<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
ENERGY VENTURES, INC.
(Name of Registrant as Specified in its Charter)
ENERGY VENTURES, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1. Title of each class of securities to which transaction
applies: N/A
2. Aggregate number of securities to which transaction applies:
N/A
3. Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: N/A
4. Proposed maximum aggregate value of transaction: N/A
5. Total fee paid: N/A
[ ] 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: N/A
2. Form, Schedule or Registration Statement No.: N/A
3. Filing Party: N/A
4. Date Filed: N/A
<PAGE> 2
ENERGY VENTURES, INC.
5 Post Oak Park, Suite 1760
Houston, Texas 77027-3415
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 8, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Energy
Ventures, Inc. (the "Company") will be held at The Ritz-Carlton Hotel, 1919
Briar Oaks, Houston, Texas 77027 on Wednesday, May 8, 1996 at 1:00 p.m.,
Central Daylight Savings Time, for the following purposes:
1. To vote on the election of eight directors to the Board of Directors.
2. To consider and act upon a proposal to amend the Company's Certificate
of Incorporation to increase the number of authorized shares of the
Company's common stock, $1.00 par value (the "Common Stock"), from
20,000,000 shares to 40,000,000 shares.
3. To consider for approval an amendment to the Company's 1992 Employee
Stock Option Plan to increase the number of shares of the Company's
Common Stock that may be subject to options granted under the plan from
600,000 shares to 1,000,000 shares.
4. To transact such other business as may properly come before the meeting
or any adjournment(s) thereof.
Information with respect to the above matters is set forth in the Proxy
Statement which accompanies this Notice.
The Board of Directors has fixed the close of business on March 26, 1996,
as the record date for the determination of stockholders entitled to notice of
and to vote at such meeting or any adjournment or adjournments thereof. Only
stockholders of record at the close of business on such record date are
entitled to notice of and to vote at such meeting. The transfer books will not
be closed.
You are cordially invited to attend the meeting. However, to ensure your
representation at the meeting, the Company requests that you return your signed
proxy card at your earliest convenience, whether or not you plan to attend the
meeting. Your proxy will be returned to you if you should be present at the
meeting and should request such a return.
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY AT YOUR EARLIEST
CONVENIENCE. THE ENCLOSED RETURN ENVELOPE MAY BE USED FOR THAT PURPOSE.
By Order of the Board of Directors
April ____, 1996 James G. Kiley, Corporate Secretary
<PAGE> 3
ENERGY VENTURES, INC.
5 Post Oak Park, Suite 1760
Houston, Texas 77027-3415
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 8, 1996
The accompanying proxy is solicited by the Board of Directors of Energy
Ventures, Inc., a Delaware corporation (the "Company"), for use at the Annual
Meeting of Stockholders of the Company to be held on Wednesday, May 8, 1996
(the "Annual Meeting"), at the time and place and for the purposes set forth in
the accompanying Notice of Annual Meeting and at any adjournment or
adjournments thereof. When proxies in the accompanying form are received
properly executed, the shares will be voted by the persons named therein unless
contrary instructions are given.
Unless otherwise indicated, the proxy will be voted FOR the election of all
nominees of the Company as directors, FOR the amendment of the Company's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock to 40,000,000 shares and FOR approval of the amendment to the
Company's 1992 Employee Stock Option Plan to increase the number of shares of
the Company's Common Stock that may be subject to options granted under the
plan from 600,000 shares to 1,000,000 shares. The proxy will not be voted for
the election as directors of any nominee if authority to do so is withheld on
the proxy.
Any stockholder of the Company has the right to revoke his proxy at any
time prior to its use by submitting a written revocation to the Corporate
Secretary of the Company prior to the Annual Meeting.
Upon request, additional proxy material will be furnished without cost to
brokers and other nominees to forward to the beneficial owners of shares held
in their names. The Company will bear all costs of preparing, printing,
assembling, delivering and mailing the Notice of Annual Meeting, Proxy
Statement, Proxy and Annual Report. Copies of the Notice, Proxy Statement,
Proxy and Annual Report will be first sent or given to stockholders on or about
April ____, 1996. In addition to the use of the mail, proxies may be solicited
by the directors, officers and employees of the Company, without additional
compensation, by personal interview, telephone, telegram or otherwise.
VOTING RIGHTS AND PRINCIPAL STOCKHOLDERS
The record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting is the close of business on March 26, 1996
(the "Record Date"). As of the Record Date, there were _________________
shares of Common Stock, $1.00 par value ("Common Stock"), of the Company issued
and outstanding. Each share of Common Stock is entitled to one vote on each
matter to be acted upon at the meeting.
1
<PAGE> 4
The following table sets forth certain information with respect to each
person who at the Record Date was known by the Company to be the beneficial
owner of more than 5% of the outstanding shares of Common Stock.
<TABLE>
<CAPTION>
Number of Shares
Name and Address of Beneficially Owned Percent
Beneficial Owner as of the Record Date (1) of Class
---------------- ---------------------- --------
<S> <C> <C>
GulfMark International, Inc. 2,535,572 (2) 13.67%
5 Post Oak Park, Suite 1170
Houston, Texas 77027
Christiana Companies, Inc. and 1,948,731 10.51%
Sheldon B. Lubar (3)
777 E. Wisconsin Avenue, #3380
Milwaukee, Wisconsin 53202
Lehman Brothers Holdings Inc. 1,120,000 (2) 6.04%
3 World Financial Center
New York, New York 10285
</TABLE>
(1) Unless otherwise indicated below, the persons or group listed have sole
voting and investment power with respect to their shares of Common Stock, and
none of such shares are deemed to be owned because the holder has the right to
acquire the shares within 60 days.
(2) Lehman Brothers Holdings Inc. ("Lehman Holdings") beneficially owns
31.60% of the common stock of GulfMark International, Inc. ("GulfMark"). The
beneficial ownership of Common Stock of Lehman Holdings indicated in the table
above does not include any of the shares of Common Stock held by GulfMark,
beneficial ownership of which is disclaimed.
(3) Sheldon B. Lubar, a Director of the Company, is the Chairman and Chief
Executive Officer of Christiana Companies, Inc. ("Christiana") and is the
beneficial owner, through a voting trust, of 49.9% of the common stock of
Christiana.
2
<PAGE> 5
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth, as of the Record Date, the number and
percentage of Common Stock beneficially owned by each of the Company's
directors, each executive officer named in the Summary Compensation Table
herein, and all directors and officers as a group:
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Ownership (1)
-----------------------------------------------------
Options
Voting and Exercisable Percent
Name Investment Power Within 60 Days Of Class
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bernard J. Duroc-Danner 40,000 321,666 2.73%
John C. Coble (2) -- 124,732 *
Ghazi J. Hashem -- -- *
James G. Kiley -- 5,000 *
Frances R. Powell 200 6,666 *
David J. Butters 3,622 25,000 *
Uriel E. Dutton -- 25,000 *
Eliot M. Fried 10,000 15,000 *
Sheldon S. Gordon -- -- *
Sheldon B. Lubar (3) 1,948,731 -- 10.51%
Robert B. Millard -- 25,000 *
Robert A. Rayne -- 25,000 *
All directors and officers as
a group (12 persons) 2,002,553 573,064 13.89%
</TABLE>
* Less than 1% of the outstanding shares of Common Stock.
(1) Unless otherwise indicated, directors and executive officers have sole
voting and investment power with respect to their shares of Common Stock.
(2) Mr. Coble resigned as an executive officer of the Company in October
1995.
(3) The 1,948,731 shares of Common Stock indicated as beneficially owned by
Mr. Lubar are owned directly by Christiana and are deemed to be
beneficially owned by Mr. Lubar because Mr. Lubar is the Chairman and
Chief Executive Officer of Christiana and is the beneficial owner,
through a voting trust, of 49.9% of the common stock of Christiana.
PROPOSAL NO. 1: ELECTION OF DIRECTORS
Eight directors are to be elected at the Annual Meeting, each to hold office
until the next Annual Meeting of Stockholders of the Company and until his
successor shall be duly elected and qualified. The persons named in the
enclosed proxy will vote the shares covered thereby in favor of the nominees
listed below unless specifically instructed to the contrary. Although the
management of the Company does not contemplate that any of the nominees will be
unable to serve, if such a situation arises prior to the Annual Meeting, the
proxies will be voted for a substitute to be named by the Board of Directors.
All of the nominees named in the following table are now serving as directors
of the Company:
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<TABLE>
<CAPTION>
Year First
Became
Name Age Director
------------------------------------------------------------
<S> <C> <C>
David J. Butters 55 1984
Bernard J. Duroc-Danner 42 1988
Uriel E. Dutton 65 1986
Eliot M. Fried 63 1990
Sheldon S. Gordon 60 1995
Sheldon B. Lubar 67 1995
Robert B. Millard 45 1989
Robert A. Rayne 47 1987
</TABLE>
The nominees receiving a plurality of votes cast at the Annual Meeting will
be elected as directors. Abstentions and broker non-votes will not be treated
as a vote for or against any particular director and will not affect the
outcome of the election of directors.
David J. Butters is a Managing Director of Lehman Brothers ("Lehman
Brothers"), an investment banking firm and division of Lehman Brothers Inc.,
which is a subsidiary of Lehman Brothers Holdings, Inc., where he has been
employed for more than the past five years. Mr. Butters is currently Chairman
of the Board of Directors of GulfMark, a director of Anangel-American
Shipholdings, Ltd. and BT Shipping Ltd. and a member of the Board of Advisors
of Energy International, N.V. Mr. Butters is also Chairman of the Board of
Directors of the Company.
Bernard J. Duroc-Danner joined the Company in May 1987 upon inception of
the Company's strategic redeployment in the oilfield service and equipment
industry. He was elected President of the Company in January 1990 and Chief
Executive Officer in May 1990. In prior years, Mr. Duroc-Danner was with
Arthur D. Little Inc., a management consulting firm in Cambridge,
Massachusetts. Mr. Duroc-Danner holds a Ph.D. in economics from Wharton
(University of Pennsylvania).
Uriel E. Dutton has been a Partner in Fulbright & Jaworski L.L.P., a law
firm, for more than the past five years.
Eliot M. Fried is a Managing Director of Lehman Brothers, where he has been
employed for more than the past five years. He is Co-Chairman of the firm-wide
Investment Committee and a member of the Investment Banking Commitment
Committee of Lehman Brothers. Mr. Fried is a director of Bridgeport Machines,
Inc., Lear Corporation, Sun Distributors L.P., Walter Industries, Inc. and
Vernitron Corporation.
Sheldon S. Gordon has been a Limited Partner of The Blackstone Group, L.P.
since May 1995 and Chairman of Blackstone Alternative Asset
Management L.P. since January 1993. Mr. Gordon has been employed with The
Blackstone Group, L.P. since April 1991, serving as a general partner from
April 1991 until May 1995. Prior to April 1991, Mr. Gordon was Chairman and
Chief Executive Officer of Stamford Capital Group, Inc. for four years ending
August 1990. Mr. Gordon is a director of Ametek, Inc. and Anangel-American
Shipholdings Ltd.
Sheldon B. Lubar has been Chairman and Chief Executive Officer of
Christiana and Chairman of Lubar & Co. Incorporated for more than
the past five years. Mr. Lubar is a director of Ameritech, Massachusetts
Mutual Life Insurance Company, Firstar Corporation and MGIC Investment
Corporation. Under the terms of the agreements relating to the Company's
acquisition of Prideco, Inc. in June 1995, the Company agreed to nominate Mr.
Lubar or another acceptable nominee of Christiana for election to the Board of
Directors of the Company as long as Christiana beneficially owns 8% or more of
the outstanding shares of Common Stock of the Company.
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<PAGE> 7
Robert B. Millard is a Managing Director of Lehman Brothers, where he has
been employed for more than the past five years. Mr. Millard is also a
director of GulfMark.
