<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 Section 240.14a-11(c) or
Section 240.14a-12
THE EXPLORATION COMPANY
- --------------------------------------------------------------------------------
(Name of 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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / 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:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
THE EXPLORATION COMPANY
500 NORTH LOOP 1604 EAST, SUITE 250
SAN ANTONIO, TEXAS 78232
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MARCH 29, 1996
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders of The Exploration Company, a
Colorado corporation (the "Company"), will be held at the office of the
Company, 500 North Loop 1604 East, Suite 250, San Antonio, Texas, on Friday,
March 29, 1996, at 10:00 a.m., for the following purposes:
1. To elect three Directors;
2. To ratify the appointment of Akin, Doherty, Klein &
Feuge, certified public accountants, as independent
auditors of the Company and its subsidiaries for the
fiscal year ending August 31, 1996; and
3. To transact any other business as properly may come
before the meeting or any adjournment thereof.
Only shareholders of record at the close of business on February 10,
1996, (the Record Date) are entitled to notice of and to vote at the meeting or
any adjournment thereof.
We hope you will be represented at the meeting by signing and
returning the enclosed proxy card in the accompanying envelope as promptly as
possible, whether or not you expect to be present in person. Your vote is
important and the Board of Directors of the Company appreciates the cooperation
of shareholders in promptly returning proxies.
James E. Sigmon
President
February 21, 1996
<PAGE> 3
THE EXPLORATION COMPANY
500 NORTH LOOP 1604 EAST, SUITE 250
SAN ANTONIO, TEXAS 78232
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 29, 1996
SOLICITATION AND REVOCABILITY OF PROXIES
The enclosed proxy is solicited on behalf of the Board of Directors of
The Exploration Company for use at the Annual Meeting of Shareholders (the
"Meeting") on March 29, 1996, at 10:00 a.m., San Antonio Time to be held at the
office of the Company, 500 North Loop 1604 East, Suite 250, San Antonio, Texas,
and at any adjournment thereof.
The cost of soliciting proxies will be borne by the Company. In
addition, the Company will reimburse its transfer agent for charges and
expenses in connection with the distribution of proxy material to the
beneficial owners. Solicitations may further be made by officers, directors
and regular employees of the Company, without additional compensation, by use
of mails, telephone, telegraph or by personal calls.
Any shareholder giving a proxy for the Meeting has the power to revoke
it at any time prior to its use by giving notice in person or in writing to the
Secretary of the Company. The approximate date on which this Proxy Statement
and the accompanying form of the proxy are first sent or given to security
holders is February 21, 1996.
In addition to this Proxy Statement, the Company is pleased to enclose
a copy of the 1995 Annual Report for the fiscal year ending August 31, 1995.
PURPOSE OF MEETING
At the Meeting, action will be taken: (1) to elect three directors to
hold office until the next Annual Meeting of Shareholders and until their
successors shall have been elected and qualified; (2) to ratify the
appointment of Akin, Doherty, Klein & Feuge, as independent auditors for the
Company and its subsidiaries for the fiscal year ending August 31, 1996; and
(3) to transact any other business that may properly come before the Meeting.
The Board of Directors does not know of any other matter that is to come before
the Meeting. If any other matters are properly presented for consideration,
however, the persons authorized by the enclosed proxy will have discretion to
vote on such matters in accordance with their best judgment.
<PAGE> 4
OUTSTANDING SHARES, QUORUM AND VOTING RIGHTS
Only holders of record of Common Stock of the Company at the close of
business on February 10, 1996, shall be entitled to notice of and to vote at
the Meeting. As of the close of business on February 10, 1996, there were
5,583,635 shares of Common Stock outstanding and entitled to be voted. Each
share outstanding entitles the holder thereof to one vote.
A majority of the outstanding shares of Common Stock represented in
person or by proxy, will constitute a quorum at the Meeting. However, if a
quorum is not represented at the Meeting, the shareholders entitled to vote
thereat, present in person or represented by proxy, have the power to adjourn
the Meeting from time to time, without notice other than by announcement at the
Meeting, until a quorum is present or represented. At any such adjourned
meeting at which a quorum is present or represented, any business may be
transacted that might have been transacted at the Meeting.
