<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
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:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
LOMAK PETROLEUM
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] 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: ...........................................................
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<PAGE> 2
(Lomak letterhead)
Dear Shareholders:
On behalf of the Board of Directors, it is our pleasure to invite you
to attend Lomak's 1997 Annual Meeting of Shareholders to be held at the Fort
Worth Club, 306 West Seventh Street, 12th Floor, Fort Worth, Texas on Thursday,
June 19, 1997 at 9:00 a.m. local time.
Details of the meeting are given in the enclosed Notice of Annual
Meeting of Shareholders. During the meeting, we plan to review the business and
affairs of the Company and our plans for the coming year.
We hope you personally attend the meeting, but whether or not you
expect to attend, please sign and return the enclosed proxy card at your
earliest convenience so that your shares will be represented and voted at the
Annual Meeting. You may revoke your proxy prior to, or at the meeting, and still
vote in person if you so desire.
Sincerely,
John H. Pinkerton
President
<PAGE> 3
PRELIMINARY PROXY STATEMENT
LOMAK PETROLEUM, INC.
500 THROCKMORTON STREET, SUITE 2104
FORT WORTH, TEXAS 76102
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 19, 1997
To the Stockholders of Lomak Petroleum, Inc.:
The Annual Meeting of Stockholders (the "Meeting") of Lomak Petroleum,
Inc. (the "Company") will be held at the Fort Worth Club, 306 West Seventh
Street, 12th Floor, Fort Worth, Texas, on Thursday, June 19, 1997 at 9:00 a.m.
local time. The list of stockholders entitled to vote at the Meeting will be
open to the examination of any stockholder during ordinary business hours for a
period of ten days prior to the Meeting at the Company's headquarters, 500
Throckmorton Street, Fort Worth, Texas. Such list will also be produced at the
time and place of the Meeting and be kept open during the Meeting for the
inspection by any stockholder who may be present. The purposes for which the
Meeting is to be held are as follows.
1. To elect a board of seven Directors, each for one-year terms.
2. To consider and adopt an amendment to the Company's Articles
of Incorporation increasing the number of authorized shares of
the Company's common stock, par value $.01 per share (the
"Common Stock") from 35 million shares to 50 million shares
and increasing the number of authorized shares of Preferred
Stock, par value $1 per share (the "Preferred Stock") from 4
million shares to 10 million shares.
3. To consider and adopt an amendment to the Company's Stock
Option Plan increasing the number of authorized shares in the
Plan from 2 million to 3 million shares of Common Stock.
4. To consider and adopt the Company's 1997 Stock Purchase Plan
covering 500,000 shares.
5. To transact such other business as may properly come before
the Meeting or any adjournment thereof.
The holders of shares of Common Stock and the Company's $2.03
Convertible Exchangeable Preferred Stock of record at the close of business on
May 15, 1997 are entitled to notice of and to vote at the Meeting or any
adjournment thereof.
Whether or not you plan to attend the Meeting, please complete, date
and sign the enclosed proxy and return it in the envelope provided. Any person
giving a proxy has the power to revoke it at any time prior to its exercise and,
if present at the Meeting, may withdraw it and vote in person.
BY THE ORDER OF THE BOARD OF DIRECTORS
Jeffery A. Bynum
Secretary
May 16, 1997
Fort Worth, Texas
<PAGE> 4
LOMAK PETROLEUM, INC.
500 THROCKMORTON STREET
SUITE 2104
FORT WORTH, TEXAS 76102
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 19, 1997
The enclosed proxy is solicited by and on behalf of the Board of
Directors (the "Board") of LOMAK PETROLEUM, INC., a Delaware corporation (the
"Company"), for use at the Annual Meeting of Stockholders to be held Thursday,
June 19, 1997 at 9:00 a.m. local time, at the Fort Worth Club, 306 West Seventh
Street, 12th Floor, Fort Worth, Texas 76102 and any adjournment thereof (the
"Meeting"). The matters to be considered and acted upon at the Meeting are
described in the foregoing Notice of Annual Meeting of Stockholders and this
Proxy Statement. This Proxy Statement and the related form of proxy are being
mailed on or about May 16, 1997, to all holders of the Company's Common Stock,
$.01 par value (the "Common Stock"), the Company's $2.03 Convertible
Exchangeable Preferred Stock, $1 par value (the "Preferred Stock") (collectively
the "Stockholders") of record on May 15, 1997. Shares of the Common Stock and
Preferred Stock represented by proxies will be voted as hereinafter described or
as otherwise specified by each Stockholder. Any proxy given by a Stockholder may
be revoked by the Stockholder at any time prior to the voting of the proxy by
delivering a written notice to the Secretary of the Company, by executing and
delivering a later-dated proxy or by attending the meeting and voting in person.
The persons named as proxies are John H. Pinkerton and Chad L.
Stephens, President and Senior Vice President of the Company, respectively. The
cost of preparing, assembling and mailing the proxy, this Proxy Statement and
the other material enclosed and all clerical and other expenses of solicitation
will be borne by the Company. In addition to the solicitation of proxies by use
of the mails, directors, officers and employees of the Company may solicit
proxies by telephone, telegram or personal interview. The Company also will
request brokerage firms and other custodians, nominees and fiduciaries to
forward soliciting material to the beneficial owners of Common Stock and
Preferred Stock held of record by such custodians and will reimburse such
custodians for their expenses in forwarding soliciting materials.
2
<PAGE> 5
VOTING RIGHTS
Only holders of shares of Common Stock and Preferred Stock of record at
the close of business on May 15, 1997 will be entitled to vote at the Meeting.
On April 16, 1997, the Company had 20,326,201 issued and outstanding shares of
Common Stock, each such share entitling the holder thereof to one vote on each
matter and 1,150,000 outstanding shares of Preferred Stock, each such share
entitling the holder thereof to one vote on each matter. Holders of shares of
Common Stock and Preferred Stock are not entitled to cumulative voting rights.
The presence at the Meeting in person or by proxy of the holders of a
majority of the outstanding shares of Common Stock and Preferred Stock in the
aggregate entitled to vote shall constitute a quorum for the transaction of
business. If a quorum is present, the affirmative vote of a plurality of the
shares cast at the Meeting and entitled to vote will be required to act on the
election of directors, and the affirmative vote by the holders of a majority of
the shares cast at the Meeting will be required to act on all other matters to
come properly before the Meeting, except for Proposal II, III and IV as to which
the affirmative vote of the holders of a majority of the outstanding shares
entitled to vote at the Meeting shall be required. If a stockholder, present in
person or by proxy, abstains on any matter, the stockholder's shares will not be
voted on such matter and, in the case of matters other than the election of
directors and Proposal II, III and IV, will be not treated as a vote against
such matter. Broker non-votes are treated as shares as to which voting power has
been withheld by the beneficial owners of such shares and, therefore, as votes
not cast.
3
<PAGE> 6
SECURITY OWNERSHIP
The following table sets forth certain information as of April 16, 1997
regarding (i) the share ownership of the Company by each person known to the
Company to be the beneficial owner of more than 5% of the outstanding shares of
Common Stock or Preferred Stock of the Company, (ii) the share ownership of the
Company by each Director and each of the four Named Executive Officers ( as
defined under "Executive Compensation - Summary Compensation Table"), (iii) the
share ownership of the Company by all Directors and executive officers, as a
group. The business address of each officer and Director listed below is: c/o
Lomak Petroleum, Inc., 500 Throckmorton Street, Fort Worth, Texas 76102.
<TABLE>
<CAPTION>
COMMON STOCK PREFERRED STOCK
-----------------------------------------------------------------
NUMBER OF SHARES NUMBER OF SHARES
BENEFICIALLY PERCENT BENEFICIALLY PERCENT
OWNER OWNED OF CLASS OWNED OF CLASS
- ----------------------------- -------------------- ---------- ---------------- --------
<S> <C> <C> <C> <C>
Thomas J. Edelman 979,541 (1) 4.78% 0 0%
John H. Pinkerton 494,093 (2) 2.41% 0 0%
C. Rand Michaels 296,598 (3) 1.46% 0 0%
Robert E. Aikman 92,776 (4) 0.46% 0 0%
Anthony V. Dub 68,965 (5) 0.34% 0 0%
Allen Finkelson 13,200 (6) 0.06% 0 0%
Ben A. Guill 57,200 (7) 0.28% 0 0%
Steven L. Grose 93,143 (8) 0.46% 0 0%
Chad L. Stephens 126,651 (9) 0.62% 0 0%
Thomas W. Stoelk 33,500 (10) 0.16% 0 0%
All Directors and executive officers as a group (14 persons) 2,417,747 (11) 11.51% 0 0%
Public Employees Retirement System of Ohio 1,350,000 (12) 6.64% 0 0%
Cometra Energy, L.P. 1,410,106 (13) 6.94% 0 0%
Cincinnati Financial Corporation 86,957 (14) 7.56%
Guardian Life Insurance Company of America 191,304 (15) 16.64%
Fidelity Management & Research Company 139,130 (16) 12.10%
Palisade Capital 121,739 (17) 10.59%
Merrill Lynch Asset Management 91,304 (18) 7.94%
Pecks Management 86,957 (19) 7.56%
Putman Investments 52,174 (20) 4.54%
- -----------------
<FN>
(1) Includes 145,000 shares which may be purchased under currently
exercisable stock options or options that are exercisable within 60
days; 113,333 shares held under IRA, KEOGH and pension plan accounts;
29,916 shares owned by Mr. Edelman's spouse; and 91,200 shares owned by
Mr. Edelman's minor children, to which Mr. Edelman disclaims beneficial
ownership.