Robert A. Rayne has been an Executive Director of London Merchant
Securities plc (property investment and development with major investments in
leisure enterprises), a United Kingdom listed public limited company, for more
than the past five years.
COMMITTEES AND MEETINGS OF DIRECTORS
Pursuant to the Company's By-laws, the Board of Directors has established
several committees, including an Audit Committee, a Compensation Committee, an
Executive Committee and a Nominating Committee. During the year ended December
31, 1995, the Board of Directors met six times, the Audit Committee met two
times and the Compensation Committee met one time. The Executive Committee and
the Nominating Committee did not meet. Except for Messrs. Rayne and Fried who
attended 63% and 88%, respectively, of the Board meetings and Committee
meetings of which each was a member during 1995, each director attended all of
the Board meetings and Committee meetings of which he was a member during 1995.
Messrs. Butters, Dutton, Fried, Gordon and Rayne are the current members of
the Audit Committee. The Audit Committee recommends to the Board the selection
and discharge of the Company's independent auditors, reviews the professional
services performed by the auditors, the plan and results of their auditing
engagement and the amount of fees charged for audit services by the auditors,
and evaluates the Company's system of internal accounting controls.
Messrs. Butters, Dutton, Lubar and Millard are the current members of the
Compensation Committee. The Compensation Committee recommends to the Board the
compensation to be paid to the Company's directors, officers and key employees
and administers the compensation plans for the Company's executive offices.
Messrs. Butters, Dutton and Millard are the current members of the
Executive Committee, which acts on behalf of the Board between regularly
scheduled meetings of the Board of Directors.
Messrs. Butters and Millard are the current members of the Nominating
Committee, which is empowered to propose to the Board of Directors the slate of
director nominees to be voted by the stockholders of the Company. The
Committee will consider nominees for election at the next annual meeting of
stockholders who are recommended by stockholders provided any such
recommendation is in writing and has been received by the Chairman of the
Nominating Committee at the Company's executive offices prior to December 6,
1996.
DIRECTOR COMPENSATION
Each non-employee director of the Company is paid $1,000 for each meeting
of the Board of Directors and $500 for each committee meeting of the Board of
Directors he attends. In addition, each non-employee director of the Company
is paid a retainer of $2,000 for each quarter of the year in which such
director serves as a director. Mr. Butters receives an additional retainer of
$6,250 per month for serving as Chairman of the Board. Total compensation paid
to the non-employee directors for 1995, including director fees and retainers
but excluding deferred compensation, was $83,713 for Mr. Butters, $14,338 for
Mr. Dutton, $12,025 for Mr. Fried, $5,625 for Mr. Gordon, $5,625 for Mr. Lubar,
$14,500 for Mr. Millard and $11,563 for Mr. Rayne.
The Company maintains a deferred compensation plan for it non-employee
directors (the "Non-Employee Director Plan") that is intended to provide
additional long-term incentive to the directors. Under the Non-Employee
Director Plan, each non-employee director may elect to defer up to 7 1/2% of
any retainer, meeting, committee or other similar fee or compensation to which
the non-employee director is entitled for services performed for the Company.
Each election by a non-employee director to defer compensation is irrevocable
and must state the date on which distributions under the Non-Employee Director
Plan are to be made, which date may not be less than one year after the
effective date of the election. Deferred compensation under the Non-Employee
Director Plan is credited to an account for the director. In the event the
5
<PAGE> 8
director elects to defer at least 5% of his compensation under the Non-Employee
Director Plan, the Company will make an additional allocation to the director's
account equal to the sum of (i) 7 1/2% of the director's compensation and (ii)
a percentage of the director's compensation equal to the percentage deferred by
the director.
All amounts credited to the account of a director are converted into
non-monetary units equal to the number of whole shares of Common Stock that
could have been purchased by the amounts credited to the account at the market
price of the Common Stock as of the last day of the calendar month in which the
amounts are credited. The amount of funds to be paid to a director at the time
of payment will be determined by multiplying the number of units credited to
the director's account at such time multiplied by the market price of the
Common Stock on the last business day of the month preceding the date the
distribution is to commence. Distributions under the Non-Employee Director
Plan commence as of the first day of the calendar quarter coincident with or
following the date specified by the director in his election to defer
compensation and may be either in the form of a lump sum or in quarterly
installments not to exceed ten years. In the event a director elects to
receive deferred compensation through installments, the unpaid amounts will
accrue interest on a quarterly basis at a rate equal to an announced prime
rate. No distribution may be made to a director with respect to units relating
to amounts deferred and additional credits made by the Company within six
months prior to the proposed date of distribution except where the distribution
follows the director's death or termination of service as a director. In such
case, the director will be entitled to receive a distribution in an amount
equal to the compensation deferred during such six-month period plus interest.
During 1995, $20,363, $3,488, $2,925, $1,125, $1,125 and $2,813 were credited
under the Non-Employee Director Plan as deferrals and Company contributions to
the accounts of Messrs. Butters, Dutton, Fried, Gordon, Lubar and Rayne,
respectively, with total units allocated to their respective accounts of 4,707,
748, 681, 47, 47 and 652.
Pursuant to the Company's Amended and Restated Non-Employee Director Stock
Option Plan (the "Director Plan"), each non-employee director is granted an
option to purchase 5,000 shares of Common Stock as of the date he is first
elected or is re-elected as a director of the Company. Subject to certain
anti-dilution provisions in the Director Plan, an aggregate of 500,000 shares
of Common Stock have been reserved for issuance upon the exercise of options
granted under the Director Plan. During 1995, options to purchase 5,000 shares
of Common Stock were granted to each non-employee director of the Company. In
1995, Mr. Fried purchased 5,000 shares of Common Stock upon the exercise of an
option granted under the Director Plan.
Under the Director Plan, each stock option granted to a non-employee
director shall not be exercisable for a period of one year from the date of
grant, but will be fully exercisable following such one-year anniversary. Each
option granted under the Director Plan is exercisable at a purchase price per
share of Common Stock equal to the fair market value of the Common Stock as of
the date of grant.
Options granted to non-employee directors under the Director Plan are
exercisable for a term of ten years from the date of grant, subject to early
termination within a specified period following an event of death, disability
or retirement, resignation or termination from the Board of Directors of the
Company. This period is one year in the case of retirement. The Company does
not currently have a formal retirement policy for directors for the Director
Plan. The Director Plan defines retirement to be the termination of service
following five years of service on the Board of Directors.
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<PAGE> 9
EXECUTIVE OFFICERS
In addition to Mr. Duroc-Danner, who is also a director of the Company, the
following persons are executive officers of the Company, each of whom serves at
the discretion of the Board of Directors:
<TABLE>
<CAPTION>
Name Position Age
--------------------------------------------------------------------------------------------
<S> <C> <C>
Ghazi J. Hashem Senior Vice President, Technical Operations 61
James G. Kiley Vice President-Finance, Treasurer and Secretary 39
Frances R. Powell Vice President-Accounting and Controller 41
</TABLE>
Ghazi J. Hashem was elected Senior Vice President, Technical Operations of
the Company in May 1994 and Vice President, Technical Operations in November
1992. Mr. Hashem previously served as Chairman of the Board of Grant Prideco,
Inc. ("Grant Prideco"), a wholly-owned subsidiary of the Company, from May 1992
to November 1992 and as President of Grant Prideco from April 1984 to May 1992.
James G. Kiley joined the Company in May 1994 and has served as Vice
President-Finance, Treasurer and Secretary of the Company since that time.
From April 1991 to April 1994, Mr. Kiley served as Treasurer of Baroid
Corporation, a provider of oilfield services. Prior to his position at Baroid,
Mr. Kiley held various positions, including Assistant Treasurer at NL
Industries, Inc., a manufacturer of titanium dioxide pigments and specialty
chemicals.
Frances R. Powell was elected Vice President-Accounting of the Company in
May 1994, Controller in November 1991 and has been employed by the Company
since 1990. Ms. Powell was employed with GulfMark from 1986 to 1990, where she
served as Controller from 1988 to 1990.
PROPOSAL NO. 2: PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION
The Board of Directors has recommended the adoption of an amendment to the
Company's Certificate of Incorporation which will increase the authorized
shares of Common Stock from 20,000,000 shares to 40,000,000 shares. Of the
20,000,000 shares of Common Stock currently authorized, at the record date
there were _______________ shares of Common Stock outstanding and an aggregate
of 501,000 shares of Common Stock reserved for issuance pursuant to
outstanding options under the Company's 1981 Employee Stock Option Plan, 1992
Employee Stock Option Plan and Director Plan, leaving a total of
________________ shares of Common Stock authorized and available for future
issuances for corporate purposes, including acquisitions and employee benefit
plans. Of such shares, 113,601 shares are currently held as treasury
shares by an independent trustee of a "Rabbi Trust" established by the Company
for the Company's Executive Deferred Compensation Plan.
The purpose of the amendment increasing the authorized number of shares of
Common Stock is to provide the Company with greater flexibility in effecting
acquisitions and financings. The Company has in recent years significantly
expanded its business and operations through acquisitions and internal growth
that have been financed in part with Common Stock or proceeds from the sale of
Common Stock. The Company expects that future growth of the Company will
continue to require the use of its Common Stock from time to time either as
consideration for acquisitions or as part of a financing for the Company either
through the use of Common Stock or securities convertible into Common Stock.
The proposed amendment would provide the Company with additional flexibility to
effect these acquisitions and financings without the delay and expense
associated with obtaining the approval or consent of stockholders at the same
time the shares are needed. Such shares may be issued in conjunction with
either a public offering or a private placement of shares of Common Stock.
7
<PAGE> 10
The increase in the authorized number of shares of Common Stock will be
effected through an amendment to the first paragraph of Article 4 of the
Company's Certificate of Incorporation. As amended, such paragraph would read
as follows:
"4. The total number of shares of stock of all classes which the
Corporation has authority to issue is Forty- Three Million (43,000,000)
shares of which Forty Million (40,000,000) shares shall be Common
Stock, with a par value of one dollar ($1.00) per share ("Common
Stock"), and Three Million (3,000,000) shares shall be Preferred Stock,
with a par value of one dollar ($1.00) per share ("Preferred Stock")."
The Company is not currently subject to any definitive agreements that
would require the use of the additional shares of Common Stock to be
authorized. The Company, however, anticipates that some portion of the
additional shares would be utilized by the Company in the future for
acquisitions as well as for public offerings of Common Stock or securities
convertible or exchangeable into shares of Common Stock. Such shares would
also be used for the proposed increase in the shares that may be issued under
the Company's 1992 Employee Stock Option Plan described below and other stock
based plans. Unless required by law, regulatory authorities or applicable
rules of the National Association of Securities Dealers, Inc., it is not
anticipated that any future authorization by a vote of stockholders will be
sought for the issuance of any shares of Common Stock. Stockholders of the
Company do not have any preemptive rights to purchase additional shares of
Common Stock, whether now or hereafter authorized.
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock is required for approval of the proposed amendment to the
Company's Certificate of Incorporation. Abstentions and broker non-votes will
not be treated as either a vote for or against the proposal. However, because
the proposal requires the affirmative vote of a majority of the outstanding
shares, abstentions and broker non-votes will have the same effect as a vote
against the proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF THE
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION
PROPOSAL NO. 3: PROPOSAL TO AMEND THE 1992 EMPLOYEE STOCK OPTION PLAN
In 1992, the stockholders of the Company approved the Company's 1992
Employee Stock Option Plan (the "1992 Plan"). The 1992 Plan authorized the
granting of options to the Company's employees to purchase up to an aggregate
of 600,000 shares of Common Stock. The 1992 Plan is intended to advance the
best interest of the Company by providing the Company's key employees,
including officers and employee directors, who have substantial responsibility
for the Company's management and growth, with additional incentive by
increasing their proprietary interest in the success of the Company, and
thereby encouraging them to remain in the Company's employ.
