SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, For Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[_] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
IRAMSCO, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
[_] Fee paid previously with preliminary materials:
- --------------------------------------------------------------------------------
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
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3) Filing Party:
4) Date Filed:
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ISRAMCO, INC.
1770 St. James Place, Suite 607, Houston, Texas
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held June 25, 1999
DEAR STOCKHOLDER:
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of Shareholders of Isramco, Inc.
will be held at the Red Lion Hotel, 2525 West Loop South, Houston, Texas 77027
on June 25, 1999 at 10:00 A.M. for the following purposes:
Proposal 1. To elect five (5) directors for the ensuing year.
Proposal 2. To approve an amendment to the Company's Certificate of
Incorporation to reduce the number of shares that the Company is authorized to
issue from Seventy Five million (75,000,000) common shares to Seven Million
Five-Hundred Thousand (7,500,000) common shares.
Proposal 3. To approve the appointment of the certified public accounting
firm of KPMG LLP as independent auditors of the Company for 1999.
Proposal 4. To transact such other business as may properly come before the
meeting and any adjournment thereof.
A Proxy Statement relating to this meeting is enclosed herewith.
Shareholders of record at the close of business on April 29, 1999 are entitled
to notice of and to vote at the meeting or any adjournment thereof.
I hope you plan to attend the Annual Meeting. It is requested that you read
carefully the attached Proxy Statement for information on matters to be
considered and acted upon.
YOUR VOTE IS IMPORTANT
You are urged to date, sign and promptly return your Proxy so that your
shares may be voted in accordance with your wishes and in order that the
presence of a quorum may be assured. The prompt return of your signed Proxy,
regardless of the number of shares you hold, will assist the Company in reducing
the expense of additional Proxy solicitation. The giving of such Proxy does not
affect your right to vote in person in the event you attend the meeting.
Haim Tsuff
Chairman of the Board
Chief Executive Officer
June 7, 1999
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2
ISRAMCO, INC.
1770 St. James Place, Suite 607, Houston, Texas
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
June 25, 1999
PROXY STATEMENT
General Information
This Proxy Statement is being furnished in connection with the solicitation
of proxies in the enclosed form on behalf of the Board of Directors of Isramco,
Inc. (the "Company") for use at the annual meeting of stockholders, to be held
on June 25, 1999 at 10:00 A.M., local time, at the Red Lion Hotel, 2525 West
Loop South, Houston, Texas 77027, and at any adjournments thereof (the "Annual
Meeting").
Annual Report
Enclosed is the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1998, including audited Financial Statements. Such Annual Report on
Form 10-KSB does not form any part of the material for the solicitation of
proxies.
Voting and Revocability of Proxies
Unless authority to vote is herein withheld or is withheld with respect to
any specific nominee or proposal, all shares represented by properly signed
Proxies received pursuant to this solicitation (and not revoked before they are
voted) will be voted for (i) the election of those persons nominated herein for
election as directors and (iii) the approval of the appointment of KPMG, LLP as
the Company's independent auditors.
As of the date of this Proxy Statement, the Board of Directors knows of no
business that will be presented for consideration at the Annual Meeting other
than that referred to above. If any other business property comes before the
Annual Meeting, the persons designated in the enclosed Proxy will vote on such
business in accordance with their best judgment.
Proxy Cards for use by the Company's stockholders accompany this Proxy
Statement.
Any stockholder who executes and returns a Proxy Card may revoke it at any
time before it is exercised by delivering to the Secretary of the Company, at
the offices of the Company at the address set forth above, either an instrument
revoking the proxy, or a duly executed proxy bearing a later date, or by
attending the Annual Meeting and voting in person.
This Proxy Statement is being first given or sent to the Company's
Shareholders on or about June 4, 1999.
Solicitation of Proxies
The enclosed Proxy is being solicited by the Board of Directors of the
Company for use in connection with the Annual Meeting. The cost of such
solicitation will be borne by the Company. Solicitation may be made by
directors, officers, employees and management of the
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3
Company, however, such persons will not receive any fees for such solicitation.