(2) Includes 171,667 shares which may be purchased under currently
exercisable stock options or options that are exercisable within 60
days; 115,899 shares held under IRA and pension plan accounts; 1,572
shares owned by Mr. Pinkerton's minor children; and 743 shares owned by
Mr. Pinkerton's spouse, to which Mr. Pinkerton disclaims beneficial
ownership.
(3) Includes 55,666 shares which may be purchased under currently
exercisable stock options or options that are exercisable within 60
days; 1,804 shares held under the IRA account; 107,011 shares owned by
Mr. Michael's spouse; and 19,460 shares owned by Mr. Michael's
children, to which Mr. Michaels disclaims beneficial ownership.
(4) Includes 28,200 shares which may be purchased under currently
exercisable stock options or options that are exercisable within 60
days; 9,366 shares owned by Mr. Aikman's spouse; and 10,010 shares
owned by Mr. Aikman's minor children, to which Mr. Aikman disclaims
beneficial ownership.
(5) Includes 7,200 shares which may be purchased under currently
exercisable stock options or options that are exercisable within 60
days.
(6) Includes 13,200 shares which may be purchased under currently
exercisable stock options or options that are exercisable within 60
days.
(7) Includes 7,200 shares which may be purchased under currently
exercisable stock options or options that are exercisable within 60
days.
(8) Includes 55,166 shares which may be purchased under currently
exercisable stock option or options that are exercisable within 60
days.
(9) Includes 56,167 shares which may be purchased under currently
exercisable stock options or options that are exercisable within 60
days; 10,000 shares owned by Mr. Stephens' spouse; and 3,879 shares
owned by Mr. Stephens' minor children, to which Mr. Stephens disclaims
beneficial ownership.
(10) Includes 32,500 shares which may be purchased under currently
exercisable stock options or options that are exercisable within 60
days.
(11) Includes 674,682 shares which may be purchased under currently
exercisable stock options or options that are exercisable within 60
days.
(12) Such stockholder's address is 227 East Town Street, Columbus, Ohio 43215.
(13) Such stockholder's address is 500 Throckmorton, Suite 2500, Fort Worth,
Texas 76102.
(14) Such person's address is 6200 South Gilmore Road, Fairfield, Ohio
45014-5141.
(15) Such person's address is 201 Park Avenue, New York, New York 10003.
(16) Such person's address is 82 Devonshire, Boston, Massachusetts 02110.
(17) Such person's address is One Bridge Plaza, Suite 695, Fort Lee, New
Jersey 07024.
(18) Such person's address is 800 Scuddersmill Road, Plainsboro, New Jersey
08536.
(19) Such person's address is 1 Rockefeller Place, Suite 320, New York, New
York 10020.
(20) Such person's address is One Post Office Square, Boston, Massachusetts
02109.
</TABLE>
4
<PAGE> 7
PROPOSAL I -- ELECTION OF DIRECTORS
NOMINATION AND ELECTION OF DIRECTORS
The Board has nominated Messrs. Robert E. Aikman, Anthony V. Dub,
Thomas J. Edelman, Allen Finkelson, Ben A. Guill, C. Rand Michaels, and John H.
Pinkerton (all of whom are members of the present Board) to serve as Directors
of the Company for terms of one year expiring at the 1998 Annual Meeting of
Stockholders and until their successors have been elected and qualified.
Unless otherwise specified, shares represented by proxies will be voted
in favor of the election of all of the nominees, except that, in the event any
nominee should not continue to be available for election, such proxies will be
voted for the election of such other persons as the Board may recommend.
Management does not presently contemplate that any of the nominees will become
unavailable for election for any reason.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE NOMINEES.
INFORMATION CONCERNING NOMINEES
The following table sets forth the names of the nominees and certain
information with regard to each nominee.
HELD
NAME OF NOMINEE AGE OFFICE SINCE POSITION WITH COMPANY
--------------- --- ------------ ---------------------
Robert E. Aikman 65 1990 Director
Anthony V. Dub 47 1995 Director
Thomas J. Edelman 46 1988 Chairman and Director
Allen Finkelson 50 1994 Director
Ben A. Guill 46 1995 Director
C. Rand Michaels 60 1976 Vice Chairman
and Director
John H. Pinkerton 43 1988 President, Chief Executive
Officer and Director
Nominees for Election at Annual Meeting:
ROBERT E. AIKMAN, a Director, joined the Company in 1990. Mr. Aikman
has more than 40 years experience in petroleum and natural gas exploration and
production throughout the United States and Canada. From 1984 to 1994 he was
Chairman of the Board of Energy Resources Corporation. From 1979 through 1984,
he was the President and principal shareholder of Aikman Petroleum, Inc. From
1971 to 1977, he was President of Dorchester Exploration Inc., and from 1971 to
1980, he was a Director and a Member of the Executive Committee of Dorchester
Gas Corporation. Mr. Aikman is also Chairman of Provident Trade Company,
President of EROG, Inc., and President of The Hawthorne Company, an entity which
organizes joint ventures and provides advisory services for the acquisition of
oil and gas properties, including the financial restructuring, reorganization
and sale of companies. He was President of Enertec Corporation which was
reorganized under Chapter 11 of the Bankruptcy Code in December 1994. In
addition, Mr. Aikman is a director of the Panhandle Producers and Royalty Owners
5
<PAGE> 8
Association and a member of the Independent Petroleum Association of America,
Texas Independent Producers and Royalty Owners Association and American
Association of Petroleum Landmen. Mr. Aikman graduated from the University of
Oklahoma in 1952.
ANTHONY V. DUB, was elected to serve as a Director of the Company in
1995. Mr. Dub is Managing Director-Senior Advisor of Credit Suisse First Boston,
an international investment banking firm with headquarters in New York City. Mr.
Dub joined Credit Suisse First Boston in 1971 and was named a Managing Director
in 1981. Mr. Dub received his Bachelor of Arts Degree from Princeton University
in 1971.
THOMAS J. EDELMAN, holds the office of Chairman and is Chairman of the
Board of Directors. Mr. Edelman joined the Company in 1988 and served as its
Chief Executive Officer until 1992. From 1981 to February 1997, Mr. Edelman
served as a director and President of Snyder Oil Corporation ("SOCO"), an
independent, publicly-traded oil and gas company. In 1996, Mr. Edelman was
appointed Chairman, President and Chief Executive Officer of Patina Oil & Gas
Corporation, a publicly traded affiliate of SOCO. Prior to 1981, Mr. Edelman was
a Vice President of The First Boston Corporation. From 1975 through 1980, Mr.
Edelman was with Lehman Brothers Kuhn Loeb Incorporated. Mr. Edelman received
his Bachelor of Arts Degree from Princeton University and his Masters Degree in
Finance from Harvard University's Graduate School of Business Administration.
Mr. Edelman serves as a director of Petroleum Heat & Power Co. Inc., Star Gas
Corporation, Weatherford Enterra, Inc., and Paradise Music & Entertainment, Inc.
ALLEN FINKELSON, was appointed a Director in 1994. Mr. Finkelson has
been a partner at Cravath, Swaine & Moore since 1977, with the exception of the
period from September 1983 through August 1985, when he was a managing director
of Lehman Brothers Kuhn Loeb Incorporated. Mr. Finkelson was first employed by
Cravath, Swaine & Moore as an associate in 1971. Mr. Finkelson received his
Bachelor of Arts Degree from St. Lawrence University and his Doctor of Laws
Degree from Columbia University School of Law.
BEN A. GUILL, was elected to serve as a Director of the Company in
1995. Mr. Guill is a Partner and Managing Director of Simmons & Company
International, an investment banking firm located in Houston, Texas focused
exclusively on the oil service and equipment industry. Mr. Guill has been with
Simmons & Company since 1980. Prior to joining Simmons & Company, Mr. Guill was
with Blyth Eastman Dillon & Company from 1978 to 1980. Mr. Guill received his
Bachelor of Arts Degree from Princeton University and his Masters Degree in
Finance from the Wharton Graduate School of Business at the University of
Pennsylvania.