Since the adoption of the 1992 Plan, the Company has granted various
options to its employees. As of March 31, 1996, there were outstanding under
the 1992 Plan options to purchase an aggregate of 394,000 shares of Common
Stock and 136,000 shares of Common Stock available for grant under future
options. The options that are currently outstanding were all granted exercise
prices equal to the market price on the date of grant and subject to three or
five year vesting. Such options have various exercise prices ranging from
$9.38 to $23.88, with an average exercise price of $13.50.
The Board of Directors believes that the ability of the Company to
grant options is an important component of the Company's compensation program
and that the 1992 Plan has been successful in providing the desired incentive
to the Company's executive officers and other key employees. In light of the
low number of shares of Common Stock remaining available for grant under the
1992 Plan, the Board of Directors of the Company has approved, subject to
approval by the stockholders of the Company, an amendment to the 1992 Plan that
would increase the number of shares of Common Stock that may be subject to
options granted under the 1992 Plan from 600,000 shares to 1,000,000 shares. The
amendment also adds a restriction on the number of shares of
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<PAGE> 11
Common Stock that may be granted under any option to any one employee in any
year to 250,000 shares in order to satisfy the requirements under Section
162(m) of the Code with respect to stock options.
The affirmative vote of the holders of the majority of the shares of
Common Stock represented in person or by proxy at the Annual Meeting is
required for approval of the proposal to amend the 1992 Plan. Abstentions will
not be treated as either a vote for or against the proposal, but will have the
same effect as a vote against the proposal. Broker non-votes will not be
counted as a vote for or against the proposal.
Approval of the amendment to the 1992 Plan is also subject to the
approval by the stockholders of the Company of the proposal to amend the
Company's Certificate of Incorporation increasing the authorized number of
shares of Common Stock from 20,000,000 to 40,000,000. If the proposal to amend
the Company's Certificate of Incorporation is not approved by the stockholders
of the Company, the 1992 Plan can not be amended as proposed.
The Board of Directors believes that the proposed amendment to the
1992 Plan is in the best interest of the Company and recommends that the
stockholders approve the proposed amendment
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF
THE PROPOSED AMENDMENT TO THE 1992 EMPLOYEE STOCK OPTION PLAN.
The following is a summary of the material provisions of the 1992 Plan.
ADMINISTRATION OF THE 1992 PLAN
The 1992 Plan is administered by the Compensation Committee of the
Board of Directors of the Company (the "Committee"). The Committee is
comprised of not less than three directors of the Company selected by the Board
of Directors of the Company from time to time. The current members of the
Committee are Messrs. Butters, Dutton, Lubar and Millard, all of whom are
non-employee directors. It is the Board's policy that the Committee be
composed of non-employee directors, and it is anticipated that this policy will
be continued.
ELIGIBILITY AND PARTICIPATION
The individuals eligible to participate in the 1992 Plan are such key
employees, including officers and employee directors, of the Company, or of any
parent or subsidiary corporation, as the Committee may determine from time to
time. The Company estimates that approximately 50 persons are currently
eligible to participate in the 1992 Plan. Notwithstanding any other provisions
of the 1992 Plan to the contrary, the aggregate fair market value (determined
as of the date the option is granted) of the stock with respect to which ISO's
(as defined below) are exercisable for the first time by the optionee in any
calendar year (under the 1992 Plan and any other incentive stock option plan of
the Company and any parent and subsidiary corporations thereof) may not exceed
$100,000. No individual will be eligible to receive an option under the 1992
Plan while such individual is a member of the Committee.
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<PAGE> 12
SHARES SUBJECT TO OPTIONS
The 1992 Plan currently provides for the granting of stock options in
the aggregate amount of 600,000 shares of Common Stock, subject to adjustment
for changes in capitalization. If this proposal is approved, the 1992 Plan
would provide for the granting of stock options in the aggregate amount of
1,000,000 shares of Common Stock, subject to adjustment for changes in
capitalization. Such shares may be treasury shares or authorized but unissued
shares. If any outstanding options expire or terminate, the shares of Common
Stock allocable to the unexercised portion of such option may again be subject
to option under the 1992 Plan. The Committee has the discretion to grant
either "incentive stock options" ("ISO's") (within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended (the "Code")) or
"non-statutory" stock options ("NSO's"). A description of these two types of
stock options appears below under the heading "- Federal Income Tax
Consequences".
GRANT AND EXERCISE OF OPTIONS
Each option grant to an employee and the number of shares subject to
the option are fixed by the Committee. The proposed amendment, however, will
restrict the number of shares that may be subject to option grants to any one
employee during any one year to 250,000 shares. This restriction is intended
to permit options granted under the 1992 Plan to satisfy the requirements of
Section 162(m) of the Code so as to allow compensation relating to option
grants to be excluded in determining deductible compensation over $1 million.
Each option granted under the 1992 Plan is required to be embodied in
a written option agreement, which is subject to the terms and conditions of the
1992 Plan and which will contain such other provisions as the Committee in its
discretion deems advisable.
The price at which shares may be purchased pursuant to an option,
whether an ISO or an NSO, is determined by the Committee, but in no event may
such price be less than the fair market value of the shares of Common Stock on
the date the option is granted. In the case of any eligible employee who owns
or is deemed to own stock possessing more than 10% of the total combined voting
power of all classes of stock of the corporation employing the employee or of
its parent or subsidiary corporation, the option price at which shares may be
purchased pursuant to any option that is an ISO granted under the 1992 Plan may
not be less than 110% of the fair market value of the Common Stock on the date
such option is granted.
No option is exercisable after the expiration of ten years from the
date such option is granted. The Committee in its discretion may provide that
such option will be exercisable throughout such ten-year period or during any
lesser period of time commencing on or after the date of grant of such option
and ending upon or before the expiration of such ten-year period. The
Committee in its discretion may change or accelerate the terms of exercise,
including in the event of changes in control of the Company, but in no event
will any option be exercisable after the tenth anniversary of the date of the
grant. In the case of any eligible employee who owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
corporation employing the employee or of its parent or subsidiary corporation,
no option that is an ISO will be exercisable after the expiration of five years
from the date such option is granted.
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<PAGE> 13
Options are exercised by the optionee by the delivery to the Company
of a written notice stating (I) that such optionee wishes to exercise such
option on the date such notice is delivered, (ii) the number of shares of stock
with respect to which the option is to be exercised, (iii) the address to which
the certificate representing such shares of stock should be mailed and (iv) the
social security number of the optionee. Such written notice must be
accompanied by the payment by cashier's check of (I) the option price of such
shares of stock and (ii) the amount of money necessary to satisfy any resulting
withholding tax liability. Subject to certain limitations set forth in the
1992 Plan, and in the sole discretion of the Committee, payment may be made in
shares of stock owned by the optionee. The 1992 Plan does not provide for the
successive, simultaneous stock payment procedure, which is commonly referred to
as "pyramiding".
Options granted under the 1992 Plan will vest according to such terms
and conditions as the Committee in its discretion deems advisable.
The Committee has not made any grants of options under the 1992 Plan
that would require the additional shares of Common Stock contemplated by this
proposal to amend the 1992 Plan.
RIGHTS OF OPTIONEES
No optionee will have rights as a stockholder with respect to the
shares covered by his option until the date of issuance of a stock certificate
for such shares. The granting of any option by the Company will not impose any
obligation on the Company to employ or continue to employ any optionee. The
right of the Company to terminate the employment of any officer or other
employee will not be diminished or affected by reason of the fact that an
option has been granted to him.
CHANGES IN THE COMPANY'S CAPITAL STRUCTURE
As set forth in Section 16 of the 1992 Plan, the number, class and per
share exercise price of shares of stock subject to outstanding options are
subject to adjustment under the 1992 Plan if the Company effects certain
changes in its capital structure. The existence of outstanding options will
not affect in any way the right or power of the Company or its stockholders to
make or authorize any or all adjustments, recapitalizations, reorganizations or
other changes in the Company's capital structure or its business, or any merger
or consolidation of the Company, or any issue of bonds, debentures, preferred
or prior preference stock ahead of or affecting the Common Stock or the rights
thereof, or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.
AMENDMENT OF THE 1992 PLAN
The Board of Directors may modify, revise or terminate the 1992 Plan
at any time and from time to time; provided, however, that without the further
approval of the holders of a majority of the shares of Common Stock represented
at a meeting or by written consent in lieu of a meeting, or if the provisions
of the Company's Certificate of Incorporation or By-Laws or if applicable state
law prescribes a greater degree of stockholder approval for this action,
without the degree of stockholder approval thus required, the Board of
Directors may not (I) change the aggregate number of shares
11
<PAGE> 14
that may be issued under options pursuant to the 1992 Plan, (ii) extend the
term during which an option may be exercised or the termination date of the
1992 Plan or (iii) materially change the class of employees eligible to receive
options under the 1992 Plan unless, in each such case, the Board of Directors
of the Company shall obtain an opinion of legal counsel to the effect that
stockholder approval of the amendment is not required (I) by law, (ii) by the
applicable rules and regulations of, or any agreement with, any national
securities exchange on which the Common Stock is then listed or if the Common
Stock is not so listed, the rules and regulations, or any agreement with, the
National Association of Securities Dealers, Inc. and (iii) in order to make
available to the optionee, with respect to any option granted under the 1992
Plan, the benefits of Rule 16b-3 of the Rules and Regulations under the
Securities Exchange Act of 1934, or any similar or successor rule.
The Board of Directors also has the power to make such changes in the
1992 Plan and in the regulations and administrative provisions under the 1992
Plan or in any outstanding option as in the opinion of counsel for the Company
may be necessary or appropriate from time to time to enable any option granted
pursuant to the 1992 Plan to qualify as an ISO under Section 422 of the Code
and the regulations that may be issued thereunder.
DURATION OF THE 1992 PLAN; REGISTRATION OF SHARES
The 1992 Plan became effective as of March 24, 1992, and no options
may be granted pursuant to the 1992 Plan after March 24, 2002. If the proposal
to amend the 1992 Plan is approved by the stockholders of the Company at the
Annual Meeting, the Company intends to register the additional 400,000 shares
of Common Stock reserved for issuance under the 1992 Plan with the Securities
and Exchange Commission as soon as practicable after approval of the amendment
by the stockholders.
TRANSFER OF OPTIONS
Options will not be transferable by the optionee other than by will or
under the laws of descent and distribution, and will be exercisable, during his
lifetime, only by the optionee.
EFFECT OF TERMINATION OF EMPLOYMENT
Except as may be otherwise expressly provided in the 1992 Plan, all
options will terminate on the earlier of the date of the expiration of the
option or one day less than three months after the date of the severance, upon
severance of the employment relationship between the Company and the optionee,
whether with or without cause, for any reason other than the death, disability
or retirement of the optionee, during which period the optionee will be
entitled to exercise the option in respect of the number of shares that the
optionee would have been entitled to purchase had the optionee exercised the
option on the date of such severance of employment.
In the event of severance because of the disability of the holder of
any option while in the employ of the Company and before the date of expiration
of the option, the option will terminate on the earlier of such date of
expiration or one year following the date of such severance because of
disability, during which period the optionee will be entitled to exercise the
option in respect of the
12
<PAGE> 15
number of shares that the optionee would have been entitled to purchase had the
optionee exercised the option on the date of such severance because of
disability.
In the event of the death of the holder of any option while in the
employ of the Company and before the date of expiration of the option, the
option will terminate on the earlier of such date of expiration or one year
following the date of death. After the death of the optionee, his executors,
administrators or any person or persons to whom his option may be transferred
by will or by the laws of descent and distribution will have the right, at any
time prior to the expiration of an option, to exercise the option, in respect
of the number of shares that the optionee would have been entitled to purchase
if he had exercised the option on the day of his death while in the employ of
the Company.