Proxies may be solicited in person or by mail, telephone, telegram, mailgram, or
other means. Brokers, nominees, fiduciaries and other custodians have been
requested to forward such soliciting material to the beneficial owners of shares
held of record by such custodians. Such custodians may be reimbursed for their
expenses.
Voting Securities and Holders Thereof
As of the close of business on April 29, 1999, the record date for voting
at the Annual Meeting, the Company had 2,639,809 shares of common stock, par
value $0.01 per share outstanding. Such shares were held by approximately 341
shareholders of record. The total number of votes entitled to be cast at the
Annual Meeting is 2,639,809.
Submission of Shareholder Proposals for 2000 Annual Meeting
Under the rules of the Securities and Exchange Commission, Shareholder
proposals intended to be presented at the 2000 Annual Meeting of the Company
must be received by the Company at its principal executive offices at 1770 St.
James Place, Suite 607, Houston, Texas by February 4, 2000 for inclusion in the
Proxy Statement and form of Proxy relating to that meeting.
Quorum and Voting Requirements
The holders of a majority of the shares issued and outstanding and entitled
to vote in person or represented by proxy will constitute a quorum for the
transaction of business at the Annual Meeting. Assuming a quorum is present, the
affirmative vote of a majority of shares present in person or by proxy and
voting on a matter is necessary for approval.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Board of Directors and Committees
The business of the Company is managed by its Board of Directors. The Board
of Directors is presently comprised of five (5) directors, of which all five (5)
directors are standing for re-election. The number of members of the Board of
Directors is fixed by a majority of the Board of Directors. The Board of
Directors held one (1) meeting during 1998.
At the Annual Meeting, five (5) directors are to be elected, to hold office
pursuant to the Company's By-laws, for a term of one year and until a successor
shall be elected and qualified. Unless otherwise instructed, the shares
represented by the Proxies, will be voted FOR the election of the nominees in
the Proxy Statement and on the Proxy Card.
Because of the size of the Board of Directors the Company does not require
a standing, nominating or compensation committee of the Board of Directors.
Avihu Ginzburg, Ph.D. and Linda Canina, Ph.D. are members of the Audit
Committee.
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Each Director receives a fee of $750.00 for attendance at a meeting of the
Board of Directors. Directors are eligible to participate in the Company's Stock
Incentive Plan and are eligible to receive stock options granted under this
Plan.
Information Concerning Nominees
Each of the five (5) nominees named on the following pages has been
nominated for election as a director of the Company to serve until the 2000
Annual Meeting of Shareholders, or until his successor has been duly elected and
qualified. All five (5) of the nominees are currently directors of the Company.
If so authorized, the persons named in the accompanying Proxy Card intend to
vote FOR the election of each nominee. Shareholders who do not wish their shares
to be voted for a particular nominee may so indicate in the space provided on
the Proxy Card. If one or more of the nominees should become unavailable to
serve at the time of the Annual Meeting, the shares presented by proxy will be
voted for the remaining nominees and for any substitute nominee or nominees
designated by the Board of Directors. The Board of Directors knows of no reason
why any of the nominees will be unavailable to serve.
There follows a brief description of each of the nominees' principal
occupation and business experience, age and directorships held in other
corporations.
The Board of Directors recommends a vote FOR each of the nominees
identified on the following pages.
Haim Tsuff, Age 41, has been a director of the Company since January 1996
and the Chairman of the Board of Directors and Chief Executive Officer since May
1996. Mr. Tsuff is the sole director and owner of United Kingsway Ltd. and
Chairman of YHK General Manager Ltd. (which entity effectively controls Equital
Ltd., JOEL Ltd., Naphtha, Naphtha Holdings Ltd., public companies in Israel) and
may be deemed to control the Company. During the past five years, Mr. Tsuff has
served as General Manager of Painton Chemical Industries Ltd., a private company
which produces printed material. Mr. Tsuff is also the Managing Director and
Chairman of the Board of Y. Habaron Ltd. (real estate), Painton Chemical Factors
Ltd. (printed material), Madad Ltd. (printed material), Benfica Holdings Ltd.
