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PAN WESTERN ENERGY CORPORATION
1850 South Boulder Avenue, Suite 300
Tulsa, Oklahoma 74110
Information Statement
Pursuant to Section 14(f)
Of the Securities Exchange Act of 1934
And Rule 14f-1 thereunder
INTRODUCTION
This Information Statement is being mailed on or before October 10,
2000, to holders of record on September 29, 2000, of shares of Common Stock of
Pan Western Energy Corporation (the "Company"), an Oklahoma corporation, in
connection with the anticipated change in a majority of the members of the
Company's Board of Directors, under the terms of the Merger Agreement and Plan
of Reorganization (the "Agreement") dated August 25, 2000, between the Company
and IntelliReady, Inc. (sometimes referred to as "IntelliReady"). This
transaction will hereinafter be referred to as the "Proposed Transaction."
Under the Agreement, the shareholders of IntelliReady will acquire
approximately 95% of the Common Stock of the Company. See "Certain Information
Concerning Security Ownership of Certain Beneficial Owners and Management."
At the closing called for by the Agreement, the Company will deliver
the resignations of each of its officers and directors and a new Board of
Directors will be elected who will then appoint new officers of the Company. As
soon as practicable after the completion of the closing, the shareholders of
IntelliReady will cause the Company to call a special meeting of its
shareholders ("Proposed Stockholders Meeting") to: effect a recapitalization of
the Company which may include a reverse stock split of a magnitude not yet
determined; change the name of the Company to IntelliReady, Inc.; and change the
domicile of the Company to Colorado. After the reverse stock split and
recapitalization the shareholders of IntelliReady will own approximately 95% of
the Common Stock of the Company.
This Information Statement is being delivered to provide information
regarding anticipated changes in the membership of the Board of Directors of the
Company as a result of completion of the Proposed Transaction, and is provided
for information purposes only. You are urged to read this Information Statement
carefully. However, no action on your part is sought or required.
The Company is an independent oil and gas company which, until
recently, engaged in the acquisition, development and production of oil and gas
in the United States. The Company was incorporated in 1981 under the laws of the
State of Oklahoma to explore for, develop, produce and manage oil and gas
reserves. Early efforts of the Company focused on exploratory drilling in
Oklahoma, Colorado, Kansas, Nebraska and Texas. Since 1989, the Company has
focused primarily on the acquisition of producing oil and gas properties in
Oklahoma and Texas. During 1995 and 1996, the Company acquired the producing oil
and gas properties of six limited
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partnerships in which the Company was the general partner. These producing
properties, along with producing properties acquired from others during the same
period, significantly increased the Company's asset base. In addition, in August
1998, the Company purchased 11 wells in Sherman County, Texas from Exxon
Corporation. During the remainder of 1998, the average daily gross production
from these 11 wells was approximately 848 mcf per day.
As of December 31, 1999, the Company owned and operated producing oil
and gas properties located in the states of Texas and Oklahoma and owned royalty
interests in 14 non-operated wells located in the state of Ohio. Daily gross
production from 104 wells operated by the Company in these states currently
averages approximately 81 Bbls of oil and 1,968 Mcf of gas. Total daily
production from both operated and non-operated wells, net to the Company's
interest, averaged approximately 103 Bbls of oil and 1,575 Mcf of gas from a
total of 70 net wells during the year ended December 31, 1999.
During the fourth quarter of 1999, the Company retained Albrecth &
Associates, Inc., Houston, Texas, to dispose of the Company's oil and gas
properties. No offer for the properties was received prior to December 31, 1999
that was sufficient to pay the Company's secured and unsecured creditors. Based
on Albrecth & Associates' estimate of the properties' value at the time, the
Company complied with Albrecth's recommendation to take the properties off the
market.
