<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
CRYSTAL OIL COMPANY
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
CRYSTAL OIL COMPANY
229 Milam Street
Shreveport, Louisiana 71101
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON
MAY 25, 1995
Notice is hereby given that the Annual Meeting of Shareholders of Crystal
Oil Company (the "Company") will be held at the offices of the Company at 229
Milam Street, Shreveport, Louisiana, on May 25, 1995, at 9:30 A.M., Shreveport,
Louisiana time, for the following purposes:
1. To elect six directors of the Company to hold office until the next
annual meeting of shareholders and until their respective successors
are duly elected and qualified.
2. To ratify the selection by the Board of Directors of the Company of
KPMG Peat Marwick LLP as the Company's independent auditors for 1995.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 25,
1995, as the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting and any adjournment or
adjournments thereof.
The Board of Directors welcomes the personal attendance of shareholders
at the meeting. However, whether or not you expect to be present at the
meeting, please fill in, date and sign the enclosed proxy and return it to
the Company in the enclosed envelope, which requires no postage if mailed in
the United States.
By Order of the Board of Directors,
J. A. Ballew
Secretary
Dated: April 26, 1995
<PAGE>
CRYSTAL OIL COMPANY
229 Milam Street
Shreveport, Louisiana 71101
---------------
PROXY STATEMENT
---------------
April 26, 1995
This Proxy Statement is being furnished in connection with a
solicitation of proxies by the Board of Directors of Crystal Oil Company, a
Louisiana corporation (the "Company"), to be used at the Annual Meeting of
Shareholders of the Company (the "Annual Meeting") to be held on May 25,
1995, at 9:30 A.M., Shreveport, Louisiana time, at the offices of the Company
at 229 Milam Street, Shreveport, Louisiana, and at any adjournment or
adjournments thereof.
If the enclosed form of proxy is properly executed and returned, it will
be voted at the Annual Meeting, or at any adjournment or adjournments
thereof, in accordance with the specifications thereof. If no instructions
are specified in the proxy, the shares represented thereby will be voted for
the election of the nominees listed herein as directors and in favor of the
proposals set forth herein. A proxy may be revoked, at any time before it
has been voted, upon written notice to the Secretary of the Company, by
submitting a subsequently dated proxy or by attending the Annual Meeting and
withdrawing the proxy.
The record date for the determination of shareholders entitled to notice
of and to vote at the Annual Meeting has been fixed by the Board of Directors
to be the close of business on April 25, 1995 (the "Record Date"). As of the
Record Date, the Company had outstanding 2,609,792 shares of Common Stock,
$.01 par value ("Common Stock"), and 14,788,328 shares of $.06 Senior
Convertible Voting Preferred Stock, $.01 par value ("Senior Preferred
Stock"). Each outstanding share of Common Stock will be entitled to one vote
on each matter considered at the Annual Meeting and each outstanding share of
Senior Preferred Stock will be entitled to .001 of a vote on each matter
considered at the Annual Meeting. There are no other classes of voting
securities of the Company outstanding.
This Proxy Statement and the enclosed form of proxy will be mailed on or
about April 28, 1995, to shareholders of record on the Record Date entitled to
vote at the Annual Meeting. The Company will bear the cost of solicitation of
proxies by the Board of Directors, including charges and expenses of brokerage
firms, banks and others for forwarding solicitation material to beneficial
owners. In addition to the use of the mails, proxies may be solicited by
officers and employees of the Company, without remuneration, by personal
contact, telephone or telegraph. The Company has retained Morrow & Company to
aid in the solicitation of proxies, for whose services the Company will pay a
fee of $2,500, plus out-of-pocket costs and expenses.
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended December 31, 1994, is enclosed.
<PAGE>
MATTERS TO COME BEFORE THE MEETING
PROPOSAL NO. 1
ELECTION OF DIRECTORS
At the Annual Meeting, six directors are to be elected to hold office
until the next annual meeting of shareholders and until their respective
successors shall have been elected and qualified. It is the intention of the
persons named in the enclosed form of proxy to vote such proxy for the
election of the nominees named below. The nominees have indicated that they
are willing to serve as directors. The Board of Directors does not
contemplate that any of the nominees will be unable or become unavailable for
any reason. However, should any of the following nominees for the Board of
Directors be unable to serve as a director or become unavailable for any
reason, proxies which do not withhold authority to vote for the nominee will
be voted for another nominee to be selected by the Board of Directors.
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 cast for or against any particular director and will not affect the
outcome of the election of directors.
The following table sets forth for each nominee (i) the name and age of
such nominee, (ii) the positions and offices with the Company of such nominee
and (iii) the year during which such nominee first became a director. Such
table has been prepared from information obtained from the respective
nominees. The term of office of each director is until the next annual
meeting of shareholders or until his earlier resignation or his successor is
duly elected and qualified.
<TABLE>
<CAPTION>
POSITIONS
AND OFFICES SERVED AS
NAME AGE WITH THE COMPANY DIRECTOR SINCE (1)
---- --- ---------------- ------------------
<S> <C> <C> <C>
J. N. Averett, Jr. (2) . . . . . . . . . 52 President and Director 1985
Gary S. Gladstein (3). . . . . . . . . . 50 Director 1989
Robert B. Hodes (4). . . . . . . . . . . 69 Director 1989
Lief D. Rosenblatt (5) . . . . . . . . . 41 Director 1989
George P. Giard, Jr. (6) . . . . . . . . 56 Director 1987
Donald G. Housley (7). . . . . . . . . . 58 Director 1987
<FN>
- - -------------
(1) Messrs. Gladstein, Hodes and Rosenblatt were recommended as directors to
the Company by Quantum Fund N.V. and Quantum LDC Partners (collectively,
"Quantum"), which, together with George Soros, controls approximately 65.2%
of the total voting power of the Company. Messrs. Gladstein and Rosenblatt
are also employed by Soros Fund Management, the investment advisor to
Quantum.
(2) Mr. Averett has served as President of the Company since November 1985.
Mr. Averett is a member of the Executive Committee of the Board of
Directors of the Company.
(3) Mr. Gladstein has served as a Managing Director of Soros Fund Management,
an investment advisory firm, for more than the past five years.
Mr. Gladstein is also a director of Joseph A. Bank Clothiers, Inc. and
Mueller Industries, Inc. Mr. Gladstein is a member of the Audit Committee
and Compensation Committee of the Board of Directors of the Company.
(4) Mr. Hodes is a partner with the law firm of Willkie Farr & Gallagher and
has served in such capacity for more than the past five years. Mr. Hodes
is also a director of Aerointernational Inc., W. R. Berkley Corporation,
Loral Corporation, SS/L Inc. and The Cremer Foundation. Mr. Hodes is a
member of the Audit Committee of the Board of Directors of the Company.
