<PAGE>
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
Bellwether 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] 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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[BELLWETHER LETTERHEAD APPEARS HERE]
April 24, 1998
Dear Stockholder,
You are cordially invited to attend the Annual Meeting of Stockholders of
Bellwether Exploration Company which will be held at the Houston Center Club,
1100 Caroline Street, Houston, Texas, on Friday, May 22, 1998, at 10:00 a.m.,
Houston time.
The Notice of the Annual Meeting and Proxy Statement, which are attached,
provide information concerning the matters to be considered at the meeting. The
report to Stockholders for the six-month transition period commencing July 1,
1997 and ending December 31, 1997, and which was used for financial reporting
purposes in connection with the Company's change from a fiscal year end of June
30 to December 31, is being mailed to Stockholders along with these proxy
materials.
It is important that your shares be represented at this Annual Meeting,
regardless of the size of your holdings. We urge you to return the signed proxy
in the enclosed envelope as soon as possible. If you do attend the meeting in
person, you may withdraw your proxy and vote your stock if you so desire. We
value your opinions and encourage you to participate in the Annual Meeting by
voting your proxy.
Very truly yours,
/s/ J. DARBY SERE
J. Darby Sere
Chairman of the Board and
Chief Executive Officer
<PAGE>
BELLWETHER EXPLORATION COMPANY
1331 LAMAR STREET, SUITE 1455
HOUSTON, TEXAS 77010-3039
(713) 650-1025
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 22, 1998
To the Stockholders of
Bellwether Exploration Company:
The Annual Meeting of Stockholders of BELLWETHER EXPLORATION COMPANY (the
"Company") will be held at the Houston Center Club, 1100 Caroline Street,
Houston, Texas at 10:00 a.m., Houston time, on Friday, May 22, 1998, for the
following purposes:
1. To elect the nominees of the Board of Directors to serve until their
successors are duly elected and qualified.
2. To consider and act upon a proposal to ratify the appointment of KPMG
Peat Marwick LLP as the independent auditors of the Company for the
period ending December 31, 1998.
3. To transact such other business as may properly come before the
meeting or any adjournment(s) thereof.
Stockholders of record at the close of business on April 9, 1998, are
entitled to notice of and to vote at the meeting and any adjournment(s) thereof.
A complete list of all Stockholders entitled to vote at the Annual Meeting will
be open for examination by any Stockholder for any purpose germane to the Annual
Meeting, during normal business hours for a period of ten days prior to the
Annual Meeting, at the offices of the Company at 1331 Lamar Street, Suite 1455,
Houston, Texas 77010-3039. Such list will also be available at the Annual
Meeting and may be inspected by any Stockholder who is present for any purpose
germane to the Annual Meeting.
You are cordially invited to attend the meeting. Whether or not you are
planning to attend the meeting, you are urged to complete, date and sign the
enclosed proxy and return it promptly.
Sincerely,
/s/ J. DARBY SERE
J. Darby Sere
Chairman of the Board
and Chief Executive Officer
Houston, Texas
April 24, 1998
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
TO ENSURE REPRESENTATION AT THE MEETING, PLEASE COMPLETE,
DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING POSTAGE-
PAID ENVELOPE. NO ADDITIONAL POSTAGE IS NECESSARY
IF MAILED IN THE UNITED STATES.
- --------------------------------------------------------------------------------
-1-
<PAGE>
PROXY STATEMENT
______________________________
BELLWETHER EXPLORATION COMPANY
1331 LAMAR STREET, SUITE 1455
HOUSTON, TEXAS 77010-3039
(713) 650-1025
ANNUAL MEETING OF STOCKHOLDERS
MAY 22, 1998
INTRODUCTION
This Proxy Statement is being furnished in connection with the solicitation
of proxies by and on behalf of the Board of Directors of Bellwether Exploration
Company (the "Company") for use at the Annual Meeting of Stockholders of the
Company to be held on Friday, May 22, 1998 (the "Annual Meeting") at 10:00 a.m.,
Houston time, at the Houston Center Club, 1100 Caroline Street, Houston, Texas,
and at any adjournment(s) thereof, for the purposes set forth in this Proxy
Statement.
This Proxy Statement and the enclosed form of proxy are being mailed on or
about April 24, 1998 to the Stockholders of record as of April 9, 1998. The
report to Stockholders for the Company's six-month transition period which began
July 1, 1997 and ended December 31, 1997 (the "Transition Period"), which was
used for financial reporting purposes in connection with the Company's change
from a fiscal year end of June 30 to December 31, is also being mailed to
Stockholders contemporaneously with this Proxy Statement, although the report
does not form a part of the materials for the solicitation of proxies.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
Unless otherwise indicated, proxies in the form enclosed that are properly
executed, duly returned and not revoked will be voted in favor of:
(1) the election of the seven nominees to the Board of Directors of the
Company named herein; and
(2) the ratification of the appointment of KPMG Peat Marwick LLP as
independent auditors for the Company for the period ending December
31, 1998.
The Board of Directors is not presently aware of other proposals which may
be brought before the Annual Meeting. In the event other proposals are brought
before the Annual Meeting, the persons named in the enclosed form of proxy will
vote in accordance with what they consider to be in the best interests of the
Company and its Stockholders.
-2-
<PAGE>
VOTING REQUIREMENTS
The Board of Directors of the Company has fixed the close of business on
April 9, 1998, as the record date (the "Record Date") for the determination of
Stockholders entitled to notice of and to vote at the Annual Meeting. On the
Record Date, the Company had issued and outstanding 14,136,812 shares of its
common stock, $.01 par value ("Common Stock"). Only the record owners of the
Company's Common Stock on the Record Date are entitled to notice of and to vote
at the Annual Meeting.