Each share of Common Stock may be voted to elect up to three
individuals (the number of directors to be elected) as directors of the
Company. To be elected, each nominee must receive a plurality of all votes cast
with respect to such position as director. It is intended, that unless
authorization to vote for one or more nominees for director is withheld,
proxies will be voted for the election of all of the nominees named in this
Proxy Statement.
Votes cast by proxy or in person will be counted by one or more
persons appointed by the Company to act as inspectors (the "Election
Inspectors") for the Meeting. The Election Inspectors will treat shares
represented by proxies that reflect abstentions as shares that are present and
entitled to vote for the purpose of determining the presence of a quorum and
for determining the outcome of any matter submitted to the shareholders for a
vote. Under Colorado law, in an election of directors, that number of
candidates having the highest number of votes cast in favor of their election
are elected as directors. As to the ratification of the Company's auditors,
Colorado law provides that an action of shareholders is approved if the votes
cast within the voting group favoring the action exceed the votes cast within
the voting group opposing the action. Thus abstention and broker non-votes
generally would have no effect on any vote.
Broker non-votes occur when a broker holding stock in street name
votes the shares on some matters but not others. Brokers are permitted to vote
on routine, non-controversial proposals in instances where they have not
received voting instruction from the beneficial owner of the stock but are not
permitted to vote on non-routine matters. The missing votes on non-routine
matters are deemed to be "broker non-votes." The Election Inspectors will
treat broker non-votes as shares that are present and entitled to vote for the
purpose of determining the presence of a quorum. However, for the purpose of
determining the outcome of any matter as to which the broker or nominee has
indicated on the Proxy that it does not have discretionary authority to vote,
those shares will be treated as not present and not entitled to vote with
respect to that matter (even though their shares are considered entitled to
vote for quorum purposes and may be entitled to vote on other matters).
2
<PAGE> 5
PROPOSAL I - ELECTION OF DIRECTORS
The Board of Directors has, pursuant to the Company's amended by-laws,
fixed the number of directors of the Board of Directors at three (3) members.
Three directors, constituting the entire Board, are to be elected at the
Meeting. Each director is to hold office until the next Annual Meeting or until
a successor is elected and qualified. Each of the nominees has consented to
serve as a director if elected. The proxies named in the accompanying proxy
have been designated by the Board of Directors and they intend to vote for the
following nominees for election as directors, unless otherwise instructed in
such proxy. The Board of Directors has no reason to believe that any nominee
will be unable to serve if elected. In the event any nominee shall become
unavailable for election, the proxies named in the accompanying proxy intend to
vote for the election of a substitute nominee of their selection. The
following table sets forth for each nominee for election as a director of the
Company, his age, principal occupation, position with the Company and certain
other information:
<TABLE>
<CAPTION>
Director
Names Age Principal Occupation since
----- --- -------------------- -----
<S> <C> <C>
Stephen M. Gose, Jr. 66 Mr. Steve Gose has served as Chairman of the Board of 1984
Directors of the Company since July, 1984. He has been and
continues to be active in exploration and development of
oil and gas properties. Mr. Gose also serves as Chairman
of ExproFuels, Inc., a Delaware corporation that was
created in anticipation of acquiring the Company's
alternative fuels division.
Thomas H. Gose 40 Mr. Gose is the President and sole Director of Cibolo 1989
Properties, Inc. He has been active for over five years
in the above referenced company, its predecessors and
affiliates. He has served as a Director of the Company
since February 15, 1989 and was elected Secretary of the
Company by the Board of Directors on January 14, 1992.
Mr. Gose is President of the Company's alternative fuels
division. He is also President and a Director of
ExproFuels, Inc. Thomas H. Gose is the son of Stephen M.
Gose, Jr.
</TABLE>
3
<PAGE> 6
<TABLE>
<S> <C> <C>
James E. Sigmon 47 Mr. James E. Sigmon has served as the Company's President 1984
since February 1985. He also served in this capacity from
July 1984 to October 1984. From October 1984 to February
1985 he served as Vice Chairman of the Board of Directors
of the Company. He has been a Director of the Company
since July 27, 1984 and was elected Treasurer of the
Company by the Board of Directors on January 14, 1992. Mr.