(5) Mr. Rosenblatt has served as a Managing Director of Soros Fund Management
for more than the past five years. Mr. Rosenblatt is also a director of
Food 4 Less, Inc. Mr. Rosenblatt is a member of the Executive Committee
of the Board of Directors of the Company.
</TABLE>
-2-
<PAGE>
<TABLE>
<S> <C>
(6) Mr. Giard has been Chairman of the Board and Chief Executive Officer of
Presidio Oil Company, a company engaged in the exploration and production
of crude oil and natural gas, since January 1986. Mr. Giard also has been
a partner in Oil & Gas Finance Limited, a private energy investment firm,
since 1981. Mr. Giard is a member of the Executive Committee, Audit
Committee and Compensation Committee of the Board of Directors of the
Company.
(7) Mr. Housley is an independent investor. Mr. Housley is a member of the
Audit Committee and Compensation Committee of the Board of Directors of
the Company.
</TABLE>
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
On March 27, 1995, the Board of Directors, upon the recommendation of
its Audit Committee, appointed the firm KPMG Peat Marwick LLP as independent
auditors for the year ending December 31, 1995, subject to ratification by
the shareholders at the Annual Meeting. KPMG Peat Marwick LLP was originally
appointed as independent auditors of the Company by the Board of Directors,
upon recommendation of its Audit Committee, on May 13, 1987.
Representatives of KPMG Peat Marwick LLP are expected to attend the
Annual Meeting, will be afforded an opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions by
shareholders.
The affirmative vote of a majority of the voting power of the Common
Stock and Senior Preferred Stock, voting as a single class, cast at the
Annual Meeting is necessary for ratification of the selection of KPMG Peat
Marwick LLP. Because abstentions and broker non-votes will not be considered
to have been cast for or against the proposal, they will have no effect on
the vote on the ratification of the selection of KPMG Peat Marwick LLP. If
shareholders do not ratify the selection of KPMG Peat Marwick LLP, the Board
of Directors will consider the selection of other independent auditors for
the year ending December 31, 1995.
-3-
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of the Record Date, the beneficial
ownership of each person (including any "group" as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934 (the "Exchange Act"))
who is known by the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock and Senior Preferred Stock. Unless otherwise
indicated, each person listed has sole voting and investment power with
respect to the shares beneficially owned.
<TABLE>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
(EXCLUDING SHARES DEEMED (INCLUDING SHARES DEEMED
OWNED PURSUANT TO RIGHTS TO OWNED PURSUANT TO RIGHTS TO
ACQUIRE)(1) ACQUIRE)(2)
--------------------------- ---------------------------
NAME AND ADDRESS
OF BENEFICIAL OWNER TITLE OF CLASS SHARES PERCENT(3) SHARES PERCENT(3)
------------------- -------------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C>
Quantum Fund N.V.(4)
Quantum Partners LDC
Kaya Flamboyan 9 Common Stock 1,628,066 62.4% 1,641,895 (5) 62.6%
Curacao, Netherlands Antilles Senior Preferred Stock 878,752 5.9% 878,752 5.9%
George Soros(6) Common Stock 1,708,713 65.5% 1,752,515 (6) 66.0%
888 Seventh Avenue
New York, NY 10106
Metropolitan Life Insurance Company(7) Common Stock 314,430 12.0% 314,430 12.0%
One Madison Avenue
New York, NY 10010-3690
Chemical Banking Corporation(8) Common Stock 230,111 8.8% 230,111 8.8%
270 Park Avenue
New York, NY 10017
The Baird Family Group(9)
The Cameron Baird Foundation(9) Common Stock -- -- 13,567 *
Bridget B. Baird, Successor Trustee(9) Senior Preferred Stock 6,030,076 40.8% 6,030,076 40.8%
1350 One M&T Plaza
Buffalo, NY 14203
W. R. Huff Asset Management Company,
L.P.(10) Common Stock -- -- 5,420 *
30 Schuyler Place Senior Preferred Stock 2,409,112 16.3% 2,409,112 16.3%
Morristown, NJ 07960
Lehman Brothers Inc.(11)
World Financial Center Common Stock -- -- 3,543 *
New York, NY 10285 Senior Preferred Stock 1,575,034 10.7% 1,575,034 10.7%
Base Assets Trust(12)
11400 West Olympic Blvd. Common Stock -- -- 2,699 *
Los Angeles, CA 90064 Senior Preferred Stock 1,199,996 8.1% 1,199,996 8.1%
<FN>
*Represents less than one percent (1%) of outstanding class.
</TABLE>
-4-
<PAGE>
<TABLE>
<S> <C>
- - ----------
(1) The number and percentage of securities owned excludes any shares that the
person may be deemed to be the beneficial owner of pursuant to Rule 13d-3
promulgated under the Exchange Act as a result of any rights that such
person may have to acquire beneficial ownership of such security within 60
days.
(2) The number and percentage of securities owned includes all shares that the
person may be deemed to be the beneficial owner of pursuant to Rule 13d-3
promulgated under the Exchange Act as a result of any rights that such
person may have to acquire beneficial ownership of such security within 60
days.
(3) The percentages shown in the above table are calculated on the basis of
the 2,609,792 shares of Common Stock and 14,788,328 shares of Senior
Preferred Stock that were issued and outstanding as of the Record Date.
(4) Quantum owns in the aggregate 1,628,066 shares of Common Stock directly.
George Soros, operating as a sole proprietorship under the name Soros Fund
Management ("SFM"), is the investment advisor to Quantum and its
investment subsidiaries. Pursuant to its investment advisory contract
with Quantum and its principal subsidiaries, SFM exercises direct
investment discretion with respect to the portfolio assets held for the
account of Quantum. In addition, SFM is responsible for developing the
overall investment strategy of Quantum and its subsidiaries. Mr. Soros,
as the sole proprietor and the person who ultimately controls SFM, may
be deemed to be the beneficial owner of the securities owned by Quantum
as a result of SFM's contractual authority to exercise investment
discretion with respect to such securities. The foregoing information,
as well as the information set forth in Note 5 hereof, is based solely
on information provided to the Company by Quantum, Amendment No. 11 to
the joint Schedule 13D dated February 28, 1995 of Quantum and George
Soros.
(5) The number of shares of Common Stock beneficially owned by Quantum and
George Soros includes 1,977 shares of Common Stock that are issuable upon
conversion of 829,552 shares of Senior Preferred Stock and 6,397 shares of
Common Stock that are issuable upon the exercise of 12,795,331 $.075
Warrants and 5,455 shares that are issuable upon the exercise of
10,911,024 $.10 Warrants, which warrants are owned by Quantum.