In the event of the retirement of the holder of any NSO, in accordance
with the provisions of the Company's then existing policies regarding
retirement as applied by the Committee, before the date of expiration of the
option, the option will terminate on the earlier of such date of expiration or
one year following the date of such retirement and, if such optionee should die
within the one year period, any rights he may have to exercise the option will
be exercisable by his executor or administrator or the person or persons to
whom the option has been transferred by will or by the laws of descent and
distribution, as appropriate, for the remainder of the one year period.
SUBSTITUTION OPTIONS
Options may be granted under the 1992 Plan from time to time in
substitution for stock options held by employees of other corporations who are
about to become employees of the Company, or whose employer is about to become
a parent or subsidiary corporation of the Company, conditioned in the case of
an ISO upon the employee becoming an employee of the Company or a parent or
subsidiary corporation of the Company, as the result of the merger or
consolidation of the Company with another corporation, or the acquisition by
the Company of substantially all the assets of another corporation, or the
acquisition by the Company of at least 50% of the issued and outstanding stock
of another corporation as the result of which it becomes a subsidiary of the
Company. The terms and conditions of the substitute options so granted may
vary from the terms and conditions set forth in the 1992 Plan to such extent as
the Board of Directors of the Company at the time of grant may deem appropriate
to conform, in whole or in part, to the provisions of the stock options in
substitution for which they are granted, but with respect to stock options that
are ISO's, no such variation will be such as to affect the status of any such
substitute option as an "incentive stock option" under Section 422 of the Code.
FEDERAL INCOME TAX CONSEQUENCES
In the case of NSO's the optionee is not taxed upon receipt of the
option. When the option is exercised, the optionee is taxed at ordinary income
rates on the difference between the option price and the fair market value of
the acquired shares on the date of exercise. The Company receives a deduction
for compensation expense for this amount, and there is a withholding
requirement on the date of exercise.
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<PAGE> 16
For ISO's, the optionee does not have income upon the grant of the
option or when the option is exercised. However, the excess of the fair market
value of the acquired shares as of the date of exercise over the option price
may constitute income for purpose of the participant's alternative minimum tax
computation. If the optionee holds the option at least two years from the date
of grant and holds the stock at least one year from the date of the transfer of
the shares, the optionee is taxed at the time of the disposition of the stock
on the capital gain or loss based on the difference between the price on the
date of the disposition and the option price. Absent an early disposition of
the stock acquired by exercise of an ISO, the Company will not be entitled to a
deduction for compensation expense as a result of the grant, exercise or sale
of ISO shares by the optionee. If the optionee disposes of the stock prior to
expiration of the holding period, he will generally recognize ordinary income
in the year of sale equal to the excess, if any, of (I) the lesser of (a) the
fair market value of the shares as of the date of exercise and (b) the amount
realized on the sale over (ii) the option price. Any additional amount
realized should be treated as a long-term or short-term capital gain based on
the optionee's holding period. In this case, the Company will be entitled to
deduct the amount of ordinary income recognized by the optionee with respect to
the sale.
The amendments to the 1992 Plan are intended to qualify the
compensation under the 1992 Plan to be performance based and therefore
deductible without regard to the restriction on the deduction of compensation
in excess of $1 million provided by Section 162(m).
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of Energy Ventures,
Inc. (the "Committee") is pleased to present this report on the compensation
policies of the Company for its executive officers. This report sets forth the
major components of executive compensation and the basis by which 1995
compensation determinations were made by the Committee with respect to the
executive officers of the Company, including the executive officers who are
named in the compensation tables.
COMPENSATION POLICY AND GUIDELINES
The Company's compensation policy and practices are intended to provide a
competitive compensation package designed to attract and retain key executive
officers and to offer compensation programs that align executive remuneration
levels both with the interests of stockholders and with overall Company
performance. The Company's programs stress stock based compensation as a means
of providing incentives to executive officers to achieve growth in value of the
Company's stock. In this regard, the Company's executive compensation program
includes a combination of reasonable base salaries and various long and
short-term incentive programs linked to the financial and stock performance of
the Company. The Committee's decisions take into account the cyclical nature
of the industry and the Company's progress toward achieving strategic
objectives.
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<PAGE> 17
COMPENSATION PROGRAM COMPONENTS
The compensation programs of the Company are generally administered by or
under the direction of the Committee and are reviewed on an annual basis to
ensure that remuneration levels and benefits are competitive and reasonable in
light of the overall performance of the Company. The Committee reviews and
recommends the specific base and bonus compensation of the Company's President
and Chief Executive Officer (the "Principal Executive"). The Committee has
delegated to the Company's Chief Executive Officer the authority to review and
adjust the base and cash bonus compensation for the Company's other executive
officers. Decisions with regard to the granting of stock options and other
long-term incentive plans are made by the Committee after consideration of the
Company's results and discussion with and recommendations from the Company's
Chief Executive Officer as to the executive officers under his supervision.
The particular elements of the compensation programs for the Principal
Executive and other executive officers are explained in more detail below.
Base Salary - Base salary levels are primarily determined by comparisons
with companies in the same industry and of similar size and complexity as the
Company, including a number of companies in the Dow Jones Oilfield Equipment
and Services Index in the performance graph set forth herein. Salary levels
are based on individual performance and market comparisons. Adjustments were
made during 1995 to the compensation of two of the Company's three other
executive officers based on various factors, including their individual scope
of responsibility, tenure, and overall performance. The Committee believes
that base salary levels for the Company's executive officers are competitive
within a range that is considered to be reasonable.
Annual Performance Compensation - Annual performance compensation is
provided to the Company's executive officers in the form of cash and non-cash
bonuses relating to financial and operational achievements. The amount and
form of such bonuses is determined by the Committee in the case of the
Principal Executive and by the Chief Executive Officer in the case of the
Company's other executive officers, subject to approval of the Committee as to
grants of stock options or other non-cash bonuses. The decision to award an
annual bonus is based primarily upon a subjective analysis of the executive
officer's job performance and the specific accomplishments of the executive
officer during the preceding twelve month period after giving consideration to
other compensation received by the officer. Although the financial results of
the Company are expressly considered in connection with the decision to award
an annual bonus, no specific thresholds relating to financial performance
criteria are established. Rather, the decision to grant an annual bonus is
based upon the financial results of the Company in light of its internally
projected results and the results of its peers, market conditions and
operational achievements that are expected to affect earnings in the future.
The decision making process for the granting of bonuses has typically occurred
in May of each year following the annual meeting of stockholders and involves
the consideration of the prior year's results as well as achievements and
results through such time. However, various bonuses were paid to the Company's
executive officers in the first quarter of 1996 in recognition of those
officers assistance in achieving the Company's growth in 1995 and contributing
to the Company's successful stock offering in 1995 and other factors. Other
bonuses paid in 1995 were paid to the Company's executive officers based on the
Company's results in 1994 and the first part of 1995. The decisions on the
amounts of such bonuses were based on subjective factors.
Deferred Compensation Plan - The Company maintains an executive deferred
compensation plan that provides the Company's key employees with long-term
incentive compensation through benefits that are directly linked to future
increases in the value of the Common Stock and that may only be realized upon
the employee's retirement, termination or death. Under this plan, eligible
employees receive a tax deferred contribution under the plan equal to 7 1/2% of
their annual compensation through a credit to an account that is converted into
non-monetary units representing the number of shares of Common Stock that the
contributed funds could purchase in the market at the time of the contribution.
In addition, in an effort to provide incentive to the participants to invest in
the equity of the Company a portion of the compensation that they would
otherwise receive from the Company, the participating employees are offered the
opportunity to defer up to 7 1/2% of their compensation to their account under
the plan, in which case the Company will make a matching contribution equal to
the amount of the deferral by the employee. The Principal Executive and other
executive officers have all elected to defer 7 1/2% of their compensation under
the plan. The plan provides for a five year vesting period with respect to the
Company's contributions and the ultimate value of benefits under the plan to
the participant are wholly dependent upon the price of the Common Stock at the
time the employee retires, terminates his employment or dies. The Committee
believes
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<PAGE> 18
that this plan is an important component of the Company's stock based
compensation program and provides and serves the purpose of aligning
management's interest with those of the Company's stockholders.
Stock Option Program - The Committee also believes that the use of stock
options provides incentive to its executive officers for working toward the
long-term growth of the Company by providing them with a benefit that will
increase only to the extent that the value of the Common Stock increases.
Accordingly, the Committee from time to time grants to the Company's executive
officers options to purchase shares of Common Stock. In addition, as described
above, the Board of Directors is seeking stockholder approval of an amendment
to the 1992 Plan to increase the number of shares of Common Stock the may be
subject to options granted or to be granted under the 1992 Plan from 600,000
to 1,000,000. The number of shares granted is determined based on the level
and contribution of the employee and generally takes into account stock
ownership and other options held by the employee. Stock options are generally
subject to vesting over a number of years and have exercise prices equal to the
market price of the Common Stock at the date of grant. The Committee believes
that the number of stock options granted to executive officers is consistent
with industry standards and the Company's objectives to emphasizing stock based
compensation at the senior executive officer level.
DISCUSSION OF 1995 COMPENSATION FOR THE PRESIDENT AND CHIEF EXECUTIVE OFFICER
In fixing the compensation of Mr. Duroc-Danner for 1995, the Committee
determined that it would be appropriate to increase Mr. Duroc-Danner's base
compensation from $256,000 to $290,000 and award him a bonus of $50,000 in
recognition of his significant contributions to the success of the Company's
development during 1994 and first quarter of 1995. Mr. Duroc-Danner also
received a bonus of $100,000 in the first quarter of 1996 in recognition of his
past services to and accomplishments for the Company. The increase in Mr.
Duroc-Danner's base salary was intended to make his compensation more
competitive with those of similar officers in competing companies, including a
number of companies included in the Dow Jones Oilfield Equipment and Services
Index in the performance graph set forth herein. During 1995, Mr. Duroc-
Danner also received options to purchase 25,000 shares of Common Stock. In
reviewing Mr. Duroc-Danner's compensation for 1995, the Committee sought to
reward Mr. Duroc-Danner for his substantial achievements in bringing growth to
the Company as well as provide incentive for the future through stock option
grants. No single factor was considered determinative in this decision.
COMPENSATION DEDUCTION LIMITATION
Section 162(m) of the Internal Revenue Code of 1986, as amended, currently
imposes a $1 million limitation on the deductibility of certain compensation
paid to the Company's five highest paid executives. Excluded from the
limitation is compensation that is "performance based". For compensation to be
performance based, it must meet certain criteria, including being based on
predetermined objective standards approved by the stockholders of the Company.
The Company believes that compensation relating to options granted under its
option plan should be excluded from the $1 million limitation. The Committee
believes that maintaining the discretion to evaluate the performance of the
Company's management is an important part of its responsibilities and benefits
the Company's stockholders. The Committee intends to take into account the
potential application of Section 162(m) with respect to incentive compensation
awards and other compensation decisions made by it in the future. The
Committee does not currently anticipate that Section 162(m) will limit the
deductibility of any compensation paid by the Company to its executive officers
during 1996.
SUMMARY
The Committee continues to believe that the Company's executive
compensation program is consistent with the compensation programs provided by
other companies which are comparable in size and complexity to the Company and
with which the Company competes, including many of the companies in the Dow
Jones Oilfield Equipment and Services Index in the performance graph set forth
herein. The Committee believes that the Company's compensation program is
necessary to retain the services of officers and employees who are essential to
the continued success and development of the Company and to compensate those
officers and employees for their efforts and achievements. The Committee
believes that compensation paid under the annual performance plan will be
appropriately related to corporate and individual performance, yielding awards
that are reflective of the annual financial and operational results of the
Company. The Committee also believes that the Company's deferred compensation
plan and stock option program provide significant
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<PAGE> 19
incentives to participants to enhance stockholder value by providing financial
opportunities to them that are consistent with and dependent upon the returns
that are generated on behalf of the Company's stockholders.
COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
David J. Butters
Uriel E. Dutton
Sheldon B. Lubar
Robert B. Millard
COMPENSATION COMMITTEE INTERLOCKS
Messrs. Butters, Dutton, Lubar and Millard are the current members of the
Compensation Committee of the Board of Directors of the Company.
Mr. Dutton, a director of the Company, is a Partner of Fulbright & Jaworski
L.L.P., a law firm that the Company retained during 1995 with respect to
various legal matters and proposes to retain in 1996. Fulbright & Jaworski
L.L.P. received customary compensation in connection with its services to the
Company.
Messrs. Butters and Millard, directors of the Company, are employed by
Lehman Brothers. During 1995, Lehman Brothers received customary compensation
for services rendered in connection with a public offering of 3,450,000 shares
of the Company's Common Stock.
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<PAGE> 20
EXECUTIVE COMPENSATION
The aggregate compensation paid for the years ended December 31, 1995, 1994
and 1993 to Mr. Duroc-Danner, the Company's Chief Executive Officer, and the
three most highly compensated executive officers of the Company whose total
annual salary and bonus exceeded $100,000 (hereafter referred to as the "named
executive officers") during the year ended December 31, 1995 was as follows:
<TABLE>
<CAPTION>
=============================================================================================================================
SUMMARY COMPENSATION TABLE
=============================================================================================================================
Long-Term
Annual Compensation Compensation
- -----------------------------------------------------------------------------------------------------------------------------
Securities
Name Other Annual Underlying All Other
and Compen- Options Compen-
Principal Position Year Salary(2) Bonus(2) sation(3)(4) (shares) sation(5)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bernard J. Duroc-Danner 1995 $280,000 $50,000 $41,400 25,000 $7,192
President 1994 256,250 40,000 28,463 25,000 7,007
Chief Executive Officer 1993 238,501 40,000 20,308 -- 6,150
- -----------------------------------------------------------------------------------------------------------------------------
John C. Coble (1) 1995 $200,000 $30,000 $28,600 17,000 $5,114
Former Executive Vice President 1994 176,250 30,000 20,363 17,000 4,924
Chief Operating Officer 1993 166,667 30,000 15,398 50,000 4,602
- -----------------------------------------------------------------------------------------------------------------------------
Ghazi J. Hashem 1995 $137,500 -- $13,901 -- $3,966
Senior Vice President, 1994 132,813 $25,000 11,363 -- 2,892
Technical Operations 1993 125,000 -- 6,347 -- 2,355
- -----------------------------------------------------------------------------------------------------------------------------
James G. Kiley 1995 $145,000 $25,000 $10,200 25,000 --
Vice President-Finance, 1994 82,031 -- 1,399 -- --
Treasurer and Secretary 1993 -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Frances R. Powell 1995 $125,000 $25,000 19,665 -- $2,901
Vice President-Accounting 1994 99,375 20,000 12,069 10,000 2,625
and Controller 1993 72,301 10,000 6,765 -- 2,072
=============================================================================================================================
</TABLE>
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<PAGE> 21
(1) Mr. Coble resigned as an executive officer of the Company in October
1995.
(2) Salary and bonus compensation include amounts deferred by the named
executive officer pursuant to the Energy Ventures, Inc. Executive Deferred
Compensation Stock Ownership Plan (the "Executive Deferred Plan") described in
Note 3 below. For purposes of the Executive Deferred Plan, the compensation of
a participant will be the participant's total cash compensation as reported on
his or her Form W-2 for the calendar year plus all amounts deferred under the
Executive Deferred Plan and any eligible cash or deferred arrangement under
Section 401(k) of the Internal Revenue Code, of 1986, as amended. A
participant may elect a percentage (not less than 1% nor more than 7 1/2%) of
his or her compensation to be deferred under the Executive Deferred Plan for
the following calendar year. Once an election has been made as to the
percentage to be deferred, the election is irrevocable for the subsequent Plan
year. Bonus compensation is based on date when paid because such compensation
is not based solely on achievements for the prior fiscal year. Bonuses are
typically paid in May following the Company's annual meeting. Subsequent to
December 31, 1995, the Company paid bonuses to its executive officers in
recognition of services provided by such officers to the Company. Such bonuses
included $100,000, $50,000 and $30,000 for Mr. Duroc-Danner, Mr. Kiley and Ms.
Powell, respectively.
(3) Other Annual Compensation includes (i) the vested portion of the amount
accrued by the Company under the Executive Deferred Plan for the basic benefit
of each participant equal to 7 1/2% of the participant's compensation for each
calendar year, plus (ii) the vested portion of matching contribution under the
Executive Deferred Plan provided by the Company to each participant who elects
to defer a portion of his or her compensation in an amount equal to 100% of the
amount deferred by the participant. The Company's 7 1/2% accrual under the
Executive Deferred Plan and any matching accruals made with respect to
deferrals by participants, vest generally over a five-year period on the basis
of 20% per year for each year of service by the participant with the Company or
its subsidiaries after the later of January 1, 1992 or the date one became a
participant in the Executive Deferred Plan, subject to 100% vesting upon the
participant's retirement, death or disability while in the employment of the
Company or a subsidiary, except under certain circumstances.
Under the Executive Deferred Plan, the compensation deferred by the
employee and the matching contributions provided by the Company are converted
into non-monetary units equal to the number of whole shares of Common Stock
that could have been purchased by the amounts credited to the account at a
market based price. Distributions are made to participants under the Executive
Deferred Plan following the time the employee retires, terminates his
employment or dies. The amount of the distribution under the Executive Deferred
Plan is based on the number of vested units in the employee's account at such
time multiplied by the market price of the Common Stock at that time.
Distributions under the Executive Deferred Plan may, at the election of the
Company, be made in cash, stock, or combination thereof. It is the current
intention of the Company that all distributions be made in the form of shares
of Common Stock. The obligations of the Company with respect to the Executive
Deferred Plan are unfunded. However, the Company has established a grantor
trust that is subject to the claims of creditors of the Company to which funds
are deposited with an independent trustee that purchases shares of Common Stock
for the Executive Deferred Plan. As of December 31, 1995, Messrs.
Duroc-Danner, Coble, Hashem and Kiley and Ms. Powell had 16,260, 11,341, 5,968,
2,884 and 6,214 units allocated to their respective accounts.
Other Annual Compensation also includes the vested portion of the
Company's matching contribution and any refunds made pursuant to the Company's
401(k) savings plan ("Savings Plan"). Matching contributions made by the
Company during 1995 for Messrs. Duroc-Danner, Coble, Hashem and Kiley and Ms.
Powell were $1,800, $1,800, $1,526, $0 and $1,665 respectively. All full-time
employees who have at least six months of service are eligible to participate.
The Savings Plan provides for all participating employees a 20%
non-discretionary matching contribution plus a discretionary matching
contribution in an amount determined by the Company from time to time. The
Company's contributions have a five year vesting based on years of service.
The named executive officers are fully vested.
(4) Excludes perquisites and other benefits because the aggregate amount of
such compensation was the lesser of $50,000 or 10% of the total of annual
salary and bonus reported for the named executive officer.
(5) All Other Compensation includes the total premiums paid on a life
insurance policy provided by the Company for the benefit of the named executive
officer.
19
<PAGE> 22
PERFORMANCE GRAPH
The following performance graph sets forth the yearly cumulative return on
the Company's Common Stock to the Dow Jones Equity Market Index and the Dow
Jones Oilfield Equipment and Services Index (which consists of Baker Hughes,
Inc., Dresser Industries, Inc., ENSCO International Inc., Global Marine Inc.,
Halliburton Company, Helmerich & Payne Inc., McDermott International, Inc.,
Nabors Industries, Inc., Parker Drilling Company, Rowan Companies, Inc.,
Schlumberger Limited and Western Atlas Inc.) since 1988, the year in which the
Company's operations began to substantially expand. The graph assumes (i) the
reinvestment of dividends, if any, and (ii) the value of the investment in the
Company's Common Stock and each index to have been $100 at December 31, 1990.
[TO COME]
EMPLOYEE STOCK OPTION PLANS
The Company has two stock option plans for the benefit of its employees,
the 1981 Employee Stock Option Plan (the "1981 Plan") and the 1992 Employee
Stock Option Plan. There are currently outstanding options to purchase 237,736
shares of Common Stock under the 1981 Plan and no further options may be granted
under this plan. The 1992 Plan currently provides for the grant of options to
purchase up to 600,000 shares of Common Stock to key employees. If the proposal
to amend to the Company's 1992 Plan is approved by the stockholders of the
Company, the Company may make grants of options to purchase up to 1,000,000
shares of Common Stock under the 1992 Plan. These options may be either
incentive stock option or nonstatutory stock options. There are currently
136,000 shares of Common Stock available for future grants of options under the
1992 Plan. No options may be granted under the 1992 Plan after March 19, 2002.
20
<PAGE> 23
The 1981 Plan and 1992 Plan are administered by the Compensation Committee
of the Board of Directors of the Company, which consists of three members of
the Board of Directors who are neither employees of the Company nor eligible to
participate in either the 1981 Plan or the 1992 Plan. Each option granted
under the 1981 Plan and 1992 Plan may be exercised from time to time with
respect to the number of shares of Common Stock as to which it is then
exercisable in accordance with the terms of the 1981 Plan and 1992 Plan,
respectively, and an option agreement setting forth the specific terms thereof.
The price at which shares of Common Stock may be purchased upon the
exercise of an option is determined by the Committee at the time the option is
granted. The purchase price per share under the 1981 Plan may not be less than
the greater of (i) 50% of the fair market value as determined by the Committee
of the Common Stock and (ii) the par value of share of Common Stock. The
purchase price per share under the 1992 Plan may not be less than the fair
market value of the shares of Common Stock on the date the option is granted.
The following table shows, as to the named executive officers, the options
granted pursuant to the 1992 Plan during the year ended December 31, 1995:
<TABLE>
<CAPTION>
========================================================================================================================
OPTIONS GRANTED IN LAST FISCAL YEAR
========================================================================================================================
Number of % of Total
Securities Options
Underlying Granted to Exercise Price Grant Date
Options Granted Employees in (Per Share) Expiration Present
Name (Shares) 1995 Date Value(1)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Bernard J. Duroc-Danner 25,000(2) 37% $ 16.75 5/19/2005 267,500
- ------------------------------------------------------------------------------------------------------------------------
John C. Coble 17,000(2) 25% $ 16.75 5/19/2005 181,900
- ------------------------------------------------------------------------------------------------------------------------
Ghazi J. Hashem -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------
James G. Kiley 25,000(2) 37% $16.75 5/19/2005 267,500
- ------------------------------------------------------------------------------------------------------------------------
Frances R. Powell -- -- -- -- --
========================================================================================================================
</TABLE>
(1) Based upon Black-Scholes option valuation model. The calculation
assumes volatility of .4092, a risk free rate of 6.49%, a ten year option term,
and option grants at $16.75 per share. The actual value, if any, which may be
realized with respect to any option will depend on the amount, if any, by which
the stock price exceeds the exercise price on the date the option is exercised.
Thus, such valuation may not be a reliable indication as to value and there is
no assurance the value realized will be at or near the value estimated by the
Black-Scholes model.
(2) Stock options granted on May 19, 1995 under the Company's 1992 Plan.
Options become fully exercisable on May 19, 2000.
