<PAGE> 1
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
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 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):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
CRYSTAL OIL COMPANY
229 Milam Street
Shreveport, Louisiana 71101
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON
MAY 29, 1997
Notice is hereby given that the Annual Meeting of Shareholders of Crystal
Oil Company (the "Company") will be held at 888 Seventh Avenue, 32nd Floor, New
York, New York, on May 29, 1997, at 9:00 A.M., Eastern 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
1997.
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 21, 1997,
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,
/s/ J. A. Ballew
J. A. Ballew
Secretary
Dated: April 24, 1997
<PAGE> 3
CRYSTAL OIL COMPANY
229 Milam Street
Shreveport, Louisiana 71101
-----------------
PROXY STATEMENT
-----------------
April 24, 1997
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 29, 1997, at 9:00 A.M.,
Eastern Time, at 888 Seventh Avenue, 32nd Floor, New York, New York, 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 21, 1997 (the "Record Date"). As of the
Record Date, the Company had outstanding 2,665,622 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 25, 1997, 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 $3,000, plus out-of-pocket costs and expenses.
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended December 31, 1996, is enclosed.
<PAGE> 4
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 that 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) .... 54 President, Chief 1985
Executive Officer
and Director
Gary S. Gladstein (3) ..... 52 Director 1989
Robert B. Hodes (4) ....... 71 Director 1989
Lief D. Rosenblatt (5) .... 43 Director 1989
George P. Giard, Jr. (6) .. 58 Director 1987
Donald G. Housley (7) ..... 60 Director 1987
</TABLE>
(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
63.9% of the total voting power of the Company. Messrs. Gladstein and
Rosenblatt are also employed by Soros Fund Management LLC ("SFM"), 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 SFM, an investment
advisory firm, for more than the past five years. Mr. Gladstein is also
a director of Jos. A. Bank Clothiers, Inc., Cresud, S.A., IRSA
Inversiones y Representaciones S.A., Argentina High Yield &
Capital Appreciation Fund Ltd. and Global Telesystems Group, Inc. Mr.
Gladstein is a member of the Audit Committee and Compensation Committee of
the Board of Directors of the Company (the "Compensation Committee").
-2-
<PAGE> 5
(4) Mr. Hodes is counsel to the law firm of Willkie Farr & Gallagher and
has served in such capacity or as partner for more than the past five
years. Mr. Hodes is also a director of Aerointernational Inc., W. R.
Berkley Corporation, Globalstar Telecommunications, Ltd., LCH Investments
N.V., Loral Space Telecommunications Corporation, Ltd., Mueller
Industries, Inc., Restructured Capital Holdings, Ltd., R.V.I. Guaranty
Co., Ltd. and Space Systems/Loral, Inc. 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 SFM for more than the
past five years. Mr. Rosenblatt is a member of the Executive Committee
of the Board of Directors of the Company.
(6) Mr. Giard has served as Chairman of the Board and Chief Executive Officer
of Panamerican Oil Company, an oil and gas exploration and production
company, since January 1997. From 1986 to 1996, Mr. Giard was Chairman of
the Board and Chief Executive Officer of Presidio Oil Company, an oil and
gas exploration and production company. 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.
PROPOSAL NO. 2
--------------
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
On March 10, 1997, 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, 1997, 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, 1997.