C. RAND MICHAELS, who holds the office of Vice Chairman and is a
Director, served as President and Chief Executive Officer of the Company from
1976 through 1988 and Chairman of the Board from 1984 through 1988, when he
became Vice Chairman. Mr. Michaels received his Bachelor of Science Degree from
Auburn University and his Master of Business Administration Degree from the
University of Denver. Mr. Michaels is also a director of American Business
Computers Corporation of Akron, Ohio, a public company serving the beverage
dispensing and fast food industries and North Coast Energy, Inc., an
independent, publicly-traded oil and gas company.
JOHN H. PINKERTON, President, Chief Executive Officer and a Director,
joined the Company in 1988. He was appointed President in 1990 and Chief
Executive Officer in 1992. Previously, Mr. Pinkerton was Senior Vice
President-Acquisitions of SOCO. Prior to joining SOCO in 1980, Mr. Pinkerton was
with Arthur Andersen & Co. Mr. Pinkerton received his Bachelor of Arts Degree in
Business Administration from Texas Christian University and his Master of Arts
Degree in Business Administration from the University of Texas. Mr. Pinkerton is
also a director of North Coast Energy, Inc., an independent, publicly-traded oil
and gas company.
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND COMMITTEES
During 1996, the Board met in person or by telephone nine times. During
1996, each Director attended or participated in at least 67% of the meetings of
the Board and of the Committees on which they served. In addition, management
confers frequently with its Directors on an informal basis to discuss Company
affairs.
6
<PAGE> 9
The Board has established five committees to assist in the discharge of
its responsibilities.
EXECUTIVE COMMITTEE. The Executive Committee was established in 1994 to
review and authorize actions required in the management of the business and
affairs of the Company, which would otherwise be determined by the Board, where
it is not practicable to convene the full Board. The members of the Executive
Committee are Messrs. Edelman, Finkelson and Pinkerton. During 1996, the
Committee held no meetings.
COMPENSATION COMMITTEE. The Compensation Committee reviews and approves
executive salaries and administers bonus, incentive compensation and stock
option plans of the Company. This Committee advises and consults with management
regarding pensions and other benefits and significant compensation policies and
practices of the Company. This Committee also considers nominations of
candidates for corporate officer positions. The members of Compensation
committee are Messrs. Aikman, Finkelson and Guill. During 1996, the Committee
held two meeting.
AUDIT COMMITTEE. The Audit Committee reviews the professional services
provided by the Company's independent public accountants and the independence of
such accountants from management of the Company. This Committee also reviews the
scope of the audit coverage, the annual financial statements of Lomak and such
other matters with respect to the accounting, auditing and financial reporting
practices and procedures of Lomak as it may find appropriate or as have been
brought to its attention. The members of the audit committee are Messrs. Aikman,
Dub and Guill. During 1996, the Committee held two meetings.
DIVIDEND COMMITTEE. The Dividend Committee was established in late 1996
and is authorized and directed to approve the payment of dividends on all of the
Company's securities at the same rates as were paid by the Company to its
shareholders in the previous quarter. The members of the Dividend Committee are
Messrs. Edelman and Pinkerton. During 1996, the Committee held one meeting.
INSIDER TRANSACTION REVIEW COMMITTEE. The Insider Transaction Review
Committee was established in late 1996 and is responsible for reviewing certain
grants, issuances and dispositions of the Company's common stock under each of
the Company's benefit plans. The members of the Insider Transaction Review
Committee are Messrs. Finkelson and Guill. During 1996, the Committee held no
meetings.
Non-officer Directors receive $3,750 per calendar quarter and $750 for
each Committee meeting attended and are reimbursed for expenses in attending
Board and Committee meetings. Directors who are officers of the Company or its
affiliates are not compensated for their Board and Committee activities.
7
<PAGE> 10
EXECUTIVE OFFICERS
Set forth below is certain information, as of April 1, 1997, regarding
the executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE OFFICER SINCE POSITION(S) WITH COMPANY
---- --- ------------- ------------------------
<S> <C> <C> <C>
Thomas J. Edelman 46 1988 Chairman
John H. Pinkerton 43 1988 President and Chief Executive Officer
C. Rand Michaels 60 1976 Vice Chairman
Steven L. Grose 48 1980 Senior Vice President - Appalachia Region
Chad L. Stephens 42 1990 Senior Vice President - Midcontinent Region
Thomas W. Stoelk 41 1994 Senior Vice President - Administration and
Chief Financial Officer
Danny M. Sowell 46 1996 Vice President - Gas Management
Jeffery A. Bynum 42 1985 Vice President - Land
George A.Teer 49 1997 Vice President - Texas Division
Paul F. Blanchard 36 1997 Vice President - Oklahoma Division
John R. Frank 41 1994 Controller
Geoffrey T. Doke 30 1996 Treasurer
</TABLE>
For biographical information with respect to Messrs. Edelman, Pinkerton
and Michaels, see "Election of Directors - Information Concerning Nominees"
above.
STEVEN L. GROSE, Senior Vice President-Appalachia Region, joined the
Company in 1980. Previously, Mr. Grose was employed by Halliburton Services,
Inc. as a Field Engineer from 1971 until 1974. In 1974, he was promoted to
District Engineer and in 1978, was named Assistant District Superintendent based
in Pennsylvania. Mr. Grose is a member of the Society of Petroleum Engineers and
a trustee of The Ohio Oil and Gas Association. Mr. Grose received his Bachelor
of Science Degree in Petroleum Engineering from Marietta College. Mr. Grose is
also a director of North Coast Energy, Inc. an independent , publicly-traded oil
and gas company.
CHAD L. STEPHENS, Senior Vice President-Midcontinent Region, joined the
Company in 1990. Previously, Mr. Stephens was a landman with Duer Wagner & Co.,
an independent oil and gas producer, since 1988. Prior thereto, Mr. Stephens was
an independent oil operator in Midland, Texas for four years. From 1979 to 1984,
Mr. Stephens was a landman for Cities Service Company and HNG Oil Company. Mr.
Stephens received his Bachelor of Arts Degree in Finance and Land Management
from the University of Texas.
8
<PAGE> 11
THOMAS W. STOELK, Senior Vice President - Administration and Chief
Financial Officer, joined the Company in 1994. Mr. Stoelk is a Certified Public
Accountant and was a Senior Manager with Ernst & Young LLP. Prior to rejoining
Ernst & Young LLP in 1986 he was with Partners Petroleum, Inc. Mr. Stoelk
received his Bachelor of Science Degree in Industrial Administration from Iowa
State University.
DANNY M. SOWELL, Vice President-Gas Management, joined the Company in
1996. Previously, Mr. Sowell was Chief Executive Officer and President of Jay
Gas Marketing, which Lomak acquired May 1, 1996. Prior to founding Jay Gas
Marketing, Mr. Sowell was Director of Marketing for a subsidiary of Oklahoma Gas
& Electric Company. From 1975 to 1988, Mr. Sowell held various technical and
international management positions with Phillips Petroleum Co. Mr. Sowell
received his Master and Bachelor of Science Degrees in Mathematics from Lamar
University.
JEFFERY A. BYNUM, Vice President-Land and Secretary, joined the Company
in 1985. Previously, Mr. Bynum was employed by Crystal Oil Company and Kinnebrew
Energy Group of Shreveport, Louisiana. Mr. Bynum holds a Professional
Certification with American Association of Petroleum Landmen and attended
Louisiana State University in Baton Rouge, Louisiana and Centenary College in
Shreveport, Louisiana.
GEORGE A. TEER, Vice President-Texas Division, joined the Company in
1994. Previously Mr. Teer was employed by Bass Enterprises from 1974 to 1994 and
served as Production manager of their West Texas Division in Midland, Texas. Mr.
Teer received his Bachelor of Science Degree in Petroleum Engineering from Texas
A & M University.
PAUL F. BLANCHARD, Vice President-Oklahoma Division, joined the company
in 1997. Previously Mr. Blanchard was the Operations manager for the Oklahoma
Division of Enron Oil & Gas Company, where he was employed form 1991 to 1997.
From 1990 to 1991, Mr. Blanchard was Senior Reservoir Engineer for the Louisiana
Land and Exploration Company in Oklahoma City, Oklahoma. Prior to that, Mr.
Blanchard served in various operational and reservoir engineering capacities for
the Texas Oil & Gas Company, Oklahoma District, from 1981 to 1990. Mr. Blanchard
received his Bachelor of Science Degree in Petroleum Engineering from the
University of Oklahoma.
JOHN R. FRANK, Controller and Chief Accounting Officer, joined the
Company in 1990. From 1989 until he joined Lomak in 1990, Mr. Frank was Vice
President Finance of Appalachian Exploration, Inc. Prior thereto, he held the
positions of Internal Auditor and Treasurer with Appalachian Exploration, Inc.
beginning in 1977. Mr. Frank received his Bachelor of Arts Degree in Accounting
and Management from Walsh College and attended graduate studies at the
University of Akron.