(construction) and Benfica Ltd. (construction), all of which are private
companies. See Security Ownership of Certain Beneficial Owners. Age 39.
Noa Lendner, Adv., Age 48, has been a director of the Company since July
1998. Ms. Lendner has served as legal counsel to Equital, Naphtan and J.O.E.L.
since February 1997. Ms. Lendner also serves as Secretary of Naphta, a related
entity, since 1997. From December, 1995 through January 1997, Ms. Lendner has
also served on the Board of Directors of J.O.E.L. From 1995 through January
1997, Ms. Lendner engaged in the private practice of law, specializing in the
commercial and corporate areas. Ms. Lendner received an LL.B. degree form the
Hebrew University in Jerusalem in 1976 and since 1977 has been a member of the
Israeli Bar.
Tina Maimon Arckens, Age 44, has been a director of the Company since March
1997. Mrs. Arckens is a director of YHK General Manager Ltd. Mrs. Arckens is the
sister of Jackob Maimon, the Chairman of the Board of Directors of Naphtha
Israel Petroleum Corp. Ltd. Mrs. Maimon Arckens is a housewife.
Linda Canina, Age 44, has been a director of the Company since December
1997. From 1993 to the present Dr. Canina has held the position of Professor of
Finance at Cornell
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University, Ithaca, New York. Dr. Canina also holds the position of Visiting
Assistant Professor of Finance at the Recanati School of Business in Tel Aviv,
Israel. From July 1992 - January 1993 Dr. Canina was a Research Fellow, Johnson
Graduate School of Management, Cornell University.
Avihu Ginzburg, Age 72, has been a director of the Company since July 1997.
Dr. Ginzburg is currently Emeritus Professor in Geophysics at Tel Aviv
University. In 1996 he was Visiting Professor in Exploration Geophysics at
Curtin University, Perth, Western Australia; and, Research Fellow at the
Department of Geological Sciences, University College, London. From 1992 - 1995
Dr. Ginzburg held the position of Chairman of Geophysics and Planetary Science
at Tel Aviv University.
SUMMARY OF COMPENSATION
The following table sets forth the compensation paid for years 1996 - 1998
to the Chief Executive Officer and the five (5) other highly paid officers
and/or key employees of the Company.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Name and Year Salary/ Bonus Other Annual Securities Other
Principal Consulting Compensation Underlying
Position Fee (7) Options
<S> <C> <C> <C> <C> <C> <C>
Haim Tsuff 1998 $240,000 ------ ------ ------ ---
Chairman of the 1997 $216,000 ------ ------ ------ ---
Board and Chief
Executive Officer (1)
Daniel Avner 1998 $90,000 ------ ------ ------ ---
President and 1997 $37,900 ------ ------ ------ ---
Secretary (2)
Yossi Levy 1998 $88,000 ------ ------ ------ ---
Branch 1997 $92,230 ------ ------ ------ ---
Manager(3)
Pincus Pincus 1998 $48,000 ------ ------ ------ ---
Controller, 1997 -0- ------ ------ ------ ---
Branch Office(4)
Joshua Folkman 1998 $95,600 ------ ------ ------ ---
Exploration 1997 $101,128 ------ ------ ------ ---
Manager, Branch
Office
Yuval Ran 1998 -0- ------ ------ ------ ---
Former 1997 $151,000 ------ ------ ------ ---
President (5)
Raanan 1998 -0- ------ ------ ------ ---
Wiessel (6) 1997 $91,358 ------ ------ ------ ---
Former Treasurer
& Controller
Branch Office
</TABLE>
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6
Notes
(1) In May of 1996 the Company entered into a Consulting Agreement with a
company owned and controlled by Haim Tsuff, the Chairman of the Board and
Chief Executive Officer of the Corporation. Pursuant to this Consulting
Agreement as amended April 1997, the Company pays to consultant the sum of
$240,000 per annum in installments of $20,000 per month in addition to
reimbursing all reasonable business expenses incurred in connection with
the services rendered on behalf of the Company.