-3-
<PAGE> 6
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 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>
<CAPTION>
Shares Beneficially Owned Shares Beneficially Owned
(Excluding Shares Deemed (Including Shares Deemed
Name and Address Owned Pursuant to Rights Owned Pursuant to Rights
of Beneficial Owner Title of Class to Acquire)(1) to Acquire)(2)
------------------- -------------- ------------------------- -------------------------
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 61.1% 1,644,595 (5) 61.3%
Curacao, Netherlands Antilles Senior Preferred Stock 2,078,748 14.1% 2,078,748 14.1%
George Soros(6)
888 Seventh Avenue Common Stock 1,708,713 64.1% 1,755,215 (6) 64.7%
New York, NY 10106 Senior Preferred Stock 2,078,748 14.1% 2,078,748 14.1%
Metropolitan Life Insurance Company(7) Common Stock 263,890 9.9% 263,890 9.9%
One Madison Avenue
New York, NY 10010-3690
The Baird Family Group(8)
The Cameron Baird Foundation(8) Common Stock -- -- 14,457 *
Bridget B. Baird, Successor Trustee(8) Senior Preferred Stock 6,425,776 43.5% 6,425,776 43.5%
Jane D. Baird (8)
Aires Hill Corporation(8)
1350 One M&T Plaza
Buffalo, NY 14203
W. R. Huff Asset Management Company,
L.P.(9)
30 Schuyler Place Common Stock -- -- 5,420 *
Morristown, NJ 07960 Senior Preferred Stock 2,409,112 16.3% 2,409,112 16.3%
Lehman Brothers Inc.(10)
3 World Financial Center Common Stock -- -- 3,543 *
New York, NY 10285 Senior Preferred Stock 1,575,034 10.7% 1,575,034 10.7%
*Represents less than one percent (1%) of outstanding class.
</TABLE>
- -------------
(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.
-4-
<PAGE> 7
(3) The percentages shown in the above table are calculated on the basis of
the 2,665,622 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 under the name Soros Fund Management LLC ("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 person who
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. 13 to the joint Schedule 13D dated January 1, 1997 of Quantum, SFM,
George Soros and Stanley F. Druckenmiller.
(5) The number of shares of Common Stock beneficially owned by Quantum and
George Soros includes 4,677 shares of Common Stock that are issuable upon
conversion of 2,078,748 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. 7 to the Schedule 13G dated February 5, 1997, 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) The Baird Family Group owns in the aggregate 6,425,776 shares of Senior
Preferred Stock that may be converted into 14,457 shares of Common Stock.
The Baird Family Group is comprised of thirteen 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. 17 to the joint Schedule 13D dated February 18, 1997, 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, Bridget B.
Baird, Successor Trustee, owns in the aggregate 1,400,200 shares of Senior
Preferred Stock that may be converted into 3,150 shares of Common Stock,
Jane D. Baird owns in the aggregate 1,106,800 shares of Senior Preferred
Stock that may be converted into 2,490 shares of Common Stock and Aries
Hill Corporation owns in the aggregate 971,900 shares of Senior Preferred
Stock that may be converted into 2,186 shares of Common Stock.
-5-
<PAGE> 8
(9) 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.
(10) 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 on the Schedule 13D dated February 20,
1992, of Lehman Brothers Inc., a subsidiary of Lehman Brothers Holding,
Inc., filed with the Commission with respect to its beneficial ownership
of Senior Preferred Stock.
-6-
<PAGE> 9
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 (Including Shares Deemed
Deemed Owned Pursuant Owned Pursuant to Rights
Name Title of Class to Rights to Acquire)(1) to Acquire)(2)
- ---------------------- ---------------------- ---------------------------- --------------------------------
Shares Percent(3) Shares Percent(3)
------------- ------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
J. N. Averett, Jr. Common Stock 4,347 * 57,097 (4) 2.1%
$.075 Warrants 1,000,000 1.0% 1,000,000 1.0%
$.10 Warrants 2,000,000 1.3% 2,000,000 2.0%
Gary S. Gladstein Common Stock 1,850 * 1,850 *
Robert B. Hodes Common Stock 100 * 100 *
Lief D. Rosenblatt (5) Common Stock -- -- -- --
George P. Giard, Jr. Common Stock 540 * 578 (6) *
$.10 Warrants 39,075 * 39,075 *
$.125 Warrants 39,075 * 39,075 *
Donald G. Housley (7) Common Stock 22,454 * 26,825 (8) 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%
J. A. Ballew Common Stock 780 * 12,280 (9) *
$.075 Warrants 1,000,000 1.0% 1,000,000 1.0%
$.10 Warrants 1,000,000 * 1,000,000 *
David L. Hayden Common Stock 606 * 5,356 (10) *
$.075 Warrants 500,000 * 500,000 *
$.10 Warrants 500,000 * 500,000 *
All executive officers Common Stock 31,228 1.2% 109,512 (11) 4.0%
and directors of the Senior Preferred Stock 79,999 * 79,999 *
Company as a group $.075 Warrants 3,140,000 3.2% 3,140,000 3.2%
(9 persons) $.10 Warrants 8,336,823 5.5% 8,336,823 5.5%
$.125 Warrants 3,988,224 1.5% 3,988,224 1.5%
*Represents less than one percent (1%) of outstanding class.