QUORUM AND OTHER MATTERS
The presence in person or by proxy of the holders of a majority of the
outstanding shares of Common Stock on the Record Date is necessary to constitute
a quorum at the Annual Meeting. Each share of Common Stock is entitled to one
vote, in person or by proxy, with respect to the election of directors and any
other proposal properly brought before the Annual Meeting.
Shares of Common Stock represented by a properly signed and returned proxy
will be counted as present at the Annual Meeting for purposes of determining a
quorum, without regard to whether the proxy is marked as casting a vote or
abstaining. Shares of Common Stock held by nominees which are voted on at least
one matter coming before the Annual Meeting will also be counted as present for
purposes of determining a quorum, even if the beneficial owner's discretion has
been withheld (a "non-vote") for voting on some or all other matters.
The holders of a majority of the total shares of Common Stock issued and
outstanding, whether present in person or represented by proxy, will constitute
a quorum for the transaction of business at the Annual Meeting. The election of
directors requires the favorable vote of the holders of a plurality of shares of
Common Stock present and voting, in person or by proxy, at the Annual Meeting.
Abstentions and broker non-votes have no effect on determinations of plurality
except to the extent that they affect the total votes received by any particular
candidate. A majority of the votes represented by the Stockholders present at
the Annual Meeting, in person or by proxy, is necessary for ratification of the
Company's auditors. With respect to abstentions and broker non-votes, the
shares will not be considered present at the Annual Meeting for these matters so
that abstentions and broker non-votes will have the practical effect of reducing
the number of affirmative votes required to achieve a majority vote by reducing
the total number of shares from which the majority is calculated.
Votes at the Annual Meeting will be tabulated by an Inspector of Election
appointed by the Company.
PROXY INFORMATION
The enclosed form of proxy may be revoked at any time prior to its exercise
by executing a new proxy with a later date, by voting in person at the Annual
Meeting, or by giving written notice of revocation to Roland E. Sledge,
Secretary of the Company, at any time before the proxy is voted at the Annual
Meeting. Please ensure that your shares will be voted by completing, signing,
dating and returning the enclosed form of proxy in the enclosed postage-paid
envelope.
-3-
<PAGE>
BENEFICIAL OWNERSHIP OF SECURITIES
MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth, as of the Record Date, the name, address,
and number of shares of Common Stock owned beneficially by (a) all persons known
to the Company to be the beneficial owners of more than five percent of the
outstanding shares of Common Stock, (b) each director, (c) each nominee for
director, (d) each of the executive officers named in the Summary Compensation
Table, and (e) all executive officers and directors of the Company as a group.
The information set forth in the following table is based on public filings made
with the Securities and Exchange Commission (the "Commission") as of the Record
Date and certain information supplied to the Company by the persons listed
below. Unless otherwise indicated, all shares of Common Stock are owned
directly and each owner has sole voting and investment power with respect
thereto.
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
------------------- -------------------- --------
Alpine Investment Partners 979,832 (a) 6.9
Rho Management Trust III
767 Fifth Avenue
New York, New York 10153
Fleet Financial 815,000 5.8
1 East Avenue
4/th/ Floor
Rochester, New York 14604
Allstate Insurance Company 800,000 5.7
3075 Sanders Road, Suite G5B
Northbrook, Illinois 60062
J.P. Bryan 399,497 (b) 2.8
J. Darby Sere 382,341 (c) 2.7
A.K. McLanahan 18,250 (d) *
Vincent H. Buckley 15,125 (d) *
Dr. Jack Birks 12,000 (d) *
Habib Kairouz 14,000 (e) *
Charles C. Green III 39,000 (f) *
Townes G. Pressler 6,500 (g) *
William C. Rankin 28,000 (h) *
All executive officers and directors as 914,713 (i) 6.2
a group (9 persons)
- ------------------------
* Under 1%
-4-
<PAGE>
(a) Joshua Ruch and Rho Management Partners L.P. ("Rho") may be deemed to
be the beneficial owners of the shares of Common Stock held in the
name of Alpine Investment Partners ("Alpine") and Rho Management Trust
III ("Trust"). Mr. Ruch and Rho share voting and dispositive power
over 728,590 shares of Common Stock held in the name of Alpine and Mr.
Ruch and the Trust share voting and dispositive power over 225,000
shares of Common Stock held in the name of the Trust. Mr. Ruch also
has sole voting and dispositive power over 26,242 of the shares shown.
Amount shown includes 1,242 shares beneficially owned by Mr. Ruch held
in the name of XBF Inc.
(b) Includes 250,000 shares of Common Stock beneficially owned by Torch
Energy Advisors Incorporated ("Torch"). Mr. Bryan is a director of and
a holder of options to purchase 24% of the outstanding shares of
common stock of the parent corporation of Torch on a fully diluted
basis. Mr. Bryan disclaims beneficial ownership of these shares.
Includes 137,000 shares of Common Stock which Mr. Bryan has the right
to acquire within 60 days pursuant to options. Excludes 6,250 shares
of Common Stock owned by Mr. Bryan's wife, as to which he has no
voting or dispositive power.
(c) Includes 231,000 shares of Common Stock that Mr. Sere has the right to
acquire within 60 days pursuant to options and 1,400 shares of Common
Stock owned by Mr. Sere's minor son. Does not include 7,600 shares of
Common Stock owned by Mr. Sere's wife, as to which Mr. Sere has no
voting or dispositive power.
(d) Includes 12,000 shares of Common Stock which the director has the
right to acquire within 60 days pursuant to options.
(e) Includes 14,000 shares of Common Stock which Mr. Kairouz has the right
to acquire within 60 days pursuant to options.
(f) Includes 29,000 shares of Common Stock which Mr. Green has the right
to acquire within 60 days pursuant to options. Excludes 25,000 shares
of Common Stock owned by a former spouse, as to which Mr. Green has no
voting or dispositive power.
