2) Includes (a) with respect to Mr. Anderson, 238,500 shares issuable to him
upon exercise of presently exercisable options; (b) with respect to Mr.
Livingston, II 56,000 shares issuable to him upon exercise of presently
exercisable options; (c) with respect to Mr. Kemendo, 56,000 shares
issuable to him upon exercise of presently exercisable options; and (d)
with respect to Mr. Livingston, 15,000 shares issuable to him upon exercise
of presently exercisable options.
(3) Includes 17,850 shares held by Mr. Woodrum's spouse and 73,500 shares
issuable to Mr. Woodrum upon exercise of presently exercisable options. The
address of Mr. Woodrum is Suite 605, 9 East 4th Street, Tulsa, Oklahoma
74103.
(4) Includes 225,000 shares issuable to Pangloss International, S.A. upon
exercise of presently exercisable Common Stock purchase warrants. The
address of Pangloss International, S.A. is New Moon House, Eastern Road,
Nassau, Bahamas. Pangloss International, S.A. is a Bahamian corporation,
all of the outstanding shares of which are owned by Robert A. Nihon who, by
reason of such ownership, may be deemed the beneficial owner of the
Company's securities held of record by Pangloss International, S.A. Mr.
Nihon's address is the same as the address of Pangloss International.
(5) The address of Messrs. Anderson, Kemendo and Livingston, II is Suite 300,
1850 South Boulder, Tulsa, Oklahoma 74119.
(6) The address of Mr. Livingston is Highway 66 North, Turnpike Gate, Bristow,
Oklahoma 74010.
(7) The address of Mr. Bendana is 7060 S. Yale Avenue, Suite 999, Tulsa,
Oklahoma 74136.
There are no arrangements known to management which may result in a change
in control of the Company.
4
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth the executive officers and directors of the
Company.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Sid L. Anderson 52 Chairman of the Board, President and Chief Executive Officer
Clayton E. Woodrum 59 Executive Vice President, Secretary and Director
Buddie E. Livingston, II 44 Vice President - Operations
Vincent R. Kemendo 44 Vice President and Chief Financial Officer
</TABLE>
Buddie E. Livingston, II joined the Company on September 1, 1995. From 1981
through August, 1995 Mr. Livingston was production superintendent for KATO
Operating Company located in Bristow, Oklahoma. From 1975 to 1981 Mr. Livingston
was employed by Sun Oil Company, USA as a senior engineer and production
specialist and worked in Sun's domestic and international operations. Mr.
Livingston attended the University of South Louisiana. Mr. Livingston is the
son of Mr. B. E. (Bud) Livingston, a Director of the Company.
Vincent R. Kemendo joined the Company on December 26, 1995. Prior to that,
since 1991, Mr. Kemendo was a consultant with the consulting firm of Woodrum,
Shoulders, Kemendo & Evanson in Tulsa, Oklahoma. From 1988 to 1991, Mr. Kemendo
was employed as Controller for Mathews Auto Electric, Inc., an auto parts
warehousing operation. From 1983 to 1988, Mr. Kemendo was Vice President-
Budgeting and Administration for Fitzgerald, DeArman & Roberts, Inc., a regional
brokerage firm with corporate headquarters in Tulsa, Oklahoma. Prior to that
time Mr. Kemendo was employed by Cotton Petroleum Corporation as Coordinator of
Financial Analysis. Mr. Kemendo received his Bachelor of Science in Business
Administration degree from Drake University in 1977 and received his Masters of
Business Administration from Oklahoma State University in 1978.
EXECUTIVE COMPENSATION
The table below sets forth, in summary form, (1) the compensation paid, for
the years shown, to Sid L. Anderson, the Company's President, and the two other
highest-paid executive officers of the Company serving as executive officers on
December 31, 1998 (the "Named Officers"); (2) the stock options and stock
appreciation rights granted to the Named Officers for the years shown; and (3)
long-term payouts and other compensation to the Named Officers for the years
shown.