(2) In August of 1997 the Company entered into a Consulting Agreement with
Romulas Investment Ltd. (which Agreement has been assigned to Remarkable
Holdings Ltd.), a company which is wholly owned and controlled by Daniel
Avner, the President of the Company. Pursuant to this Agreement, the
Company has agreed to pay the Consultant the sum of $7,500 per month plus
expenses. In February 1999, the agreement was amended to increase the
amount payable per month to $15,000. Pursuant to the amendment in February
1999, expenses are no longer reimbursable. The Company has also agreed to
provide a company car and company furnished apartment to Consultant, if
available. The agreement is in force through July 2,000.
(3) In November of 1996 the Company entered into an Employment Agreement with
Yossi Levy, the Managing Director of Naphtha Israel Petroleum Company Ltd.
to employ Mr. Levy as the General Manager of the Israel Branch of the
Company.
(4) Mr. Pinchas is employed as Controller of Naphta, J.O.E.L. and Equital,
affiliates of the Company. As of January 1, 1998, the Company participates
in the payment by J.O.E.L. of Mr. Pinchas' salary in an aggregate monthly
amount of $40,000.
(5) In August of 1996 the Company entered into a Consulting Agreement with
Yuval Ran, the former President of the Corporation. Pursuant to the
Consulting Agreement as amended April 1997, the Company has agreed to pay
to Mr. Ran the sum of $240,000 per annum payable in installments of $20,000
per month in addition to reimbursing all reasonable business expenses
incurred in connection with performing the consulting services on behalf of
the Company. Mr. Ran resigned as President of the Company on July 15, 1997.
(6) The services of Raanan Wiessel were terminated in December 1997.
(7) Does not include personal benefits which do not exceed 10% of the cash
compensation of all officers as a group.
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7
The following table sets forth information concerning the exercise of stock
options during 1997 by each of the named executive officer and key employee and
the year end value of unexercised options.
Aggregated Option Exercises
in 1997
and Year End Option Values
--------------------------
Name Shares Value Number of Value of
Acquired Realized ($) Securities Unexercised
on Exercise Underlying In the Money
Unexercised Options at
Options (#) Year End ($)(2)
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Joshua Folkman 0 0 2,000 0
Raanan Wiessel (1) 0 0 2,500 0
Notes
(1) Ceased his relationship with the Company in December 1997.
(2) The value reported is based on the closing price of the common stock of the
Company as reported on NASDAQ on the date of the exercise less the exercise
price.
The following table sets forth information concerning individual grants of
stock options made during the 1998 fiscal year to each named executive officer
and key employee. The Corporation did not grant any stock appreciation rights
during 1998 and has no outstanding SAR's.
Option Grants in 1998
Individual Grants
No. of
Shares % of Total
Underlying Options Exercise
Options Granted to Price Expiration
Name Granted Employees ($/SH) Date
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NONE
All stock options were granted with an exercise price equal to the market
price of the common stock on the date of grant.
In May 1998, the Company effected a 10 for 1 reverse stock split which
effectively amended the exercise price of the outstanding stock options
previously awarded to any of the named
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8
executive officers or directors or employees. The only incentive plan which the
Company has is its 1993 Stock Option Plan (the "Stock Option Plan").
Stock Option Plan
The Company's Stock Option Plan was adopted with the intention of
encouraging stock ownership by directors, officers, employees and consultants of
the Company and its subsidiaries. The plan provides for stock options of up to
50,000 shares of common stock of the Company. Options may either be options
intended to qualify as "incentive stock options" or "non-statutory stock
options", as those terms are defined in the Internal Revenue Code.
Employees (including officers) of the Company are eligible to receive
incentive stock options, however, non-statutory stock options may be granted to
officers, directors, employees and consultants of the Company and its
subsidiaries. Options are granted for a period of up to ten (10) years from the
grant date for an exercise price of not less than 100% of the fair market value
of the securities of the Company's common stock on the date of grant. As of this
date no persons have been appointed to fill the current vacancies on the
committee which administers this plan.