(g) Includes 4,000 shares of Common Stock which Mr. Pressler has the right
to acquire within 60 days pursuant to options and 2,000 shares of
Common Stock owned indirectly through Teepee Petroleum.
(h) Includes 25,000 shares of Common Stock which Mr. Rankin has the right
to acquire within 60 days pursuant to options.
(i) Includes the following: the shares of Common Stock beneficially owned
by Mr. Bryan as described in note (b); and shares of Common Stock
which officers and directors of the Company have the right to acquire
pursuant to options, as described above.
-5-
<PAGE>
PROPOSAL I ELECTION OF DIRECTORS
NOMINEES
Each incumbent director identified in the table below (other than Mr.
Green) are nominees for election as directors of the Company. The term of
office for which the following persons are nominated will expire at the time of
the 1999 Annual Meeting of Stockholders of the Company or when their respective
successors shall have been elected and qualified. It is the intention of the
persons named in the accompanying proxy that proxies will be voted for the
election of the seven nominees named below unless otherwise indicated thereon.
Should any nominee for the office of director named herein become unable or
unwilling to accept nomination or election, the person or persons acting under
the proxies will vote for the election in his stead such other person as the
Board of Directors may recommend. The Board of Directors has no reason to
believe that any of the nominees will be unable to serve if elected to office
and, to the knowledge of the Board of Directors, the nominees intend to serve
the entire term for which election is sought.
Directors will be elected by a plurality vote of the shares of Common Stock
present, in person or by proxy, at the Annual Meeting. The Board of Directors
recommends a vote FOR each of the nominees listed and, unless marked to the
contrary, proxies received from Stockholders will be voted for the election of
such nominees.
DIRECTORS AND EXECUTIVE OFFICERS
The following table provides information with respect to the directors and
nominees for director (other than Mr. Green who will not stand for reelection)
and present executive officers of the Company. Each executive officer has been
elected to serve until his successor is duly appointed or elected by the Board
of Directors or his earlier removal or resignation from office.
COMPANY
NAME AGE POSITION SINCE PRESENT COMPANY POSITION
- ---- --- -------------- ------------------------
J. Darby Sere 50 1988 Chairman of the Board,* Chief
Executive Officer, and President
William C. Rankin 48 1997 Senior Vice President and
Chief Financial Officer
Dr. Jack Birks 78 1988 Director*
J. P. Bryan 58 1987 Director*
Vincent H. Buckley 75 1987 Director*
Charles C. Green III 51 1992 Director
Habib Kairouz 31 1994 Director*
A. K. McLanahan 72 1987 Director*
Townes G. Pressler 61 N/A Director*
* Nominee for director
-6-
<PAGE>
Mr. Sere has been the Company's Chairman of the Board since June 2, 1997,
Chief Executive Officer since January 2, 1995, its President since November 27,
1997, and a Director since March 25, 1988. Mr. Sere was the Company's Chief
Executive Officer from March 7, 1988 to June 29, 1994 and President from March
7, 1988 to June 2, 1997.
Mr. Rankin has been Senior Vice President and Chief Financial Officer of
the Company since September 29, 1997. Prior to joining the Company, Mr. Rankin
was Vice President and Chief Financial Officer of Gulfstar Energy, Inc. From
February 1996 to March 1997, he was Senior Vice President and Chief Financial
Officer of Kelley Oil and Gas Corporation ("Kelley") and from March 1994 until
he joined Kelley, Vice President and Chief Financial Officer of Kelley's largest
shareholder, Contour Production Company. From December 1985 to November 1993,
Mr. Rankin was a Financial Officer with Hadson Energy Resources Corporation and
its predecessors, serving the last four years as Senior Vice President, Chief
Financial Officer and a Director.
Dr. Birks has been a Director of the Company since 1988. He was Chairman of
the Board of Midland & Scottish Resources Plc. until September 30, 1997. He is
life President of British Marine Technology Limited. Dr. Birks served as
Chairman of the Board of North American Gas Investment Trust Plc. from 1989
until his retirement in 1995; as Chairman of the Board of British Maritime
Technology Limited from 1985 to 1995; as Chairman of the Board of Charterhouse
Petroleum Plc from 1982 to 1986; as Chairman of the Board of London American
Energy Inc. from 1982 to 1988; as Vice Chairman of the Board of Petrofina (UK)
Limited from 1986 to 1989; and as a Director of George Wimpey Plc, a
construction company, from 1982 to May 1990. He was appointed as a Director of
Gulf Indonesia Resources Limited in August 1997.
Mr. Bryan has served as a Director of the Company since June 2, 1997. He
was the Company's Chairman of the Board from August 31, 1987 to June 2, 1997,
and Chief Executive Officer from June 30, 1994 to January 25, 1995 and from
August 31, 1987 to March 6, 1988. From January 1995 to February 1998, Mr. Bryan
was Chief Executive Officer of Gulf Canada Resources Limited. He was Chairman of
the Board of Nuevo Energy Company ("Nuevo") from March 1990 to December 1997,
and was Chief Executive Officer of Nuevo from March 1990 to January 1995. Mr.
Bryan was also Chairman of the Board and Chief Executive Officer of Torch and
its predecessor from January 1985 to May 1997. Mr. Bryan is also a member of the
Board of Directors of Republic Waste Industries.
Mr. Buckley has been a Director of the Company since 1987. He has been Of
Counsel to the law firm of Liddell, Sapp, Zivley, Hill & LaBoon since January
1989. He also serves as a Director of Enron Cactus III Corporation, and as a
Director of Enron Cash Company. Mr. Buckley was President and Chief Executive
Officer of Cockburn Oil Corporation from August 1984 until September 1988, and
was Vice President of Apache Corporation, an oil and gas company, from October
1982 to August 1984.