5
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE Long Term Compensation
-----------------------
Annual Compensation Awards Payouts
--------------------- ----------- --------
Restricted Securities
Other Annual Stock Underlying LTIP All Other
Name and Principal Salary Bonus Compensation Awards Options/ Payouts Comp
Position Year ($) ($) ($)(1) ($) SARs (#) ($) ($)
- -------------------------- ---- ---------- ------- ------------ ---------- ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sid L. Anderson, 1998 150,000 6,250 170,171/(2)/ --- 221,468 --- ---
Chairman 1997 150,000 6,250 85,130/(3)/ --- 330,000 --- ---
and President 1996 150,000 6,250 94,347/(4)/ --- --- --- ---
Buddie E. Livingston, II 1998 52,000 2,500 --- --- --- --- 353
Vice President - 1997 48,000 2,000 --- --- 80,000 --- 353
Operations 1996 48,000 2,000 --- --- --- --- 216
Vincent R. Kemendo 1998 44,000 2,167 --- --- --- --- ---
Vice President - 1997 40,000 1,667 --- --- 80,000 --- ---
Finance 1996 40,000 1,667 --- --- --- --- ---
</TABLE>
(1) Except as noted, none of the executive officers listed received perquisites
or other personal benefits that exceeded the lesser of $50,000 or 10
percent of the salary and bonus for such officers.
(2) Includes a $35,080 guaranty fee paid to Mr. Anderson (see "Employment
Agreements") and a total of $104,090 which represents the excess of market
price, reduced for a marketability discount, over the option exercise
price, and a total of $31,001 paid by the Company to or on behalf of Mr.
Anderson for country club dues and automobile allowance.
(3) Includes a $63,754 guaranty fee paid to Mr. Anderson (see "Employment
Agreements") and a total of $21,376 paid by the Company to or on behalf of
Mr. Anderson for country club dues, automobile allowance and life insurance
premiums.
(4) Includes a $75,370 guaranty fee paid to Mr. Anderson (see "Employment
Agreements") and a total of $18,977 paid by the Company to or on behalf of
Mr. Anderson for country club dues, automobile allowance and lease expense
and life insurance premiums.
Bonus Plan
The Company has an incentive compensation bonus plan in effect for certain
salaried employees other than its President. The annual bonus pool is equal to
10% of annual net income of the Company in excess of $100,000. The plan is
currently administered and allocated among the eligible employees by the
Company's Board of Directors. No distributions have been made from this plan
since its inception.
Stock Options
Director Stock Option Plan. The Company has adopted a Directors' Stock
Option Plan pursuant to which non-employee Directors of the Company may be
granted options to purchase shares of Common Stock of the Company. The total
number of shares which may be issued pursuant to this plan is 150,000 shares of
Common Stock. The plan provides that the exercise price of options granted
pursuant to the plan shall not be less than the fair market value of the shares
of Common Stock on the date of grant and that options granted are exercisable
for the lesser of ten years and thirty days from the date of grant or 30 days
following termination as a member of the Company's Board of Directors. The plan
is administered by the Board of Directors. Through December 31, 1998, options to
purchase 32,500 shares of the Company's Common Stock at an exercise price
ranging from $1.30 to $1.40 per share had been granted and were outstanding
under this plan.
6
<PAGE>
Employee Stock Option Plan. The Company has adopted an Employee Stock
Option Plan pursuant to which employees and any other persons who perform
substantial services for or on behalf of the Company may be granted options to
purchase shares of Common Stock of the Company. Directors who are also employees
are eligible to receive options under this plan. The total number of shares
which may be issued pursuant to this plan is 100,000 shares of Common Stock. The
plan provides that the exercise price of options granted pursuant to the plan
shall not be less than the fair market value of the shares of Common Stock on
the date of grant and that options granted are exercisable for the lesser of ten
years and thirty days from the date of grant or 30 days following termination of
employment with the Company. The plan is administered by the Board of Directors.
Through December 31, 1998, no options had been granted under this plan.
During the year ended December 31, 1998, there were no issuances of stock
options under the Directors Stock Option Plan or the Employee Stock Option Plan
There were however, 32,500 Director Stock Options canceled during the year ended
December 31, 1998 due to the resignation of two Directors of the Company. In
addition, during the year ended December 31, 1998, the Company issued 221,468
stock options exercisable at $0.05 per share to the President of the Company.
These options were not issued under either of the Company's stock option plans
and were exercised on June 16, 1998. The Company recorded compensation expense
of $104,090, representing the excess of market price, reduced for a
marketability discount, over the option exercise price. Other than these option
grants, there were no restricted stock awards granted, no options or stock
appreciation rights were exercised, and no awards under any long-term incentive
plan were made to any officer or employee of the Company during the year ended
December 31, 1998.