GEOFFREY T. DOKE, Treasurer, joined the Company in 1991. He was
appointed Treasurer in 1996. Previously, Mr. Doke served in the accounting
department of Edisto Resources Corporation. Mr. Doke received his Bachelor of
Business Administration Degree in Finance and International Business from Baylor
University and his Master of Business Administration Degree from Case Western
Reserve University.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board establishes the general
compensation policies of the Company, establishes the compensation plans and
specific compensation levels for officers and certain other managers and
administers the Company's stock option plan for all employees.
In establishing compensation policies, the Committee believes that the
cash compensation of executive officers, as well as other key employees, should
be competitive with other similar size oil and gas companies while, within the
Company, being fair and discriminating on the basis of personal performance.
Annual awards of stock options and restricted stock grants are intended both to
retain executives and to motivate them to improve long-term stock market
performance.
9
<PAGE> 12
In establishing total cash compensation (salary plus bonus) for its
executives, the Company targets the median cash compensation for competitors of
executives having similar responsibilities. Base salaries have historically been
set below the median, so that bonuses, which are primarily determined by
individual performance, will constitute a larger portion of cash compensation.
The base salary for Mr. Pinkerton was increased 16% during 1996. Mr. Pinkerton's
bonus is based on Company performance. The Committee has not established any
particular formula or singled out particular factors as more important than
others. In determining Mr. Pinkerton's larger bonus for 1996, the Committee
considered the fact that 1996 constituted the seventh consecutive year in which
the Company had established records for virtually all financial parameters,
including revenues, cash flow and net income. In addition, the Committee
considered more subjective criteria, such as steps taken during 1996 to improve
the Company's long-term prospects. The bonuses of other executives are
influenced by Company performance, but are determined primarily based upon
performance of the executive's duties and success in attaining performance goals
which are directed toward improving Company performance.
Stock options and bonuses are awarded to Mr. Pinkerton and other
executives and key employees to retain and motivate the grantees and to improve
long-term market performance. To date, options have been granted only at the
prevailing market price and will have value only if the price of the Common
Stock increases. Generally, to provide incentives for its executives to remain
with the Company and to benefit for the improvement in the performance of the
Company, options have a term of five years and vest 30% after one year, an
additional 30% after two years and fully after three years. An employee must be
employed by the Company at the time of vesting in order to exercise the options.
In addition, annual bonuses are awarded with 50% of the amount payable in the
year of the award, and 50% vesting on January 1 of the year following the award.
These bonuses are payable, at the option of the employee, in cash or shares of
the Company's Common Stock. An employee must be employed by the Company at the
time of vesting in order to receive the vested bonus previously granted to such
employee. The restricted stock issued pursuant to the bonuses represents
unregistered shares and therefore initially cannot be sold by the recipient.
The Committee generally determines the number of options granted and
the amount of the bonuses awarded to Mr. Pinkerton and to other executives and
key employees based on how an individual's responsibilities might affect the
long-term price of the Common Stock. The Committee occasionally grants
additional options when the Committee believes additional incentives are
appropriate.
In the aggregate, approximately 22% of the Named Executive Officers'
cash compensation for 1996 consisted of incentive bonuses tied to Company and
individual performance. Mr. Pinkerton received approximately 31% of his cash
compensation for 1996 from incentive bonuses. When the potential future value of
stock options and restricted stock grants are included (assuming a 10% annual
increase in the stock price), approximately 67% of the total compensation of Mr.
Pinkerton for 1996 is from incentives which are linked to creation of
stockholder value.
No voting member of the Committee is a former or current officer or
employee of the Company or any of its subsidiaries. No member of the
Compensation Committee had any Compensation Committee Interlocks during the
Company's last fiscal year.
The foregoing report has been furnished by the members of the
Committee. The members of the committee are Messrs. Aikman, Finkelson and Guill.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The voting members of the Company's Compensation Committee consisits of
Messrs. Aikman, Finkelson and Guill, none of whom are officers of the Company.
10
<PAGE> 13
SUMMARY COMPENSATION TABLE
The following table sets forth information for the fiscal years ended
December 31, 1996, 1995, and 1994 respecting all compensation awarded to, earned
by or paid to all persons who were chief executive officers at anytime in 1996
and the four highest paid executive officers (named executives), other than the
Chief Executive Officer, whose aggregate annual salary and bonuses exceeded
$100,000 for the 1996 fiscal year (the "Named Executive Officers").
<TABLE>
<CAPTION>
Long-term
Annual Compensation Compensation
------------------------ -------------------
Name and Stock Option All Other
Principal Position Year Salary Bonus(a) Awards (#) Compensation(b)
- ----------------------------------------- ---------- ------------ ----------- -- ------------------- -------------------
<S> <C> <C> <C> <C> <C>
Thomas J. Edelman 1996 $133,077 $116,250 50,000 $ 36,996
Chairman 1995 120,480 63,750 50,000 10,608
1994 100,000 37,500 50,000 8,246
John H. Pinkerton 1996 199,487 232,500 50,000 23,976
President & Chief Executive 1995 151,750 147,500 50,000 14,062
Officer 1994 145,846 108,500 50,000 13,610
Steven L. Grose 1996 99,237 42,500 25,000 8,137
Senior Vice President-Appalachia
Chad L. Stephens 1996 101,524 60,000 25,000 18,430
Senior Vice President-Midcontinent 1995 89,788 41,250 25,000 7,093
1994 76,192 37,000 25,000 5,460
Thomas W. Stoelk 1996 106,634 52,500 25,000 13,863
Senior Vice President-Administration 1995 98,471 31,250 25,000 8,159
<FN>
(a) Includes amounts earned or vested in the specified fiscal year,
whether or not received during such fiscal year. Prior to 1996,
annual bonuses are awarded with 50% of the amount payable in the
year of the award, 25% vesting on January 1 of the year following
the award and the remaining 25% vesting on January 1 of the second
year after the award. During 1996, annual bonuses to Messrs.
Grose, Stephens and Stoelk were awarded with 50% of the amount
payable in the year of the award and 50% vesting on January 1 of
the year following the award. During 1996, annual bonuses for
Messrs. Edelman and Pinkerton were awarded with 50% payable to the
recipient in the year of award and 50% contributed to the
recipient's deferred compensation plan in the year of award,
vesting 33 1/3 % on January 1, for each of the three years
following the award unless waived by the Board of Directors. An
employee must be employed by the Company at the time of vesting in
order to receive the vested bonus previously granted to such
employee. The bonuses payable to the recipients are, at the option
of the employee, payable in cash or shares of the Company's Common
Stock. The bonuses contributed to the deferred compensation plan
were determined by the Compensation Committee. The restricted
stock issued pursuant to the bonuses represent unregistered shares
and therefore initially cannot be sold by the recipient.
(b) Represents amounts contributed by the Company to the Employee
401(k) and Deferred Compensation Plans.
</TABLE>
STOCK OPTION GRANTS AND EXERCISES
The Company's stock option plan, which is administered by the
Compensation Committee, provides for the granting of options to purchase shares
of Common Stock to key employees and certain other persons who are not
11
<PAGE> 14
employees for advice or other assistance or services to the Company. The plan
permits optionees to acquire up to 2 million shares of Common Stock to be
outstanding at any time subject to the limitation that the outstanding options
cannot exceed 10% of all outstanding Common Stock on a fully diluted basis. All
options issued under the plan vest 30% after one year, 60% after two years and
100% after three years. At December 31, 1996 a total of 1,232,499 options had
been granted under the plan of which 515,849 were exercisable at that date. The
options outstanding at December 31, 1996 were granted at exercise prices ranging
from $3.38 to $13.88 per share. The exercise price of all such options was equal
to the fair market value of the Common Stock on the date of grant.
The Company's Outside Directors Stock Option Plan (the "Directors
Plan"), which is administered by the Compensation Committee, provides for the
granting of options to purchase shares of Common Stock to outside directors of
the Company. The plan permits optionees to acquire up to 200,000 shares of
Common Stock. All options issued under the plan vest 30% after one year, 60%
after two years and 100% after three years. At December 31, 1996 a total of
76,000 options had been granted under the plan of which 16,800 were exercisable
at that date. The options outstanding at December 31, 1996 were granted at
exercise prices ranging from $7.75 to $13.88 per share. The exercise price of
all such options was equal to the fair market value of the common stock on the
date of grant.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information for the fiscal year ended
December 31, 1996, respecting the grant of stock options to the Named Executive
Officers. The stock options were granted at the market price on the date of
grant. No stock appreciation rights have ever been granted by the Company.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
-------------------------------------------------------- ------------------------
Number of Percent of
securities Total Options
Underlying Granted to
Options Employees in Exercise Expiration
Name Granted (#) Fiscal Year Price Date 5% 10%
- ---------------------- -------------- ---------------- ----------- ------------ --- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Thomas J. Edelman 50,000 13.2% $ 10.50 3/12/01 $144,900 $320,775
John H. Pinkerton 50,000 13.2% 10.50 3/12/01 144,900 320,775
Steven L. Grose 25,000 6.6% 10.50 3/12/01 72,450 160,388
Chad L. Stephens 25,000 6.6% 10.50 3/12/01 72,450 160,388
Thomas W. Stoelk 25,000 6.6% 10.50 3/12/01 72,450 160,388
<FN>
(a) The assumed annual rates of stock price appreciation used in
showing the potential realization value of stock option grants are
prescribed by the Securities and Exchange Commission. The actual
realized value of the options may be significantly greater or less
than assumed amounts. For options granted in 1996, the values
shown for 5% and 10% appreciation equate to a stock price of
$13.40 and $16.92, respectively, at the expiration date of the
options.