SECURITY OWNERSHIP OF DIRECTORS, OFFICERS AND KEY EMPLOYEES
On March 31, 1999 the Directors, executive Officers and certain key
employees of the Company beneficially owned or controlled, in the aggregate,
1,320,222 shares of the Company's common stock (comprising 50.01% of the shares
of common stock of the Company) including 2,000 shares under options which are
currently exercisable. Unless otherwise indicated, the individuals named hold
sole voting and investment power over the shares listed below.
Number of
Shares
Owned
Name Position Beneficially
- ---- -------- ------------
Haim Tsuff Chairman of the Board, 1,320,222 (1)
Chief Executive Officer,
Chief Financial Officer,
and Director
Daniel Avner President, Principal Accounting Officer
Secretary and Director
Joshua Folkman Exploration Manager (Israel) 2,000 (2)
Yossi Levy Manager of Branch Office (Israel)
Pincus Pincus Controller of Branch Office Israel)
Avihu Ginzburg, Ph.D. Director
Linda Canina, Ph.D. Director
Tina Maimon Arckens Director
-----------
All Directors, Officers and Key Employees as a Group
(nine persons) 1,320,000
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Notes
(1) Haim Tsuff owns 100% of United Kingsway Ltd. which through YHK General
Manager Ltd. controls various entities, which may be deemed to control the
Company. For more information see Security Ownership of Certain Beneficial
Owners.
(2) Includes 2,000 shares of common stock issuable upon exercise of Stock
Options.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Set forth below is certain information with respect to ownership of the
Company's securities as of March 31, 1999 by persons or entities who are known
by the Company to own beneficially more than 5% of the outstanding shares of the
common stock, as determined in accordance with Rule 13d-3 under the Act.
Name of No. of
Beneficial Owner Common Shares Percentage
- ---------------- ------------- ----------
Naphtha Holdings Ltd.* 1,320,222 50.01%+
Haim Tsuff*
United Kingsway Ltd.*
YHK Investment Limited Partnership*
Notes
* Haim Tsuff owns and controls 100% of United Kingsway Ltd. (Kingsway) which
holds a 74% interest in YHK Investment Limited Partnership (YHK). Avrahm
Livnat Ltd. through its subsidiary Carmen Management and Assets (1997) Ltd.
owns 26% of YHK. The General Partner of YHK is YHK General Manager Ltd. and
Haim Tsuff, Joseph Tsuff (the father of Haim Tsuff) and Tina Maimon-Arckens
(the sister of the Chairman of the Board of Naphtha are the directors of
YHK General Manager Ltd. YHK owns of record 42.4% of Equital Ltd. (formerly
known as Pass-port Ltd.), Equital Ltd. owns 43.4% of J.O.E.L. - Jerusalem
Oil Exploration Ltd. (JOEL), JOEL owns 86.6% of Naphtha, which holds 100%
of Naphtha Holdings Ltd. JOEL also owns 9.7% of the shares of Equital Ltd.
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10
Information regarding these relationships is set forth on the Chart of
Ownership and in Schedule 13d filings and amendments made thereto made on
behalf of the above entities which are on file with the Securities and
Exchange Commission.
As a result of the foregoing, Haim Tsuff, Kingsway, YHK, Equital Ltd.,
JOEL, Naphtha and Naphta Holdings Ltd. may be deemed to control the
Company.
+ This percentage is based on 2,639,809 shares of common stock outstanding
April 29, 1999.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In May of 1996 the Company entered into a Consulting Agreement with
Goodrich Global L.T.D. B.V.I., a company owned and controlled by Haim Tsuff, the
Chairman of the Board of Directors and Chief Executive Officer of the
Corporation. Pursuant to this Consulting Agreement which had a term of two (2)
years, the Company agreed to pay the sum of $144,000 per annum in installments
of $12,000 per month, in addition to reimbursing all reasonable business
expenses incurred during the term in connection with the performance of services
on behalf of the Company. In April 1997 the consulting compensation was
increased to $240,000 per annum and in December 1997 the term of the Agreement
was extended to May 31, 2001. The Consulting Agreement provides that the term
shall be automatically extended for an additional term of three (3) years,
commencing June 1, 2001, unless the Company has given notice at least ninety
(90) days prior to June 1, 2001, that it does not intend that the term be
renewed.