During the year ended December 31, 1997, the Company issued 50,000 stock
options exercisable at $1.40 per share to Directors of the Company. These stock
options were issued pursuant to the Director Stock Option Plan. In addition,
during the year ended December 31, 1997, the Company issued 570,000 stock
options exercisable at $1.40 per share to employees of the Company. These
options were not issued under either of the Company's stock option plans. Other
than these option grants, there were no restricted stock awards granted, no
options or stock appreciation rights were exercised, and no awards under any
long-term incentive plan were made to any officer or employee of the Company
during the year ended December 31, 1997.
During 1996, no restricted stock awards were granted, no stock options or
stock appreciation rights were granted, no options or stock appreciation rights
were exercised, and no awards under any long-term incentive plan were made to
any officer or employee of the Company.
The table below sets forth, in summary form, with respect to the Named
Officers, (i) the name of such officer receiving grants of stock options from
the Company during the year ended December 31, 1998; (ii) the number of
securities underlying the options; (iii) the percent such grant represents of
the total options granted to employees during the year ended December 31, 1998;
(iv) the per-share exercise price of the options granted; (v) the expiration
date of the options; and (vi) the potential realizable value at assumed annual
rates of stock price appreciation.
Option Grants during the Year Ended December 31, 1998
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Rates of Stock Price
Appreciation for
Individual Grants Option Term (1)(2)
- ----------------------------------------------------------------------- --------------------
Percent of
Number of Total
Securities Options/SARS
Underlying Granted to Exercise or
Options/SARS Employees in Base Price Expiration
Name In Year (1) Year ($/Share) Date 5% ($) 10% ($)
---- ---------- ---- --------- ---- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Sid L. Anderson 221,468 100% $0.05 2/20/09 $176,515 $287,630
</TABLE>
7
<PAGE>
(1) Some of these options are exercisable only as they vest. See description of
option grants above.
(2) For purposes of this calculation the option term is assumed to be ten years
and thirty days from date of grant.
The following table sets forth information relating to the exercises of
stock options by each of the Company's officers and directors during the year
ended December 31, 1997 and the value of unexercised stock options as of
December 31, 1998.
AGGREGATED OPTION EXERCISES IN THE FISCAL
YEAR ENDED DECEMBER 31, 1998 AND
DECEMBER 31, 1998 OPTION VALUES
<TABLE>
<CAPTION>
Option Exercises
During Year
Ended December 31, 1998 Number of Securities
------------------------ Underlying Unexercised Value of Unexercised
Number of Options at In-The-Money Options
Shares December 31, 1998 December 31, 1998 (1)
Acquired Value ------------------------- ---------------------
Name on Exercise Realized Unexercisable Exercisable Unexercisable Exercisable
---- ----------- ----------------- ------------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Sid L. Anderson 221,468 $ 104,090 99,000/(1)/ 238,500/(1)/ $ --- $ ---
Clayton E. Woodrum None None 24,000/(2)/ 73,500/(2)/ --- ---
Buddie E. Livingston II None None 24,000/(3)/ 56,000/(3)/ ---
Vincent R. Kemendo None None 24,000/(4)/ 56,000/(4)/ --- ---
B. E. (Bud) Livingston None None --- 15,000/(5)/ --- ---
Frederick A. Bendana None None --- --- --- ---
</TABLE>
(1) Reflects 7,500 options granted in July 1993 not under either of the
Company's option plans, exercisable at $1.30 per share and 330,000 options
granted in January, 1997 not under either of the Company's option plans,
exercisable at $1.40 per share.
(2) Reflects 7,500 options granted in July 1993 under the Company's Directors'
Stock Option Plan, exercisable at $1.30 per share, 10,000 options granted
in January 1997 under the Company's Directors' Stock Option Plan,
exercisable at $1.40 per share, and 80,000 options granted in January, 1997
not under either of the Company's option plans, exercisable at $1.40 per
share.
(3) Reflects 80,000 options granted in January, 1997 not under either of the
Company's option plans, exercisable at $1.40 per share.
(4) Reflects 80,000 options granted in January, 1997 not under either of the
Company's option plans, exercisable at $1.40 per share.
(5) Reflects 15,000 options granted in January, 1997 under the Company's
Directors' Stock Option Plan, exercisable at $1.40 per share
Warrants
As part of the credit facility the Company entered into on July 1, 1998,
the Company issued 200,000 warrants to the lender. These warrants are
exercisable at any time at $2.00 per share and they expire on June 30, 2003. In
addition, on August 1, 1998, the Company amended its credit facility with this
lender and as part of the amendment, the Company issued the lender an additional
200,000 warrants which are also exercisable at any time at $2.00 per share and
expire on June 30, 2003.