</TABLE>
12
<PAGE> 15
YEAR END OPTION VALUES TABLE
The following table sets forth information at December 31, 1996,
respecting exercisable and non exercisable options held by the Named Executive
Officers. The table also includes the value of "in-the-money" options which
represents the spread between the exercise price of the existing stock options
and the year end Common Stock price of $17.125.
<TABLE>
<CAPTION>
Number of Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Fiscal Options at Fiscal
Shares Year-End 1996 Year-End 1996
Acquired on Value (Unexercisable (U)/ (Unexercisable (U)/
Name Exercise (#) Realized Exercisable (E)) Exercisable (E))
- -------------------------- -------------- ------------- ----------------------- ----------------------
<S> <C> <C> <C> <C>
Thomas J. Edelman -0- $ -0- 105,000 U $ 805,625 U
95,000 E 863,125 E
John H. Pinkerton 63,333 467,081 105,000 U 863,125 U
121,667 E 1,460,662 E
Steven L. Grose 6,667 44,969 52,500 U 431,563 U
35,166 E 358,593 E
Chad L. Stephens 5,000 29,350 52,500 U 431,563 U
36,167 E 370,610 E
Thomas W. Stoelk -0- -0- 46,500 U 378,313 U
13,500 E 128,188 E
</TABLE>
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the percentage change in the
cumulative total return of the Common Stock, Dow Jones Secondary Oils Index, and
the S&P 500 Index for the five year period ending December 31, 1996. The graph
assumes that the value of the investment in the Common Stock and each index was
$100 on December 31, 1991. During this period, a dividend of $.01 per share was
paid on the Common Stock.
13
<PAGE> 16
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
[GRAPHIC]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Lomak Petroleum, Inc. $100 $ 75 $128 $122 $173 $303
DJ Secondary Oils 100 101 112 119 135 164
S&P 500 100 109 119 120 160 195
</TABLE>
EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS
The Board has adopted a change in control plan pursuant to which a key
employee group comprised of executive officers and other key employees of the
Company designated by the Board (the "Management Group") will receive a certain
level of severance and vesting benefits if there is a change in control of the
Company and all other employees of the Company (the "Employee Group") will
receive more limited severance and vesting benefits. The Company has no
employment agreements with its employees.
Upon a change in control of the Company all non-vested securities of
the Company held by persons in both the Executive Group and the Employee Group,
including, without limitation, all non-vested options to purchase Common Stock
held by them, will automatically vest.
If any person in the Management Group is terminated within one year of
such change in control or if job responsibilities or compensation of a person in
the Management Group is materially altered within one year of such change in
control, then such person shall receive a lump sum payment (the "Management
Payment") equal to (i) an amount equal to such person's base salary for the year
in which the Management Payment is to be made plus (ii) an amount equal to the
average of such person's bonuses for each of the two years prior thereto. If any
person in the Employee Group is terminated within one year of such change in
control, then such person shall receive a lump sum payment (the "Employee
Payment") equal to (i) an amount equal to one quarter of such person's base
salary for the year in which the Employee Payment is to be made plus (ii) an
amount equal to one quarter of the average of such person's bonuses for each of
the two years prior thereto.
Notwithstanding the foregoing, the amount of either the Management
Payment or the Employee Payment (collectively, the "Payment") is dependent upon
the duration of employment with the Company, with each person receiving one
third of the Payment if they have been employed by the Company for less than two
years, two thirds of
14
<PAGE> 17
the Payment if they have been employed by the Company for between two and three
years and receiving the full amount of the Payment if they have been employed by
the Company for at least three years.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Edelman, Chairman of the Company, previously served as an executive
officer and is currently a shareholder of Snyder Oil Corporation ("SOCO"). The
Company and SOCO hold no interests in any of the same properties.
During 1995, the Company incurred fees of $145,000 to the Hawthorne
Company in connection with acquisitions. Mr. Aikman, a director of the Company,
is an executive officer and a principal owner of the Hawthorne Company. The fees
were consistent with those paid by the Company to third parties for similar
services.
PROPOSAL II - APPROVAL OF AMENDMENT TO THE
COMPANY'S ARTICLES OF INCORPORATION
The Board of Directors on April 4, 1997 unanimously approved a proposed
amendment to Article IV of the Company's Articles of Incorporation. The proposed
amendment to Article Fourth would increase the number of authorized shares of
Common Stock from 35 million shares to 50 million shares and increase the number
of authorized shares of Preferred Stock from 4 million shares to 10 million
shares. This proposed amendment, a copy of which is set forth in EXHIBIT A, is
being submitted to the Meeting for Stockholder approval.
REASONS FOR PROPOSED AMENDMENT
The Company's goal is to build itself into a prominent independent oil
and gas company. A portion of this growth is expected to be financed through the
issuance of additional equity of the Company. In this regard, the Board believes
that authorization of additional shares of Common Stock and Preferred Stock will
provide the Company with greater flexibility in effectively consummating
acquisitions and raising capital.
The Board of Directors has the authority to issue shares of Common
Stock and shares of Preferred Stock for such corporate purposes as it may from
time to time deem to be in the best interests of the Company, including fixing
the voting, dividend, redemption, conversion, liquidation and other terms of
different series of Preferred Stock, all without stockholder approval. The
proposed Amendment would not change the rights of the holders of any of the
Company's outstanding Common Stock or Preferred Stock.
If the amendment is approved, the Board may cause the issuance of
additional shares of Common Stock and Preferred Stock without further vote of
Stockholders of the Company, except as provided under the Delaware corporate law
or under the rules of any securities exchange on which shares of the Common
Stock or Preferred Stock are then listed. Current Stockholders have no
preemptive or like rights, which means that current stockholders do not have a
prior right to purchase any new issue of capital stock of the company in order
to maintain their proportionate ownership thereof. The effects of the
authorization of additional shares of the Common Stock and Preferred Stock may
also include dilution of the voting dividends and of liquidation proceeds
payable to the holders of currently outstanding Common Stock and Preferred
Stock.
In addition, the Board could use authorized but unissued shares of the
Common Stock and Preferred Stock to create impediments to a takeover or a
transfer of control of the Company. Accordingly, the increase in the number of
authorized shares of the Common Stock and Preferred Stock may deter a future
takeover attempt which holders of the Common Stock and Preferred Stock may deem
to be in their best interest or in which holders of the Common Stock and
Preferred Stock may be offered a premium for their shares over the market price.
The Board is not currently aware of any attempt to take over or acquire the
Company. While it may be deemed to have potential anti-takeover effects, the
amendment to increase the authorized Common Stock and Preferred Stock is not
prompted by any specific effort or takeover threat currently perceived by
management.
15
<PAGE> 18
The Board will, in the exercise of its fiduciary duties to the
Stockholders, weigh all the factors carefully, together with the needs and
prospects of the Company, before committing to the issuance of further shares
not requiring stockholder approval.
RECOMMENDATION:
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE OUTSTANDING SHARES ENTITLED
TO VOTE AT THE MEETING IS REQUIRED FOR APPROVAL OF THE PROPOSED AMENDMENT. THE
BOARD BELIEVES THAT IT IS APPROPRIATE AND ADVISABLE THAT THE STOCKHOLDERS ADOPT
THE PROPOSED AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION AND RECOMMENDS
THAT THE STOCKHOLDERS VOTE FOR THE PROPOSED AMENDMENT.
PROPOSAL III - APPROVAL OF
AMENDMENT TO THE COMPANY'S STOCK OPTION PLAN
The Board of Directors on April 4, 1997 unanimously approved a proposed
amendment to Section 1.01 of the Company's Stock Option Plan (the "Plan"). The
proposed amendment to Section 1.01 would increase the number of shares of the
Common Stock reserved under the Plan from 2 million to 3 million. However, no
new options may be granted which would result in their being outstanding
aggregate options exceeding 10% of the Common Stock outstanding plus those
shares issuable under convertible securities. The proposed amendment, a copy of
which is set forth in EXHIBIT B, is being submitted to the Meeting for
Stockholder approval.
EFFECT OF AND REASONS FOR PROPOSED AMENDMENT
The purpose of increasing the number of shares of Common Stock reserved
under the Plan is to strengthen the ability of the Company to attract and to
retain the services of experienced and knowledgeable individuals and key
employees (the "Participants") as members of management of the Company, to
extend to them the opportunity to acquire a proprietary interest in the Company
so that they will apply their best efforts for the benefit of the Company, and
to provide those individuals with an additional incentive to continue in their
position, for the best interest of the Company and its stockholders.