Sigmon is also a Director of ExproFuels, Inc.
</TABLE>
None of the nominees for director or executive officers of the Company
has a family relationship with any of the other nominees for director or
executive officer except that Thomas H. Gose is the son of Stephen M. Gose, Jr.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company, as reflected in the Company's
minute book, held no formal meetings during the fiscal year ended August 31,
1995. All resolutions of the directors were adopted by unanimous written
consent, without a meeting.
The Board of Directors has no committees. The entire Board of
Directors acts as the nominating committee for directors and will consider
nominations by shareholders for directors. Any such nomination, together with a
statement of the nominee's qualifications and consent to be considered as a
nominee and to serve if elected, should be mailed to the Secretary of the
Company no later than November 30, 1996, to be included in the proxy statement
in connection with next year's Annual Meeting of Shareholders.
COMPENSATION OF DIRECTORS
Members of the Board of Directors of the Company are not compensated
for any services provided as a director except that during the fiscal year
ended August 31, 1995, Mr. Stephen M. Gose, Jr. was paid $46,000 in his
capacity as Chairman of the Board of Directors.
4
<PAGE> 7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following tables sets forth the beneficial ownership of the
Company's Common Stock, its only class of equity security as of February 10,
1996, of certain beneficial owners and management. Each of the persons or
entities listed has sole voting power and sole investment power with respect to
the shares listed opposite his or its name.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information concerning all persons
known to the Company to beneficially own five percent (5%) or more of its
Common Stock. as of February 10, 1996, the Record Date:
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES OF COMMON STOCK PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
------------------- ------------------ --------
<S> <C> <C>
Thomas H. Gose 1,351,875(1) 17.78%(2)
500 North Loop 1604 East
Suite 250
San Antonio, Texas 78232
Cibolo Properties, Inc. 1,331,375(1) 17.51%(2)
500 North Loop 1604 East
Suite 250
San Antonio, Texas 78232
Western Exploration Pty. Ltd. 400,000 5.26%(2)
11490 Westheimer
Suite 200
Houston, TX 77077-6841
</TABLE>
___________________
(1) Includes 1,144,644 shares owned by Spectrum Resources, Inc. (SRI) and
186,731 shares owned by Retamco Operating, Inc. (ROI). Both SRI and
ROI are wholly owned subsidiaries of Cibolo Properties, Inc.
("Cibolo"). As such, Cibolo may be deemed to share beneficial
ownership of such shares owned by SRI and ROI. Thomas H. Gose, as the
sole shareholder of Cibolo, has the power to vote the shares by SRI
and ROI. Accordingly, he is deemed to be the beneficial owner of the
SRI and ROI shares.
(2) Assumes a total of 7,603,400 shares outstanding including 1,769,765
shares outstanding under options and warrants.
5
<PAGE> 8
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the number of shares of Common Stock
beneficially owned as of February 10, 1996, by each director, each executive
officer named in the Summary Compensation Table, and by all directors and
executive officers as a group.
<TABLE>
<CAPTION>
Name and Address Shares of Common Stock Percent
of Beneficial Owner(1) Beneficially Owned(2) of Class
- ------------------- ------------------ --------
<S> <C> <C>
James E. Sigmon 200,000 2.63%
Stephen M. Gose, Jr. 100,000 1.32%
Thomas H. Gose 1,351,875(3) 17.78%
All Directors and Executive 1,651,875(3) 21.73%
Officers as a group (three persons)
</TABLE>
___________
(1) The address of each of the persons named herein is: 500 North Loop
1604 East, Suite 250, San Antonio, Texas 78232.
(2) Information provided is based on the Forms 4 filed with the Securities
and Exchange Commission ("SEC') by the directors and executive
officers of the Company.
(3) See footnote (1) to the previous table.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires that
Company's directors, executive officers, and persons who own more than ten
percent of the Common Stock file initial reports of ownership and reports of
changes in ownership of Common Stock with the Securities and Exchange
Commission ("SEC"). Officers, directors, and stockholders who own more than ten
percent of the Common Stock are required by the SEC to furnish the Company with
copies of all Section 16(a) reports they file.