In August of 1997 the Company entered into a Consulting Agreement with
Romulas Investment Ltd. (which Agreement has been assigned to Remarkable
Holdings Ltd.), a company which is wholly owned and controlled by Daniel Avner,
the President of the Company. Pursuant to this Agreement which has a term of one
(1) year through July 31, 1998, the Company has agreed to pay the Consultant the
sum of $7,500 per month plus expenses. In February 1999, the Consulting
Agreement was amended to increase the monthly compensation payable thereunder to
$15,000 and pursuant to the amendment, the reimbursement of expenses was
disallowed. The Company has also agreed to make provide a company car and
company furnished apartment to Consultant, if available. The Consulting
Agreement is in effect through July 2000.
On January 21, 1998, the Company entered into a Inventory Management
Agreement with Equital Ltd. pursuant to which the Company is obligated to pay to
Equital Ltd. $1,650 plus VAT payable December, March, June and September of each
year during the term of the Agreement. In the case of the drilling of a well if
the total monthly hours of services provided to the Company by Equital Ltd.
exceed 30 hours per month, then the Company shall pay an additional $40.00 per
hour plus VAT for services rendered. The Agreement may be terminated on three
(3) month's written notice. The Company believes that the prices charged by
Equital Ltd. to the Company for these services are comparable to the cost for
such services negotiated in arm's length transactions. Equital Ltd. may be
deemed to be a control person to the Company.
Pursuant to the agreement terminating the employment of Mr. Toledano as the
Company's President and Chief Operating Officer in October 1995, Mr. Toledano
executed a Covenant Not to Compete Agreement with the Company. Pursuant to the
terms of the Covenant
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11
Not to Compete, Mr. Toledano agreed that for a period of five (5) years he would
not directly or indirectly compete with the Company in connection with the
exploration for oil and gas in the State of Israel, the territorial waters off
Israel or the territories currently under control of the State of Israel. In
consideration for the Covenant Not To Compete, the Company paid to Mr. Toledano
the sum of $200,000. The Company also entered into a Consulting Agreement with
Natural Resources Exploration Services B.V., a Netherlands corporation
controlled by Mr. Toledano. Pursuant to the Consulting Agreement between the
Company and Natural Resources Exploration Services B.V., the Company paid a lump
sum payment of $72,000 to Natural Resources Exploration Services B.V. to provide
the services of Mr. Toledano to the Company through June 23, 1997.
In July of 1995 the Company formalized its existing oral consulting
agreement with Dr. Joseph Elmaleh and entered into a written Consulting
Agreement for the payment to Dr. Elmaleh of an annual fee of $99,000 payable in
equal monthly installments of $8,250. The expiration of the term of the
Consulting Agreement commenced August 1, 1995 and was to expire July 31, 1997.
Under the terms of a Termination Agreement made on April 17, 1996, Dr. Elmaleh
resigned as the Chairman of the Board, Chief Executive Officer and a director of
Isramco and its subsidiaries, the Company terminated the 1995 Consulting
Agreement with Dr. Elmaleh and (i) paid to him the sum of $123,750 representing
the balance of unpaid consulting fees; (ii) paid to him the sum of $270,000 for
a non-compete agreement for a term of three (3) years in connection with the
exploration for oil and gas in the State of Israel, the territorial waters off
Israel or the territories currently under control of the State of Israel. The
Company also purchased from Southern Shipping and Energy Inc. (a company
controlled by Dr. Elmaleh) 29,268 shares of the common stock of the Company held
by Southern Shipping and Energy Inc. for a purchase price of $208,238.