On June 19, 2000, the Company signed an agreement with Cambrian Capital
Corporation ("Cambrian") transferring substantially all of the Company's oil and
gas properties to Cambrian in lieu of a foreclosure proceeding. The oil and gas
properties transferred to Cambrian were held as collateral for the repayment of
approximately $9.0 million of non-recourse secured debt owed to Cambrian by the
Company. As a result of the transaction, the Company was released from all debt
owed to Cambrian. Based on the Company's January 1, 2000 Report of Audited
Reserves prepared by an independent petroleum engineering firm, the value of the
oil and gas properties transferred to Cambrian was substantially less than the
debt owed to Cambrian. Further, as part of the transaction, Cambrian agreed to
make funds available to the Company for payment to unsecured creditors. In
addition, Cambrian agreed to purchase from the Company 10% of the Company's
common stock for $250,000 on or before December 31, 2000. The effective date of
the transaction was July 31, 2000. Since May, 2000, in anticipation that the
Company no longer would be engaged in the oil and gas business, the Company has
attempted to find an operating enterprise with which to merge or otherwise form
a business combination. After reviewing and entertaining several proposals, the
Company's board of directors voted to accept IntelliReady's proposal.
IntelliReady is a technology integrator that provides home automation
services to its customers. Following the closing of the Proposed Transaction,
the Company will seek additional business opportunities in the communications,
Internet, digital content, home automation and the structured wiring businesses.
IntelliReady has indicated its intentions to have the Company acquire certain of
these interest but has informed the Company that it has not yet determined the
terms and conditions of any such acquisition.
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The parties intend to close under the Agreement as soon as possible,
but not later than October 3, 2000. However, the obligations of the parties to
close are subject to the satisfaction of certain conditions. One condition is
compliance with all applicable securities laws, rules and regulations, including
Securities and Exchange Commission (the "SEC") Rule 14f-1 which requires the
Company to provide not less than ten days prior written notice to its
shareholders of the change in a majority of the Company's directors. The new
directors may not take office until the expiration of the ten-day period.
MANAGEMENT
The directors and executive officers currently serving the Company are
as follows:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Sid L. Anderson 53 Chairman, President and CEO
Clayton E. Woodrum 60 Executive Vice President, Secretary
and Director
Vincent R. Kemendo 46 Vice President and CFO
B.E. (Bud) Livingston 74 Director
Frederick A. Bendana 49 Director
Jimmac G. Lofton 42 Director
</TABLE>
The Company's Directors will serve until the closing of the Agreement
and until their successors are elected and qualified. New officers will be
appointed by the new Board of Directors. Directors of the Company currently do
not receive any compensation for serving in their capacity as directors, but are
reimbursed for out-of-pocket expenses incurred in attending meetings.
SID L. ANDERSON. Mr. Anderson 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
KPMG Peat Marwick (formerly 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 a
former Director of the Oklahoma Independent Petroleum Association and member of
its Natural Gas Committee. He is currently a member of the Executive Advisory
Board for the College of Business Administration at the University of Tulsa, a
former Regent and Chairman of the Rogers
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University Board of Regents, and currently serves as a Trustee on Oklahoma State
University - Tulsa's Board of Trustees. Mr. Anderson is former Chairman and
Trustee of the Tulsa Industrial Authority as well as Chairman and Director of
the Oklahoma Investment Forum and currently serves as Treasurer and Trustee of
the University Center Tulsa Trust Authority. He is a member of the Company's
Executive Committee.
CLAYTON E. WOODRUM. Mr. Woodrum has been a principal in the financial
consulting firm of Woodrum, Kemendo & Cuite, P.C. and its predecessors, located
in Tulsa, Oklahoma since 1986. 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. He is a member of the Company's Executive
and Audit Committees.
VINCENT R. KEMENDO. Mr. Kemendo joined the Company on December 26,
1995. From 1991 through 1995, 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 Mathew 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.
B.E. (BUD) LIVINGSTON. Mr. Livingston 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. He is a member of the Executive Committee.
FREDERICK A. BENDANA. Mr. Bendana became a Director in 1998. 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 a 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
Agricultural Economics. Mr. Bendana is a member and has been a board member of
numerous education and civic organizations including, Rogers University Board of
Regents, The University Center at Tulsa Trust Authority, The Hispanic-American
Foundation, and Tulsa Global Alliance. He is a member of the Company's Executive
and Audit Committees.
JIMMAC G. LOFTON. Mr. Lofton was selected as a Director in 2000 to fill
a vacancy created by the resignation from the board of Tony Ciciola. Mr. Lofton
is currently Branch Manager and Vice President for Raymond James & Associates,
Inc. in Boca Raton, Florida.