21
<PAGE> 24
The following table shows, as to the named executive officers, the
aggregate option exercises during 1995 and the values of unexercised options as
of December 31, 1995:
<TABLE>
<CAPTION>
=============================================================================================================================
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND DECEMBER 31, 1995 OPTION VALUES
=============================================================================================================================
Number of Securities Underlying Value of Unexercised
Unexercised Options In-The-Money Options
at December 31, 1995 at December 31, 1995(1)
- -----------------------------------------------------------------------------------------------------------------------------
Shares
Acquired on
Exercise Value Exercisable Unexercisable
Name (Number) Realized (Shares) (Shares) Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bernard J. Duroc-Danner -- N/A 308,333 41,667 $3,745,830 $404,171
- -----------------------------------------------------------------------------------------------------------------------------
John C. Coble 20,000 298,641 115,666 58,334 $905,784 $548,591
- -----------------------------------------------------------------------------------------------------------------------------
Ghazi J. Hashem 20,000 74,142 -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
James G. Kiley -- N/A -- 25,000 -- $212,500
- -----------------------------------------------------------------------------------------------------------------------------
Frances R. Powell -- N/A 3,333 6,667 $38,330 $76,671
=============================================================================================================================
</TABLE>
(1) Value based on difference in market value of Common Stock on December
31, 1995, and exercise price. The actual value, if any, of the unexercised
options will be dependent upon the market price of the Common Stock at the time
of exercise. The value of unexercisable options has not been discounted to
reflect present value.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Arthur Andersen LLP, independent public accountants, served as
the Company's auditors for the fiscal year ending December 31, 1995, and has
served as the Company's auditors since its inception in 1972. A representative
of Arthur Andersen LLP will be present at the Annual Meeting to respond to
appropriate questions and will be afforded an opportunity to make a statement
if he or she so desires.
PROPOSALS BY STOCKHOLDERS
Any stockholder wishing to present a proposal for consideration at the next
Annual Meeting of Stockholders, anticipated to be held in May 1997, must submit
the proposal in sufficient time so that it may be received by the Company at
its principal executive offices at the address set forth on the cover of this
Proxy Statement on or before December 6, 1996, in order to be included in the
proxy statement and form of proxy relating to that meeting. Such proposal must
also comply with the requirements as to form and substance established by
applicable laws and regulations in order to be included in the proxy statement.
OTHER BUSINESS
The Company's management knows of no other business that will be brought
before the meeting. If, however, any other matters are properly presented, it
is the intention of the persons named in the accompanying form of proxy to vote
the shares covered thereby as in their discretion they may deem advisable.
By Order of the Board of Directors
Houston, Texas
April ____, 1996 James G. Kiley, Corporate Secretary
22
<PAGE> 25
ENERGY VENTURES, INC.
1992 EMPLOYEE STOCK OPTION PLAN
1. PURPOSE. This 1992 Employee Stock Option Plan (the "Plan") of
Energy Ventures, Inc. (the "Company") for certain employees, including officers
and directors, is intended to advance the best interests of the Company by
providing such personnel, who have substantial responsibility for its
management and growth, with additional incentive and by increasing their
proprietary interest in the success of the Company, thereby encouraging them to
remain in its employ.
2. ADMINISTRATION. The Plan shall be administered by a committee
(the "Committee") consisting of three or more members of the Board of Directors
of the Company, all of whom shall be "disinterested persons" as defined in Rule
16b-3 of the Rules and Regulations promulgated under the Securities Exchange
Act of 1934 (the "Exchange Act") or any similar or successor rule. For the
purposes of the Plan, a majority of the members of the Committee shall
constitute a quorum for the transaction of business, and the vote of a majority
of those members present at any meeting shall decide any question brought
before that meeting. In addition, the Committee may take any action otherwise
proper under the Plan by the affirmative vote, taken without a meeting, of a
majority of its members. All questions of interpretation and application of
the Plan, or as to options granted hereunder (the "Options"), shall be subject
to the determination, which shall be final and binding, of a majority of the
whole Committee. When appropriate, the Plan shall be administered in order to
qualify certain of the Options granted hereunder as "incentive stock options"
described in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
3. OPTION SHARES. The stock subject to the Options and other
provisions of the Plan shall be shares of the Company's Common Stock, $1.00 par
value (or such other par value as may be designated by act of the Company's
stockholders) (the "Common Stock"). The total amount of the Common Stock with
respect to which Options may be granted shall not exceed in the aggregate
1,000,000 shares; provided, that the class and aggregate number of shares which
may be subject to the Options granted hereunder shall be subject to adjustment
in accordance with the provisions of Paragraph 16 hereof. Such shares may be
treasury shares or authorized but unissued shares.
In the event that any outstanding Option for any reason shall expire
or terminate by reason of the death or severance of employment of the optionee,
the surrender of any such Option or any other cause, the shares of Common Stock
allocable to the unexercised portion of such Option may again be subject to an
Option under the Plan.
4. AUTHORITY TO GRANT OPTIONS. The Committee may grant the
following options from time to time to such eligible employees of the Company
as it shall from time to time determine:
<PAGE> 26
(a) "INCENTIVE" STOCK OPTIONS. The Committee may grant to
an eligible employee an Option, or Options, to buy a stated number of
shares of Common Stock under the terms and conditions of the Plan, so
that the Option will be an "incentive stock option" within the meaning
of Section 422 of the Code (an "incentive stock option").
(b) "NON-STATUTORY" STOCK OPTIONS. The Committee may grant
to an eligible employee an Option, or Options, to buy a stated number of
shares of Common Stock under the terms and conditions of the Plan, even
though such Option or Options would not constitute an "incentive stock
option" within the meaning of Section 422 of the Code (a "non-statutory
stock option").
Each Option granted shall be approved by the Committee which
shall specify whether each Option constitutes an incentive or non-statutory
stock option. Subject only to any applicable limitations set forth in the
Plan, the number of shares of Common Stock to be covered by any Options shall
be as determined by the Committee.
5. ELIGIBILITY. The individuals who shall be eligible to
participate in the Plan shall be such key employees, including officers and
directors if they are employees, of the Company, or of any parent or subsidiary
corporation, as the Committee shall determine from time to time. However, no
eligible employee who owns stock possessing more than ten percent of the total
combined voting power of all classes of stock of the corporation employing the
employee or of its parent or subsidiary corporation shall be eligible to
receive an Option which is an incentive stock option unless at the time that
such Option is granted the Option price is at least one hundred ten percent
(110%) of the fair market value of the Common Stock at the time such Option is
granted and such Option by its own terms is not exercisable after the
expiration of five years from the date such Option is granted. No individual
shall be eligible to receive an Option under the Plan while such individual is
a member of the Committee.
For the purposes of the preceding paragraph, an employee will be
considered as owning the stock owned, directly or indirectly, by or for his
brothers and sisters (whether by the whole or half blood), spouse, ancestors,
and lineal descendants; and stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust will be considered as being owned
proportionately by or for its stockholders, partners or beneficiaries. Except
as otherwise provided, for all purposes of the Plan, the term "parent
corporation" shall mean any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company if, on the date of grant of the
Option in question, each of the corporations other than the Company owns stock
possessing fifty percent (50%) or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain; and the
term "subsidiary corporation" shall mean any corporation in an unbroken chain
of corporations, beginning with the Company if, on the date of grant of the
Option in question, each of the corporations, other than the last corporation
in the chain, owns
-2-
<PAGE> 27
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
6. OPTION PRICE. The price at which shares may be
purchased pursuant to an Option, whether it is an incentive stock option or a
non-statutory stock option, shall be not less than the fair market value of the
shares of Common Stock on the date such Option is granted and the Committee in
its discretion may provide that the price at which shares may be so purchased
shall be more than such fair market value. In the case of any eligible
employee described in Paragraph 5 who owns stock possessing more than ten
percent of the total combined voting power of all classes of stock of the
corporation employing the employee or of its parent or subsidiary corporation
(described in Paragraph 5), the option price at which shares may be so
purchased pursuant to any Option which is an incentive stock option granted
hereunder shall be not less than one hundred ten percent (110%) of the fair
market value of the Common Stock on the date such Option is granted.
7. DURATION OF OPTIONS. No Option which is an incentive
stock option shall be exercisable after the expiration of ten years from the
date such Option is granted; and the Committee in its discretion may provide
that such Option shall be exercisable throughout such ten-year period or during
any lesser period of time commencing on or after the date of grant of such
Option and ending upon or before the expiration of such ten-year period. In
the case of any eligible employee who owns stock possessing more than ten
percent of the total combined voting power of all classes of stock of the
corporation employing the employee or of its parent or subsidiary corporation
(described in Paragraph 5), no Option which is an incentive stock option shall
be exercisable after the expiration of 5 years from the date such Option is
granted. No Option which is a non-statutory stock option shall be exercisable
after the expiration of ten years from the date such Option is granted; and the
Committee in its discretion may provide that such Option shall be exercisable
throughout such ten-year period or during any lesser period of time commencing
on or after the date of grant of such Option and ending upon or before the
expiration of such ten-year period.
8. MAXIMUM VALUE OF STOCK SUBJECT TO OPTIONS WHICH ARE
INCENTIVE STOCK OPTIONS. Notwithstanding any other provisions of the Plan to
the contrary, the aggregate fair market value (determined as of the date the
Option is granted) of the stock with respect to which incentive stock options
are exercisable for the first time by the optionee in any calendar year (under
this Plan and any other incentive stock option plan(s) of the Company and any
parent or subsidiary corporation(s) thereof) shall not exceed $100,000. In
making this determination, Options shall be taken into account in the order in
which they were granted.
9. AMOUNT EXERCISABLE. The agreement with respect to each
Option (whether incentive or non-statutory) shall set forth such terms and
conditions, including vesting, with respect to the exercise of such Option that
are not inconsistent with the Plan and as may be approved by the Committee.
The Committee, in its discretion, may change the terms of exercise so that any
Option may be exercised so long as it is valid and outstanding from time to
time in part or as a whole in such
-3-
<PAGE> 28
manner and subject to such conditions as it may set. In addition, the
Committee, in its discretion, may accelerate the time in which any outstanding
Option may be exercised. But in no event shall any Option be exercisable after
the tenth anniversary of the date of the grant.
10. EXERCISE OF OPTIONS. An optionee may exercise such
optionee's Option by delivering to the Company a written notice stating (i)
that such optionee wishes to exercise such Option on the date such notice is so
delivered, (ii) the number of shares of stock with respect to which such Option
is to be exercised, (iii) the address to which the certificate representing
such shares of stock should be mailed, and (iv) the social security number or
such optionee. In order to be effective, such written notice shall be
accompanied by (i) payment of the Option Price of such shares of stock and (ii)
payment of an amount of money necessary to satisfy any withholding tax
liability that may result from the exercise of such Option. Each such payment
shall be made by cashier's check drawn on a national banking association and
payable to the order of the Company in United States dollars.
If, at the time of receipt by the Company of such written
notice, (i) the Company has unrestricted surplus in an amount not less than the
Option Price of such shares of stock, (ii) all accrued cumulative preferential
dividends and other current preferential dividends on all outstanding shares of
preferred stock of the Company have been fully paid, (iii) the acquisition by
the Company of its own shares of stock for the purpose of enabling such
optionee to exercise such Option is otherwise permitted by applicable law and
without any vote or consent of any stockholder of the Company, and (iv) there
shall have been adopted, and there shall be in full force and effect, a
resolution of the Board of Directors of the Company authorizing the acquisition
by the Company of its own shares of stock for such purpose, then such optionee
may deliver to the Company, in payment of the Option Price of the shares of
stock with respect to which such Option is exercised, (x) certificates
registered in the name of such optionee that represent a number of shares of
stock legally and beneficially owned by such optionee (free of all liens,
claims and encumbrances of every kind) and having a fair market value on the
date of receipt by the Company of such written notice that is not greater than
the Option Price of the shares of stock with respect to which such Option is to
be exercised, such certificates to be accompanied by stock powers duly endorsed
in blank by the record holder of the shares of stock represented by such
certificates, with the signature of such record holder guaranteed by a national
banking association (or in lieu of such certificates, other arrangements for
the transfer of such shares to the Company which are satisfactory to the
Company), and (y) if the Option Price of the shares of stock with respect to
which such Option is to be exercised exceeds such fair market value, a
cashier's check drawn on a national banking association and payable to the
order of the Company in an amount, in United States dollars, equal to the
amount of such excess plus the amount of money necessary to satisfy any
withholding tax liability that may result from the exercise of such Option.