(6) George Soros directly owns an aggregate of 80,647 shares of Common
Stock. In addition, Mr. Soros may be deemed to be the beneficial owner
of the shares beneficially owned by Quantum described above as a result
of SFM's contracted authority to exercise investment discretion with
respect to such securities. The number of shares of Common Stock and
percentage of beneficial ownership of Mr. Soros includes 16,340 shares
of Common Stock that are issuable upon the exercise of 32,681,208 $.075
Warrants and 13,633 shares of Common Stock that are issuable upon the
exercise of 27,266,098 $.10 Warrants. The foregoing information is
based solely on information provided to the Company in filings by George
Soros with the Commission with respect to his beneficial ownership of
Common Stock.
(7) Metropolitan Life Insurance Company, through its subsidiary State Street
Research and Management Company, Inc., owns beneficially all the shares of
Common Stock listed. The foregoing information is based solely on
Amendment No. 5 to the Schedule 13G dated February 9, 1995, of
Metropolitan Life Insurance Company filed with the Commission with
respect to its beneficial ownership of Common Stock and information
obtained directly from State Street Research and Management Company, Inc.
(8) Chemical Banking Corporation, through its subsidiary Texas Commerce Bank
National Association, owns beneficially all of the shares of Common Stock
listed. The foregoing information is based solely on the joint
Schedule 13G dated February 10, 1995, of Chemical Banking Corporation and
Texas Commerce Bank filed with the Commission with respect to its
beneficial ownership of Common Stock.
</TABLE>
-5-
<PAGE>
<TABLE>
<S> <C>
(9) The Baird Family Group owns in the aggregate 6,030,076 shares of Senior
Preferred Stock that may be converted into 13,567 shares of Common Stock.
The Baird Family Group is comprised of twelve family members, Aires Hill
Corporation and Belmont Contracting Co., Inc., private holding companies
of the Baird family, The Cameron Baird Foundation, a charitable foundation
trust controlled by the Baird family and Citizens Growth Properties, a
business trust controlled by the Baird family. The foregoing information,
as well as the other information set forth in this Note, is based solely
on Amendment No. 15 to the joint Schedule 13D dated April 6, 1995, of the
Baird family filed with the Commission with respect to their beneficial
ownership of the Senior Preferred Stock. The Cameron Baird Foundation
owns in the aggregate 1,623,821 shares of Senior Preferred Stock that may
be converted into 3,653 shares of Common Stock and Bridget B. Baird,
Successor Trustee, owns in the aggregate 1,349,900 shares of Senior
Preferred Stock that may be converted into 3,037 shares of Common Stock.
(10) W. R. Huff Asset Management Company, L.P. owns in the aggregate 2,409,112
shares of Senior Preferred Stock that may be converted into 5,420 shares
of Common Stock. Such shares are held on behalf of The Northern Trust
Company as trustee of the Allied-Signal Inc. Master Pension Trust. The
foregoing information is based solely on the Schedule 13G dated
November 13, 1991, of W. R. Huff Asset Management Company, L.P. filed
with the Commission with respect to its beneficial ownership of Senior
Preferred Stock.
(11) Lehman Brothers Inc. owns in the aggregate 1,575,034 shares of Senior
Preferred Stock which may be converted into 3,543 shares of Common Stock.
The foregoing information is based solely on the joint Schedule 13D dated
February 20, 1992, of Lehman Brothers Inc. and its indirect parent,
American Express Company, filed with the Commission with respect to their
beneficial ownership of Senior Preferred Stock.
(12) Base Assets Trust owns in the aggregate 1,199,996 shares of Senior
Preferred Stock which may be converted into 2,699 shares of Common Stock.
The foregoing information is based solely on Amendment No. 2 to the
Schedule 13G dated February 14, 1995, of Base Assets Trust filed with the
Commission with respect to its beneficial ownership of the Senior
Preferred Stock.
</TABLE>
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<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of the Record Date, the beneficial
ownership of the equity securities of the Company of each of the directors of
the Company, each executive officer named in the Summary Compensation Table and
all executive officers and directors of the Company as a group. Unless
otherwise indicated, the named person directly owns the securities listed and
exercises sole voting and investment power with respect thereto. Such table
has been prepared from information obtained from the respective directors and
executive officers.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
(EXCLUDING SHARES DEEMED OWNED (INCLUDING SHARES DEEMED OWNED
PURSUANT TO RIGHTS PURSUANT TO RIGHTS
TO ACQUIRE)(1) TO ACQUIRE)(2)
------------------------------- ------------------------------
NAME TITLE OF CLASS SHARES PERCENT(3) SHARES PERCENT(3)
---- -------------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C>
J. N. Averett, Jr. Common Stock 3,912 * 48,912 (4) 1.8%
$.075 Warrants 1,000,000 1.0% 1,000,000 1.0%
$.10 Warrants 2,000,000 1.3% 2,000,000 1.3%
Gary S. Gladstein(5) Common Stock 2,100 * 2,100 *
Robert B. Hodes Common Stock 100 * 100 *
Lief D. Rosenblatt (6) Common Stock -- -- -- --
George P. Giard, Jr.(7) Common Stock 1,526 * 1,986 (8) *
$.10 Warrants 461,030 * 461,030 *
$.125 Warrants 461,030 * 461,030 *
Donald G. Housley (9) Common Stock 22,454 * 26,825 (10) 1.0%
Senior Preferred Stock 79,999 * 79,999 *
$.075 Warrants 140,000 * 140,000 *
$.10 Warrants 4,297,748 2.8% 4,297,748 2.8%
$.125 Warrants 3,949,149 1.5% 3,949,149 1.5%
Sam J. Clinton (11) Common Stock 535 * 13,796 (12) *
Senior Preferred Stock 1,019 * 1,019 *
$.075 Warrants 1,001,785 1.0% 1,001,785 1.0%
$.10 Warrants 1,001,529 * 1,001,529 *
$.125 Warrants 6,177 * 6,177 *
$.15 Warrants 6,177 * 6,177 *
$.25 Warrants 6,177 * 6,177 *
All executive officers Common Stock 31,933 1.2% 126,615 (13) 4.7%
and directors of the Senior Preferred Stock 81,018 * 81,018 *
Company as a group $.075 Warrants 4,481,785 4.6% 4,481,785 4.6%
(11 persons) $.10 Warrants 10,100,307 6.6% 10,100,307 6.6%
$.125 Warrants 4,416,356 1.7% 4,416,356 1.7%
$.15 Warrants 6,177 * 6,177 *
$.25 Warrants 6,177 * 6,177 *
<FN>
*Represents less than one percent (1%) of outstanding class.