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Prior to joining Raymond James, Mr. Lofton was Branch Manager with JW Charles
Securities in West Palm Beach, Florida. Mr. Lofton received his Bachelor of Arts
degree from the University of Florida in 1980 with majors in Economics and
English. Mr. Lofton is active in various civic organizations including the
Jupiter Tequesta Athletic Association, Florida Alumni Association and the
Securities Industry Association.
The Company currently has an executive and audit committees of the
Board of Directors made up of various members of the Company's Board of
Directors. The Executive Committee includes: Sid L. Anderson, Clayton E.
Woodrum, and B.E. Livingston. The Audit committee includes: Clayton E. Woodrum
and Frederick A. Bendana.
The Company's Board of Directors held two formal meetings during the
year ended on December 31, 1999. The Company's Board of Directors has held two
formal meetings this year and executed one set of consent minutes.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
To the best knowledge and belief of the Company each of the 10%
Beneficial Owners and Directors has made the necessary filing on Form 3.
DESIGNATED COMPANY DIRECTORS AND EXECUTIVE OFFICERS
AFTER CLOSING OF THE AGREEMENT
The following table sets forth the name, age and position of each of the persons
expected to be designated by the Company to be elected to the Company's Board of
Directors and each of the person expected to be appointed as an executive
officer of the Company following completion of the Proposed Transaction.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Scott B. Campbell 53 President, CEO and Director
Thomas J. Wiens 48 Chairman of the Board
Brendan F. Reidy 47 Director
Sid L. Anderson 53 Director
Gerald Raskin 59 Director and Secretary
</TABLE>
SCOTT B. CAMPBELL. Mr. Campbell served as a Vice President of Worldgate
Communications, Inc. from 1997 through August 2000. From 1994 to 1997 he was the
founder of Genesis International Group, LLC, a cable industry and e-commerce
consulting firm. From 1989 to 1993 he was the Executive Vice President of a
subsidiary of the Home Shopping Network. He has a Bachelor of Science degree
from the University of Delaware and has done graduate studies in marketing at
Temple University.
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THOMAS J. WIENS. Mr. Thomas J. Wiens has served as the Chairman of
IntelliReady, Inc. since its inception in April of 1998. Mr. Wiens is CEO of New
West Capital, Inc. and First Western Industries, LLC, privately held venture
capital and venture catalyst firms. Mr. Wiens has been involved in various
entrepreneurial pursuits including banking, communications, insurance and
recycling. Mr. Wiens was the founder and chairman of the Board of Directors of
Recycling Industries from 1987 through May 1999 and was the 1998 recipient of
the Ernst & Young LLP Entrepreneur of the Year award for his entrepreneurial
activities as Chairman and CEO of Recycling Industries, Inc. Due to the
precipitous decline in the price of metals due to the dumping of foreign steel
in the U.S. marketplace Recycling Industries, Inc. filed for reorganization
under Chapter 11 of the Federal Bankruptcy Code on February 22, 1999. The case
is still pending in Federal Bankruptcy Court. Additionally Mr. Wiens has been
named as a defendant in two lawsuits in connection with his services as an
officer and director of Recycling Industries, Inc. He is vigorously defending
the suits and believes they are without merit. Mr. Wiens received his BA from
the School of Government and Public Administration at The American University in
Washington D.C. and received a MDIV from Yale University. Mr. Wiens serves on
the Board of Advisors of Yale Divinity School, the Board of Directors of the
National Cutting Horse Association and various charitable organizations.
BRENDAN F. REIDY. Mr. Reidy has been employed by US West Communications
Inc. and its affiliates since 1995, most recently as Vice President, Corporate
Strategy. Mr. Reidy previously served as an independent consultant and as a
Senior Consultant to Arthur Andersen & Company. Mr. Reidy earned his Masters in
Business Administration from the Wharton School of Business at the University of
Pennsylvania and earned his undergraduate degree from Stanford University.
GERALD RASKIN. Mr. Raskin is an attorney with more than 35 years of
practice experience in securities law, corporate law and mergers and
acquisitions. He was a member of Friedlob Sanderson Raskin Paulson &
Tourtillott, LLC and its predecessor firms from 1977 through March 31, 2000. He
currently is a business consultant. Mr. Raskin graduated from the Columbia
University School of Law in 1965 and from the City College of the City of New
York in 1962.