Mr. Green has been a Director of the Company since February 24, 1997. He
was the Company's Executive Vice President and Chief Financial Officer from
January 1, 1997 to September 3, 1997, and Vice President and Assistant Secretary
from December 31, 1992 to December 31, 1996. Since September 4, 1997, Mr. Green
has been Executive Vice President and Chief Financial Officer of Castle Tower
Holding Corporation, a company involved in the development and management of
telecommunications infrastructure, including wireless support. He was Torch's
Vice President and Chief Financial Officer from November 1992 through February
1994, President and Chief Operating Officer from February 1994 to May 1995, and
Vice Chairman and Chief Investment Officer from May 1995 to December 1996. For
over ten years prior to joining Torch, Mr. Green was President and Chief
Operating Officer of Treptow Development Company, a real estate development
company. Previously, at J.P. Morgan Investment Management he was Vice President
and Senior Portfolio Manager and Head of International Fixed Income in London
(1974-1982), and was Assistant Vice President in the Investment Department in
New York (1973-1974), and Investment Research Officer and Energy Analyst in New
York
-7-
<PAGE>
(1969-1973). He has been a Director of Teletouch Communications, Inc. since May
1995. Mr. Green is a Chartered Financial Analyst. Mr. Green will not stand for
reelection to the Company's Board of Directors.
Mr. Kairouz has been a Director of the Company since August 26, 1994. Mr.
Kairouz is a Managing Director of Rho Management Company, Inc., an investment
advisory firm which serves as advisor to the principal investor of Alpine
Investment Partners. Prior to that, Mr. Kairouz was employed for five years in
investment banking at the firms of Jesup & Lamont Securities, Inc. and more
recently, Reich & Co., Inc. Under the agreement pursuant to which the Company
acquired Odyssey, certain former owners ("Owners") of the Odyssey Partnership
acquired the right to designate one representative to the Company's Board of
Directors. Pursuant to such agreement, until the earlier to occur of the five-
year anniversary of the closing of such acquisition or the date such Owners no
longer own at least 5% of the outstanding Common Stock of the Company, the
Company is obligated to nominate and recommend to the Company's Stockholders one
representative of the Owners. Mr. Kairouz is the person so designated by the
Owners.
Mr. McLanahan has been a Director of the Company since November 6, 1987. He
has been a First Vice President of PaineWebber Incorporated ("PaineWebber")
since January, 1995. He was a Vice President of Kidder Peabody & Co., Inc., an
investment banking firm, from April 1985 until its sale to PaineWebber in 1995.
From April 1982 to April 1985, he served as a Senior Vice President and Branch
Office Manager of Donaldson, Lufkin & Jenrette, Inc., an investment banking
firm.
Mr. Pressler has been owner and President of Tepee Petroleum Company, Inc.,
an exploration and production company with operations in Texas, Louisiana and
Oklahoma, and Pressler Petroleum Consultants, a reservoir engineering consulting
firm, since 1985. He currently serves as a Trustee of Pacific American Investors
Trust and as a Director of Korea Industrial Holdings, Ltd. From 1983 - - 1985,
he was President, Chief Operating Officer and Director of Philip Hill Energy,
Inc., PHE (Texas) Inc. and PHE (Ohio) Inc., three exploration and production
companies owned by Philip Hill Investment Trust, London. From 1979 - 1983, he
was co-founder, President and Director of Republic Oil and Gas Corp., a private
exploration and production company. Mr. Pressler is a registered professional
engineer in the state of Texas and has 38 years of experience in the oil and gas
industry.
-8-
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table details annual and long-term
compensation paid during the Company's three most recent fiscal years and the
six-month Transition Period to: J. Darby Sere, the Company's Chairman of the
Board and Chief Executive Officer; William C. Rankin, Senior Vice President and
Chief Financial Officer; C. Barton Groves, former Senior Vice President; and
Kenneth W. Welch, former Vice President-Land.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
- ----------------------------------------------------------------------------------------- --------------
NAME AND OTHER NUMBER
PRINCIPAL FISCAL ANNUAL OF
POSITION YEAR SALARY BONUS COMPENSATION(3) OPTIONS
- -------------------------- ------------- ---------- -------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
J. Darby Sere 1997 (1) $103,500 $100,000 (4) $20,523 (2) 55,000 (5)
Chairman of the Board 1997 183,000 70,000 26,193 (2) 55,000
and Chief Executive Officer 1996 171,000 50,000 8,752 (2) 0
1995 158,000 0 8,450 (2) 25,000
William C. Rankin 1997 (1) 44,818 0 (4) 3,000 100,000
Senior Vice President
and Chief Financial Officer
C. Barton Groves 1997 (1) 82,950 50,000 (4) 13,107 20,000 (5)
Senior Vice President 1997 160,000 32,500 30,500 15,000
1996 154,000 30,000 30,500 0
1995 125,000 0 21,013 165,000
Kenneth W. Welch 1997 (1) 52,800 25,000 (4) 3,950 10,000 (5)
Vice President - Land 1997 102,000 17,500 12,178 7,500
1996 98,000 15,000 10,750 0
1995 80,486 0 7,899 82,500
</TABLE>
- -------------------
(1) Represents the Transition Period from July 1, 1997 to December 31, 1997.
(2) These amounts do not include: the value of the benefit to Mr. Sere of the
use of a Company-owned automobile used primarily for commuting to and from
the Company; the expense of a disability insurance policy under which Mr.
Sere is insured, the premiums of which are paid by the Company; and the
expenses of Mr. Sere's membership in certain professional and athletic
clubs. While some personal benefit may be derived from the foregoing, the
expenses are considered by the Company to be ordinary, necessary and
reasonable to its business and such expenses did not exceed 10% of Mr.
Sere's salary in the Transition Period.