</TABLE>
-7-
<PAGE>
<TABLE>
<S> <C>
- - -----------
(1) The number and percentage of securities owned excludes any shares that the
person may be deemed to be the beneficial owner of pursuant to Rule 13d-3
promulgated under the Exchange Act as a result of any rights that such
person may have to acquire beneficial ownership of such security within 60
days.
(2) The number and percentage of securities owned includes all shares that the
person may be deemed to be the beneficial owner of pursuant to Rule 13d-3
promulgated under the Exchange Act as a result of any rights that such
person may have to acquire beneficial ownership of such security within 60
days.
(3) The percentages shown in the above table are calculated on the basis of
the 2,609,792 shares of Common Stock, 14,788,328 shares of Senior
Preferred Stock, 96,963,866 $.075 Warrants, 152,742,753 $.10 Warrants,
259,078,740 $.125 Warrants, 194,414,877 $.15 Warrants and 195,415,983
$.25 Warrants that were issued and outstanding as of the Record Date.
(4) The number of shares and percentage of beneficial ownership includes
45,000 shares of Common Stock that are issuable upon the exercise of
1,000,000 $.075 Warrants, 2,000,000 $.10 Warrants and stock options to
acquire 43,500 shares of Common Stock owned by Mr. Averett and 702 shares
of Common Stock that are owned by him through the Company's Employee
Stock Ownership Plan.
(5) Mr. Gladstein owns directly the shares identified. In addition, Mr.
Gladstein may be deemed to be the beneficial owner of 300 shares of
Common Stock that are held by a trust for which he acts as trustee.
Mr. Gladstein exercises voting and investment power with respect to
the shares of Common Stock held by such trust.
(6) Mr. Rosenblatt does not own any of the Company's securities.
(7) Of the securities listed above, 269 shares of Common Stock, 39,075 $.10
Warrants and 39,075 $.125 Warrants are owned directly by Mr. Giard. In
addition, Mr. Giard may be deemed to be the beneficial owner of 1,257
shares of Common Stock, 421,955 $.10 Warrants and 421,955 $.125 Warrants
that are owned by Oil & Gas Investment A.G., in which Mr. Giard owns a
substantial stock interest. Mr. Giard has shared voting and investment
power with respect to the securities owned by Oil & Gas Investment A.G.
(8) The number of shares and percentage of beneficial ownership includes 230
and 230 shares of Common Stock that are issuable upon the exercise of
461,030 $.10 Warrants and 461,030 $.125 Warrants, respectively, listed in
Note 7 hereof.
(9) Of the securities listed above, 10,150 shares of Common Stock, 3,223,177
$.10 Warrants and 2,994,577 $.125 Warrants are owned directly. In
addition, Mr. Housley may be deemed to be the beneficial owner of 12,304
shares of Common Stock, 79,999 shares of Senior Preferred Stock, 140,000
$.075 Warrants, 1,074,571 $.10 Warrants and 954,572 $.125 Warrants that
are owned by Mr. Housley's mother, for whom he exercises investment power
with respect to such securities.
(10) Of the shares of Common Stock listed above, 13,258 shares of Common Stock
(including 3,108 shares that may be received upon the conversion or
exercise of other securities) are owned directly and 13,567 shares of
Common Stock (including 1,263 shares that may be received upon the
conversion or exercise of other securities) are owned by Mr. Housley's
mother, for whom he exercises investment power with respect to such
shares. The number of shares of Common Stock and percentage of beneficial
ownership of Mr. Housley includes 179 shares of Common Stock that are
issuable upon the conversion of 79,999 shares of Senior Preferred Stock.
In addition, the number of shares of Common Stock and percentage of
beneficial ownership of Mr. Housley includes 70, 2,148 and 1,974 shares
of Common Stock that are issuable upon the exercise of the $.075
Warrants, $.10 Warrants and $.125 Warrants, respectively.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(11) Of the securities listed above, 525 shares of Common Stock, 1,000,000
$.075 Warrants, 1,000,000 $.10 Warrants, 3,868 $.125 Warrants, 3,868 $.15
Warrants and 3,868 $.25 Warrants are owned directly. In addition, Mr.
Clinton may be deemed to be the beneficial owner of 10 shares of Common
Stock, 1,019 shares of Senior Preferred Stock, 1,785 $.075 Warrants, 1,529
$.10 Warrants, 2,309 $.125 Warrants, 2,309 $.15 Warrants and 2,309 $.25
Warrants that are owned by Mr. Clinton's wife.
(12) Of the shares of Common Stock listed above, 13,708 shares of Common Stock
(including 13,183 shares that may be received upon conversion or exercise
of other securities) are owned directly and 88 shares of Common Stock
(including 78 shares that may be received upon conversion or exercise of
other securities) are owned by Mr. Clinton's wife. The number of shares
of Common Stock and percentage of beneficial ownership of Mr. Clinton
include 2 shares of Common Stock that are issuable upon conversion of
1,019 shares of Senior Preferred Stock. In addition, the number of shares
of Common Stock and percentage of beneficial ownership of Mr. Clinton
includes 13,259 shares of Common Stock that are issuable upon the exercise
of 1,001,785 $.075 Warrants, 1,001,529 $.10 Warrants, 6,177 $.125
Warrants, 6,177 $.15 Warrants, 6,177 $.25 Warrants, stock options to
acquire 12,250 shares of Common Stock and 455 shares of Common Stock
owned by him through the Company's Employee Stock Ownership Plan.
(13) The number of shares of Common Stock and percentage of beneficial
ownership attributable to all directors and executive officers of the
Company as a group includes 181 shares of Common Stock that are issuable
upon the conversion of 81,018 shares of Senior Preferred Stock that may be
beneficially owned by such persons. In addition, the number of shares of
Common Stock and percentage of beneficial ownership attributable to such
persons include 2,240, 5,048, 2,207, 3, 3 and 85,000 shares of Common
Stock, respectively, that are issuable upon the exercise of the 4,481,785
$.075 Warrants, 10,100,307 $.10 Warrants, 4,416,356 $.125 Warrants,
6,177 $.15 Warrants, 6,177 $.25 Warrants, stock options to acquire 85,000
shares of Common Stock and 2,413 shares of Common Stock owned through the
Company's Employee Stock Ownership Plan that may be beneficially owned by
such persons.
</TABLE>
MANAGEMENT
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors of the Company has a standing Audit Committee,
which is currently comprised of Messrs. Gladstein, Hodes, Giard and Housley.
The Audit Committee is charged with the duties of recommending to the Board
the appointment of independent auditors; reviewing the compensation of such
auditors; assuring that proper guidelines are established for the
dissemination of financial information; conferring with the independent
auditors to assure that the personnel of the Treasurer's and Controller's
departments are adequately trained and supervised; meeting periodically with
the independent auditors, Board of Directors and certain officers of the
Company to insure the adequacy of internal controls and reporting; reviewing
the Company's consolidated financial statements; and performing any other
duties or functions deemed appropriate by the Board. Two meetings of the
Audit Committee were held in 1994.