SID L. ANDERSON. Mr. Anderson currently serves on the Company's Board
of Directors and his biography was previously discussed.
SECURITY OWNERSHIP OF CERTAIN CURRENT BENEFICIAL
OWNERS AND MANAGEMENT
As of December 31, 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
December 31, 1999, the number and percentage of shares of Common Stock of the
Company owned beneficially by (i) each director of the Company, (ii) each
officer of the Company named in the Summary Compensation Table, (iii) all
directors and
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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
December 31, 1999, the Company had more than 500 holders of Common Stock of
record.
<TABLE>
<CAPTION>
Number of Shares
Name of Beneficial Owner Beneficially Owned Percent of Class(1)
------------------------ ------------------ -------------------
<S> <C> <C>
Sid L. Anderson(2)(5) 1,746,468 44.11%
Clayton E. Woodrum(3) 115,350 3.10%
Vincent R. Kemendo(2)(5) 142,500 3.85%
B.E. (Bud) Livingston(2)(6) 15,000 *
Frederick A. Bendana(7) 500 *
Jimmac G. Lofton(9) * *
Pangloss International, S.A.(4) 481,250 12.51%
Cambrian Capital Partners LP(8) 400,000 9.95%
All Executive Officers and 2,019,818 48.65%
Directors as a group (6 persons)(2)(3)
</TABLE>
* less than one percent
(1) Based upon 3,621,873 issued and outstanding shares of Common Stock at
December 31, 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, 337,500 shares issuable to
him upon exercise of presently exercisable options; (b) with respect to
Mr. Kemendo, 80,000 shares issuable to him upon exercise of presently
exercisable options (as a condition to the Merger Mr. Anderson
forfeited his options); and (c) with respect to Mr. Livingston, 15,000
shares issuable to him upon exercise of presently exercisable options.
Mr. Anderson's and Mr. Kemendo's options will expire upon the closing
of the Proposed Transaction.
(3) Includes 17,850 shares held by Mr. Woodrum's spouse and 80,000 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
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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 and Kemendo 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 7747 South Harvard Place, Tulsa, Oklahoma
74136.
(8) Includes 400,000 shares issuable to Cambrian Capital Partners LLC upon
exercise of presently exercisable common stock purchase warrants. The
address for Cambrian Partners LLC is Two Houston Center, Suite 3150,
909 Fannin, Houston, Texas 77010.
(9) The address for Mr. Lofton is 1200 North Federal Highway, Suite 100,
Boca Raton, Florida 33432.
The following table sets forth, as of the date of closing the Proposed
Transaction, the number of shares of Common Stock expected to be owned of record
and beneficially by persons who are expected to be appointed as directors and
executive officers of the Company, by persons who are expected to then hold 5%
or more of the outstanding Common Stock of the Company and all expected future
officers and directors as a group.
<TABLE>
<CAPTION>
Number of Shares
Name of Beneficial Owner Beneficially Owned(1) Percent of Class
------------------------ --------------------- ----------------
<S> <C> <C>
Sid L. Anderson(2) 1,408,967 1.65%
First Western Industries, LLC(3) 52,021,449 61.03%
Gerald Raskin(4) 619,335 .73%
Scott B. Campbell(5) 2,477,343 2.91%
Brendan Reidy(6) 825,781 .97%
Robert Kaminski(7) 8,893,661 10.44%
Thomas J. Wiens(8) 52,021,449 61.03%
All Executive Officers and 57,352,876 67.29%
Directors as a group (5 persons)(8)
</TABLE>
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1. All calculations are on a fully diluted basis and are based on stock
ownership immediately prior to the proposed 8.25780933 reverse stock
split. These calculations do not include the effects of stock payments
that are required to be made to consultants for services that have or
currently are being rendered because these payments are based on the
fair market value of the company's stock once it becomes publicly
traded. Furthermore, the net effect of these payments are not
anticipated to materially alter the ownership interest of the officers,
directors and 5% shareholders.
2. The address of Mr. Anderson is Suite 300, 1850 South Boulder Avenue,
Tulsa, Oklahoma 74119
3. The address of First Western Industries is 5567 South Perry Park Road,
Sedalia, Colorado 80135. First Western Industries is controlled by
Thomas J. Wiens and his immediate family.