</TABLE>
- ------------
(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.
-7-
<PAGE> 10
(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 2,665,622 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
52,750 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 51,250 shares of Common Stock owned by Mr. Averett and 1,137
shares of Common Stock that are owned by him through the Company's
Employee Stock Ownership Plan.
(5) Mr. Rosenblatt does not own any of the Company's securities.
(6) The number of shares and percentage of beneficial ownership includes 38
shares of Common Stock that are issuable upon the exercise of 39,075 $.10
Warrants and 39,075 $.125 Warrants, owned by Mr. Giard.
(7) 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.
(8) 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.
(9) The number of shares of Common Stock and percentage of beneficial
ownership of Mr. Ballew includes 11,500 shares of Common Stock that are
issuable upon the exercise of 1,000,000 $.075 Warrants, 1,000,000 $.10
Warrants, stock options to acquire 10,500 shares of Common Stock and 780
shares of Common Stock owned by him through the Company's Employee Stock
Ownership Plan.
(10) The number of shares of Common Stock and percentage of beneficial
ownership of Mr. Hayden includes 4,750 shares of Common Stock that are
issuable upon the exercise of 500,000 $.075 Warrants, 500,000 $.10
Warrants, stock options to acquire 4,250 shares of Common Stock and 576
shares of Common Stock owned by him through the Company's Employee Stock
Ownership Plan.
(11) 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 179 shares of Common Stock that are issuable
upon the conversion of 79,999 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 1,570, 4,167, 1,993 and 70,375 shares of Common Stock,
respectively, that are issuable upon the exercise of the 3,140,000 $.075
Warrants, 8,336,823 $.10 Warrants, 3,988,224 $.125 Warrants, stock options
to acquire 70,375 shares of Common Stock and 3,044 shares of Common Stock
owned through the Company's Employee Stock Ownership Plan that may be
beneficially owned by such persons.
-8-
<PAGE> 11
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. One meeting of the Audit Committee was held
in 1996.
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 1996.
The Board of Directors of the Company has a Compensation Committee, which
is currently comprised of Messrs. Giard, Housley and Gladstein. The
Compensation Committee 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, to make
recommendations to the Board of Directors with respect to option grants under
the Company's stock option plans and to administer the other employee benefit
plans of the Company and make awards thereunder. One meeting of the
Compensation Committee was held in 1996.
The Board of Directors of the Company does not have a standing Nominating
Committee.
During 1996, there were four meetings of the Board of Directors. All
current directors of the Company attended 75% or more 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) .. 54 1985 President, Chief Executive Officer
and Director
J. A. Ballew (2) ........ 41 1986 Senior Vice President, Treasurer,
Secretary and Chief Financial Officer
David L. Hayden (3) ..... 42 1990 Vice President/Engineering
Paul E. Holmes (4) ...... 40 1990 Vice President/Controller
</TABLE>
- ------------
(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.
-9-
<PAGE> 12
(3) Mr. Hayden has been associated with the Company since 1982 and is
currently Vice President/Engineering.
(4) Mr. Holmes has been associated with the Company since 1978 and is
currently Vice President/Controller.
