<PAGE> 1
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
[ x ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule
14a-12
[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
TMBR/SHARP DRILLING, INC.
(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),
or 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> 2
TMBR/SHARP DRILLING, INC.
4607 West Industrial Boulevard
Midland, Texas 79703
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held August 31, 1995
To The Shareholders of
TMBR/Sharp Drilling, Inc.:
The 1995 Annual Meeting of Shareholders of TMBR/Sharp
Drilling, Inc. (the "Company"), a Texas corporation, will be held
on Thursday, August 31, 1995, at 10:00 a.m., local time, in the
Executive Room, Midland Petroleum Club, 501 West Wall, Midland,
Texas 79701, for the following purposes:
(1) To elect four Directors to hold office
until the next succeeding annual meeting of
shareholders and until their successors have been
duly qualified and elected; and
(2) To transact such other business as may
properly come before the meeting and any
adjournments thereof.
The Board of Directors has fixed the close of business on
July 21, 1995 as the record date for the determination of
shareholders entitled to notice of and to vote at such meeting
and any adjournments thereof. Only shareholders of record at the
close of business on July 21, 1995 will be entitled to vote at
the Annual Meeting and any adjournments thereof.
By Order of the Board of Directors
James M. Alsup
Secretary
Midland, Texas
July 26, 1995
Whether or not you plan to be present at the meeting in
person, please complete, sign, date and mail the enclosed Proxy
in the accompanying return envelope to which no postage need be
affixed by the sender if mailed within the United States. If you
receive more than one Proxy because your shares are registered in
different names or addresses, each such Proxy should be signed
and returned to assure that all of your shares will be voted.
<PAGE> 3
TMBR/SHARP DRILLING, INC.
4607 West Industrial Boulevard
Midland, Texas 79703
PROXY STATEMENT
The accompanying Proxy is solicited on behalf of the
Board of Directors of TMBR/Sharp Drilling, Inc. (the "Company")
to be voted at the Annual Meeting of Shareholders of the Company
to be held on Thursday, August 31, 1995, at the time and place
and for the purposes set forth in the accompanying Notice of
Annual Meeting, and at any adjournments thereof.
This Proxy Statement and the accompanying form of Proxy
are first being mailed to the shareholders on or about July 26,
1995.
Proxies, Solicitation and Voting
The record date for the determination of shareholders
entitled to notice of and to vote at the meeting is the close of
business on July 21, 1995. On the record date, there were
3,232,786 shares of the Company's $.10 par value common stock
(the "Common Stock") issued and outstanding. Each share of
Common Stock is entitled to one vote on all matters to be acted
upon at the meeting. The Company's Articles of Incorporation
deny cumulative voting rights.
With respect to matters to be voted upon at the Annual
Meeting, the attendance, in person or by Proxy, of the holders of
a majority of the shares of Common Stock entitled to vote on such
matters is necessary to constitute a quorum. For quorum
purposes, the total votes received, including abstentions and
broker non-votes, are counted in determining the number of shares
present. Under the Company's bylaws, when a quorum is present,
with respect to any matter (other than the election of
Directors), the affirmative vote of the holders of a majority of
the shares entitled to vote on such matter and represented in
person or by Proxy shall be the act of the shareholders. As to
the election of Directors, Directors are elected by a plurality
of votes cast. "Plurality" means that the individuals who
receive the largest number of votes cast are elected as Directors
up to the maximum number of Directors to be chosen at the
meeting. Consequently, any shares not voted (whether by
abstention, broker non-vote or otherwise) have no impact in the
election of Directors, except to the extent the failure to vote
for an individual results in another individual receiving a
larger number of votes.
Properly executed Proxies will be voted in accordance
with the instructions thereon or, if no instructions are
indicated thereon, the shares will be voted FOR the election of
management's nominees to the Board of Directors, and in the
discretion of the persons named as proxies, upon such other
matters as may properly come before the meeting.
<PAGE> 4
Any shareholder giving a Proxy has the power to revoke it
at any time before it is voted by appearing and voting personally
at the Annual Meeting, by delivering a later dated Proxy or by
delivering to the Secretary of the Company a written revocation
of such Proxy prior to the Annual Meeting.
The cost of preparing, assembling, printing and mailing
this Proxy Statement and enclosed Proxy and the cost of
soliciting Proxies relating to the Annual Meeting will be borne
solely by the Company. The Company may request banks and brokers
to solicit their customers who beneficially own shares of Common
Stock of the Company listed of record in names of nominees and
will reimburse such banks and brokers for their reasonable
out-of-pocket expenses of such solicitation. It is contemplated
that the original solicitation of Proxies by mail will be
supplemented by telephone, telegram and personal solicitation by
officers, Directors and other regular employees of the Company.