The Board of Directors of the Company has an Executive Committee, which
is currently comprised of Messrs. Averett, Giard and Rosenblatt. The
Executive Committee of the Board of Directors has the authority to exercise
all powers of the Board of Directors that may be legally delegated to it
under Louisiana law, except that it does not have the authority to declare a
dividend or to authorize the issuance of shares of stock. No meetings of the
Executive Committee were held in 1994.
The Board of Directors of the Company has a Compensation Committee,
which is currently comprised of Messrs. Giard, Housley and Gladstein. The
Compensation Committee of the Board of Directors has the authority to review
the performance of the employees of the Company and make recommendations to
management with respect thereto, to review the compensation policies of the
Company and to administer the employee benefit plans of the Company and make
awards thereunder. One meeting of the Compensation Committee was held in
1994.
-9-
<PAGE>
The Board of Directors of the Company does not have a standing
Nominating Committee.
During 1994, there were eleven meetings of the Board of Directors. All
current directors of the Company attended more than 75% of the combined
number of Board meetings and meetings of the committees of the Board of which
they are members.
EXECUTIVE OFFICERS
The following table lists the names, ages, positions and periods of
service with the Company of the Company's current executive officers. Such
persons were elected by the Board of Directors of the Company and serve until
their earlier resignation or until they are removed or replaced by the Board
of Directors.
<TABLE>
<CAPTION>
SERVED AS
EXECUTIVE
NAME AGE OFFICER SINCE CURRENT POSITION
---- --- ------------- ----------------
<S> <C> <C> <C>
J. N. Averett, Jr. (1) . 52 1985 President and Director
J. A. Ballew (2) . . . . 39 1986 Senior Vice President, Treasurer,
Secretary and Chief Financial Officer
Sam J. Clinton (3) . . . 60 1982 Senior Vice President-Operations
Paul E. Holmes (4) . . . 38 1990 Vice President/Controller
David L. Hayden (5). . . 40 1990 Vice President/Engineering
John W. Walsh (6) . . . 45 1990 Vice President/Land
<FN>
- - ------------
(1) See "Election of Directors" for biographical information.
(2) Mr. Ballew has been associated with the Company since 1985 and currently
serves as Senior Vice President, Treasurer, Secretary and Chief Financial
Officer.
(3) Mr. Clinton has been associated with the Company since 1976 either as a
full-time production consultant or officer and currently serves as Senior
Vice President-Operations.
(4) Mr. Holmes has been associated with the Company since 1978 and is currently
Vice President/Controller.
(5) Mr. Hayden has been associated with the Company since 1982 and is currently
Vice President/Engineering.
(6) Mr. Walsh has been associated with the Company since 1981 and is currently
Vice President/Land.
</TABLE>
-10-
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Board of Directors
of the Company is pleased to present this report regarding the compensation
policies and practices of the Company applicable to its chief executive
officer and other executive officers.
GENERAL POLICY
The Company's compensation policy applicable to its executive officers
is to offer compensation opportunities that the Committee believes are
competitive and reasonable based on a number of factors, including the
individual's performance and contribution to the future growth of the
Company, the financial and operational results of the Company and industry
and market conditions. Compensation decisions for 1994 also took into
consideration the Company's recent sale of the Company's domestic oil and gas
properties and the officer's assistance in effecting the same for the benefit
of the Company's shareholders. Future compensation decisions, including bonus
and other incentive compensation, will also take into account the efforts of
the Company's executive officers in pursuing new opportunities for the future
growth of the Company.
The specific compensation of the Company's executive officers is
reviewed and approved annually by the Compensation Committee, which is
comprised entirely of non-employee directors. The components of the
Company's executive compensation program are summarized below.
BASE SALARIES
The base salaries of the Company's executives are determined based on
their positions with the Company, their experience, the cost of living in
their area of employment and competitive market factors. Base salaries are
reviewed annually and adjusted where deemed appropriate. In reviewing the
base salaries of the Company's officers, the Committee considers data from
published reports regarding reported compensation for companies located in
the Shreveport, Louisiana area and for other companies of similar size and
complexity. These reports are used as a check on the general competitiveness
of the Company's salaries and not as a means to mathematically establish
salaries within specified percentiles of salary ranges.
In 1994, Mr. Averett's base compensation was increased to $200,000 from
$160,000. Other increases were granted to the Company's other executive
officers ranging from $7,000 to $15,000. The increases in base compensation
were based on the fact that no increases had been granted in recent years and
in order to make the base compensation of the Company's executive officers
more competitive.
BONUSES
Bonus compensation is provided to the Company's executive officers from
time to time based on the financial results of the Company, the executive's
past personal performance and related prior specific operational and other
achievements. Accordingly, bonus decisions are determined by the Committee
on a subjective basis in light of such factors as the Committee considers
relevant. Bonus compensation for Mr. Averett is determined primarily pursuant
to his employment agreement with the Company, which provides Mr. Averett with
an annual cash bonus equal to 2% of the Company's net profits in excess of
$1,000,000. Mr. Averett, however, received an additional bonus for 1994 for
his efforts in structuring, negotiating and effecting the successful
disposition of the Company's domestic oil and gas properties to Apache
Corporation.
A special retention bonus arrangement was also adopted in late 1994 in
connection with the Company's decision to dispose of its domestic oil and gas
properties. Under this arrangement, a semi-annual bonus equal to 1/8th of
the officer's annual base salary is to be paid for a period of two years as
long as the officer remains in the employ of the Company. This arrangement
was implemented to provide incentive for the officers to remain in the employ
of the Company following the asset disposition and to work toward the
successful redeployment of the net proceeds from the sale for the future
growth of the Company.
-11-
<PAGE>
LONG-TERM INCENTIVE COMPENSATION
The Committee believes that long term incentive compensation is a key
component of the Company's compensation program and that the value of long
term incentive compensation should be directly related to increases in
shareholder value. Thus, in addition to base salaries and bonuses, the
Company provides long-term incentive compensation to its executive officers
through stock options under the Company's stock option plan and contributions
to a broad-based employee stock ownership plan. Awards under these plans are
intended to provide incentives to the participants to increase shareholder
value by providing benefits that are directly related to the market value of
the Common Stock.
STOCK OPTIONS.
Under the Company's stock option plan, the Committee has the authority to
grant options to purchase shares of Common Stock to the Company's executive
officers and key employees for terms of up to ten years, with exercise prices
equal to or greater than the market price of the Common Stock at the time of
grant and with vesting conditions established by the Committee. The Committee
believes that options provide a desirable form of incentive to the Company's
officers in that options received by an officer will be of no value to the
officer unless the value of the Common Stock increases.