(3) Represents premiums paid on an insurance policy for Mr. Sere and an annual
payment pursuant to a Simplified Employee Pension Plan for Messrs. Sere,
Rankin, Groves and Welch. Also includes $8,500 per year for personal
benefit plans paid to Mr. Groves in lieu of certain Company benefits and
amounts paid for a car allowance to Mr. Rankin, Mr. Groves and Mr. Welch.
(4) Represents the bonuses paid during the Transition Period based upon
performance in fiscal 1997. On March 27, 1998, Mr. Sere and Mr. Rankin
were granted bonuses of $57,000 and $14,000, respectively, in recognition
of their performance during the Transition Period.
(5) Represents the number of options granted during the Transition Period based
upon performance in fiscal 1997.
-9-
<PAGE>
OPTION/SAR GRANTS IN TRANSITION PERIOD
The following table sets forth certain information concerning grants of
options to purchase Common Stock made during the Transition Period to the
executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL PER SHARE GRANT DATE
OPTIONS OPTIONS GRANTED EXERCISE EXPIRATION PRESENT
NAME GRANTED TO EMPLOYEES PRICE(a) DATE VALUE(b)
---- ------- ------------ -------- ---- --------
<S> <C> <C> <C> <C> <C>
J. Darby Sere...... 55,000 23% $12.375 9/10/07 $355,740
William C. Rankin.. 100,000 41% 10.625 11/21/07 694,400
C. Barton Groves... 20,000 8% 12.375 9/10/07 129,360
Kenneth W. Welch... 10,000 4% 12.375 9/10/07 64,680
- -------------
</TABLE>
(a) The exercise price is the average of the high and low price of the Common
Stock on the date of grant.
(b) In accordance with the rules of the Securities and Exchange Commission,
this column illustrates the gains that may exist for the respective options
over a ten-year period using the Black-Scholes option pricing model. This
valuation model is hypothetical; the actual value, if any, depends on the
excess of the market price of the shares over the exercise price on the
date the option is exercised. If the market price does not increase above
the exercise price, compensation to the grantee will be zero. The Black-
Scholes option pricing model is a mathematical formula used for estimating
option values that incorporates various assumptions. The Grant Date
Present Value set out in the column above is based on the following
assumptions: (a) a ten-year option term; (b) 40% expected future annual
stock volatility for the options; (c) a risk-free rate of return of 6% for
the options granted; and (d) no expected dividend yield. The above model
does not include any reduction in value for non-transferability, forfeiture
or vesting of options.
AGGREGATED OPTION/SAR EXERCISES IN TRANSITION PERIOD AND FISCAL YEAR END
OPTION/SAR VALUES
The following table sets forth certain information concerning the exercise
during the Transition Period of options to purchase Common Stock by the
executive officers named in the Summary Compensation Table and the number and
value of unexercised options to purchase Common Stock held by such individuals
at December 31, 1997. Also reported are the values for "in-the-money" options
which represent the positive spread between the exercise price of any such
existing stock options and the December 31, 1997 price of the Common Stock. The
actual amount, if any, realized upon exercise of stock options will depend upon
the market price of the Common Stock relative to the exercise price per share of
Common Stock at the time the stock option is exercised. There is no assurance
that the values of unexercised, "in-the-money" stock options reflected in this
table will be realized.
-10-
<PAGE>
<TABLE>
<CAPTION> NUMBER OF VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT DECEMBER 31, 1997 AT DECEMBER 31, 1997 (1)
ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISES REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. Darby Sere 5,000 $43,750 309,451 55,000 $1,707,887 --
William C. Rankin -- -- -- 100,000 -- $37,500
C. Barton Groves -- -- 180,000 20,000 $ 956,250 --
Kenneth W. Welch -- -- 90,000 10,000 $ 478,125 --
</TABLE>
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(1) Based upon $11.00, the closing price of Common Stock on December 31, 1997.
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
At this time, the Company does not have a long-term incentive plan for its
employees, other than the 1994 Stock Incentive Plan ("1994 Plan") and the 1996
Stock Incentive Plan ("1996 Plan").
1988 PLAN
In 1988, the Board of Directors adopted and stockholders approved the
Company's 1988 Non-Qualified Stock Option Plan. The Company reserved 131,325
shares of Common Stock under the 1988 Plan and no further options will be
granted under the 1988 Plan. Options under the 1988 Plan were granted by the
Compensation Committee to directors, executive officers or key employees of the
Company. The exercise price of an option is 100% of the fair market value on the
date of the grant. Options granted under the 1988 Plan were all exercised by
March 25, 1998, the expiration date of the 1988 Plan and options granted
pursuant thereto.
1994 PLAN
In 1994, the Board of Directors adopted and stockholders approved the
Bellwether Exploration Company 1994 Plan. The Company has reserved 825,000
shares of Common Stock under the 1994 Plan. The Company has issued options to
purchase an aggregate of 825,000 shares of Common Stock under the 1994 Plan.
The 1994 Plan is administered by the Compensation Committee of the Board of
Directors. The Compensation Committee has full power to select, from among the
persons eligible for awards, the individuals to whom awards are granted, to make
any combination of awards to any participant and to determine the specific terms
of each grant, subject to the provisions of the 1994 Plan. The option price per
share of Common Stock deliverable upon the exercise of a stock option is 100% of
the fair market value of a share of Common Stock on the date the stock option is
granted.
Directors, officers and key employees of the Company and officers and key
employees of Torch who render services to the Company under the Management
Agreement are eligible to receive stock options or performance shares under the
1994 Plan.
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<PAGE>
1996 PLAN
In 1996, the Board of Directors adopted and the stockholders approved the
1996 Plan. The Company initially reserved 500,000 shares of Common Stock under
the 1996 Plan and amended the plan on November 21, 1997 reserving another
500,000 shares. Members of the Board of Directors who are not employed by the
Company receive annual automatic grants of stock options.
