<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
HUNTWAY REFINING COMPANY
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(Name of Registrant as Specified in Its Charter)
HUNTWAY REFINING COMPANY
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(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(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(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 filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
[HUNTWAY REFINING COMPANY LOGO]
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 12, 1999
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To the stockholders of Huntway Refining Company:
The annual meeting of stockholders of Huntway Refining Company will be held on
Wednesday, May 12, 1999 at 10:00 A.M., local time, at The Hyatt Valencia Hotel,
24500 Town Center Drive, Valencia, California, for the following purposes:
1. To elect two directors to serve until the 2002 annual meeting.
2. To transact such other business as may properly be brought before the
meeting.
The annual meeting may be postponed or adjourned from time to time without any
notice other than announcement at the meeting, and any and all business for
which notice is hereby given may be transacted at any such postponed or
adjourned meeting.
The Board of Directors has fixed the close of business on March 31, 1999 as the
record date for determination of stockholders entitled to notice of and to vote
at the meeting.
A list of stockholders entitled to vote at the annual meeting will be available
for examination by any stockholder, for any purpose germane to the meeting,
during ordinary business hours at The Hyatt Valencia Hotel, 24500 Town Center
Drive, Valencia, California, during the ten days preceding the meeting.
Please complete and sign the enclosed proxy, which is solicited by the Board of
Directors, and promptly return it in the accompanying envelope.
By Order of the Board of Directors
WARREN J. NELSON
Secretary
Newhall, California
April 9, 1999
<PAGE> 3
[HUNTWAY REFINING COMPANY LOGO]
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PROXY STATEMENT
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This proxy statement is furnished in connection with the solicitation by the
Board of Directors of Huntway Refining Company (herein called the "Company") of
proxies for use at the Company's annual meeting of stockholders to be held on
Wednesday, May 12, 1999 and at any postponement or adjournment thereof. All
shares of Common Stock entitled to vote at the annual meeting which are
represented by properly executed proxies will, unless such proxies have been
revoked, be voted in accordance with the instructions given in such proxies or,
if no contrary instructions are given therein, will be voted in the election of
directors as described under "Election of Directors" and as to any other matters
that may properly be presented to the meeting will be voted as described under
"Other Matters." Any stockholder who has given a proxy with respect to any
matter may revoke it at any time prior to the closing of the polls as to that
matter at the annual meeting by delivering to the Secretary of the Company a
notice of revocation or a duly executed proxy bearing a later date or by
attending the annual meeting and voting in person.
On March 31, 1999, the record date for the annual meeting, 14,983,271 shares of
Common Stock were outstanding. The Common Stock is traded on the New York Stock
Exchange.
Under the Company's By-laws, attendance at the meeting in person or by proxy by
the holders of a majority of the shares of Common Stock entitled to vote at the
meeting is required in order to establish a quorum.
Pursuant to Delaware law, shares entitled to cast votes on a matter at the
meeting which are the subject of an ABSTAIN on that matter will be treated for
all purposes relevant to that matter as being present at the meeting and
entitled to vote, and thus will have the same effect as a vote of such shares
against that matter. Shares entitled to cast votes on a matter at the meeting
which are the subject of a broker non-vote on that matter will be treated for
quorum purposes relevant to that matter as being present at the meeting and
entitled to vote but will not be so treated in determining whether a majority or
other required percentage of the "shares present and entitled to vote" on that
matter has been obtained.
Proxy statements and proxies are being mailed to stockholders on or about April
9, 1999. The mailing address of the principal executive offices of the Company
is 25129 The Old Road, Suite 322, Newhall, California 91381.