REPORT ON EXECUTIVE COMPENSATION
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 Board of Directors 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, including bonus and other incentive
compensation, also take into account the efforts of the Company's executive
officers in pursuing new opportunities, such as the Company's 1995 acquisition
of First Reserve Gas Company ("FRGC"), for the future growth of the Company.
The base and bonus compensation of the Company's executive officers is
reviewed and approved annually by the Compensation Committee of the Board of
Directors (the "Committee"), which is comprised entirely of non-employee
directors. Prior to 1997, stock based compensation was also approved by the
Committee. Beginning in 1997 following changes in the rules of the Securities
and Exchange Commission (the "Commission") regarding the administration of
stock based plans under Rule 16b-3 of the Commission, the Company amended its
stock based plans to provide for the administration of such plans by the full
Board of Directors, if desirable, with Mr. Averett abstaining from voting on
such matters. As a result, stock based compensation, such as grants of stock
options under the Company's stock option plans, are now approved by the full
Board of Directors of the Company upon the recommendation and advice of the
Committee. 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. Increases in the base salaries of the
Company's four executive officers were approved in April 1997, in light of the
foregoing factors.
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 before income tax
in excess of $1,000,000. Mr. Averett received a bonus of $62,500 under his
employment agreement with the Company based on the Company's results for 1996.
-10-
<PAGE> 13
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 at that time. Under this arrangement, a semi-annual bonus equal to
1/8th of the officer's annual base salary was to be paid for a period of two
years following the transaction as long as the officer remained 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. Messrs. Averett, Ballew and Hayden
received bonuses in 1996 of $50,000, $23,750 and $18,500, respectively,
pursuant to this arrangement.
In addition to the above described contractual bonuses, on April 2, 1997,
the Company granted cash bonuses to Messrs. Averett, Ballew and Hayden of
$15,000, $7,000 and $6,000, respectively, in recognition of their services to
the Company during 1996, including pursuing new acquisition opportunities and
expanding the revenue from the operations of the Company's Hattiesburg Gas
Storage facility.
LONG-TERM INCENTIVE COMPENSATION
The Board of Directors 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 Board of Directors 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 Board. The
Board of Directors 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 Board of Directors 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 Board of Directors
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. The employees receiving options and the number
of shares subject to option grants are recommended by the Committee and
approved by the full Board of Directors after consideration of the Committee's
recommendation and other relevant matters. 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 and the Board of Directors
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 and the Board of Directors 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.
On March 8, 1996, the Company granted options to purchase an aggregate of
24,000 shares of Common Stock at an exercise price of $32.75 per share to five
of its executive officers and employees. The market price of the Common Stock
at the time of grant was $32.75 per share. On April 2, 1997, the Company also
granted options to purchase an aggregate of 19,500 shares of Common Stock at an
exercise price of $34.50 per share to its four executive officers. The market
price of the Common Stock at the time of grant was $34.50 per share. These
grants were made in recognition of each of the optionee's contributions to the
successful efforts by the Company to achieve growth and shareholder value in
1996, and the anticipated contribution of each optionee to the Company in the
future as the Company pursues new opportunities for growth.
-11-
<PAGE> 14
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 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 Board of Directors or the Committee. It is the current
policy of the Board of Directors 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 Board of
Directors authorized a $50,000 contribution to the ESOP for each of 1996 and
1997, 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 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 currently receives an annual base salary of
$212,000, 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
market factors and Mr. Averett's performance in the prior year. Mr. Averett's
base compensation was increased to its current level in April 1997, from
$200,000 based on such factors.
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 before income taxes
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 $62,500
with respect to 1996 results. This bonus reflects the beneficial financial
impact that the Company's acquisition of FRGC had on the Company during 1996.
In addition, Mr. Averett received a cash bonus of $15,000 in respect of his
services to the Company in 1996.