It is the policy of the Committee that options not be granted under the
Company's stock option plan as a matter of course. Rather, decisions as to
whether to grant options to an officer are made by the Committee on an annual
basis in light of the circumstances, including the officer's contributions to
the Company over the prior year and the expected contributions by the officer
in the future. If an option is granted to an officer, the number of shares
of Common Stock subject to the granted option will be based on, among other
things, the level of responsibility of the officer, the anticipated
contribution of the officer to the future growth of the Company, the number
of shares that the Committee believes would be necessary to provide the
officer with a meaningful incentive to improve shareholder value and the
potential dilution that might result from the grant. The Committee also
considers the amount and terms of the options held by the officers. Vesting
requirements will generally be placed on options in order to relate the
benefits of any options granted to an officer to the continued employment of
the officer with the Company.
During 1994, the Company granted options to purchase 37,500 shares of
Common Stock at an exercise price of $22.125 per share to nine of its
executive officers and employees. The market price of the Common Stock at
the time of grant was $22.125 per share. These grants were made following
the Committee's assessment of each of the optionees' contributions to the
Company in 1993, in particular their efforts in developing the Company's
Southeast Pass properties acquired in 1992, in pursuing new opportunities for
the Company domestically and abroad and in assisting the Company in
simplifying its capital structure through the reclassification of the
Company's Series A Preferred Stock.
Under the terms of the Company's previously granted options, the
disposition of the Company's domestic oil and gas properties accelerated the
vesting of the outstanding options in December 1994. The effect of this
acceleration was considered by the Committee in connection with the decisions
made by it regarding bonuses and the granting of new options for 1994.
On April 17, 1995, the Company granted options to purchase 17,500 shares
of Common Stock at an exercise price of $31.125 per share to three of its
executive officers. The market price of the Common Stock at the time of
grant was $31.125 per share. These grants were made following the
Committee's assessment of each of the optionee's contributions to the
successful efforts by the Company to achieve value for its assets in 1994,
with an emphasis on the anticipated contributions by the optionee to the
Company in the future as the Company pursues new opportunities for growth.
EMPLOYEE STOCK OWNERSHIP PLAN.
The Company also provides long-term incentive compensation to its
officers and employees through the Company's Employee Stock Ownership Plan
("ESOP"). The ESOP is a broad based plan that is qualified under the
Internal Revenue Code of 1986 and provides for annual cash contributions by
the Company of up to 10% of annual compensation of all participating
employees to a trust for the purchase
-12-
<PAGE>
of shares of Common Stock for the account of the employees. The amount of
the contribution, if any, for any given year is in the sole discretion of the
Committee. It is the current policy of the Committee that the amount of the
Company's contribution to the ESOP be determined after considering both
financial and operational results of the Company and that the contribution
serve both as a recognition of past performance and as an incentive for
future performance. The Committee authorized a $150,000 contribution to the
ESOP for 1994, which represented approximately 5% of the compensation of the
participating employees. Benefits under the ESOP vest over a five year
period. The Company's asset disposition in 1994, however, accelerated vesting
under the ESOP for all contributions prior to such disposition. Employees
realize benefits under the ESOP with respect to contributions and to the
extent of growth in the market value of Common Stock.
COMPENSATION OF AND EMPLOYMENT AGREEMENT WITH CHIEF EXECUTIVE OFFICER
The base and fixed bonus compensation of the Company's Chief Executive
Officer, J. N. Averett, Jr., is determined pursuant to a one year employment
agreement between the Company and Mr. Averett that is renewable annually.
Under such agreement, Mr. Averett receives an annual base salary of $200,000,
which may be increased by mutual agreement between the Company and Mr.
Averett based on annual reviews by the Board of Directors of the Company of
Mr. Averett's performance in the prior year. Mr. Averett's base salary was
increased by $40,000 to its current level in March 1994 in recognition of the
contributions that Mr. Averett has provided to the Company over the past
years and the fact that his base salary had not been increased since 1985.
In addition to his base salary, Mr. Averett is entitled to receive under
his agreement with the Company an annual cash bonus in an amount equal to 2%
of the excess over $1,000,000 of the consolidated net profits of the Company
in each year during the term of his employment agreement. Under this
arrangement, Mr. Averett received a cash bonus in the amount of $50,136 with
respect to 1994 results. This bonus reflects the beneficial financial impact
of the Company's disposition of its oil and gas properties during 1994. Mr.
Averett also received a supplemental cash bonus of $30,864 relating to his
efforts in connection with the Company's 1994 property disposition to Apache
Corporation and was intended to offset the effect on the calculation of Mr.
Averett's bonus of the $3.8 million extraordinary charge associated with the
Company's prepayment of debt in 1994 in connection with the property
disposition.
In addition to the cash bonus paid to Mr. Averett for 1994, the
Committee concluded that it would be appropriate to provide Mr. Averett with
additional incentive to further develop the businesses of the Company to
improve shareholder value through the grant of an option to purchase
additional shares of Common Stock. Accordingly, on April 17, 1995, the
Committee granted to Mr. Averett an option to purchase an aggregate of 10,000
shares of Common Stock at an exercise price of $31.125 per share, the market
price of the stock on the date of grant. The number of shares subject to
such option was determined by the Committee after considering Mr. Averett's
other compensation arrangements with the Company and reflects the number of
shares which the Committee believed would provide Mr. Averett with a
meaningful form of incentive to continue to work toward the financial growth
of the Company so as to improve shareholder value.
The Committee believes that the combination of the compensation provided
to Mr. Averett under his employment agreement and the benefits provided to
him through the granting of options and his participation in the ESOP closely
align Mr. Averett's compensation with the financial and stock performance of
the Company.
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
shareholders 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
-13-
<PAGE>
management is an important part of its responsibilities and benefits the
Company's shareholders. 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 1995.
SUMMARY
After review of the existing compensation programs of the Company, the
Committee believes that the Company's executive compensation program is
consistent with the compensation programs provided by other companies
comparable in size and complexity to the Company. Further, the Committee
believes that the components of the Company's compensation program are
necessary and appropriate to retain the services of those officers and
employees who are considered by the Committee essential to the continued
success, development and growth of the Company and provide for compensation
that is significantly dependent upon and related to the Company's performance
such that the financial interests of the Company's executive officers will be
closely aligned with those of the Company's shareholders.
Gary S. Gladstein
George P. Giard, Jr.
Donald G. Housley
-14-
<PAGE>
COMPENSATION AND TRANSACTIONS WITH MANAGEMENT
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information with respect to the Chief
Executive Officer and the other executive officers of the Company as to whom
the total annual salary and bonus for the fiscal year ended December 31,
1994, exceeded $100,000.