The Company is the successor to Huntway Partners, L.P., a Delaware limited
partnership (the "Predecessor LP"), as a result of the June 1, 1998 conversion
of the Predecessor LP to corporate form (the "Conversion"). In this Proxy
Statement, the term "the Company" refers to the Predecessor LP prior to the
Conversion and refers to Huntway Refining Company after the Conversion. The
Predecessor LP's business and affairs were managed by a managing general
partner, which was a partnership, and the managing general partner's business
and affairs were managed by its general partner, a corporation. The corporation
established an operating committee (the "Predecessor LP Operating Committee") to
consult with its sole director with respect to the management of the managing
partner and the Predecessor L.P. As indicated below under "Election of
Directors," certain of the Company's directors served on the Predecessor LP
Operating Committee.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the beneficial
ownership (as such term is used in Section 13(d) of the Securities Exchange Act
of 1934 (the "Exchange Act")) of Common Stock as of March 31, 1999 by (a) the
persons known by the Company to have then been the beneficial owners of more
than 5% of the outstanding shares of Common Stock, (b) each director, and
nominee for director, of the Company, (c) each of the executive officers of the
Company listed in the Summary Compensation Table and (d) all directors, nominees
and executive officers of the Company as a group. The information set forth in
the table as to directors, nominees and executive officers is based upon
information furnished to the Company by them in connection with the preparation
of this Proxy Statement.
<TABLE>
<CAPTION>
NUMBER
OF SHARES(1) PERCENT
-------------- -------
<S> <C> <C>
5% Holders:
Lighthouse Investors, LLC................................... 8,192,824(2) 36.7
200 Seventh Avenue, Suite 105
Santa Cruz, CA 95062
First Chicago Equity Corporation............................ 5,320,518 35.5
One First National Plaza
Chicago, IL 60670
DDJ Capital Management, LLC................................. 5,333,333(3) 26.3
141 Linden Street, Suite S-4
Wellesley, MA 02181
Andre Danesh................................................ 3,226,227(4) 20.0
Allied Financial Corp.
1583 Beacon Street
Brookline, MA 02146
Contrarian Capital Advisors, L.L.C. ........................ 2,790,935(5) 16.6
411 West Putnam Avenue, Suite 225
Greenwich, CT 06830
Directors, Nominees and Executive Officers(6):
Juan Y. Forster............................................. 1,022,806(7) 6.6
Harris Kaplan............................................... 0 0
J.C. McFarland.............................................. 57,000 .4
Warren J. Nelson............................................ 676,400(8) 4.3
Richard Spencer............................................. 8,192,824(2) 36.7
William G. Darnell.......................................... 257,030(9) 1.7
Lucian A. Nawrocki.......................................... 287,254(10) 1.9
Terrance L. Stringer........................................ 302,000(11) 2.0
All directors, nominees and executive officers as a group (8
persons).................................................. 10,795,314(12) 44.5
</TABLE>
- -------------------------
(1) Except as otherwise indicated below, beneficial ownership means the sole
power to vote and dispose of shares.
(2) Includes shares beneficially owned by other persons who, together with
Lighthouse Investors, LLC, have filed a statement with the Securities and
Exchange Commission (the "SEC") pursuant to Section 13(d) of the Exchange
Act identifying themselves as a group. Such persons include Richard
Spencer. Also includes 7,333,333 shares which Lighthouse Investors,
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<PAGE> 5
LLC has the right to acquire within 60 days through conversion of Company
Senior Subordinated Secured Convertible Notes. According to the statement
filed with the SEC, the power to vote and dispose of 8,042,955 of the
shares is shared.
(3) Consists of shares which BIII Capital Partners, L.P. has the right to
acquire within 60 days through conversion of Company Senior Subordinated
Secured Convertible Notes.
(4) Includes 1,146,059 shares which Mr. Danesh has the right to acquire within
60 days through exercise of outstanding options.
(5) Includes 1,833,333 shares which Contrarian Capital Fund I, L.P., Contrarian
Capital Fund, II, L.P. and persons for which Contrarian Capital Advisors,
L.L.C. acts as agent or provides direction have the right to acquire within
60 days through conversion of Company Senior Subordinated Secured
Convertible Notes.
(6) The address of each set forth below is c/o Huntway Refining Company, 25129
The Old Road, Suite 322, Newhall, California 91381.
(7) Includes 560,250 shares which Mr. Forster has the right to acquire within
60 days through exercise of options outstanding under the Predecessor LP's
1996 Huntway Employee Incentive Option Plan.
(8) Includes 615,000 shares which Mr. Nelson has the right to acquire within 60
days through exercise of options outstanding under the Predecessor LP's
1996 Huntway Employee Incentive Option Plan.
(9) Includes 192,500 shares which Mr. Darnell has the right to acquire within
60 days through exercise of options outstanding under the Predecessor LP's
1996 Huntway Employee Incentive Option Plan.
(10) Includes 272,500 shares which Mr. Nawrocki has the right to acquire within
60 days through exercise of options outstanding under the Predecessor LP's
1996 Huntway Employee Incentive Option Plan.
(11) Includes 295,000 shares which Mr. Stringer has the right to acquire within
60 days through exercise of options outstanding under the Predecessor LP's
1996 Huntway Employee Incentive Option Plan.
(12) Includes 9,268,583 shares which directors, nominees and executive officers
have the right to acquire within 60 days.