In addition to the cash bonuses paid to Mr. Averett for 1996, the Board of
Directors 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 options to purchase additional
shares of Common Stock. Accordingly, on March 8, 1996, the Committee granted
to Mr. Averett an option to purchase an aggregate of 11,000 shares of Common
Stock at an exercise price of $32.75 per share, the market price of the stock
on the date of grant. Mr. Averett was also granted in April 1997, an option to
purchase an aggregate of 10,000 shares of Common Stock at an exercise price of
$34.50 per share, the market price of the stock on the date of grant. The
number of shares subject to such options was determined after considering Mr.
Averett's other compensation arrangements with the Company and reflects the
number of shares which the Committee and the Board of Directors 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 and the Board of Directors 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
-12-
<PAGE> 15
standards approved by the shareholders of the Company. The Committee and the
Board of Directors believes that maintaining the discretion to evaluate the
performance of the Company's management is an important part of its
responsibilities and benefits the Company's shareholders. The Committee and the
Board of Directors 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.
SUMMARY
After review of the existing compensation programs of the Company, the
Committee and the Board of Directors 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 and the Board of Directors 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
and the Board of Directors 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.
J.N. Averett, Jr.
Gary S. Gladstein*
George P. Giard, Jr.*
Donald G. Housley*
Robert B. Hodes
Lief Rosenblatt
*Compensation Committee Member
-13-
<PAGE> 16
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, 1996,
exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term
----------------------------------- Compensation
Awards
------------
Securities
Name and Other 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. 1996 $200,000 $127,500 -0- 11,000 $1,872
President and Chief 1995 200,000 77,891 -0- 10,000 864
Executive Officer 1994 193,333 90,000 -0- 7,500 1,231
J. A. Ballew 1996 117,917 30,750 -0- 5,000 379
Senior Vice President 1995 106,875 23,750 -0- 5,000 112
Treasurer, Secretary and 1994 92,741 -0- 13,289 3,000 697
Chief Financial Officer
David L. Hayden 1996 82,708 24,500 -0- 3,000 235
Vice President/Engineering 1995 74,000 18,500 -0- -0- 49
1994 72,333 -0- 11,105 2,000 4
</TABLE>
(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.
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, 1996. The Company does not grant any stock appreciation
rights.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
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. 11,000 46% $32.75 03/08/06 $195,526
J. A. Ballew 5,000 21% 32.75 03/08/06 88,876
David L. Hayden 3,000 13% 32.75 03/08/06 53,325
</TABLE>
__________________
(1) Stock options granted on March 8, 1996. Options vest in one-quarter
increments on an annual basis and become fully vested on March 8, 2000.
(2) Based upon Black-Scholes option valuation model. The calculation assumes
volatility of 23.5%, a risk free rate of return of 6.5%, a 10 year option
term, option grants at $32.75 per share and that no dividends are paid
during the life of the option.
-14-
<PAGE> 17
The following table shows aggregate option exercises during the year ended
December 31, 1996, and option values at December 31, 1996, for the executive
officers named in the Summary Compensation Table. The Company does not grant
any stock appreciation rights.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
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
----------- ------------- ----------- -------------
J. N. Averett, Jr. -0- -0- 46,000 18,500 $726,250 $72,313
J. A. Ballew -0- -0- 8,000 8,750 102,094 34,531
David L. Hayden -0- -0- 3,500 3,000 49,500 9,750
</TABLE>
____________________
(1) Computed based upon the difference between aggregate market value of the
Common Stock issuable on the exercise of the option at December 31, 1996,
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.
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, 1996. 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 Company made a $50,000 contribution to the ESOP for the fiscal
year ended December 31, 1996.
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. 199 (1)
J. A. Ballew 188 (1)
David L. Hayden 134 (1)
</TABLE>
____________________
(1) Fully vested as a result of the Company's sale of its oil and gas
properties in December 1994.