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Employment Agreements
The Company has entered into an employment agreement with Sid L. Anderson,
President of the Company. The term of Mr. Anderson's Employment Agreement
continues until the later of October 31, 2000 or so long as Mr. Anderson is a
personal guarantor of any of the Company's debt. Under this Agreement, Mr.
Anderson receives a base salary of $150,000 per year, plus additional annual
incentive compensation in an amount equal to 10% of the Company's annual audited
pre-tax net income in excess of $150,000. In addition, Mr. Anderson is entitled
to participate in all benefit programs the Company makes available to employees.
The Agreement also provides for the payment to Mr. Anderson of an automobile
allowance of $1,000 per month, and such other benefits as may be determined from
time to time by the Board of Directors of the Company. In addition, under the
terms of a separate Guaranty Fee Agreement between Mr. Anderson and the Company,
Mr. Anderson is entitled to a semi-annual payment of an amount equal to the
greater of $15,000 or 3% of the aggregate amount of Company indebtedness
guaranteed personally by him. To secure payment of this fee, the Company has
granted Mr. Anderson a security interest in the Company's equipment, inventory,
fixtures, receivables and other assets. Mr. Anderson's Employment Agreement
provides that the Company has the right to terminate the Agreement at any time
upon written notice and, unless the Agreement has been terminated for cause, as
defined, the Company is obligated to pay Mr. Anderson the compensation payable
for the remainder of the term of the Agreement, including any incentive
compensation, vacation pay or accrued employee benefits. Mr. Anderson has the
right to terminate his employment with the Company upon 30 days written notice
in which event, the Company is only obligated to compensate him under the terms
of the Agreement up to the date of termination. The Agreement also contains
provisions restricting Mr. Anderson from engaging in business activities in
competition with the Company.
The Company has also entered into employment agreements with Buddie E.
Livingston, II, and Vincent R. Kemendo pursuant to which they are employed by
the Company as Vice President - Operations and Vice President - Finance,
respectively. The agreements with Messrs. Livingston and Kemendo expire on
December 31, 2000, unless extended by the Company's Board of Directors. Under
these agreements, Messrs. Livingston and Kemendo receive base salaries of
$48,000 and $40,000 per year, respectively. In addition, Messrs. Livingston and
Kemendo are entitled to participate in all benefit programs the Company makes
available to employees. Under their agreements, Messrs. Livingston and Kemendo
are eligible to participate in the Company's incentive compensation bonus plan.
See "Bonus Plan". The Company has the right to terminate each of these
employment agreements upon written notice and, unless the agreement has been
terminated for cause, as defined, the Company is obligated to pay the terminated
individual the compensation payable for the remainder of the term of his
agreement, including any incentive compensation, vacation pay or accrued
employee benefits. Messrs. Livingston and Kemendo each have the right to
terminate their employment agreements with the Company upon 30 days written
notice to the Company in which event the Company is only obligated to compensate
the individual up to the date of termination. Each of the Employment Agreements
also contain certain provisions restricting Messrs. Livingston and Kemendo from
engaging in business activities in competition with the Company. In September,
1998 the base salaries of Messrs. Livingston and Kemendo were increased to
$60,000 and $52,000 per year, respectively.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16 (a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's Directors and executive officers, and persons who own
more than 10% of a registered class of the Company's equity securities to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership of any equity securities of the Company. Copies
of such reports are required to be furnished to the Company. To the Company's
knowledge, based solely on review of the copies of such reports furnished to the
Company, there were no persons subject to these reporting requirements who
failed to file the required reports on a timely basis with respect to the
Company's most recent fiscal year.
Certain Transactions and Relationships
In 1995, the Company began paying a fee to Sid L. Anderson, Chairman of the
Board, President and Chief Executive Officer of the Company, pursuant to the
terms of a Guaranty Fee Agreement. Under the terms of this Agreement, Mr.
Anderson receives an annual fee for guaranteeing Company debt equal to the
greater of
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$15,000 or 3% of the guaranteed debt. During 1998, 1997 and 1996, fees paid to
Mr. Anderson under this Agreement were approximately $35,080, $64,000 and
$75,000, respectively.
The Company incurs fees for tax and accounting services provided by a firm
in which Clayton E. Woodrum, Executive Vice President and a Director of the
Company, is a partner. Amounts paid by the Company to this firm during 1998,
1997 and 1996 were $10,407, $11,359 and $39,943, respectively. In addition,
during 1996, the Company issued a total of 35,700 shares of Common Stock to this
firm in payment for services rendered. The value assigned to this stock,
$49,980, was based on billings received from the firm. At the request of the
firm, 17,850 of these shares were issued to Pat Woodrum, spouse of Clayton E.