ELECTION OF DIRECTORS
The Board of Directors consists of three classes of directors elected to serve
staggered three-year terms of office. The class to be elected at the 1999 annual
meeting consists of two directors to hold office until the 2002 annual meeting
and until their successors have been elected and qualified.
At the 1999 annual meeting, the terms of office of Justin S. Huscher and Samuel
M. Mencoff will expire. Messrs. Huscher and Mencoff, who had been members of the
Predecessor LP Operating Committee for ten years prior to the Conversion and for
continuity purposes agreed to serve as directors following the Conversion until
the 1999 annual meeting, have advised the Company that they are unable to stand
for re-election due to other business commitments. Under the Company's
Certificate of Incorporation, the three classes of directors of the Company must
be as nearly equal in number as possible. Accordingly, the Board of Directors
has determined that Harris Kaplan and Richard Spencer, who currently serve on
the Board of Directors in the class whose term expires in 2000, will be the
nominees for election at the 1999 annual meeting. If elected at the 1999 annual
meeting, Messrs. Kaplan and Spencer will relinquish their service as members of
the class whose term expires in 2000 and will instead be members of the class
whose term expires in 2002.
Except to the extent that stockholders indicate otherwise on their proxies
solicited by the Company's Board of Directors, the holders of such proxies
intend to vote such proxies for the election as
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<PAGE> 6
directors of the persons named as nominees in the following table; provided that
if either of the nominees for election shall be unable or shall fail to act as
such by virtue of an unexpected occurrence, such proxies will be voted for such
other person as shall be determined by the holders of such proxies in their
discretion or, so long as such action does not conflict with the provisions of
the Company's Certificate of Incorporation relating to the relative sizes of
classes of directors, the Board of Directors may, in its discretion, reduce the
number of directors to be elected. The following table anticipates the
relinquishment by Messrs. Kaplan and Spencer of their membership in the class
whose term expires in 2000.
NOMINEES FOR ELECTION AT THE 1999 ANNUAL MEETING
For Three-Year Terms Expiring in 2002:
Harris Kaplan, age 48. President of Eastgate Management
Corporation, an offshore and domestic money management firm,
since 1996; member of management team of Nabors Industries, an
oil service company, from prior to 1994 to 1996. Director of
the Company since the Conversion. Member of the Audit
Committee.
Richard Spencer, age 46. Manager of Westcliff Management, LLC,
a money management firm, since prior to 1994. Director of the
Company since the Conversion. Member of the Compensation
Committee.
DIRECTORS WHOSE TERMS EXPIRE IN 2001:
Juan Y. Forster, age 62. President and Chief Executive Officer
of the Company since prior to 1994. Director of the Company
since the Conversion; member of the Predecessor LP Operating
Committee from 1988 to the Conversion.
Warren J. Nelson, age 48. Executive Vice President and Chief
Financial Officer of the Company since prior to 1994. Director
of the Company since the Conversion.
DIRECTOR WHOSE TERM EXPIRES IN 2000:
J.C. McFarland, age 52. Consultant since 1997; Chairman and
Chief Executive Officer of McFarland Energy, Inc., an
exploration and production company, from prior to 1994 to
1997. Director of the Company since the Conversion. Member of
the Audit and Compensation Committees.
In connection with a refinancing by the Predecessor LP in 1997, the Predecessor
LP agreed to use its best efforts to nominate and cause to be elected as a
director of the Company at all times after the Conversion one individual
selected by B III Capital Partners, L.P. ("B III") and one individual selected
by Lighthouse Investors, L.L.C. ("Lighthouse"). This agreement will expire with
respect to B III or Lighthouse when such person no longer owns Company Senior
Subordinated Secured Convertible Notes with a principal amount of at least $3.5
million or shares of Common Stock issued on conversion of such Notes with a
principal amount of at least $3.5 million or a combination of the two. The
individuals currently selected by B III and Lighthouse are Messrs. Kaplan and
Spencer, respectively.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company met six times during 1998.