As of April 10, 1998, the Company had 343,500 shares of Common Stock
available for grant under the 1996 Plan.
INFORMATION CONCERNING THE OPERATION OF THE BOARD OF DIRECTORS
The small size of the Company's Board of Directors lends itself to frequent
informal discussions of Company matters among its members. The Board of
Directors met formally two times during the Transition Period.
The Company has a Compensation Committee comprised of Messrs. McLanahan and
Buckley and Dr. Birks (the "Compensation Committee"). The function of the
Compensation Committee is to administer the 1994 Plan and the 1996 Plan, to
establish the compensation of the Company's Chief Executive Officer and to
review the compensation of the other officers of the Company. The Compensation
Committee also generally meets quarterly to review Torch's performance under the
Management Agreement, which agreement may be terminated by the Compensation
Committee. The Compensation Committee met three times during the Transition
Period.
The Company has an Audit Committee composed of Messrs. McLanahan and
Buckley and Dr. Birks (the "Audit Committee"). The primary function of the
Audit Committee is to review the annual audit of the Company's financial
statements with the Company's independent accountants. The Audit Committee met
two times during the Transition Period.
During the Transition Period, all directors other than Mr. Green and Mr.
Bryan attended at least 75% of the total number of meetings of the Board of
Directors, and each committee member attended at least 75% of the total number
of meetings held by all Committees on which he served.
The Company does not have a nominating committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The service of the members of the Company's Compensation Committee does not
create any corporate interlocks or insider participation between the
Compensation Committee and another entity.
COMPENSATION OF DIRECTORS
Directors of the Company who are neither officers nor employees of the
Company received $3,000 per quarter during the fiscal year ended June 30, 1997,
and were reimbursed for reasonable expenses incurred in attending such meetings.
Commencing with the first quarter of the Transition Period, such quarterly fees
were increased to $5,000. Each member of the Compensation and Audit Committees
also received $1,000 per meeting. Directors who are officers or employees of
the Company received no additional compensation for services as members of the
Board of Directors. The Company paid a total of $62,000 in director fees for
the Transition Period. Each Non-Employee Director (as defined herein) receives
an annual grant of 4,000 options under the 1996 Plan.
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REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for establishing policies
concerning the compensation of the Company's executive officers. The report of
the Compensation Committee describing the Company's compensation philosophy and
objectives is presented below.
COMPENSATION COMMITTEE REPORT
As members of the Compensation Committee, we are responsible for the
administration of the Company's 1994 Plan and the 1996 Plan. We also evaluate
compensation levels of management and review with the Board of Directors the
various factors affecting compensation of the Company's highest paid officers.
In addition, the Compensation Committee considers management succession and
related matters.
The Compensation Committee has reviewed the compensation of J. Darby Sere,
the Chairman of the Board and Chief Executive Officer, C. Barton Groves, former
Senior Vice President, William C. Rankin, Senior Vice President and Chief
Financial Officer, and Kenneth W. Welch, former Vice President, for the
Transition Period and concluded that the compensation of each aforesaid
individual was reasonable in view of the Company's performance and their
respective contributions to that performance. Generally, their compensation was
comprised of three elements: (1) base compensation; (2) incentive bonus; and (3)
stock options.
The Compensation Committee continues to endorse the compensation policy of
the Company, which is that a substantial portion of the annual compensation of
each officer must be related to the performance of the Company, as well as the
particular contribution of each officer.
For fiscal 1997, the Compensation Committee adopted an Annual and Long-Term
Incentive Plan to establish guidelines for base compensation, incentive bonuses
and stock options with the assistance of KPMG Peat Marwick LLP, who had prepared
an Executive and Director Compensation Review in fiscal 1996. Performance
measures and targets were established.
For the Transition Period, all of the Company's targets were exceeded
except for growth in oil and gas reserves. The committee noted that except for
an error in the June 30, 1997 reserve report which overstated reserves at such
date by approximately 1,000,000 equivalent barrels, this target would have been
exceeded. For the Transition Period as compared to fiscal 1997, the
Compensation Committee notes that: (1) proved reserves were added at a cost of
$4.99 per barrel; (2) operating cash flows (normalized for the Transition
Period) increased 88%; and (3) the ratio of the present value of future net
revenues discounted at 10% of new proved reserves to the cost incurred to add
such reserves was 144%.
No raises have been granted to executive officers since the date of the
last proxy statement. On March 27, 1998, Mr. Sere was granted a bonus of
$57,000 and Mr. William C. Rankin was granted a bonus of $14,000 in recognition
of their overall leadership and the performance of the Company during the
Transition Period.
The Compensation Committee believes that stock options serve as important
long term incentives for executive officers of the Company by encouraging
continued employment and commitment to the performance of the Company.
Moreover, the Compensation Committee believes that stock options are an
excellent means to align the interests of the Company's officers with those of
its stockholders.
The number of options that the Compensation Committee grants to executive
officers is based on individual performance and level of responsibility. In
addition, the Compensation Committee strives to grant options at a level
sufficient to provide a strong incentive for executives to work for the long-
term
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<PAGE>
success of the Company. The Compensation Committee does not consider the number
of options currently held by an executive officer in determining individual
grants, since such a factor would create an incentive to exercise options and
sell the shares.
No additional options have been granted to executive officers of the
Company since the date of the last proxy statement.
The main elements of the Company's compensation policy of base salary,
bonus and stock options constitute an appropriate reward for the short and long-
term efforts of the Company's officers and officers of its principal
subsidiaries in order to support the future development of the Company and
growth in stockholder value.