4. The address of Gerald Raskin is 830 Good Hope Drive, Castle Rock,
Colorado 80104.
5. The address for Scott B. Campbell is 1390 South Potomac, Suite 136,
Aurora, Colorado 80012.
6. The address for Brendan Reidy is PO Box 880, Evergreen, Colorado 80437.
7. The address for Robert Kaminski is 24000 Southwestern Avenue, Park
Forest, Illinois, 60466. These shares are actually held by the Robert
S. Kaminski Revocable Trust.
8. The address for Thomas J. Wiens is 5567 South Perry Park Road, Sedalia,
Colorado 80135. Mr. Wiens' interest consists of his beneficial
ownership of First Western Industries, LLC's 52,021,449 shares.
LEGAL PROCEEDINGS
During 1999, the Company was a party to various legal proceedings. In
spite of cost cutting measures including personnel and salary reductions, the
Company was unable to consistently pay a portion of it operating expenses which
was the direct result of record low oil and natural gas prices during all or
portions of calendar years 1997, 1998 and 1999. At this time, the Company has
settled these legal proceedings, however, the Company is still in the process of
collecting a judgment. To management's knowledge, no further legal proceedings
from unsecured creditors are contemplated. In addition, the Company was party to
a foreclosure action on the real estate it owned and occupied as its corporate
headquarters. The building was recently sold to an unrelated third party.
Proceeds from the sale were sufficient to pay off the mortgage secured by the
real estate. No director, officer or affiliate of the Company, no owner of
record or beneficial owner of more than five percent of the securities of the
Company, or any associate of any such director, officer or security holder, nor
stockholders of IntelliReady is a party adverse to the Company or has a material
interest adverse to the Company in reference to the various legal proceedings.
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EXECUTIVE COMPENSATION OF CURRENT MANAGEMENT
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, 1996 (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.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
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, 1999 150,000 5,000 30,097(2) --- --- --- 10,000(5)
Chairman, 1998 150,000 6,250 170,171(3) --- 221,468 --- ---
President and CEO 1997 150,000 6,250 85,130(4) --- 330,000 --- ---
B. E. Livingston, II 1999 *50,000 --- --- --- --- --- 1,500(5)
Vice President of 1998 48,000 2,500 --- --- --- --- 353
Operations 1997 48,000 2,000 --- --- 80,000 --- 353
Vincent R. Kemendo 1999 52,000 2,167 --- --- --- --- 3,120(5)
Vice President of 1998 40,000 2,167 --- --- --- --- ---
Finance 1997 40,000 1,667 --- --- 80,000 --- ---
</TABLE>
*(Mr. Livingston resigned his position with the effective Company November 1,
1999)
(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 $11,250 guarantee fee paid to Mr. Anderson and a total of
$18,847 paid by the Company to or on behalf of Mr. Anderson for country
club dues and automobile allowance.
(3) Includes a $35,080 guaranty fee paid to Mr. Anderson 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.
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(4) 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.
(5) Represents the Company's matching portion of 401(k) contributions made
by the Company pursuant to the Company's retirement plan which was
adopted January 1, 1999.
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 the 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 awards have been made under 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 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.
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 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, 1999, no options had been granted under this plan.
During the year ended December 31, 1999, there were no issuances of
stock options under the Directors Stock Option Plan or the Employee Stock Option
Plan. During the year ended December 31, 1999, there were 80,000 options
canceled due to the resignation of one employee. These options had not been
issued under either of the Company's stock option plans.
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During the year ended December 31, 1998, there were 32,500 Director
Stock Options canceled 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.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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 $15,000 or 3% of the guaranteed debt. During 1999, 1998, 1997 and
1996, fees paid to Mr. Anderson under this agreement were approximately $11,250,
$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 1999,
1998, 1997 and 1996 were $4,934, $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
1999, 1998 and 1997 were $36,000, $36,000 and $37,424, respectively.
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Pursuant to an agreement signed in February 1996, B. E. (Bud)
Livingston, a former 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
former director provides various services to the Company. Such amounts incurred
in 1999, 1998, 1997 and 1996 were $19,560.50, $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.
THIS INFORMATION STATEMENT IS PROVIDED TO YOU FOR INFORMATION PURPOSES ONLY. NO
ACTION ON YOUR PART IS SOUGHT OR REQUIRED.
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