The Company's Board of Directors has an Audit Committee and a Compensation
Committee. The Company does not have a Nominating Committee.
The Audit Committee reviews and, as it deems appropriate, recommends to the
Board internal accounting and financial controls for the Company and accounting
principles and auditing practices
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<PAGE> 7
and procedures to be employed in the preparation and review of the Company's
financial statements. The Committee also makes recommendations to the Board
concerning the engagement of independent public accountants to audit the
Company's annual financial statements and the scope of such audits. The
Committee currently consists of Messrs. Kaplan, McFarland and Mencoff. During
1998, the Committee did not meet. However, in early 1998, Mr. Mencoff, the sole
director of the corporate general partner of the managing partner of the
Predecessor LP, met with the Predecessor LP's independent public accountants to
review the results of the Predecessor LP's 1997 audit. It is anticipated that
following the 1999 annual meeting the Committee will consist of Messrs. Kaplan
and McFarland.
The Compensation Committee reviews and, as it deems appropriate, recommends to
the Board policies, practices and procedures relating to the compensation of
managerial employees and the establishment and administration of employee
benefit plans. The Committee determines the compensation of executive officers
and administers the Huntway Refining Company 1998 Stock Incentive Plan. The
Committee currently consists of Messrs. Huscher, McFarland (since February,
1999) and Spencer. During 1998, the Committee met once. It is anticipated that
following the 1999 annual meeting the Committee will consist of Messrs.
McFarland and Spencer.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1998 subsequent to the Conversion, Messrs. Huscher and Spencer were the
members of the Compensation Committee. During 1998 prior to the Conversion,
functions corresponding to those of the Compensation Committee were performed
for the Predecessor LP by Samuel M. Mencoff (currently a director of the
Company), the sole director of the corporate general partner of the managing
partner of the Predecessor LP.
No other information is reportable under this caption for 1998.
EXECUTIVE OFFICERS
All officers of the Company are elected each year by the Board of Directors at
its annual organization meeting in May. In addition to Juan Y. Forster and
Warren J. Nelson, information with respect to whom is set forth above, the
executive officers of the Company include the following, each of whom has held
his current position with the Company since prior to 1994:
Lucian A. Nawrocki, age 53. Executive Vice President, Asphalt Sales
Terrance L. Stringer, age 57. Executive Vice President
William G. Darnell, age 62. Vice President and General Manager/Benicia
COMPENSATION
BOARD COMPENSATION
The Company does not pay its directors any fee or additional compensation for
service as such, except as described below in the case of non-employee
directors. The Company does reimburse Board members for out-of-pocket costs
associated with attending meetings (such as travel, food and lodging).
The Company has compensated certain non-employee directors for service on the
Board by granting them options under the Huntway Refining Company 1998 Stock
Incentive Plan. During 1998, the Company granted to each of Messrs. Kaplan and
McFarland an option under such Plan to purchase 100,000 shares of Common Stock
at an exercise price equal to the market price on the date of grant. Each option
has a term of ten years, but, if earlier, will expire one year after the
optionee's service on the Board terminates for any reason. Subject to
acceleration in the event of a
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<PAGE> 8
"Change in Control" (as defined in such options), each option becomes
exercisable over four years at the rate of 25% per year, commencing one year
after the date of grant, provided the optionee has continued to be a director;
but the 25% increment on a particular anniversary does not then or thereafter
become exercisable if, during the year ending on that anniversary, the optionee
has not been "present" at least two-thirds of the total meetings of the Board
and its committee(s) on which he served. For this purpose, being "present" means
(i) in the case of a meeting at which participation by directors is intended to
be in person (as opposed to by conference telephone or other communications
equipment), participation in person, and (ii) in the case of a meeting at which
participation by all non-employee directors is intended to be by conference
telephone or other communications equipment, participation by such equipment or
in person. The Company may further compensate Messrs. Kaplan and McFarland for
services on the Board, and may compensate other existing or future non-employee
directors for such service, by granting them options under such Plan. The nature
and amount of any such options have not yet been determined.