<TABLE>
<CAPTION> SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------------- ------
OTHER SECURITIES
NAME AND ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS COMPENSATION(2)
------------------ ---- ------ ----- ------------------ ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
J. N. Averett, Jr. 1994 $193,333 $90,000 $ -0- 7,500 $1,231
President 1993 160,000 13,596 -0- 14,000 1,037
1992 160,000 25,000 -0- 22,000 1,018
Sam J. Clinton 1994 108,333 -0- 15,323 3,000 697
Senior Vice President - Operations 1993 100,000 -0- -0- 5,000 648
1992 100,000 8,000 -0- 11,000 636
<FN>
- - -------------
(1) Excludes perquisites and other benefits because the aggregate amount of such compensation does not exceed the lesser of
either $50,000 or 10 percent of the total of annual salary and bonus reported for the named executive officer.
(2) Represents life insurance premiums paid by the Company.
</TABLE>
The following table shows, as to the executive officers named in
the Summary Compensation Table, information about option grants during
the year ended December 31, 1994. The Company does not grant any stock
appreciation rights.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
GRANT DATE
INDIVIDUAL GRANTS VALUE
- - ---------------------------------------------------------------------------- ----------
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES EXERCISE GRANT DATE
OPTIONS IN FISCAL PRICE EXPIRATION PRESENT
NAME GRANTED(1) YEAR (PER SHARE) DATE VALUE(2)
---- ---------- ---- ----------- ---- --------
<S> <C> <C> <C> <C> <C>
J. N. Averett, Jr. 7,500 16% $22.125 03/01/04 $162,569
Sam J. Clinton 3,000 6% 22.125 03/01/04 65,028
<FN>
- - --------------
(1) Stock options granted on March 1, 1994. Options vest in one-quarter increments on an annual
basis and become fully vested on March 1, 1998. Vesting under all such options was
accelerated as a result of the closing of the Apache transaction.
(2) Based upon Black-Scholes option valuation model. The calculation assumes volatility of .50,
a risk free rate of return of 7%, a ten year option term, option grants at $22.125 per share
and that no dividends are paid during the life of the option.
</TABLE>
-15-
<PAGE>
The following table shows aggregate option exercises during the
year ended December 31, 1994, and option values at December 31, 1994,
for the executive officers named in the Summary Compensation Table. The
Company does not grant any stock appreciation rights.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SHARES SECURITIES UNDERLYING UNEXERCISED
ACQUIRED ON VALUE UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
NAME EXERCISE REALIZED AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
---- -------- -------- ----------------------------- ----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. N. Averett, Jr. -0- $ -0- 43,500 -0- $425,875 $ -0-
Sam J. Clinton 6,750 77,825 12,250 -0- 116,594 -0-
<FN>
- - ------------
(1) Computed based upon the difference between aggregate market value of the Common Stock
issuable on the exercise of the option at December 31, 1994, and the exercise price for such
shares. 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 unexercised options
has not been described to reflect present value.
</TABLE>
The following table sets forth information regarding the number of
shares of Common Stock allocated to the account of the executive
officers named in the Summary Compensation Table as a result of
contributions made to the ESOP during the fiscal year ended December 31,
1994. The ESOP is qualified under the Internal Revenue Code of 1986 and
provides for annual cash contributions by the Company of up to 10% of
annual compensation of all participating employees to a trust for the
purchase of shares of Common Stock for the account of the employees.
The amount of the contribution, if any, for any given year is in the
sole discretion of the Compensation Committee of the Board of Directors.
The Committee authorized a $150,000 contribution to the ESOP for the
fiscal year ended December 31, 1994.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF PERFORMANCE OR
SHARES, UNITS OTHER PERIOD UNTIL
OR OTHER MATURATION OR
NAME RIGHTS PAYOUT
---- ------ ------
<S> <C> <C>
J. N. Averett, Jr. 330 (1)
Sam J. Clinton 239 (1)
<FN>
- - -------------
(1) At the time of grant, awards were subject to vesting at a rate of 20% of the shares for each
year of employment with the Company after January 1, 1993. The awards became fully vested
for the above executives under the terms of the ESOP as a result of the sale of
substantially all of the Company's domestic oil and gas properties on December 30, 1994.
</TABLE>
DIRECTORS' FEES
Each director of the Company who is not an employee of the Company
receives $25,000 in cash per year. No compensation for serving as a
director is paid to any member of the Board of Directors who is also an
employee of the Company.
In addition to their annual fees as directors of the Company, the
members of the Board of Directors are paid a per meeting fee of $500 for
each Board and Committee meeting attended. Further, the Company from
time to time requests its directors who are not employees to attend
meetings and perform services for the Company. Directors so employed by
the Company are compensated at the rate of $500 per day. During 1994,
Messrs. Gladstein, Hodes, Rosenblatt, Giard and Housley received $6,000,
$5,500, $5,000, $7,000 and $7,000, respectively, pursuant to such
arrangements, which compensation included fees paid for attendance at
Board and Committee meetings.
EXECUTIVE COMPENSATION AND SEVERANCE AGREEMENT
SEVERANCE AGREEMENTS. In an effort to provide appropriate
incentives for the Company's officers and key employees to maximize the
value of the Company's assets as part of its disposition of assets to
Apache Corporation and to encourage the retention of those officers and
employees who will be important for the Company to retain following the
transaction, the Company has entered into various Executive
-16-
<PAGE>
Compensation and Severance Agreements with its executive officers and key
employees (the "Incentive Compensation and Severance Agreements"). The term
of each Incentive Compensation and Severance Agreement expire on December 31,
1999. In general, the Incentive Compensation and Severance Agreements
provide for (i) a cash payment to the executive equal to a multiple of the
executive's most recent base salary plus an extension of health and insurance
benefits for a period of time if the employment of the executive is
terminated following an Asset Acquisition (as defined below) or a "Change in
Control" (as defined below) either by the Company without "cause" (as defined
below) or by the executive due to a decrease in the executive's salary or a
material change in the duties and responsibilities of the executive as
described therein and (ii) certain cash bonus payments payable in equal
semi-annual installments over a two-year period aggregating 50% of the
executive's base salary if the executive is in the employ of the Company at
that time. A voluntary termination of employment by an officer or key
employee without a decrease in salary or a material change in duties or
responsibilities will not entitle the employee to severance payments under
the Incentive Compensation and Severance Agreements.