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
Board 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 1996, Messrs. Gladstein, Hodes,
Rosenblatt, Giard and Housley received $3,000, $2,500, $1,500, $3,000 and
$3,000, respectively, pursuant to such arrangements, which compensation
included fees paid for attendance at Board and Board committee meetings.
-15-
<PAGE> 18
EXECUTIVE COMPENSATION AND 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 and encourage
the retention of its officers following the Company's 1994 disposition of its
oil and gas properties, the Company has entered into various Executive
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 expires 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 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) cash retention
bonuses that were paid through 1996. 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. 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.
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 President
of the Company receiving two times his 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., J. A. Ballew,
David L. Hayden and all executive officers and key employees of the Company as
a group are $636,000, $256,000, $90,000 and $1,067,000, respectively, if their
employment were to be terminated by the Company following the Transaction for
any reason other than cause.
EMPLOYMENT AGREEMENT
As described in the report of the Compensation Committee, 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 $212,000 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.
-16-
<PAGE> 19
PERFORMANCE GRAPH
The following performance graph compares the performance of the Common
Stock to the Dow Jones Equity Market Index and the Dow Jones Energy-Oil
Secondary Index for the five years ended December 31, 1996. The graph assumes
that the value of the investment in the Common Stock and each index was $100 at
December 31, 1991, and that all dividends were reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
Among Crystal Oil Company, Dow Jones Equity Market & Dow Jones-Oil Secondary
Index
<TABLE>
<CAPTION>
MEASUREMENT PERIOD CRYSTAL OIL COMPANY DOW JONES EQUITY DOW JONES ENERGY-
(FISCAL YEAR COVERED) MARKET INDEX OIL SECONDARY INDEX
<S> <C> <C> <C>
1991 100 100 100
1992 130 109 101
1993 124 119 112
1994 168 120 108
1995 172 166 125
1996 206 206 154
</TABLE>
-17-
<PAGE> 20
SHAREHOLDER PROPOSALS
Shareholder proposals for inclusion in the Proxy Statement for presentment
to the 1998 Annual Meeting of Shareholders must be received at the office of
the Company, 229 Milam Street, Shreveport, Louisiana 71101, no later than
December 26, 1997, 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 24, 1997
-18-
<PAGE> 21
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 capital stock of the Company which the undersigned would be
entitled to vote at the annual meeting of shareholders to be held on May 29,
1997, or any adjournment of adjournments thereof, on the following matters more
particulary described in the Proxy Statement dated April 24, 1997.
Receipt is hereby acknowledged of the Notice of Annual Meeting of
Shareholders and Proxy Statement, each dated April 24, 1997, and the Annual
Report of Crystal Oil Company for the year ended December 31, 1996.
(CONTINUED ON REVERSE SIDE)
<TABLE>
<S><C>
PLEASE MARK YOUR
/X/ VOTES AS IN THIS
EXAMPLE
- -------------------------------------------------------------------------------------------------
FOR ALL NOMINEES LISTED AT RIGHT WITHHELD AUTHORITY TO VOTE
(EXCEPT AS MARKED TO THE CONTRARY). FOR ALL NOMINEES LISTED AT RIGHT.
1. ELECTION OF DIRECTORS / / / / J.N. Averett, Jr., Gary S. Gladstein,
Robert B. Hodes, Leif D. Rosenblatt,
(INSTRUCTION: To withhold authority to vote for any George P. Giard, Jr. and Donald G. Housley
individual nominee, write that nominee's name
on the line provided below.)
- ----------------------------------------
FOR AGAINST ABSTAIN
2. PROPOSAL to ratify the appointment of KPMG
Peat Marwick LLP as the independent / / / / / /
auditors of the Company for 1997.
3. In their discretion the Proxies are
authorized to vote upon such other
business as may properly come before
the meeting.
This proxy, when properly executed, will be voted in the manner directed 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.
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.
SIGNATURE(S) DATED , 1997
- ------------------------------------------------ ---------------------
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
</TABLE>