SUMMARY COMPENSATION TABLE
The following table sets forth compensation information for the President and
Chief Executive Officer of the Company (who served as such throughout 1998) and
for each of the Company's four most highly compensated other executive officers
serving at the end of 1998. No other person who served as an executive officer
of the Company at any time during 1998 had 1998 compensation in excess of the
1998 compensation of any of the executive officers named in the table.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
---------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
-------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS/SARS(#) ($)
- --------------------------- ---- --------- -------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Juan Y. Forster.................... 1998 $306,250 $306,000 180,000 $19,487(1)
President and 1997 297,330 75,000 -- 13,497
Chief Executive Officer 1996 277,879 35,000 560,250 12,932
Warren J. Nelson................... 1998 207,000 207,000 180,000 17,510(2)
Executive Vice President 1997 187,000 100,000 -- 10,798
and Chief Financial Officer 1996 167,000 35,000 615,000 10,228
Terrance L. Stringer............... 1998 192,581 192,000 110,000 19,146(3)
Executive Vice 1997 186,972 62,000 -- 12,488
President of Supply, Planning and 1996 174,740 32,000 295,000 12,300
Distribution
Lucian A. Nawrocki................. 1998 154,294 154,000 110,000 17,086(4)
Executive Vice President 1997 149,800 51,000 -- 10,504
of Asphalt Marketing 1996 140,000 25,000 245,000 10,198
William G. Darnell................. 1998 126,180 126,000 90,000 14,017(5)
Vice President and 1997 117,180 45,000 -- 8,185
General Manager, Benicia 1996 109,514 22,000 192,500 8,276
</TABLE>
- -------------------------
(1) Consists of $14,992 of Company contributions for 1998 to the Company's
Profit Sharing and Money Purchase Plans and $4,495 for term life insurance
paid for by the Company during the year.
(2) Consists of $16,145 of Company contributions for 1998 to the Company's
Profit Sharing and Money Purchase Plans and $1,365 for term life insurance
paid for by the Company during the year.
(3) Consists of $16,091 of Company contributions for 1998 to the Company's
Profit Sharing and Money Purchase Plans and $3,055 for term life insurance
paid for by the Company during the year.
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<PAGE> 9
(4) Consists of $15,393 of Company contributions for 1998 to the Company's
Profit Sharing and Money Purchase Plans and $1,693 for term life insurance
paid for by the Company during the year.
(5) Consists of $12,695 of Company contributions for 1998 to the Company's
Profit Sharing and Money Purchase Plans and $1,325 for term life insurance
paid for by the Company during the year.
OPTION/SAR GRANTS DURING YEAR
The following table sets forth information with respect to options granted
during 1998 to executive officers named in the Summary Compensation Table. No
stock appreciation rights were granted to such executive officers during 1998.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF % OF TOTAL MARKET ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS EXERCISE PRICE ON PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE DATE OF OPTION TERM(2)
OPTIONS/SARS EMPLOYEES IN PRICE GRANT EXPIRATION -----------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SH) ($/SH) DATE 5%($) 10%($)
- ---- ------------- ------------ -------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Juan Y. Forster...... 180,000 16.4 $1.50 $2.125 1/27/08 $352,800 $721,800
Warren J. Nelson..... 180,000 16.4 1.50 2.125 1/27/08 352,800 721,800
Terrance L.
Stringer........... 110,000 10.0 1.50 2.125 1/27/08 215,600 441,100
Lucian A. Nawrocki... 110,000 10.0 1.50 2.125 1/27/08 215,600 441,100
William G. Darnell... 90,000 8.2 1.50 2.125 1/27/08 176,400 360,900
</TABLE>
- -------------------------
(1) Consists of non-qualified options to purchase Predecessor LP Units granted
under the Predecessor LP's 1996 Huntway Employee Incentive Option Plan,
which in the Conversion became options to purchase Common Stock. Each option
becomes exercisable on October 15, 2000, subject to acceleration in the
event of earlier termination of employment because of death or full
disability or in the event of a "Company Change of Control" (as defined in
such options).
(2) The assumed annual rates of appreciation in the price of Common Stock are in
accordance with rules of the Securities and Exchange Commission and are not
predictions of future market prices of the Common Stock nor of the actual
values the named executive officers will realize. In order for such annual
rates of appreciation to be realized over the 10-year term of the options,
the market price of Common Stock would have to increase to $3.46/share (5%)
or $5.51/share (10%) during that term. In such events, the market value of
all currently outstanding shares of Common Stock would have increased by
approximately $20,002,667 (5%) or $50,718,372 (10%) during that 10-year
term.