To the Company's knowledge, based solely on the review of such reports
furnished to the Company and written representations that no other reports were
required, during the fiscal year ended August 31, 1995, all Section 16(a)
filing requirements applicable to its officers, directors, and ten percent
stockholders were complied with.
6
<PAGE> 9
EXECUTIVE OFFICERS
The Executive Officers of the Company serve at the discretion of the
Board of Directors and are chosen annually by the Board at its first meeting
following the Annual Meeting of the Shareholders. The following table sets
forth the names and ages of the Executive Officers of the Company and all
positions held with the Company.
<TABLE>
<CAPTION>
NAME(1) AGE TITLE
- ------- --- -----
<S> <C> <C>
Stephen M. Gose, Jr. 66 Chairman of the Board
Thomas H. Gose 40 Secretary of the Company
President of ExproFuels, Inc.
James E. Sigmon 47 President
</TABLE>
______________
(1) For a description of the business experience of Messrs. Stephen M.
Gose, Thomas H. Gose, and James E. Sigmon see "Election of Directors."
EXECUTIVE COMPENSATION
Report of the Board of Directors
The following report of the Board of Directors and the performance
graph that appears immediately after such report shall not be deemed to be
soliciting material or to be filed with the SEC under the Securities Act of
1933 or the Securities Exchange Act of 1934 or incorporated by reference in any
document so filed.
BOARD COMPENSATION REPORT ON EXECUTIVE COMPENSATION. The entire Board
of Directors reviews and approves the payment of compensation amounting to
$40,000 or more per annum to any employee of the Company or its subsidiaries.
In addition, the Board approves all incentive compensation plans including,
without limitation, bonus plans, stock option plans and key employee
compensation agreements. The entire Board administers the Company's 1985
Amended and Restated Stock Option Plan (the "1985 Plan") and grants stock
options and attendant stock appreciation rights to officers and key employees
under the 1985 Plan. The Board also administers stock options granted under the
new 1995 Flexible Incentive Plan. The executive compensation policies and
practices are designed to provide competitive levels of compensation that
integrate pay with the Company's annual and long-term performance goals.
Compensation of the executive officers of the Company is primarily comprised of
base salary, long-term equity incentives, and miscellaneous other fringe
benefits. Because two of the Board members are also employees of the Company,
they approve their own salaries. There are no outside directors on the Board;
consequently, an independent executive compensation committee of Board members
is not possible.
7
<PAGE> 10
COMPENSATION PHILOSOPHY AND OBJECTIVES
Base Salary: The base salaries of the executive officers are
established at a level deemed appropriate to attract and retain qualified
executives who are instrumental in helping the Company achieve its business
objectives. In establishing salaries, the Board considers the recommendations
of management, the amount of responsibilities of the executive officers, the
salaries of others similarly situated within the Company, the recent
performance in the executive's area of responsibility, and any changes in the
cost-of-living. The Company considered the competitiveness of the entire
compensation package in determining the level of compensation. The salaries of
the executive officers are reviewed annually and reflect the performances of
the past year. As a result, the salaries received in 1995 reflected the
individual performances in 1994 for officers who were with the Company during
the that year.
Stock Option Plan: The 1985 Plan and the 1995 Flexible Incentive Plan
are designed to align the long-term interests of key employees with
shareholders. The Plans each set aside up to 400,000 shares of the Company's
Common Stock to be available to be offered to employees of the Company as a
long-term incentive. The exercise price of such options may not be less than
100% of the fair market value per share of the Common Stock on the date of the
grant. The number of options granted to any individual is dependent on the
individuals level of responsibility and ability to influence the performance of
the Company. The Board of Directors has adopted the 1995 Flexible Incentive
Plan which was approved as presented to the shareholders during the 1995 Annual
Meeting.
Fringe Benefits: From time to time, the Company makes available to key
employees and executives certain other fringe benefits. The Company may provide
automobiles, club memberships, tickets to sporting or cultural events, tickets
to community events, etc. To the extent that such items are taxable to the
individual they are considered to be part of the individual's compensation
package.