Under the Plan, if the amendment is approved by the Stockholders, the
Company will increase the number of shares reserved under the Plan from 2
million to 3 million shares of Common Stock (the "Stock Options"). The exercise
price for each Stock Option will be the fair market value on the date of grant.
However, no new options may be granted which would result in their being
outstanding aggregate options exceeding 10% of the Common Stock outstanding
together with those shares of Common Stock issuable under convertible
securities.
Stock Options may be exercised, during the period beginning one year
after the date of grant and ending five years after the date of grant, provided
that 30% of the shares of Common Stock covered by any such Stock Option vest one
year after the date of grant, an additional 30% of such shares of Common Stock
vest two years after the date of grant, and all remaining shares of Common Stock
vest three years after the date of grant.
If a Participant ceases, for any reason other than such Participant's
death or disability, to be an employee of the Company or any of its affiliates,
the portion, if any, of such Stock Options that remain unexercised, including
that portion, if any, that is not yet exercisable, on the date Participant
ceases to be an employee of the Company or any of its affiliates, shall
terminate and cease to be exercisable as of such date unless waived by the
Board of Directors.
If a Participant ceases, by reason of a disability, to be an employee
of the Company or any of its affiliates, such Participant shall have the right
for 90 days after the date such Participant ceases to be an employee of the
Company or its affiliates to exercise his Stock Options to the extent such Stock
Options are exercisable on such date, and thereafter such Stock Options shall
terminate and cease to be exercisable unless waived by the Board of Directors.
16
<PAGE> 19
If a Participant dies while an employee of the Company or any of its
affiliates, such Stock Options shall be exercisable by such Participant's legal
representatives, legatees, or distributees for 90 days following the date of
such Participant's death to the extent such Stock Options are exercisable on
such Participant's date of death. Thereafter such Stock Options shall terminate
and cease to be exercisable unless waived by the Board of Directors.
EXERCISE
Payment for stock issued upon the exercise of a Stock Option may be
made in cash or, with the consent of the Compensation Committee (i) by assigning
and delivering to the Company whole shares of Common Stock owned by the holder
of the Stock Option for at least six months prior to the date of exercise or
(ii) partly in cash and partly in such shares of Common Stock. Any shares of
Common Stock so assigned and delivered to the Company in payment or partial
payment of the purchase price shall be valued at the fair market value on the
date of exercise.
A Participant may be required to pay to the Company at the time of
exercise of a Stock Option or portion thereof the amount that the Company deems
necessary to satisfy its obligation to withhold Federal, state, or local income
or other taxes incurred by reason of such exercise. Where the exercise of a
Stock Option does not give rise to an obligation to withhold Federal, state, or
local income or other taxes on the date of exercise, the Company may, in its
discretion, require a Participant to place shares of Common Stock purchased
under the Stock Option in escrow for the benefit of the Company until such time
as Federal, state, or local income or other tax withholding is no longer
required with respect to such shares or until such withholding is required on
amounts included in the gross income of the Participant as a result of the
exercise of a Stock Option or the disposition of shares of Common Stock acquired
pursuant thereto.
FEDERAL INCOME TAX CONSEQUENCES
There are no tax consequences to the Participants or the Company by
reason of the grant of the Stock Options. Upon exercise, the Participant will
recognize taxable ordinary income equal to the excess of the Common Stock's fair
market value on the date of exercise over the exercise price. Generally, the
Company will be entitled to a business expense deduction equal to the taxable
ordinary income recognized by the Participant. Upon disposition of the Common
Stock, the Participant will recognize a capital gain or loss equal to the
difference between the selling price and the sum of the amount paid for such
stock plus any amount recognized as ordinary income upon exercise of the option.
Such gain or loss will be long or short-term depending on whether the stock was
held for more than one year.
RECOMMENDATION:
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES CAST AT THE MEETING IS
REQUIRED FOR APPROVAL OF THE PROPOSED AMENDMENT. THE BOARD BELIEVES THAT IT IS
APPROPRIATE AND ADVISABLE THAT THE STOCKHOLDERS ADOPT THE PROPOSED AMENDMENT TO
THE PLAN AND RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE PROPOSED AMENDMENT.
17
<PAGE> 20
PROPOSAL IV - APPROVAL OF
1997 STOCK PURCHASE PLAN
THE PROPOSAL
On April 4, 1997, the Board of Directors adopted the 1997 Stock Purchase Plan
(the "1997 Plan"), subject to stockholder approval covering 500,000 shares. The
purpose of the 1997 Plan is both to retain directors, executives and other key
employees ("Participants") and to motivate them to improve long-term stock
performance. Under the 1997 Plan, Participants may purchase a specified number
of shares at a specified price (ranging from 50% to 85% of market value) as
offered by the Compensation Committee of the Board (the "Compensation
Committee").
The 1997 Plan will be administered by the Compensation Committee which
has the sole authority to determine the terms and conditions (which need not be
identical) of such purchases including the persons to whom, and the time or
times at which, purchase grants will be awarded, the number of shares which may
be purchased by each such person and the exercise price. Payment for stock
purchased must be made in cash on the date of such grant.
The Company has maintained the 1994 Stock Purchase Plan ("1994 Plan")
which is identical to the 1997 Plan. As of April 4, 1997 371,000 shares had been
sold for a total consideration of $2.7 million at a price of 75% of market value
at the time of sale under the 1994 Plan. Upon approval by the shareholders of
the 1997 Plan, the 1994 Plan will terminate and no further grants will be made
thereunder. A copy of the 1997 Stock Purchase Plan is annexed hereto as EXHIBIT
C.
RECOMMENDATION:
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES CAST AT THE MEETING IS
REQUIRED FOR APPROVAL OF THE PROPOSED AMENDMENT. THE BOARD OF DIRECTORS BELIEVES
THAT THE PROPOSAL IS IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS
AND RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR APPROVAL OF THE 1997 PLAN.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers, directors and persons who beneficially own more than ten percent of
the Company's stock to file initial reports of ownership and reports of changes
of ownership with the Securities and Exchange Commission and the NASDAQ. Copies
of such reports are required to be furnished to the Company.
Based solely on a review of such forms furnished to the Company and
certain written representations from the executive officers and directors, the
Company believes that all Section 16(a) filing requirements applicable to its
executive officers, directors and greater than 10% beneficial owners were
complied with on a timely basis.
OTHER BUSINESS
Management of the Company knows of no other business which will be
presented for consideration at the meeting, but should any other matters be
brought before the Meeting, it is intended that the persons named in the
accompanying proxy will vote such proxy at their discretion.
ANNUAL REPORT
The Annual Report for the fiscal year ended December 31, 1996,
accompanies this proxy statement. The Annual Report does not constitute a part
of the proxy soliciting material.
18
<PAGE> 21
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Any stockholder desiring to present to stockholders a stockholder
proposal at the 1998 Annual Meeting must transmit such proposal to the Company
so that it is received by the Company on or before January 16, 1998. All such
proposals should be in compliance with applicable Securities and Exchange
Commission regulations.
BY ORDER OF THE BOARD OF DIRECTORS
Jeffery A. Bynum
Secretary
May 16, 1997
Fort Worth, Texas
19
<PAGE> 22
Exhibit A
TEXT OF PROPOSED AMENDMENT
WITH RESPECT TO THE COMPANY'S ARTICLES OF INCORPORATION
RESOLVED, that Article Fourth of the Company's Articles of
Incorporation be amended to read as follows:
"FOURTH. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 60,000,000 shares, divided into the
classes as follows:
10,000,000 Serial Preferred Shares having a par value of $1.00
per share and,
50,000,000 Common Shares having a par value of $.01 per share,
and"
The remainder of Article FOURTH shall remain unchanged.
20
<PAGE> 23
Exhibit B
TEXT OF PROPOSED PLAN AMENDMENT
WITH RESPECT TO THE
COMPANY'S STOCK OPTION PLAN
RESOLVED, that the plan agreement of the Company's 1989 Stock Option
Plan, as amended, be further amended by deleting Section 1.01 thereof and
substituting the following therefore:
1.01 DESCRIPTION OF STOCK AND MAXIMUM SHARES ALLOCATED. Subject to the
adjustments provided for in Paragraph 5.06 hereof, the stock to which options
granted hereunder give the holder thereof the right to purchase shall be shares
of the Corporation's authorized common stock, $.01 par value (together with any
other securities with respect to which options granted hereunder may become
exercisable, hereinafter referred to as the "Stock"), and may become unissued or
reaquired shares, as the Board of Directors of the Corporation (the "Board of
Directors") may, in its sole and absolute discretion, from time to time
determine. Subject to the adjustments provided for in Paragraph 5.06 hereof, the
aggregate number of shares of Stock to be issued pursuant to the exercise of all
options granted hereunder shall not exceed 3,000,000 shares. Notwithstanding the
foregoing, no option may be granted which would result in there being
outstanding aggregate options covering a number of shares of Common Stock
greater than 10% of the Corporation's then outstanding shares of Common Stock
(including for calculation purposes all shares of Common Stock issuable upon
exercise of outstanding warrants and other convertible securities of the
Corporation.)