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<PAGE> 10
OPTION/SAR EXERCISES AND YEAR-END VALUES
The following table sets forth information with respect to exercises of options
during 1998 by the executive officers named in the Summary Compensation Table
and the values of unexercised options held by them as of December 31, 1998. No
stock appreciation rights were exercised during 1998 by such executive officers
or held by them as of December 31, 1998.
AGGREGATED OPTION/SAR EXERCISES IN 1998 AND YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
SHARES YEAR-END(#) AT YEAR-END($)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Juan Y. Forster....... 0 0 560,250 180,000 $665,297 $33,750
Warren J. Nelson...... 0 0 615,000 180,000 730,313 33,750
Terrance L.
Stringer............ 0 0 295,000 110,000 350,313 20,625
Lucian A. Nawrocki.... 0 0 272,500 110,000 323,594 20,625
William G. Darnell.... 0 0 192,500 90,000 228,594 16,875
</TABLE>
PLANS AND ARRANGEMENTS
Profit Sharing Plan
Under the Company's profit sharing plan, the Company may elect from time to time
to make contributions to the plan for the accounts of eligible covered
employees. In addition, each such employee may, within the limits applicable to
tax-qualified plans, elect to have up to 10% of his or her compensation
(excluding bonus and commission) contributed to his or her account by the
Company on a pre-tax basis and the Company matches such contribution up to 2% of
such compensation. Account balances are invested in one or more third party
investment funds selected by the employees from among those available under the
plan. Contributions elected by employees vest immediately. Company discretionary
and matching contributions vest beginning after three years of credited service
under the plan, on a cumulative basis of 20% per year of credited service in
excess of two. Vested contributions (after any earnings or losses from the
investment thereof) are distributed in a lump sum or installments following
termination of employment, but vested account balances may under certain
circumstances be withdrawn or borrowed earlier.
Money Purchase Plan
The Company has a defined contribution pension plan for all of its eligible
covered employees. Under the plan, the Company contributes annually for the
account of each eligible employee an amount equal to 4% of such employee's
compensation (excluding bonus and commission). Contributions for the account of
the employee are invested in one or more third party investment funds selected
by the employee. Contributions vest beginning after two years of credited
service under the plan, on a cumulative basis resulting in full vesting after
seven years of such service. Vested contributions (after any earnings or losses
from the investment thereof) are distributed in an annuity, a lump sum or
installments following termination of employment.
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<PAGE> 11
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Salary decisions for 1998 with respect to all of the Company's executive
officers were made by Samuel M. Mencoff (currently a director of the Company),
the sole director of the corporate general partner of the managing partner of
the Predecessor LP, after reviewing recommendations from the Predecessor LP's
chief executive officer and chief financial officer.
Bonuses for 1998 were awarded from a bonus pool determined on a formula basis
(based on the Company's earnings before interest, taxes, depreciation and
amortization ("EBITDA") for 1998) approved by Mr. Mencoff during January of 1998
after reviewing a recommendation from the same sources. The specific
post-year-end allocations of the bonus pool so determined were made by the
Compensation Committee after reviewing recommendations from the Company's Chief
Executive Officer and Chief Financial Officer. The allocations reflected the
Committee's evaluation of the overall individual performances of the executive
officers. No specific factors or criteria formed the basis for such allocations,
but the Committee did take note of the improvement in the Company's EBITDA
during 1998.
Mr. Mencoff approved the 1998 grants of non-qualified options to the executive
officers.
The Compensation Committee has engaged an outside specialist to advise it
regarding compensation for 1999 and thereafter.