Notwithstanding the provisions of the immediately preceding sentence, the
Committee, in its sole discretion, may refuse to accept shares of stock in
payment of the Option Price of the shares of stock with respect to which such
Option is to be exercised and, in that event, any certificates representing
shares of stock that were received by the Company with such written
-4-
<PAGE> 29
notice shall be returned to such optionee, together with notice by the Company
to such optionee of the refusal of the Committee to accept such shares of
stock. The Company, upon approval of the Committee and in its sole discretion,
upon the request of the optionee, may retain shares of Common Stock which would
otherwise be issued upon exercise of an Option to satisfy any withholding tax
liability that may result from the exercise of such Option, which shares shall
be valued for such purpose at their then fair market value. If, at the
expiration of seven business days after the delivery to such optionee of such
written notice from the Company, such optionee shall not have delivered to the
Company a cashier's check drawn on a national banking association and payable
to the order of the Company in an amount, in United States dollars, equal to
the Option Price of the shares of stock with respect to which such Option is to
be exercised, such written notice from the optionee to the Company shall be
ineffective to exercise such Option.
As promptly as practicable after the receipt by the Company of
(i) such written notice from the optionee, (ii) payment, in the form required
by the foregoing provisions of this Paragraph 10, of the Option Price of the
shares of stock with respect to which such Option is to be exercised, and (iii)
payment, in the form required by the foregoing provisions of this Paragraph 10,
of an amount of money necessary to satisfy any withholding tax liability that
may result from the exercise of such Option, a certificate representing the
number of shares of stock with respect to which such Option has been so
exercised, reduced, to the extent applicable by the number of shares retained
by the Company as provided above to pay any required withholding tax, such
certificate to be registered in the name of such optionee, provided that such
delivery shall be considered to have been made when such certificate shall have
been mailed, postage prepaid, to such optionee at the address specified for
such purpose in such written notice from the optionee to the Company.
For purposes of this Paragraph 10, the "fair market value" of a
share of stock as of any particular date shall mean the closing sale price of a
share of Common Stock on that date as reported by the principal national
securities exchange on which the Common Stock is then listed if the Common
Stock is then listed on a national securities exchange or the average of the
bid and asked price of a share of Common Stock on that date as reported in the
NASDAQ listing if the Common Stock is not then listed on a national securities
exchange, provided that if no such closing price or quotes are so reported on
that date or if, in the discretion of the Committee, another means of
determining the fair market value of a share of stock at such date shall be
necessary or advisable, the Committee may provide for another means for
determining such fair market value.
11. TRANSFERABILITY OF OPTIONS. Options shall not be
transferable by the optionee otherwise than by will or under the laws of
descent and distribution, and shall be exercisable, during his lifetime, only
by him.
12. TERMINATION OF EMPLOYMENT OR DEATH OF OPTIONEE. Except
as may be otherwise expressly provided herein, each Option (whether incentive
or non-statutory), to the extent it shall not previously have been exercised,
shall terminate on the earlier of the date of the expiration of the Option or
one day less
-5-
<PAGE> 30
than three months after the date of the severance, upon severance of the
employment relationship between the Company and the optionee, whether with or
without cause, for any reason other than the death, disability or retirement of
the optionee, during which period the optionee shall be entitled to exercise
the Option in respect of the number of shares that the optionee would have been
entitled to purchase had the optionee exercised the Option on the date of such
severance of employment. Whether authorized leave of absence, or absence on
military or government service, shall constitute severance of the employment
relationship between the Company and the optionee shall be determined by the
Committee at the time thereof.
In the event of severance because of the disability of the
holder of any Option (whether incentive or non-statutory) while in the employ
of the Company and before the date of expiration of such Option, such Option
shall terminate on the earlier of such date of expiration or one year following
the date of such severance because of disability, during which period the
optionee shall be entitled to exercise the Option in respect to the number of
shares that the optionee would have been entitled to purchase had the optionee
exercised the Option on the date of such severance because of disability.
In the event of the death of the holder of any Option (whether
incentive or non-statutory) while in the employ of the Company and before the
date of expiration of such Option, such Option shall terminate on the earlier
of such date of expiration or one year following the date of death. After the
death of the optionee, his executors, administrators or any person or persons
to whom his Option may be transferred by will or by the laws of descent and
distribution, shall have the right, at any time prior to the termination of an
Option, to exercise the Option, in respect of the number of shares that the
optionee would have been entitled to purchase if he had exercised the Option on
the day of his death while in employment.
In addition, in the event of the retirement of the holder of any
non-statutory stock option, in accordance with the provisions of the Company's
then existing policies regarding retirement as applied by the Committee, before
the date of expiration of such Option, such Option shall terminate on the
earlier of such date of expiration or one year following the date of such
retirement and, if such optionee should die within the one year period, any
rights he may have to exercise the Option shall be exercisable by his executor
or administrator or the person or persons to whom the Option shall have been
transferred by his will or by the laws of descent or distribution, as
appropriate, for the remainder of the one year period.
For purposes of incentive stock options issued under this Plan,
an employment relationship between the Company and the optionee shall be deemed
to exist during any period in which the optionee is employed by the Company, by
any parent or subsidiary corporation, by a corporation issuing or assuming an
option in a transaction to which Section 424(a) of the Code applies, or by a
parent or subsidiary corporation of such corporation issuing or assuming an
option (and for this purpose, the phrase "corporation issuing or assuming an
option" shall be substituted for the word "Company" in the definitions of
parent and subsidiary corporations specified in Paragraph 5 of this Plan, and
the parent-subsidiary relationship shall be determined
-6-
<PAGE> 31
at the time of the corporate action described in Section 424(a)). For purposes
of non-statutory stock options issued under this Plan, an employment
relationship between the Company and the optionee will exist under the
circumstances described above for incentive stock options and will also exist
if the optionee is transferred to an affiliated corporation approved by the
Committee.
13. REQUIREMENTS OF LAW. The Company shall not be required
to sell or issue any shares under any Option if the issuance of such shares
shall constitute a violation by the optionee or the Company of any provisions
of any law or regulation of any governmental authority. Each Option granted
under the Plan shall be subject to the requirements that, if at any time the
Board of Directors of the Company or the Committee shall determine that the
listing, registration or qualification of the shares subject thereto upon any
securities exchange or under any state or federal law of the United States or
of any other country or governmental subdivision thereof, or the consent or
approval of any governmental regulatory body, or investment or other
representations, are necessary or desirable in connection with the issue or
purchase of shares subject thereto, no such Option may be exercised in whole or
in part unless such listing, registration, qualification, consent, approval or
representation shall have been effected or obtained free of any conditions not
acceptable to the Board of Directors. If required at any time by the Board of
Directors or the Committee, an Option may not be exercised until the optionee
has delivered an investment letter to the Company. In addition, specifically
in connection with the Securities Act of 1933 (as now in effect or hereafter
amended), upon exercise of any Option, the Company shall not be required to
issue the underlying shares unless the Committee has received evidence
satisfactory to it to the effect that the holder of such Option will not
transfer such shares except pursuant to a registration statement in effect
under such Act or unless an opinion of counsel satisfactory to the Committee
has been received by the Company to the effect that such registration is not
required. Any determination in this connection by the Committee shall be
final, binding and conclusive. In the event the shares issuable on exercise of
an Option are not registered under the Securities Act of 1933, the Company may
imprint on the certificate for such shares the following legend or any other
legend which counsel for the Company considers necessary or advisable to comply
with the Securities Act of 1933:
"The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 or under the securities laws
of any state and may not be sold or transferred except upon such
registration or upon receipt by the Corporation of an opinion of counsel
satisfactory to the Corporation, in form and substance satisfactory to
the Corporation, that registration is not required for such sale or
transfer."
The Company may, but shall in no event be obligated to, register any securities
covered hereby pursuant to the Securities Act of 1933 (as now in effect or as
hereafter amended) and, in the event any shares are so registered, the Company
may remove any legend on certificates representing such shares. The Company
shall not be obligated to take any other affirmative action in order to cause
the exercise of an Option or the issuance of shares pursuant thereto to comply
with any law or regulation of any governmental authority.
-7-
<PAGE> 32
14. NO RIGHTS AS STOCKHOLDER. No optionee shall have
rights as a stockholder with respect to shares covered by his Option until the
date of issuance of a stock certificate for such shares; and, except as
otherwise provided in Paragraph 16 hereof, no adjustment for dividends, or
otherwise, shall be made if the record date therefor is prior to the date of
issuance of such certificate.
15. EMPLOYMENT OBLIGATION. The granting of any Option
shall not impose upon the Company any obligation to employ or continue to
employ any optionee; and the right of the Company to terminate the employment
of any officer or other employee shall not be diminished or affected by reason
of the fact that an Option has been granted to him.
16. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. The
existence of outstanding Options shall not affect in any way the right or power
of the Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or
any issue of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.
If the Company shall effect a subdivision or consolidation of
shares or other capital adjustment of, or the payment of a dividend in capital
stock or other equity securities of the Company on, its Common Stock, or other
increase or reduction of the number of shares of the Common Stock without
receiving consideration therefor in money, services, or property, or the
reclassification of its Common Stock, in whole or in part, into other equity
securities of the Company, then (a) the number, class and per share price of
shares of stock subject to outstanding Options hereunder shall be appropriately
adjusted (or in the case of the issuance of other equity securities as a
dividend on, or in a reclassification of, the Common Stock, the Options shall
extend to such other securities) in such a manner as to entitle an optionee to
receive, upon exercise of an Option, for the same aggregate cash consideration,
the same total number and class or classes of shares (or in the case of a
dividend of, or reclassification into, other equity securities, such other
securities) he would have held after such adjustment if he had exercised his
Option in full immediately prior to the event requiring the adjustment, or, if
applicable, the record date for determining stockholders to be affected by such
adjustment; and (b) the number and class of shares then reserved for issuance
under the Plan (or in the case of a dividend of, or reclassification into,
other equity securities, such other securities) shall be adjusted by
substituting for the total number and class of shares of stock then received,
the number and class or classes of shares of stock (or in the case of a
dividend of, or reclassification into, other equity securities, such other
securities) that would have been received by the owner of an equal number of
outstanding shares of Common Stock as a result of the event requiring the
adjustment. Comparable rights shall accrue to each optionee in the event of
successive subdivisions, consolidations, capital adjustments, dividends or
reclassifications of the character described above.
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If the Company shall distribute to all holders of its shares of
Common Stock (including any such distribution made to non-dissenting
stockholders in connection with a consolidation or merger in which the Company
is the surviving corporation and in which holders of shares of Common Stock
continue to hold shares of Common Stock after such merger or consolidation)
evidences of indebtedness or cash or other assets (other than cash dividends
payable out of consolidated retained earnings not in excess of, in any one year
period, the greater of (a) in an amount per share of Common Stock equal to
$1.00 per share of Common Stock (as the same may be adjusted from time to time
by the Board of Directors to reflect the effect of changes in capitalization)
and (b) two times the aggregate amount of dividends per share paid during the
preceding calendar year and dividends or distributions payable in shares of
Common Stock or other equity securities of the Company described in the
immediately preceding paragraph, but including stock or other securities of any
corporation or other entity owned by the Company), then in each case the Option
Price shall be adjusted by reducing the Option Price in effect immediately
prior to the record date for the determination of stockholders entitled to
receive such distribution by the fair market value, as determined in good faith
by the Board of Directors of the Company (whose determination shall be
described in a statement filed in the Company's corporate records and be
available for inspection by any holder of an Option) of the portion of the
evidence of indebtedness or cash or other assets so to be distributed
applicable to one share of Common Stock; provided that in no event shall the
Option Price be less than the par value of a share of Common Stock. Such
adjustment shall be made whenever any such distribution is made, and shall
become effective on the date of the distribution retroactive to the record date
for the determination of the stockholders entitled to receive such
distribution. Comparable adjustments shall be made in the event of successive
distributions of the character described above.