21
<PAGE> 24
Exhibit C
LOMAK PETROLEUM, INC.
1997 STOCK PURCHASE PLAN
ARTICLE I
PURPOSE
-------
The purpose of the Plan is to provide Eligible Persons, as defined
herein, of Lomak Petroleum, Inc. (the "Company") with an opportunity to purchase
Common Stock of the Company and thereby participate in the growth and future
prospects of the Company. Each Participant will be entitled to purchase Common
Stock at prices ranging from between 50% to 85% of the then fair market value of
Common Stock. The Plan is not intended to comply with the provisions of Section
423 of the Internal Revenue Code of 1986, as amended.
ARTICLE II
DEFINITIONS
-----------
The following terms, when capitalized, shall have the meanings
specified below unless the context clearly indicates to the contrary.
2.1 "Board of Directors" shall mean the Board of Directors of the
Company.
2.2 "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
2.3 "Committee" or "Stock Purchase Plan Committee" shall mean the
Stock Purchase Plan Committee appointed by the Board of
Directors in accordance with Article III of the Plan.
2.4 "Committee Member" shall mean any past, present or future
member of the Committee.
2.5 "Common Stock" shall mean the Common Stock, $.01 par value per
share, of the Company.
2.6 "Company" shall mean Lomak Petroleum, Inc., a Delaware
corporation.
2.7 "Effective Date" shall mean the date the Plan is declared
operative by the Board of Directors.
2.8 "Eligible Person" shall, with respect to any Purchase Date,
mean only those persons who are officers, directors, key
employees or consultants of the Company, as determined in the
discretion of the Committee.
2.9 "Offering" shall mean the offering of shares of Common Stock
to Eligible Persons pursuant to the Plan that occurs on each
Purchase Date or on such other date or dates as the Committee
may determine.
2.10 "Participant" shall mean an Eligible Person who elects to
participate in the Plan.
2.11 "Plan" shall mean the Lomak Petroleum, Inc. 1994 Stock
Purchase Plan, as amended.
2.12 "Plan Year" shall mean each calendar year during the term of
the Plan commencing on January 1, 1997.
2.13 "Preferred Stock" shall mean the Preferred Stock, $1 par
value per share, of the Company.
2.14 "Purchase Amount" shall mean an amount, not less than $1,000
in any Plan Year and not more than such amounts as may from
time to time be determined by the Committee, to be applied to
the purchase of Common Stock pursuant to this Plan.
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<PAGE> 25
2.15 "Purchase Date" shall mean the last business day of March,
June, September and December in each Plan Year or any such
other date or dates as the Committee may determine.
2.16 "Stock Purchase Account" shall mean each separate account
maintained for a Participant under the Plan, collectively or
singly as the context requires. All Accounts shall be fully
vested at all times. The Committee may create special types of
Stock Purchase Accounts for administrative reasons, even
though the Stock Purchase Accounts are not expressly
authorized by the Plan.
2.17 "Vested" shall mean non-forfeitable.
The masculine gender, whenever used in this Plan, includes the
feminine, the singular includes the plural and the plural includes the singular
unless the context otherwise requires.
ARTICLE III
ADMINISTRATION OF PLAN
----------------------
The Plan shall be administered by the Stock Purchase Plan Committee
appointed by the Board of Directors and shall consist of three persons, all of
whom shall be either directors or employees of the Company. Members of the
Committee may be removed at any time by the Board of Directors and the Board of
Directors shall have the power to fill any vacancy which may occur in the
Committee. The Committee shall have full and final authority to make rules and
regulations, subject to the express provisions of the Plan, for the
administration of the Plan, to decide who shall be Eligible Persons and
Participants in the Plan, the maximum Purchase Amount, to determine the method
and times of purchase of shares of Common Stock, to determine the purchase price
of any shares of Common Stock sold to Participants hereunder, and to settle any
disputes which may arise under the terms of the Plan. The Committee's
interpretations and decisions with regard to the provisions of the Plan and any
rules or regulations promulgated thereunder shall be final and conclusive. A
majority of the Committee shall constitute a quorum, and acts of a majority of
the members present at any meeting at which a quorum is present, or acts
approved in writing by a majority of the Committee, shall be deemed the acts of
the Committee.
ARTICLE IV
SHARES
------
There shall be 500,000 shares of Common Stock reserved under the Plan,
subject to adjustment in accordance with Article XIV hereof. The shares of
Common Stock subject to the Plan shall be either shares of authorized but
unissued Common Stock or shares of Common Stock reacquired on the open market or
otherwise for the account of the Participants. The Committee shall determine
from time to time whether the shares of Common Stock shall be authorized or
unissued shares or reacquired shares.
ARTICLE V
ENTRY INTO THE PLAN; PAYMENT FOR SHARES
---------------------------------------
The Committee shall determine prior to any Purchase Date, the number of
shares that any Eligible Person shall be entitled to purchase on such Purchase
Date pursuant to the Plan. An Eligible Person may become a Participant in the
Plan only by filing with the Committee, at the address of the Company, a
consent, in such form as the Committee shall approve, to become a Participant.
The method of payment for the purchase of shares of Common Stock shall be
determined by the Committee and may include, without limitation, cash,
promissory notes, payroll deductions or any other method or combination thereof.
No share of the Company's Common Stock may be issued to a Participant until such
time as the Share has been fully paid for as above provided.
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ARTICLE VII
PURCHASE OF SHARES
------------------
On each Purchase Date, the amount credited to each Participant's Stock
Purchase Account shall be applied to purchase, in the manner and on the terms
herein provided, the number of whole shares of Common Stock determined by
dividing (a) the amount theretofore contributed by the Participant pursuant to
Article V hereof and not theretofore applied to the purchase of Common Stock by
(b) the purchase price per share of Common Stock as determined pursuant to
Article VIII hereof. Any amount remaining in a Participant's Stock Purchase
Account shall be held in such account and applied to the purchase of shares of
Common Stock on the next Purchase Date as determined by the Committee. Except as
a holder of shares of Common Stock purchased for a Participant's account, a
Participant shall have no greater rights with respect to his Stock Purchase
Account than an unsecured creditor of the Company.
ARTICLE VIII
PURCHASE PRICE
--------------
The purchase price per share of any shares of Common Stock sold to any
Participant hereunder shall, in the discretion of the Committee in respect of
any Purchase Date, be between fifty (50%) percent and eighty-five (85%) percent
of the fair market value (including transaction costs) of shares of Common Stock
on the Purchase Date. In determining the purchase price per share of any shares
of the Company's Common Stock sold to any Participants hereunder, the Committee
may consider a number of factors including the performance and future prospects
of the Company and the relationship of the fair market value of the Company's
Common Stock to other indicia of value. Anything herein to the contrary
notwithstanding, the purchase price for shares of authorized but unissued Common
Stock of the Company purchased pursuant to this Plan shall not be less than the
par value of the Common Stock. For purposes of the Plan, the fair market value
of shares of Common Stock on any date shall be determined as follows:
(a) If the Common Stock is then listed on a national securities
exchange, the "fair market value" shall be the closing price of a share of
Common Stock on such exchange on the last preceding business day on which shares
of Common Stock were traded.
(b) If the Common Stock is then not listed on a national securities
exchange, the "fair market value" shall be the closing price of a share of
Common Stock in the over-the-counter market as reported by the Nasdaq Stock
Market - National Market System ("Nasdaq") on that date or as reported on such
other similar system then in use.
(c) If the Common Stock is not then reported by Nasdaq or by such other
similar system then in use, the "fair market value" shall be the closing big
price as furnished by a professional market maker making a market in the Common
Stock as selected by the Board of Directors.
(d) If neither (a), (b) nor (c) applies, the "fair market value" shall
be determined by the Committee in good faith. Such determination shall be
binding on all persons.
(e) In any event, the "fair market value" shall be adjusted to include
actual transactions costs and expenses, including broker's commissions and fees,
stock transfer taxes and the like, of reaquisition of shares of Common Stock on
the open market or otherwise.
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<PAGE> 27
ARTICLE IX
ISSUANCE OF SHARES; STOCK CERTIFICATES
--------------------------------------
The shares of Common Stock purchased by a Participant on a Purchase
Date shall, for all purposes, be deemed to have been issued and sold at the
close of business on such Purchase Date. Prior to that time, none of the rights
or privileges of a stockholder of the Company shall exist with respect to such
shares.
As soon as practicable after each Purchase Date, the Company will
credit to each Participant's Stock Purchase Account, all whole shares purchased
by each Participant on such Purchase Date. Certificates representing Common
Stock purchased pursuant to the Plan may be registered in nominee or broker name
or in the name of the Participant, unless the Participant shall otherwise
instruct the Committee. The Company will deliver, or cause to be delivered, a
certificate for the number of shares purchased if requested by the Participant.