PROPOSAL NO. 2
Amendment to the Company's Certificate of Incorporation
At the Annual Meeting, the stockholders will be asked to approve an
amendment to the Company's Certificate of Incorporation, in the form attached
hereto as Exhibit A, to reduce the number of shares that the Company is
authorized to issue from Seventy Five Million (75,000,000) common shares to
Seven Million Five Hundred Thousand (7,500,000) common shares (the "Authorized
Share Reduction"). The Board of Directors had adopted a resolution to reduce the
number of authorized shares for the purpose of reducing the annual Delaware
State franchise tax assessable against the Company (the "Franchise Tax").
In May, 1998, the Company effected a 10 to 1 reverse stock split of its
issued and outstanding shares of common stock (the "Reverse Split"). The Reverse
Split did not affect the number of shares that the COmpany is authorized to
issue. The Franchise Tax may be determined by dividing the (i) gross assets of
the Company by (ii) total number of shares issued; the resulting figure (the
"Assumed Par") is then multiplied by the number of shares that the Company is
authorized to issue (the product thereof being the "Assumed par Value Capital").
The Franchise Tax payable by the Company is equal to $200 for each million of
Assumed Par Value Capital (as such amount is rounded up to the next million).
With the Reverse Split effectively reducing the number of the Company's issued
shares by 90%, the Franchise Tax payable by the Company, as determined in
accordance with the above, in respect of 1998 has been significantly increased.
A decrease in the number of the shares that the Company is authorized to issue
by an amount proportionate to the Reverse Split, as proposed herein for the
approval of the stockholders, will reduce the Franchise Tax payable by the
Company for subsequent years to a figure approximating the amount paid by the
Company prior to the Reverse Split.
The Authorized Share Reduction will become effective as of 5:00 P.M., New
York time (the "Effective Date"), on the date that the Certificate of Amendment
to the Company's Certificate of Incorporation is filed with the Secretary of
State of the State of Delaware.
The Board of Directors believes that the adoption of the proposed amendment
for the Authorized Share Reduction is in the best interest of the COmpany and
its stockholders and recommends that the stockholders vote FOR the proposed
amendment.
PROPOSAL NO. 3
Appointment of Independent Auditors
Subject to the approval of the shareholders, on March 10, 1999, the Company
retained the certified public accounting firm of KPMG LLP as independent
accountants of the Company to audit the Company's financial statements for 1998.
The Company's previous principal auditors, Hein & Associates LLP ("Hein"),
resigned in November, 1998. the Board of Directors has selected KPMG LLP as
independent auditors to audit the accounts of the Company for the 1999 calendar
year. KPMG LLP has no interest or relationship with the Company except in the
capacity of independent public accountants, nor has that firm had any other
interest or relationship with the Company in the past. A representative of the
firm is expected to be present at the 1999 Annual Meeting. Such representative
will have the opportunity to make a statement, if they so desire, and will be
available to respond to appropriate stockholder questions.
During the fiscal year ended December 31, 1997 and the period between
January 1, 1998, up to and including the day of its resignation, there were no
disagreements between the Company and Hein on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedures which if not resolved to Hein's satisfaction would have caused them
to make reference in connection with their opinion to the subject matter of the
disagreement. However, Hein advised the Company that it would be able to accept
the appointment to audit the Company's financial statements for the fiscal year
ended December 31, 1998 only if the Company hired a corporate controller to
reside and work in Houston, Texas
<PAGE>
12
and if Hein and the Company would come to an agreement concerning fees for the
audit. The Company declined to hire a corporate controller to reside and work in
Houston.
Hein's report on the financial statements of the Company for the year ended
December 31, 1997, contained no adverse opinion or disclaimer of opinion and was
not qualified as to uncertainty, audit scope or accounting principles. Hein's
furnished the Company with a letter addressed to the SEC confirming its
agreement with the above statements, a copy of which was filed as an exhibit to
the report filed on Form 8-K on November 23, 1998.
Recommendation of Board of Directors
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE FOLLOWING
PROPOSAL:
RESOLVED, that the appointment by the Board of Directors of the firm
KPMG LLP as Independent Auditors for the Company for the year 1998 and
1999 is hereby approved.