Compensation Committee
Justin S. Huscher
Richard Spencer
Equivalent Predecessor LP
Decisionmaker
Samuel M. Mencoff
9
<PAGE> 12
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
HUNTWAY REFINING COMPANY COMMON STOCK, S&P 500 INDEX AND
RUSSELL 2000 INDEX
[GRAPH]
<TABLE>
<CAPTION>
COMPANY
COMMON STOCK S&P 500 INDEX RUSSELL 2000 INDEX
------------ ------------- ------------------
<S> <C> <C> <C>
1993 100.00 100.00 100.00
1994 66.67 98.46 98.18
1995 29.13 132.05 126.10
1996 54.13 158.80 146.90
1997 175.00 208.05 179.74
1998 112.50 263.53 175.16
</TABLE>
The foregoing comparison of total return (change in year-end unit or stock price
plus, when applicable, reinvested dividends) assumes that 100 was invested on
January 1, 1994 in the Predecessor LP's limited partnership units, in the
Standard & Poor's ("S&P") 500 Index, a broad equity market index that includes
companies whose equity securities are listed on the New York Stock Exchange, and
in the Russell 2000 Index, a broad index of companies with small market
capitalizations (an arithmetic average of $530 million at December 31, 1998). At
December 31, 1998, the Company's market capitalization was $25.1 million.
CERTAIN TRANSACTIONS
Pursuant to a Stock Purchase Agreement dated as of March 31, 1998, immediately
preceding (and contingent upon) the Conversion, twelve individuals purchased
from the Company, for $1.75 per share (the closing price of the Predecessor LP's
Units on the New York Stock Exchange on March 30, 1998), an aggregate of 150,000
shares of Common Stock. The shares were not registered under the Securities Act
of 1933, nor did the purchasers receive any registration rights with respect to
the shares. The purchasers included Mr. McFarland, a director of the Company,
who purchased 57,000 shares.
In November of 1998, the Company entered into a settlement with Mr. Andre
Danesh, the beneficial owner of more than 5% of the outstanding shares of Common
Stock, of his claim for a fee in connection with the Predecessor LP's 1997
issuance of its Senior Subordinated Secured Convertible Notes (which became
obligations of the Company as a result of the Conversion). In return for a
release by Mr. Danesh of all of his claims against the Company other than his
rights under outstanding options to purchase Common Stock, the Company agreed to
pay him twenty consecutive equal monthly installments of $5,000 each, without
interest, from December of 1998 through July of 2000.
10
<PAGE> 13
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of reports of ownership, reports of changes of
ownership and written representations under Section 16(a) of the Securities
Exchange Act of 1934 which were furnished to the Company during or with respect
to 1998 by persons who were, at any time during 1998, directors or officers of
the Company or beneficial owners of more than 10% of the outstanding shares of
Common Stock, all reports required by such Section during 1998 were filed on a
timely basis except that Form 5s for Messrs. Kaplan and McFarland reflecting the
grant of options to them under the Huntway Refining Company 1998 Stock Incentive
Plan were filed late and except that no Form 3, Form 4 or Form 5 has been filed
by Andre Danesh with respect to his beneficial ownership of Common Stock at the
time of the Conversion or his subsequent transaction that resulted in an
increase in the number of shares of Common Stock beneficially owned by him.
ANNUAL REPORT ON FORM 10-K
The Company's Annual Report on Form 10-K for the year ended December 31, 1998
(without exhibits) is included with this proxy statement. Stockholders are
referred to the report for financial and other information about the Company.
DEADLINE FOR STOCKHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING
Any stockholder proposal to be considered for inclusion in proxy material for
the Company's annual meeting of stockholders in May 2000 must be received at the
principal executive offices of the Company no later than December 10, 1999.
ADVANCE NOTICE REQUIREMENT FOR ANY NOMINATION OR MATTER TO BE RAISED BY A
STOCKHOLDER
Any nomination for election to the Board of Directors of the Company at any
meeting of stockholders, or proposal of business to be transacted at any meeting
of stockholders, that is not included in the Company's proxy statement and form
of proxy relating to the meeting but that a stockholder wishes to make at the
meeting may be made only if it may properly be made by the stockholder at the
meeting and only if the stockholder delivers a notice to the Secretary of the
Company at its principal executive offices on a timely basis. For an annual
meeting, the notice must be so delivered not less than 45 days before the date
on which the Company first mailed its proxy materials for the prior year's
annual meeting (unless the date of the meeting is changed by more than 30 days
from the prior year, in which event such notice must be so delivered a
reasonable time before the Company mails its proxy materials for the annual
meeting). For a special meeting, the notice must be so delivered not later than
the close of business on the 10th day following the earlier of the day on which
notice of the date of the meeting was mailed or public announcement of the date
of the meeting was made. The notice must set forth the related information
required by Article II, Section 11 of the Company's bylaws. Such information
generally consists of the information relating to any nominee that would be
required to be disclosed in the Company's proxy statement for that meeting if
the nominee were proposed by the Company or, as to other matters, a brief
description of the matter, the reason for the proposal and any material interest
of the proposing stockholder (or beneficial owner) in the matter and information
regarding the proposing stockholder (or beneficial owner) and such stockholder's
(or beneficial owner's) beneficial ownership of shares of the Company.