EXECUTIVE COMPENSATION. During 1995, the compensation of the Chief
Executive Officer was maintained at levels specified in an employment agreement
with the Company, as amended in 1994. The Board evaluates the CEO's
contribution to the Company's long-term financial and non-financial objectives.
In addition, the Board evaluates the performance of the CEO based upon a
variety of factors including the Company's earnings per share, enhancement of
asset values and quality and the extent to which business plan goals are met or
exceeded. The Board does not assign relative weights to any of the foregoing
factors, but instead makes a subjective determination based upon a
consideration of all such factors.
During 1995, the Board awarded the CEO stock options to purchase 100,000 shares
of the Company's common stock under the terms of the 1995 Flexible Incentive
Plan.
In Summary, based on the performance of the Company during the past several
years, and in light of the their efforts put forth directing the Company, the
Board has determined that the compensation paid to the CEO, as described in the
Summary Compensation Table below, as well
8
<PAGE> 11
as compensation paid to other Company officers, serves the best interest of the
Company's Shareholders.
This report is submitted by the members of the Board of Directors:
Stephen M. Gose, Jr.
Thomas H. Gose
James E. Sigmon
---------------
COMPARATIVE PERFORMANCE GRAPH. The following graph compares the
performance of the Company's common stock for the five-year period commencing
August 31, 1990, to (i) the NASDAQ market composite index (NASDAQ-US) and (ii)
NASDAQ exploration and production companies comprised of approximately 98
active companies which trade on either the NASDAQ National Market System or the
NASDAQ Small-Cap Market. The graph assumes that a $100 investment was made in
the Company's common stock and each index on August 31, 1990, and that all
dividends were reinvested. Also included are the respective investment returns
based upon the stock and index values as of the end of each year during such
five-year period. The information was provided by the Center for Research in
Security Prices (CRSP) of The University of Chicago Graduate School of
Business. The index of exploration and production companies used includes all
available NASDAQ stocks under SIC codes 1310-19 (companies engaged in oil and
gas exploration and production operations) actively traded on NASDAQ during the
comparative term. The list of comparative companies is available to
shareholders directly from CRSP or may be obtained at no cost from the Company
by writing the Company or telephoning (210) 496-5300 and requesting the
information.
9
<PAGE> 12
[GRAPH]
THE EXPLORATION COMPANY
COMPARATIVE PERFORMANCE GRAPH - FY 1995 PROXY STATEMENT
SCHEDULE OF GRAPH INFORMATION IN TABULAR FORMAT
<TABLE>
<CAPTION>
Date Company Market Peer
Index Index Index
<S> <C> <C> <C>
8/31/90 100.00 100.00 100.00
8/30/91 100.00 141.88 89.07
8/31/92 57.14 153.89 90.72
8/31/93 57.14 203.01 132.54
8/31/94 48.00 211.38 107.82
8/31/95 51.43 284.01 103.77
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. The
Company does not have a compensation committee. Therefore, as set forth above
all members of the Board of Directors also serve as officers of the Company.
During the fiscal year ended August 31, 1995, the following officers
participated in deliberations of the Company's Board of Directors concerning
executive officer compensation: Mr. James E. Sigmon, Mr. Thomas H. Gose and Mr.
Stephen M. Gose, Jr.
As of August 31, 1994 the Company owed Spectrum Resources, Inc. (SRI), an
affiliate company wholly owned by Cibolo Properties, Inc. (Cibolo), in turn
wholly owned by Thomas H. Gose, $36,162 for services rendered in prior years,
plus accrued interest. In December, 1995 Retamco Operating, Inc. (ROI), an
affiliate company also wholly owned by Cibolo loaned the Company $100,000, the
note bearing interest at 10.5% per annum. The notes payable to ROI and SRI were
both paid in full on December 22, 1995 in conjunction with the settlement of a
lawsuit involving outstanding claims to 32.5% of the minerals under the
Holmgreen Ranch which the Company acquired in September, 1988.
10
<PAGE> 13
The Company disputed the legal claims, but agreed to settling the dispute by
allowing the other named defendants to purchase the 32.5% interest from the
Company. The purchasers included SRI and Cibolo. Consideration included full
payment of the outstanding balances on the two notes detailed above, plus other
property and leases valued at $400,000.