OTHER MATTERS
Management does not know of any other matters to come before the Annual
Meeting. However, if any other matters properly come before the Annual Meeting,
it is the intention of the persons designated as proxies to vote in accordance
with their judgment on such matters.
IT IS IMPORTANT THAT YOU RETURN YOUR SIGNED PROXY PROMPTLY, REGARDLESS OF
THE NUMBER OF SHARES YOU OWN. PLEASE COMPLETE, SIGN AND MAIL THE ENCLOSED PROXY
IN THE ACCOMPANYING ENVELOPE PROMPTLY, WHETHER OR NOT YOU PLAN TO ATTEND THE
ANNUAL MEETING.
By Order of the Board of Directors,
Haim Tsuff
Chairman of the Board
June 7, 1999
A copy of the Company's Annual Report on Form 10-KSB, with all
exhibits attached thereto, filed with the Securities and Exchange
Commission, is available without charge to shareholders upon written
request to:
Secretary, Isramco, Inc., 1770 St. James Place, Suite 607, Houston, Texas 77056
<PAGE>
EXHIBIT A
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ISRAMCO, INC.
Isramco, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Corporation"), does hereby
certify that:
First: The name of the Corporation is Isramco, Inc.
Second: The Certificate of Incorporation of the Corporation is hereby
revising Article IV to read in its entirety as set forth below:
"The total number of shares which the corporation is authorized to
issue is Seven Million Five Hundred (7,500,000) common shares, each with a
par value of $0.01"
IN WITNESS WHEREOF, the undersigned has executed this Certificate this ____
day of June, 1999.
Haim Tsuff,
Chairman of the Board
<PAGE>
ISRAMCO, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
June 25, 1999
This Proxy is solicited on behalf of the Board of Directors of ISRAMCO,
INC. and the Board of Directors recommends a vote FOR Proposal 1, Proposal 2 and
Proposal 3.
The undersigned having received the Notice and Proxy Statement for the
Annual Meeting of Shareholders hereby revokes all prior proxies, and appoints
Haim Tsuff and Noa Lendner, Adv. and each of them, proxies, with power of
substitution, to vote in the manner indicated below, and with discretionary
authority as to any other matter that may properly come before the meeting, all
my (our) shares of record of Isramco, Inc. at the Annual Meeting of Shareholders
to be held June 25, 1999, and at any postponements and adjournments thereof.
Unless you indicate otherwise, this Proxy will be voted in accordance with the
Board of Directors' recommendations. The Directors recommend a vote FOR Items 1,
2 and 3.
(1) FOR [ ] WITHHOLD VOTE [ ]
The election of Haim Tsuff, Noa Lendner, Adv. ,Tina Maimon Arckens, Linda
Canina, and Avihu Ginzburg as directors of the Company to hold office until
their successors are elected.
If you desire to withhold authority to vote for the election of any one or more
of the nominees listed above, please print the name of such nominee or nominees:
____________________________________.
(2) FOR [ ] AGAINST [ ] ABSTAIN [ ]
Approve the amendment of the Articles of Incorporation of the Company to reduce
the number of shares that the Company is authorized to issue from Seventy Five
Million (75,000,000) common shares to Seven Million Five Hundred Thousand
(7,500,000) common shares.
(3) FOR [ ] AGAINST [ ] ABSTAIN [ ]
Approve appointment of KPMG LLP as independent auditors of the Company for 1998
and 1999.
If no instructions are given, the proxies will vote FOR Items (1) and (2).
Dated: ......................, 1999
...................................
(Signature(s) of Shareholder(s))
Note: Please sign exactly as your name appears on your stock certificates. If
this stock is jointly held, each owner should sign. Executors, administrators,
trustees, guardians and attorneys should so indicate when signing. Attorneys
should submit powers of attorney.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE SO
THAT IT MAY BE COUNTED AT THE ANNUAL MEETING ON JUNE 25, 1999.