11
<PAGE> 14
DISCRETIONARY VOTING OF 2000 PROXIES
The persons named in proxies solicited by the Company's Board of Directors in
connection with the Company's 2000 annual meeting of stockholders will have
discretionary authority to vote such proxies with respect to any matter properly
presented by a stockholder at the meeting that is not specifically set forth in
the notice of the meeting if the Company does not have notice of such matter on
or before February 23, 2000 (unless the date of the meeting is changed by more
than 30 days from May 12, 2000, in which event such persons will have such
discretionary authority if the Company does not have notice of such matter a
reasonable time before the Company mails its proxy materials for the meeting).
PROXY SOLICITATION
Proxies will be solicited by mail. Proxies may also be solicited by directors,
officers and a small number of regular employees of the Company personally or by
mail, telephone or telegraph, but such persons will not be specially compensated
for such services. Brokerage houses, custodians, nominees and fiduciaries will
be requested to forward the soliciting material to the beneficial owners of
stock held of record by such persons, and the Company will reimburse them for
their expenses in doing so.
The entire cost of solicitation will be borne by the Company.
OTHER MATTERS
Deloitte & Touche LLP, who served as auditors for the year ended December 31,
1998, have been selected by the Board, upon recommendation of the Audit
Committee, to audit the consolidated financial statements of the Company for the
year ending December 31, 1999. It is expected that one or more representatives
of Deloitte & Touche LLP will attend the annual meeting, with the opportunity to
make a statement if they should so desire, and will be available to respond to
appropriate questions.
The management does not intend to present, and does not have any reason to
believe that others will present, any item of business at the annual meeting
other than those specifically set forth in the notice of the meeting. However,
if other matters are properly presented for a vote, the proxies will be voted
for such matters in accordance with the judgment of the persons acting under the
proxies.
By Order of the Board of Directors
WARREN J. NELSON
Secretary
Newhall, California
April 9, 1999
12
<PAGE> 15
DETACH HERE
- --------------------------------------------------------------------------------
PROXY
HUNTWAY REFINING COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 12, 1999
Warren J. Nelson and Earl G. Fleisher (each with full power of substitution)
are hereby authorized to vote all the shares of Common Stock which the
undersigned would be entitled to vote if personally present at the annual
meeting of stockholders of Huntway Refining Company to be held on May 12, 1999,
and at any postponement or adjournment thereof, as directed on the reverse side
and as follows. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED
ON THE REVERSE SIDE, BUT IF NO DIRECTION IS GIVEN, THE SHARES WILL BE VOTED FOR
THE ELECTION AS DIRECTORS OF THE NAMED NOMINEES.
YOUR VOTE IS IMPORTANT! PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE
SIDE AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
[SEE REVERSE] (CONTINUED AND TO BE SIGNED ON REVERSE SIDE) [SEE REVERSE]
SIDE SIDE
<PAGE> 16
<TABLE>
<CAPTION>
DETACH HERE
- ------------------------------------------------------------------------------------------------------------------------------------
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
<S> <C>
1. Election of Directors 2. In their discretion, upon such other business as may properly be
brought before the meeting.
NOMINEES: Harris Kaplan and Richard Spencer
FOR WITHHELD
BOTH [ ] [ ] FROM BOTH
NOMINEES NOMINEES
[ ]
---------------------------------------------
For both nominees except as noted above
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
The undersigned acknowledges receipt of the Notice of Annual
Meeting of Stockholders and of the Proxy Statement.
IMPORTANT: Please sign exactly as your name or names appear
to the left. Joint owners should each sign personally. If you
sign as agent or in any other representative capacity, please
state the capacity in which you sign.
Signature: Date: Signature: Date:
----------------------------- -------------- --------------------------------------- ----------
</TABLE>