There are no interlocks between the members of the Board of Directors and other
corporations nor any material transactions between the Company and such members
except as set forth herein and under "Transactions with Management and Others."
SUMMARY COMPENSATION INFORMATION. The following table contains certain
information for each of the fiscal years indicated with respect to the chief
executive officer and those executive officers of the Company as to whom the
total annual salary and bonuses paid or accrued during the fiscal year ended
August 31, 1995, exceeded $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
NAME AND OTHER ANNUAL COMPENSATION ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS COMPENSATION OPTIONS COMPENSATION
------------------ ---- --------- ----- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
James E. Sigmon(2) 1995 $ 72,000 $0 -- (3) $0 $0
President & CEO 1994 88,958 $0 $0 $0 $0
1993 109,000 $0 $0 $0 $0
</TABLE>
- -----------
(1) No other person's compensation exceeded $100,000.
(2) Mr. Sigmon is party to an employment agreement pursuant to which he
has been granted a 1% overriding royalty interest in certain leases in
Maverick County, Texas in which the Company has an interest. See
"Transactions with Management and Others."
(3) Other compensation is less than 10% of Salary and Bonus.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
# Shares Value Options/SARs Options/SARs
Name Exercised Realized August 31, 1995 August 31, 1995
- ---- --------- -------- --------------- ---------------
<S> <C> <C> <C> <C>
James E. Sigmon 50,000 $ 93,750 150,000 $ 20,500
Steven M. Gose, Jr. 100,000 26,848 -0- -0-
</TABLE>
All of Mr. Sigmon's unexercised options were exercisable as of August 31, 1995.
11
<PAGE> 14
EMPLOYMENT AGREEMENT. In 1994, the Company and Mr. Sigmon agreed to
modify his Employment Agreement by reducing his salary from a base salary of
$100,000 plus an additional $9,000 for reimbursement of expenses associated
with the utilization of an automobile to $72,000 in consideration of a grant to
him of a 1% overriding royalty interest in certain leases in Maverick County,
Texas.
Mr. Sigmon's Employment Agreement is terminable upon ninety days
notice but his right to the overriding royalty interest is vested and cannot be
terminated.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
During the years ended August 31, 1995, 1994 and 1993, Harold D.
Rogers, vice-president of the Company until his retirement in November 1994,
represented certain persons, including himself, who have engaged in joint
venture arrangements with the Company in certain oil and gas properties.
Specifically, Horizontal Co. and Kincaid Co. are general partnerships that have
joint ventured with the Company in two of its oil and gas properties. Mr.
Rogers owns 10% of Horizontal Co. and owned 5.125% of Kincaid Co. On September
23, 1994, the Company acquired an option for $200,000 from Horizontal Co. The
option, which originally expired on July 1, 1995, and was extended until April,
1996, allows the Company to increase its interest by 15% in the Paloma Ranch
oil & gas lease in Maverick County, Texas for $649,923. The purchase price was
determined through arm's-length negotiations with the joint ventures. Through
November, 1995 the Company had exercised 12.5% of the option with the payment
of 122,217 shares of its common stock. The transactions were valued at
$541,603. In April, 1995, the Company purchased the remaining 50% interest in
the Kincaid lease in Maverick County from Kincaid Co. for 136,000 shares of
common stock, in a transaction valued at $340,000.
In August 31, 1995, the Company elected to exercise its option to purchase an
undivided 20% interest in oil and gas leases covering 56,858 gross acres,
28,258 net acres in the Williston Basin in North Dakota and Montana. The
Company purchased the interest from Retamco Operating, Inc. (ROI), an
affiliated company wholly owned by Cibolo Properties, Inc., in turn wholly
owned by Thomas H. Gose. Consideration paid by the Company consisted of an
initial downpayment of 186,731 shares of its restricted common stock
representing a value of $100.00 per net mineral acre. Terms call for
additional shares to be issued when an independent, third party purchases a
comparable interest in the block, thereby establishing a final price to be paid
by the Company.
During November, 1995, the Company received full payment of $72,000 owed it by
the Chairman, Stephen M. Gose, Jr., due to his exercise of a stock option to
purchase common stock on August 31, 1995.