Dr. Jack Birks
Vincent H. Buckley
A. K. McLanahan
TRANSACTIONS WITH RELATED PERSONS
RELATIONSHIP WITH TORCH AND AFFILIATES
ADMINISTRATIVE SERVICES AGREEMENT
The Company has been party to an Administrative Services Agreement with
Torch ("Administrative Services Agreement") since 1987. Torch, headquartered in
Houston, Texas, is primarily engaged in the business of providing outsourcing
services for clients in the energy industry with respect to the acquisition and
divestiture, exploration, development, exploitation and operation of oil and gas
properties, including management advisory services, legal, financial and
accounting services, and the marketing of oil and gas. In addition, Torch
provides energy industry investment management and advisory services for public
companies and private investors. The Administrative Services Agreement is
subject to termination by the Company upon one year's prior notice. The
Administrative Services Agreement has an initial term expiring on December 31,
1999 and may not be terminated by Torch prior to such date.
The Administrative Services Agreement requires Torch to administer certain
activities of the Company for a monthly fee. These administrative services
include providing the Company with office space, equipment and supplies,
accounting, legal, financial, geological, engineering, technical and insurance
professionals, maintaining the books and records of the Company, assisting the
Company in determining its capital requirements, preparing any reports or other
documents required by governmental authorities, analyzing economic and other
data related to the Company's business and otherwise providing general
management services and business advice to the Company. The Company presently
intends to continue to operate under the Administrative Services Agreement.
The monthly fee payable to Torch under the Administrative Services
Agreement is equal to (i) one-twelfth of 2% of the book value of the Company's
assets, excluding cash and cash equivalents, plus (ii) 2% of operating cash
flows during such month less 20% of overhead on Torch operated properties. The
fees paid for the Transition Period were $2.4 million. The Company believes
that the terms and fees under the Administrative Services Agreement are
comparable with those that could be negotiated with a third party in an arm's
length transaction and are fair to the Company.
Under the Administrative Services Agreement, the monthly fee for
administrative services does not apply to extraordinary investing and financing
services that Torch may agree to provide to the Company upon the Company's
request. For such investing and financing services the Company pays
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<PAGE>
Torch a fee on an hourly basis for Torch employees providing such services,
certain overhead expenses with respect to such Torch employees and any related
expenses. The Company has not paid any fees for these services during the
Transition Period.
The Company has agreed to indemnify Torch and its affiliates for
liabilities incurred by Torch or its affiliates for actions taken under the
Administrative Services Agreement, other than acts of fraud, willful misconduct
or gross negligence of Torch or its affiliates or any of their employees.
The Compensation Committee of the Board of Directors, which is composed of
persons who are not employees of Torch or the Company, meets quarterly to review
Torch's performance under the Administrative Services Agreement.
OTHER RELATIONSHIPS WITH TORCH
Torch markets a portion of the oil and natural gas production for certain
properties in which the Company owns an interest. For the Transition Period,
marketing fees paid by the Company to Torch amounted to $757,000.
Torch began operating the Snyder Gas Plant ("Gas Plant") in December 1993
pursuant to an operating agreement with the Company and other interest owners in
the Gas Plant. The amount paid to Torch in connection with such operations
during the Transition Period was $42,000.
Torch operates certain oil and gas interests owned by the Company. The
Company is charged, on the same basis as other third parties, for all customary
expenses and cost reimbursements associated with these activities. Torch's
overhead charges to the Company for these activities for the Transition Period
were $698,000.
Costs of evaluating potential property acquisitions and due diligence
conducted in conjunction with acquisitions are incurred by Torch at the
Company's request. The Company was charged $217,000 for such costs in the
Transition Period.
OWNERSHIP OF TORCH
On September 30, 1996, Torch Acquisition Company ("TAC"), a company formed
by executive management of Torch, acquired all of the outstanding shares of
capital stock of Torch from United Investors Management Company ("United"), a
subsidiary of Torchmark Corporation. J.P. Bryan, a director of the Company,
owns options to purchase approximately 24% of the outstanding shares of common
stock of TAC on a fully diluted basis for a nominal price. Roland E. Sledge,
the Corporate Secretary of the Company, is an executive officer, member of the
Board of Directors and owns 5.5% of the common stock on a fully diluted basis of
TAC, and Charles C. Green III, director of the Company, holds options to
purchase 2.1% of the common stock of TAC on a fully diluted basis.
MINING VENTURES
During fiscal year 1992, the Company acquired an average 24.4% interest in
three mining ventures (the "Mining Ventures") from an unaffiliated person for
$128,500. At the time of such acquisition, Mr. Bryan, his brother and Robert L.
Gerry III, then a director of Nuevo Energy Company (the "Affiliated Group"),
owned an average 21.5% interest in the Mining Ventures. The Company's interest
in the Mining Ventures increased as it paid costs of the venture. As of
December 31, 1997, the Company had invested $387,000 in the Mining Ventures.
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<PAGE>
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the Company's
cumulative total stockholder return on its Common Stock (assuming reinvestment
of dividends at a date of payment into Common Stock of the Company) to the
cumulative total return on the NASDAQ Market Index ("Broad Market") and the
cumulative total return on the Dow Jones Secondary Oil Index ("Industry Index")
for the period of five and one-half years commencing June 30, 1992 and ending
December 31, 1997.
BELLWETHER INDUSTRY INDEX BROAD MARKET
-------------- ------------------ ----------------
Fiscal Year 100 100 100
Ending 6/92
Fiscal Year 150 118.87 122.76
Ending 6/93
Fiscal Year 183.33 116.76 134.61
Ending 6/94
Fiscal Year 200 128.97 157.88
Ending 6/95
Fiscal Year 200 151.12 198.73
Ending 6/96
Fiscal Year 334.38 178.05 239.4
Ending 6/97
Transition Period 366.67 186.33 261.53
Ending 12/97
PROPOSAL II
RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
The Stockholders will be asked to ratify the appointment of KPMG Peat
Marwick LLP as independent auditors of the Company and its subsidiaries for the
current period ending December 31, 1998.