All dividends paid with respect to the shares in a Participant's Stock Purchase
Account shall be credited to such account, and, unless the Participant otherwise
elects, dividends credited to his Stock Purchase Account will be automatically
applied to the purchase of whole shares of Common Stock on the next succeeding
Purchase Date. With respect to shares of Common Stock purchased for the account
of a Participant, the Participant shall be entitled to vote or to consent as a
stockholder to any action with respect to which other stockholders of the
Company are entitled to vote or give consent.
ARTICLE X
WITHDRAWAL
----------
A Participant may withdraw from the Plan at any time during a Plan
Year, upon at least thirty days prior written notice, by filing written notice
of withdrawal. Upon a Participant's withdrawal, the entire amount credited to
his Stock Purchase Account and not previously applied to the purchase of Common
Stock shall be promptly refunded to him. Partial withdrawal will not be
permitted. Any Participant who withdraws from the Plan may again become a
Participant hereunder in accordance with Article V hereof.
ARTICLE XI
TERMINATION OF EMPLOYMENT OR AGENCY RELATIONSHIP
------------------------------------------------
In the event of termination of the employment or retention relationship
between a Participant and the Company, for any reason, including death or
permanent disability (as defined in Section 22(e) (3) of the Code), the entire
amount credited to his Stock Purchase Account and not previously applied to the
purchase of Common Stock shall promptly be refunded to the Participant, or to
the Participant's estate.
ARTICLE XII
PROCEDURE IF INSUFFICIENT SHARES AVAILABLE
------------------------------------------
In the event that on any Purchase Date the aggregate funds available
under the Plan for the purchase of shares of Common Stock would purchase a
greater number of shares than the number of shares then available for purchase
under the Plan, the Committee shall proportionately reduce the number of shares
to be purchased by each Participant on such Purchase Date in order to eliminate
such deficiency, and the Plan shall terminate immediately after such Purchase
Date.
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<PAGE> 28
ARTICLE XIII
RIGHTS NOT TRANSFERABLE
-----------------------
Neither credit balances in a Participant's Stock Purchase Account nor
any right to purchase shares of Common Stock under the Plan may be assigned,
transferred, pledged, hypothecated or disposed of in any way and any attempted
transfer or disposition thereof shall be null and void. If a Participant
attempts to assign, transfer, pledge, hypothecate or dispose of in any way,
except by will or by the applicable laws of descent and distribution, any such
interest under the Plan, he shall be deemed to have requested withdrawal from
the Plan and the provisions of Article X hereof shall apply with respect to such
Participant.
ARTICLE XIV
RECAPITALIZATION; EFFECT OF CERTAIN TRANSACTIONS
------------------------------------------------
The aggregate number of shares of Common Stock reserved for purchase
under the Plan as provided in Article IV hereof shall be appropriately adjusted
by the Board of Directors to reflect a stock dividend, stock split-up, share
combination, exchange of shares, recapitalization, merger, consolidation,
liquidation or other similar changes or transactions by the Company.
ARTICLE XV
TERMINATION AND AMENDMENT OF THE PLAN
-------------------------------------
The Plan shall continue in effect through January 1, 2007, unless
terminated prior thereto pursuant to Article XII hereof or pursuant to the next
succeeding sentence. The Board of Directors shall have the right to terminate
the Plan at any time. In the event of expiration or termination of the Plan
pursuant to this Article, the entire amount credited to the Stock Purchase
Account of each Participant hereunder and not theretofore applied to the
purchase of Common Stock shall be refunded to each such Participant.
The Board of Directors may from time to time make such amendments or
modifications to the Plan as it shall deem advisable, provided, however, that no
such action shall prejudice or diminish any right of any Participant hereunder
which shall have theretofore accrued. Other than as expressly set forth herein,
the Board of Directors may not amend the Plan if such amendment would increase
the cost thereof to the Company other than with the affirmative vote of a
majority in interest of the Company's stockholders.
ARTICLE XVI
APPLICATION OF THE FUNDS
------------------------
All funds withheld by the Company pursuant to the Plan which have not
been applied to the purchase of Common Stock may be used for any corporate
purpose by the Company.
ARTICLE XVII
INDEMNIFICATION OF COMMITTEE
----------------------------
In addition to such other rights of indemnification as they may have as
directors or officer's of the Company or as members of the Committee, the
members of the Committee shall be indemnified by the Company against the
reasonable expenses, including attorney's fees actually and necessarily incurred
in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan and against all amounts paid by them in settlement thereof (provided such
settlement is approved by independent legal counsel selected by the Company) or
paid by them in satisfaction of a judgment in any such action, suit or
proceeding,
26
<PAGE> 29
except in relation to matters as to which it shall be adjudged in such action,
suit or proceeding that such Committee member is liable for willful misconduct
in the performance of his duties.
ARTICLE XVIII
TERMINATION OF RIGHT OF ACTION
------------------------------
Every right of action arising out of or in connection with the Plan by
or on behalf of any Participant under the Plan against the Company, or any
Committee Member will, irrespective of the place where an action may be brought
and irrespective of the place of residence of any such Participant or Committee
Member, cease and be barred by the expiration of three years from the date of
the act or omission in respect of which such right of action is alleged to have
arisen.
ARTICLE XIX
REGULATORY MATTERS
------------------
The purchase of Common Stock on behalf of the Participants pursuant to
the Plan, the issuance of Common Stock to the Participants pursuant to the Plan
and the transfer of Common Stock by participants acquired pursuant to the Plan
shall be subject to compliance with the requirements of the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder, the requirements of any stock exchange upon which
the Common Stock may then be listed and shall be subject to prior approval by
the Company's legal counsel with respect to all legal matters in connection
therewith.
ARTICLE XX
CONSTRUCTION
------------
This Plan shall be construed and enforced in accordance with the laws
of the State of Delaware.
27
<PAGE> 30
Form of proxy card
FRONT:
- ------
LOMAK PETROLEUM, INC.
The Board of Directors recommends a vote FOR Proposal Nos. 2, 3 and 4
<TABLE>
<S> <C> <C> <C> <C>
1. Election of Directors For Withheld For All
(see reverse) All All Except _________________ 2. To approve an amendment to the For Against Abstain
___ ___ ___ Nominee Exception Company's Articles of Incorporation ___ ___ ___
with respect to increasing the number
of authorized shares of Common Stock
from 35 million to 50 million shares
and Preferred Stock from 4 million to
10 million shares.
3. To approve an amendment to the For Against Abstain
Company's Stock Option Plan to increase ___ ___ ___
the number of authorized shares in the
plan from 2 million to 3 million shares
Area reserved for of Common Stock.
Name & Address
4. To consider and adopt the Company's For Against Abstain
1997 Stock Purchase Plan covering ___ ___ ___
500,000 shares.
Date:
____________________________________________________, 1997
Signature(s)
___________________________________________________
Signature(s)
___________________________________________________
</TABLE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES NAMED, AND FOR PROPOSAL NOS. 2, 3 AND 4. In
accordance with their judgement the proxies are authorized to vote upon any
other matters that may properly come before the meeting. The signer hereby
revokes all proxies heretofore given by the signer to vote at said meeting or
any adjournments thereof. NOTE: Please sign exactly as name appears hereon.
Joint owners should each sign. When signing as attorney, administrator, trustee,
or guardian, please give full title as such.
BACK:
- -----
PROXY PROXY
LOMAK PETROLEUM, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS - JUNE 19, 1997
The undersigned hereby appoints Chad L. Stephens and John H. Pinkerton, and each
of them, his/her true and lawful agents and proxies with full power of
substitution and revocation, to vote, as designated on the reverse side hereof,
all the Common and Preferred stock of Lomak Petroleum, Inc. which the
undersigned has power to vote, with all powers which the undersigned possess if
personally present, at the Annual Meeting of Shareholders of Lomak Petroleum,
Inc. to be held on June 19, 1997, and at any adjournments thereof.
1. To elect a board of seven Directors, each for one-year terms: The nominees
of the Board of Directors are: Robert E. Aikman, Anthony V. Dub, Thomas J.
Edelman, Allen Finkelson, Ben A. Guill, C. Rand Michaels and John H.
Pinkerton
2. To approve an amendment to the Company's Articles of Incorporation with
respect to increasing the number of authorized shares of Common Stock from
35 million to 50 million shares and Preferred Stock from 4 million to 10
million shares.
3. To approve an amendment to the Company's Stock Option Plan to increase the
number of authorized shares in the plan from 2 million to 3 million. shares
of Common Stock
4. To consider and adopt the Company's 1997 Stock Purchase Plan covering
500,000 shares.
You are encouraged to specify your choice by marking the appropriate boxes, SEE
REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors' recommendations. Your shares cannot be voted unless
you sign and return this card.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(Continued and to be signed on reverse side)
28