In the opinion of the Board of Directors of the Company, the terms of
the transactions described above were as favorable as would be available from
an independent third party.
12
<PAGE> 15
PROPOSAL II - RATIFY APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Akin, Doherty, Klein & Feuge
("Akin Doherty") as independent certified public accountants for the Company
and its subsidiaries for the fiscal year 1996. Akin Doherty acted in the same
capacity in 1995.
A representative of Akin Doherty is expected to attend the Meeting,
will have the opportunity to make a statement if he decides to do so, and will
be available to answer questions. Although the submission of this matter to the
shareholders is not required by law, the Board of Directors will reconsider its
selection of independent accountants if this appointment is not ratified by the
shareholders. Ratification will require the affirmative vote of the majority of
the shares of Common Stock represented at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
AUDITORS.
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<PAGE> 16
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
It is anticipated that the 1997 Annual Meeting of Shareholders will be
held on March 28, 1996. Proposals of shareholders intended to be presented at
the 1997 Annual Meeting must be received in writing by the Secretary of the
Company at its principal offices, 500 North Loop 1604 East, Suite 250, San
Antonio, Texas, 78232, not later than November 30, 1996.
OTHER MATTERS
No other business other than the matters set forth in this Proxy
Statement is expected to come before the meeting, but should any other matters
requiring a vote of shareholders arise, including a question of adjourning the
Meeting, the persons named in the accompanying proxy will vote thereon
according to their best judgment in the interests of the Company. In the event
that any of the nominees for director should withdraw or otherwise become
unavailable for reasons not presently known, the persons named as proxies in
the accompanying proxy will vote or refrain from voting for other persons in
their place in what they consider the best interests of the Company. The
foregoing Notice and Proxy Statement are sent by order of the Board of
Directors.
James E. Sigmon, President
February 21, 1996
San Antonio, Texas
STOCKHOLDERS ARE URGED, REGARDLESS OF THE NUMBER OF SHARES OF COMMON
STOCK OWNED, TO DATE, SIGN, AND RETURN THE ENCLOSED PROXY. YOUR COOPERATION IN
GIVING THESE MATTERS YOUR IMMEDIATE ATTENTION AND IN RETURNING YOUR PROXY
PROMPTLY IS APPRECIATED.
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<PAGE> 17
This Proxy is Solicited on Behalf of the Board of Directors
THE EXPLORATION COMPANY
P
R
O
X Stephen M. Gose, Jr., Thomas H. Gose and James E. Sigmon or any
Y of them, with power of substitution of each, are hereby authorized to
represent the undersigned at the Annual Meeting of Shareholders of
The Exploration Company, to be held at 500 North Loop 1604 East,
Suite 250, San Antonio, Texas, on March 29, 1996, at 10:00 a.m., and
any adjournment thereof, and to vote the number of shares which the
undersigned would be entitled to vote if personally present.
To vote in accordance with the Board of Directors'
recommendations just sign the reverse side; no boxes need to be
checked.
SEE REVERSE
(Continued and to be signed on other side.) SIDE
<PAGE> 18
[X] (Please mark
votes as in
this example.
This proxy will be voted as you direct below, in the absence of such direction,
it will be voted FOR all of the Directors and FOR each of the Proposals below.
1. SELECTION OF DIRECTORS:
Nominees: Stephen M. Gose, Jr., Thomas H. Gose and
James E. Sigmon
FOR WITHHELD
[ ] [ ]
[ ]___________________________________ MARK HERE FOR ADDRESS [ ]
For all nominees except as noted above CHANGE AND NOTE BELOW
2. Proposal to Ratify the Adoption of Akin, Doherty, Klein & Feuge, P.C. as
Independent Auditors for the Company for the fiscal year 1996.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In their discretion, upon such other matters as properly may come before the
meeting.
NOTE: Please sign exactly as name appears. Joint owners should each sign,
Executor, Administrator, or Guardian, please give full title as such. If signer
is a corporation, please sign with the full corporation name by duly authorized
officer as officer.
Signature:__________________________________________________ Date_______________
Signature:__________________________________________________ Date_______________
PLEASE DO NOT FOLD OR MUTILATE THIS CARD