The engagement of KPMG Peat Marwick LLP as independent auditors of the
Company is subject to approval by a majority of the shares of Common Stock
present, in person or by proxy, at the Annual Meeting. If the engagement of
KPMG Peat Marwick LLP is not approved, the Audit Committee will consider the
vote in appointing the Company's auditors for 1999.
A representative of KPMG Peat Marwick LLP will be present at the Annual
Meeting with an opportunity to make a statement if the representative so desires
and will be available to respond to appropriate questions.
MANAGEMENT RECOMMENDS THAT THE STOCKHOLDERS APPROVE AND RATIFY THE
APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS OF THE
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<PAGE>
COMPANY AND ITS SUBSIDIARIES FOR THE PERIOD ENDING DECEMBER 31, 1998. PROXIES
RECEIVED BY THE COMPANY WILL BE SO VOTED UNLESS A CONTRARY VOTE IS SPECIFIED.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), requires the Company's directors and executive officers, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file with the Commission initial reports of ownership and reports
of changes in ownership of Common Stock and other equity securities of the
Company. Officers, directors and greater than ten percent stockholders are
required by the Commission's regulations to furnish the Company with copies of
all Section 16(a) forms they filed with the Commission.
Based on a review of the copies of such reports furnished to the Company,
the Company believes that all reporting obligations under Section 16(a) were
satisfied.
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STOCKHOLDERS' PROPOSALS FOR 1999 ANNUAL MEETING
No person other than nominees selected by the Board of Directors shall be
eligible for election as a director unless written notice of a nomination is
received from a Stockholder of record by the Secretary of the Company not less
than 90 days prior to the meeting, accompanied by the written consent of the
nominee to be a nominee and to serve as a director. Such statement must also
contain the Bellwether stock ownership of the nominee, occupations and business
history for the previous five years, other directorships and all other
information required by the federal proxy rules in effect at the time the
proposed nominee submits the statement.
Proposals of stockholders of the Company that are intended to be presented
at the 1999 Annual Meeting of the Stockholders of the Company must be received
by the Secretary of the Company not less than 120 days in advance of April 24,
1999. Such proposals must be in conformity with all applicable legal provisions
including Rule 14a-8 of the General Rules and Regulations under the Exchange Act
and the Bylaws of the Company.
OTHER MATTERS
The cost of soliciting proxies, including the cost of preparing and mailing
this Proxy Statement and the expenses incurred by brokerage houses nominees and
fiduciaries in forwarding proxy materials to beneficial owners, will be borne by
the Company. In addition to solicitation by mail, certain directors, officers
and regular employees of the Company may solicit the return of proxies by
telephone, telecopy, fax telegram or personal interview. Such persons will
receive no additional compensation for such services.
The Board of Directors has no information that any matters other than those
referred to in this Proxy Statement will be brought before the Annual Meeting.
If, however, other matters should properly come before the meeting, the
accompanying proxy confers discretionary authority on the persons named therein
to vote thereon in accordance with the recommendations of the Board of
Directors.
By Order of the Board of Directors
/s/ ROLAND E. SLEDGE
Roland E. Sledge
Secretary
April 24, 1998
COPIES OF THE COMPANY'S TRANSITION REPORT FOR THE SIX-MONTH TRANSITION
PERIOD ENDED DECEMBER 31, 1997, ARE AVAILABLE AT NO COST TO THE STOCKHOLDERS OF
THE COMPANY UPON WRITTEN REQUEST TO ROLAND E. SLEDGE, SECRETARY OF THE COMPANY,
AT 1331 LAMAR STREET, SUITE 1455, HOUSTON, TEXAS 77010-3039.
-18-
<PAGE>
PROXY
BELLWETHER EXPLORATION COMPANY
1331 LAMAR, SUITE 1455, HOUSTON, TEXAS 77010-3039
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY FOR THE
ANNUAL MEETING ON MAY 22, 1998.
The undersigned hereby constitutes and appoints J. Darby Sere and William C.
Rankin and each of them, his true and lawful agents and proxies with full power
of substitution in each, to represent and to vote, as designated below, all of
the shares of common stock of Bellwether Exploration Company held of record by
the undersigned on April 9, 1998, at the Annual Meeting of Stockholders to be
held at the Houston Center Club, 1100 Caroline Street, Houston, Texas on
Friday, May 22, 1998, and at any adjournments thereof, on all matters coming
before said meeting. IF NO DIRECTION AS TO THE MANNER OF VOTING THE PROXY IS
MADE, THE PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR ITEM 2 AS
INDICATED ON THE REVERSE SIDE HEREOF.
Please check the box if you plan to attend the annual meeting on May 22,
1998. [_]
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF
DIRECTORS AND FOR PROPOSAL 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND FOR
PROPOSAL 2.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES 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. THE PROXIES CANNOT
VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY IN THE STAMPED,
PRE-ADDRESSED ENVELOPE ENCLOSED.
(TO BE SIGNED ON REVERSE SIDE)
<TABLE>
<CAPTION>
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<S> <C> <C> <C> <C> <C>
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
NOMINEES: J. Darby Sere
FOR WITHHELD Dr. Jack Birks FOR AGAINST ABSTAIN
1. Election of [ ] [ ] J. P. Bryan 2. To ratify the appointment of [ ] [ ] [ ]
Directors Vincent H. Buckley KPMG Peat Marwick LLP as
Habib Kairouz nominee as independent public
A. K. McLanahan accountants
Townes G. Pressler
To withhold authority to vote for any specific nominee(s), 3. In their discretion, the Proxies are
Mark the "FOR" box and write the name of each such authorized to vote upon such other
Nominee on the line provided below business as may properly come before
the meeting or any adjournments thereof.
-----------------------------------------------------------
SIGNATURE(S) ____________________________________________________________ DATE ________________
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please indicate your full title as such.
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</TABLE>