If the Company shall make a tender offer for, or grant to all of
its holders of its shares of Common Stock the right to require the Company or
any subsidiary of the Company to acquire from such stockholders shares of,
Common Stock, at a price in excess of the Current Market Price (a "Put Right")
or the Company shall grant to all of its holders of its shares of Common Stock
the right to acquire shares of Common Stock for less than the Current Market
Price (a "Purchase Right") then, in the case of a Put Right, the Option Price
shall be adjusted by multiplying the Option Price in effect immediately prior
to the record date for the determination of stockholders entitled to receive
such Put Right by a fraction, the numerator of which shall be the number of
shares of Common Stock then outstanding minus the number of shares of Common
Stock which could be purchased at the Current Market Price for the aggregate
amount which would be paid if all Put Rights are exercised and the denominator
of which is the number of shares of Common Stock which would be outstanding if
all Put Rights are exercised; and, in the case of a Purchase Right, the Option
Price shall be adjusted by multiplying the Option Price in effect immediately
prior to the record date for the determination of the stockholders entitled to
receive such Purchase Right by a fraction, the numerator of which shall be the
number of shares of Common Stock then outstanding plus the number of shares of
Common Stock which could be purchased at the Current Market Price for the
aggregate amount which would be paid if all Purchase Rights are exercised and
the denominator of
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which is the number of shares of Common Stock which would be outstanding if all
Purchase Rights are exercised. In addition, the number of shares subject to
the Option shall be increased by multiplying the number of shares then subject
to the Option by a fraction which is the inverse of the fraction used to adjust
the Option Price. Notwithstanding the foregoing, if any such Put Rights or
Purchase Rights shall terminate without being exercised, the Option Price and
number of shares subject to the Option shall be appropriately readjusted to
reflect the Option Price and number of shares subject to the Option which would
have been in effect if such unexercised Rights had never existed. Comparable
adjustments shall be made in the event of successive transactions of the
character described above.
After the merger of one or more corporations into the Company,
after any consolidation of the Company and any one or more corporations, or
after any other corporate transaction described in Section 424(a) of the Code
in which the Company shall be the surviving corporation, each optionee, at no
additional cost, shall be entitled to receive, upon any exercise of his Option,
in lieu of the number of shares as to which the Option shall then be so
exercised, the number and class of shares of stock or other equity securities
to which the optionee would have been entitled pursuant to the terms of the
agreement of merger or consolidation if at the time of such merger or
consolidation such optionee had been a holder of a number of shares of Common
Stock equal to the number of shares as to which the Option shall then be so
exercised and, if as a result of such merger, consolidation or other
transaction, the holders of Common Stock are not entitled to receive any shares
of Common Stock pursuant to the terms thereof, each optionee, at no additional
cost, shall be entitled to receive, upon exercise of his Option, such other
assets and property, including cash, to which he would have been entitled if at
the time of such merger, consolidation or other transaction he had been the
holder of the number of shares of Common Stock equal to the number of shares as
to which the Option shall then be so exercised. Comparable rights shall accrue
to each optionee in the event of successive mergers or consolidations of the
character described above.
After a merger of the Company into one or more corporations,
after any consolidation of the Company and any one or more corporations, or
after any other corporate transaction described in Section 424(a) of the Code
in which the Company is not the surviving corporation, each optionee shall, at
no additional cost, be entitled, at the option of the surviving corporation,
(i) to have his then existing Option assumed or to have a new option
substituted for the existing Option by the surviving corporation to the
transaction which is then employing him, or a parent or subsidiary of such
corporation, on a basis where the excess of the aggregate fair market value of
the shares subject to the option immediately after the substitution or
assumption over the aggregate option price of such option is equal to the
excess of the aggregate fair market value of all shares subject to the Option
immediately before such substitution or assumption over the aggregate Option
Price of such shares, provided that the shares subject to the new option must
be traded on the New York or American Stock Exchange or quoted on the National
Association of Securities Dealers Automated Quotation System, or (ii) to
receive upon any exercise of his Option, in lieu of the number of shares as to
which the Option shall then be so exercised, the securities, property and other
assets, including cash, to which the Optionee would have been
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<PAGE> 35
entitled pursuant to the terms of the agreement or merger or consolidation or
the agreement giving rise to the other corporate transaction if at the time of
such merger, consolidation or other transaction such optionee had been the
holder of the number of shares of Common Stock equal to the number of shares as
to which the Option shall then be so exercised.
If a corporate transaction described in Section 424(a) of the
Code which involves the Company is to take place and there is to be no
surviving corporation while an Option remains in whole or in part unexercised,
it shall be cancelled by the Board of Directors as of the effective date of any
such corporate transaction but before the date each optionee shall be provided
with a notice of such cancellation and each optionee shall have the right to
exercise such Option in full (without regard to any limitations on exercise set
forth in or imposed by the option agreement pursuant to which such Option was
granted as contemplated by Paragraph 9 of the Plan) to the extent it is then
still unexercised during a 30-day period preceding the effective date of such
corporate transaction.
For purposes of this Paragraph 16, Current Market Price per
share of Common Stock shall mean the closing price of a share of Common Stock
as reported by the principal national securities exchange on which the Common
Stock is then listed if the Common Stock is then listed on a national
securities exchange, or the average bid and asked prices of a share of Common
Stock as reported in the NASDAQ listing if the Common Stock is not then listed
on a national securities exchange, on the trading day immediately preceding the
first trading day on which, as a result of the establishment of a record date
or otherwise, the trading price reflects that an acquiror of Common Stock in
the public market will not participate in or receive the payment of any
applicable dividend or distribution.
Except as hereinbefore expressly provided, the issue by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, for cash or property, or for labor or services either
upon direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock then subject to outstanding Options.
17. SUBSTITUTION OPTIONS. Options may be granted under the
Plan from time to time in substitution for stock options held by employees of
other corporations who are about to become employees of the Company, or whose
employer is about to become a parent or subsidiary corporation of the Company,
conditioned in the case of an incentive stock option upon the employee becoming
an employee of the Company or a parent or subsidiary corporation of the
Company, as a result of the merger or consolidation of the Company with another
corporation, or the acquisition by the Company of substantially all the assets
of another corporation, or the acquisition by the Company of at least 50% of
the issued and outstanding stock of another corporation as the result of which
it becomes a subsidiary of the Company. The terms and conditions of the
substitute Options so granted may vary from the terms and conditions set forth
in the Plan to such extent as the Board of Directors of the
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<PAGE> 36
Company at the time of grant may deem appropriate to conform, in whole or in
part, to the provisions of the stock options in substitution for which they are
granted, but with respect to stock options which are incentive stock options,
no such variation shall be such as to affect the status of any such substitute
option as an "incentive stock option" under Section 422 of the Code.
18. AMENDMENT OR TERMINATION OF PLAN. The Board of
Directors may modify, revise or terminate the Plan at any time and from time to
time; provided, however, that without the further approval of the holders of
shares representing a majority of the total voting power of the Company at a
meeting of stockholders or by written consent, or if the provisions of the
corporate charter, by-laws or applicable state law prescribes a greater degree
of stockholder approval for this action, without the degree of stockholder
approval thus required, the Board of Directors may not (a) change the aggregate
number of shares which may be issued under Options pursuant to the provisions
of the Plan, (b) extend the term during which an Option may be exercised or the
termination date of the Plan or (c) materially change the class of employees
eligible to receive Options under the Plan; unless, in each such case, the
Board of Directors of the Company shall obtain an opinion of legal counsel to
the effect that stockholder approval of the amendment is not required (i) by
law, (ii) by the applicable rules and regulations of, or any agreement with,
any national securities exchange on which the Common Stock is then listed or if
the Common Stock is not so listed, the rules and regulations, or any agreement
with, the National Association of Securities Dealers, Inc., and (iii) in order
to make available to the optionee with respect to any option granted under the
Plan, the benefits of Rule 16b-3 of the Rules and Regulations under the
Exchange Act, or any similar or successor rule. In addition, the Board shall
have the power to make such changes in the Plan and in the regulations and
administrative provisions hereunder or in any outstanding Option as in the
opinion of counsel for the Company may be necessary or appropriate from time to
time to enable any Option granted pursuant to the Plan to qualify as incentive
stock options under Section 422 of the Code, and the regulations which may be
issued thereunder as in existence from time to time.
19. WRITTEN AGREEMENT. Each Option granted hereunder shall
be embodied in a written option agreement, which shall be subject to the terms
and conditions prescribed above, and shall be signed by the optionee and by the
appropriate officer of the Company for and in the name and on behalf of the
Company. Such an option agreement shall contain such other provisions as the
Committee in its discretion shall deem advisable.
20. INDEMNIFICATION OF COMMITTEE. The Company shall, to
the fullest extent provided by law, indemnify each present and future member of
the Committee against, and each member of the Committee shall be entitled
without further act on his part to indemnity from the Company for, all expenses
(including, without limitation, reasonable attorneys' fees, the amount of
judgments and the amount of approved settlements made with a view to the
curtailment of costs of litigation, other than amounts paid to the Company
itself) reasonably incurred by him in connection with or arising out of any
action, suit or proceeding in which he may be involved by reason of his being
or having been a member of the Committee, whether or not he
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<PAGE> 37
continues to be such member of the Committee at the time of incurring such
expenses. The foregoing right of indemnification shall inure to the benefit of
the heirs, executors or administrators of each such member of the Committee and
shall be in addition to all other rights to which such member of the Committee
may be entitled as a matter of law, contract, or otherwise. Nothing in this
Paragraph 20 shall be construed to limit or otherwise affect any right to
indemnification, or payment of expense, or any provisions limiting the
liability of any officer or director of the Company or any member of the
Committee, provided by law, the Certificate of Incorporation of the Company or
otherwise.
21. EFFECTIVE DATE OF PLAN. The Plan shall become
effective and shall be deemed to have been adopted on March 19, 1992, if within
one year of that date it shall have been approved by the holders of voting
stock of the Company representing a majority of the total voting power of the
Company at a meeting of stockholders or by written consent or if the provisions
of the corporate charter, by-laws or applicable state law prescribes a greater
degree of stockholder approval for this action, the approval by the holders of
that percentage, at a meeting of stockholders or by written consent. No Option
shall be granted pursuant to the Plan after March 19, 2002.
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<PAGE> 38
ENERGY VENTURES, INC.
PROXY FOR ANNUAL MEETING
MAY 8, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The undersigned
stockholder of Energy Ventures, Inc. (the "Company") hereby appoints BERNARD J.
DUROC-DANNER and JAMES G. KILEY as Proxies, each with power to act without the
other and with full power of substitution, for the undersigned to vote all
shares of Common Stock of the Company of undersigned at the Annual Meeting of
Stockholders of the Company to be held on May 8, 1996, or at any adjournment(s)
thereof, on the following matters more particularly described in the Proxy
Statement dated April ______, 1996:
1. ELECTION OF THE FOLLOWING NOMINEES, AS SET FORTH IN THE PROXY STATEMENT:
[ ] FOR all nominees listed below [ ] WITHHOLD all nominees listed below
(except as marked to the contrary below)
DAVID J. BUTTERS, BERNARD J. DUROC-DANNER, URIEL E. DUTTON, ELIOT M. FRIED,
SHELDON S. GORDON, SHELDON B. LUBAR, ROBERT B. MILLARD AND ROBERT A. RAYNE.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
================================================================================
2. Proposal to amend the Company's Certificate of Incorporation to increase
the number of authorized shares of the Company's common stock, $1.00 par
value, from 20,000,000 shares to 40,000,000 shares:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to amend the Company's 1992 Employee Stock Option Plan to increase
the number of shares of the Company's Common Stock that may be subject to
options granted under the plan from 600,000 shares to 1,000,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL
OF THE NOMINEES LISTED ABOVE AND FOR approval of Proposals 2 and 3.
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