Woodrum, and 17,850 of these shares were issued to Andrea Kemendo, spouse of a
partner in the firm. The Company also incurs fees for business advisory services
with a firm affiliated with this board member. Such amounts incurred in 1998 and
1997 were $36,000 and $37,424, respectively.
Pursuant to an agreement signed in February 1996, B. E. (Bud) Livingston, a
member of the Company's Board of Directors, will provide evaluation and
reservoir engineering services to the Company with respect to oil and gas wells
in Coal County, Oklahoma and Borden and Stonewall Counties, Texas in exchange
for an amount equal to the net of a percentage of the net revenue interest and a
percentage of the lease operating expenses attributable to certain producing oil
and gas wells located in Garfield and Noble Counties, Oklahoma. During 1997 and
1996, no amounts were paid by the Company to Mr. Livingston pursuant to this
Agreement. However, a company affiliated with this director provides well
operation services to the Company. Such amounts incurred in 1998, 1997 and 1996
were $7,114, $9,237 and $22,087, respectively.
Any future transactions between the Company and its directors, officers,
principal shareholders or their affiliates will be on terms no less favorable to
the Company than may be obtained in similar, arms length transactions with
unaffiliated third parties.
STOCKHOLDER PROPOSALS TO BE PRESENTED
AT NEXT ANNUAL MEETING
Proposals of stockholders intended to be presented at the next Annual
Meeting of the Stockholders of the Company must be received by the Company at
its offices at 1850 South Boulder Avenue, Suite 300, Tulsa, Oklahoma 74119, not
later than March 30, 2000 and satisfy the conditions established by the
Securities and Exchange Commission for Stockholder proposals to be included in
the Company's proxy statement for that meeting.
TRANSACTION OF OTHER BUSINESS
At the date of this Proxy Statement, the only business which the Board of
Directors intends to present or knows that others will present at the Meeting is
set forth above. If any other matter or matters are properly brought before the
Meeting, or any adjournment thereof, it is the intention of the persons named in
the accompanying form of proxy to vote the proxy on such matters in accordance
with their best judgment.
MISCELLANEOUS
All costs incurred in the solicitation of Proxies will be borne by the
Company. In addition to the solicitation by mail, officers and employees of the
Company may solicit Proxies by telephone, telegraph or personally, without
additional compensation. The Company may also make arrangements with brokerage
houses and other custodians, nominees and fiduciaries for the forwarding of
solicitation materials to the beneficial owners of shares of Common Stock held
of record by such persons, and the Company may reimburse such brokerage
10
<PAGE>
houses and other custodians, nominees and fiduciaries for their out-of-pocket
expenses incurred in connection therewith.
ANNUAL REPORT ON FORM 10-KSB
The Company's Annual Report to Stockholders for the year ended December 31,
1998, which includes financial statements (the "Annual Report"), accompanies
this Proxy Statement. The Annual Report is not to be deemed part of this Proxy
Statement.
By Order of the Board of Directors
/s/ Clayton E. Woodrum
----------------------
Clayton E. Woodrum
Secretary
Tulsa, Oklahoma
August 25, 1999
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PROXY
PAN WESTERN ENERGY CORPORATION
The undersigned hereby appoints Vincent R. Kemendo and Paul L. Pickle as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them, to represent and vote, as designated on the reverse, all shares of Common
Stock of Pan Weste rn Energy Corporation (the "Company") held of record by the
undersigned on August 20, 1999, at the Annual Meeting of Stockholders to be held
September 28, 1999 or any adjournment thereof.
(To Be Signed on Reverse Side)
Proposal 1 - Election of Directors
- ----------------------------------
[ ] FOR all nominees except as indicated
[ ] WITHHOLD AUTHORITY to vote for all nominees
(To withhold authority to vote for any nominee, strike out that nominee's
name in list at right.) Nominees: Sid L. Anderson
Clayton E. Woodrum
B.E. (Bud) Livingston
Frederick A. Bendana
Proposal 2 - Ratification of Deloitte & Touche LLP as independent public
accountants for 1999.
- ---------------------
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PLEASE SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
- ----------------------------------- ---------------------------------
(SIGNATURE) (SIGNATURE IF HELD JOINTLY)
Dated: __________________________ , 1999
NOTE: Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