Under the terms of the Incentive Compensation and Severance
Agreements, the amount of any severance payments and length of such
benefits will vary depending on the executive, with the President of the
Company receiving three times his annual salary and three years of
benefits, the Senior Vice Presidents of the Company each receiving two
times their annual salary and two years of benefits and the other
executive officers and key employees of the Company each receiving their
annual salary and one year of benefits. The amount of severance
payments that would be made to J. N. Averett, Jr., Sam J. Clinton and
all executive officers and key employees of the Company as a group are
$600,000, $220,000 and $1,481,000, respectively, if their employment
were to be terminated by the Company following the Transaction for any
reason other than cause.
An "Asset Acquisition" is defined in the Incentive Compensation
and Severance Agreements to include the recent sale of assets to Apache
Corporation. The term "Change in Control" is defined in the Incentive
Compensation and Severance Agreements to mean (i) the acquisition by a
person (other than Quantum and the executive officers and key employees)
of beneficial ownership of 50% or more of the voting power of the
Company, (ii) a change in the composition of a majority of the Board of
Directors of the Company within any four-year period that was not
approved by a majority of the Board of Directors of the Company before
such period, (iii) the failure of more than one of the persons nominated
by the Board of Directors at a meeting of shareholders of the Company to
be elected or (iv) the approval by the shareholders of the Company of a
merger, consolidation, sale of substantially all assets or other
reorganization of the Company in which the Company does not survive.
The term "cause" is defined in the Incentive Compensation and Severance
Agreements to mean dishonesty, conviction of a felony or the continued
failure by the executive officer to perform material duties consistent
with the executive officer's position.
EMPLOYMENT CONTRACTS
As described in the report of the Compensation Committee of the
Board of Directors of the Company, the Company has an employment
agreement with J. N. Averett, Jr. Under such agreement, Mr. Averett has
agreed to serve as Chief Executive Officer or President and Chief
Operating Officer through the term of the agreement. Mr. Averett's
employment agreement is a year to year contract with a provision that
provides that it will be automatically renewed at the end of each year
unless certain prior notices are provided. Mr. Averett's base
compensation under the employment agreement is currently $200,000 per
year and may be increased by mutual agreement between the Company and
Mr. Averett. Mr. Averett is also entitled to an annual cash bonus equal
to 2% of the excess over $1,000,000 of the consolidated net profits of
the Company during each year during the term of his employment
agreement. Mr. Averett's employment agreement also provides Mr. Averett
with routine benefits such as insurance, vacations, reimbursement of
expenses, use of an automobile and other similar benefits provided to
senior members of management of the Company. The Company's employment
agreement with Mr. Averett further provides that in the event
Mr. Averett's employment is terminated by Mr. Averett for "good reason"
or by the Company for any reason other than "cause", Mr. Averett will be
entitled to receive $100,000 in cash plus any other compensation to
which he may be entitled pursuant to the agreement.
-17-
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the performance of the
Company's Common Stock to the Dow Jones Equity Market Index and the Dow
Jones Energy-Oil Secondary Index for the five years ended December 31,
1994. The graph assumes that the value of the investment in the
Company's Common Stock and each index was $100 at December 31, 1989, and
that all dividends were reinvested.
COMPARISON OF FIVE YEARS CUMULATIVE TOTAL RETURN
AMONG CRYSTAL OIL COMPANY, DOW JONES EQUITY MARKET &
DOW JONES ENERGY-OIL SECONDARY INDEX
FISCAL YEAR ENDING DECEMBER 31
[GRAPH]
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994
- - --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Crystal Oil Company 100 46 58 76 73 98
- - --------------------------------------------------------------------------------------------
Dow Jones Equity Market Index 100 96 127 135 152 153
- - --------------------------------------------------------------------------------------------
Dow Jones Energy-Oil Secondary Index 100 83 82 82 91 88
- - --------------------------------------------------------------------------------------------
</TABLE>
-18-
<PAGE>
SHAREHOLDER PROPOSALS
Shareholder proposals for inclusion in the Proxy Statement for
presentment to the 1995 Annual Meeting of Shareholders must be received
at the office of the Company, 229 Milam Street, Shreveport, Louisiana
71101, no later than December 29, 1995, to be considered for inclusion
in the Proxy Statement relating to such meeting.
OTHER INFORMATION
The Board of Directors is not aware that any matters other than
those set forth herein and the Notice of Annual Meeting of Shareholders
will come before the meeting. Should any other matters requiring the
vote of the shareholders arise, it is intended that proxies will be
voted in respect thereof in accordance with the best judgment of the
person or persons voting the proxy in the interest of the Company.
By Order of the Board of Directors,
J. A. Ballew
Secretary
Dated: April 26, 1995
<PAGE>
[FRONT]
CRYSTAL OIL COMPANY
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned shareholder of Crystal Oil Company, a Louisiana
corporation (the "Company"), hereby appoints J. N. Averett, Jr.,
Gary S. Gladstein and Donald G. Housley, and each of them,
Proxies of the undersigned, with the power of substitution, to
vote, as designated hereon, all of the shares of the capital
stock of the Company which the undersigned would be entitled to
vote at the annual meeting of shareholders to be held on May 25,
1995, or at any adjournment or adjournments thereof, on the
following matters more particularly described in the Proxy
Statement dated April 26, 1995.
(CONTINUED ON REVERSE SIDE)
<PAGE>
[BACK]
This proxy when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES LISTED HEREIN OR ANY SUBSTITUTE FOR THEM AND FOR
PROPOSAL 2.
1. ELECTION OF DIRECTORS
/ / FOR all nominees listed at right J. N. Averett, Jr.,
(except as marked to the contrary). Gary S. Gladstein,
Robert B. Hodes,
Lief D. Rosenblatt,
George P. Giard, Jr. and
Donald G. Housley
/ / WITHHOLD AUTHORITY to vote for (INSTRUCTION:
all nominees listed at right. To withhold authority to
vote for any individual
nominee, write that
nominee's name on the line
provided below.)
_________________________________________________________________
2. PROPOSAL to ratify the appointment of KPMG Peat
Marwick LLP as the independent auditors of the
Company for 1995.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion the Proxies are authorized to
vote upon such other business as may properly come
before the meeting.
Receipt is hereby acknowledged of the Notice
of Annual Meeting of Shareholders and Proxy
Statement, each dated April 26, 1995, and the
Annual Report of Crystal Oil Company for the
year ended December 31, 1994.
_________________________________________________________________
(Signature)
_________________________________________________________________
(Signature)
Dated
_________________________________________, 1995
Note: Please sign your name exactly as it
appears hereon. Joint owners must each sign.
When signing as attorney, executor,
administrator, trustee or guardian, please
give your full title as such. If a
corporation, please sign in the full
corporate name by the president or other
authorized officer. If a partnership, please
sign in partnership name by authorized
person.
Please Mark, Sign, Date and Return This Proxy Card Promptly Using
the Enclosed Envelope.