No additional compensation will be paid to such individuals for
such activities.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information as of
July 21, 1995 with respect to the Company's Common Stock
beneficially owned by (i) each person known to the Company to be
the beneficial owner of more than five percent of the outstanding
shares of the Company's Common Stock, (ii) the executive officers
named in the Summary Compensation Table under "Executive
Compensation", (iii) each Director and nominee for Director of
the Company and (iv) all Directors (and nominees) and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
Amount and
Nature of Percent
Name and Address Beneficial of
of Beneficial Owner Ownership<F1> Class
------------------- ------------- -------
<S> <C> <C>
Thomas C. Brown . . . . . . . 482,153<F2> 13.05%
4607 West Industrial Blvd.
Midland, Texas 79703
Donald L. Evans . . . . . . . 73,746 2.28%
500 Empire Plaza
Midland, Texas 79701
David N. Fitzgerald . . . . . 37,682<F3> 1.17%
2300 West 42nd Street
Odessa, Texas 79764
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<PAGE> 5
Joe G. Roper . . . . . . . . 909,852<F4> 25.20%
4607 West Industrial Blvd.
Midland, Texas 79703
State Farm Mutual Automobile 400,000<F5> 12.37%
Insurance Company
One State Farm Plaza
Bloomington, Illinois 61710
All Directors (and nominees . 1,568,508<F6> 38.33%
and executive officers as a
group (7 persons)
____________
<FN>
<F1> Unless otherwise indicated, all shares of Common Stock are
held directly with sole voting and investment powers.
<F2> Includes 462,000 shares of Common Stock underlying a
presently exercisable stock option and 19,856 shares of
Common Stock owned by the Estate of C. V. Lyman, deceased,
of which estate Mr. Brown serves as Co-Executor.
<F3> Includes 12,500 shares of Common Stock held by Mr.
Fitzgerald's wife as her separate property. Mr. Fitzgerald
disclaims beneficial ownership of such shares.
<F4> Includes 377,500 shares of Common Stock underlying presently
exercisable stock options.
<F5> Includes 5,250 shares of Common Stock which are reported to
be beneficially owned by State Farm Fire and Casualty
Company.
<F6> Includes 859,500 shares of Common Stock underlying presently
exercisable stock options.
</FN>
</TABLE>
ELECTION OF DIRECTORS
Directors of the Company are elected annually by the
shareholders to serve until the next annual meeting of
shareholders and until their successors are duly qualified and
elected. The number of Directors is established by resolution
of the Board of Directors. The Board of Directors has
established the size of the Board at four Directors.
Accordingly, the Board of Directors is recommending that the four
current Directors of the Company be re-elected to serve until the
1996 annual meeting of shareholders and until their respective
successors have been duly qualified and elected. If any nominee
becomes unavailable for any reason, which is not anticipated, a
substitute nominee may be designated by the Board of Directors
and the shares represented by Proxy will be voted for any such
substitute nominee, unless the Board reduces the number of
Directors. All of the nominees listed below were previously
elected Directors by the shareholders at the last annual meeting
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<PAGE> 6
of shareholders. There are no family relationships among any of
the nominees, nor is there any arrangement or understanding
between any nominee and any other person pursuant to which the
nominee was selected. The four nominees for the Board of
Directors are as follows:
<TABLE>
<CAPTION>
Position with Year
Company and First
Principal Elected
Nominee Age Occupation Director
------------------ --- ------------------------ --------
<S> <C> <C> <C>
Thomas C. Brown . . . . 68 Chairman of the Board 1982
of Directors and Chief
Executive Officer of the
Company; Director of
Tom Brown, Inc.;
Director of Weatherford
International Incorporated.
Donald L. Evans . . . . 48 Director of the Company; 1982
Chairman of the Board of
Directors, Chief Executive
Officer and President of
Tom Brown, Inc.
David N. Fitzgerald . . 72 Director of the Company; 1984
Director of Mineral
Development, Inc.;
President and principal
shareholder of Exit Oilfield
Equipment, Inc. and from
1984 to 1991, president and
principal shareholder of
Oil Patch Sales and Rentals,
Inc., both privately held
oilfield equipment sales
companies.
Joe G. Roper . . . . . 67 President and Director 1982
of the Company.
</TABLE>
Unless otherwise directed on any duly executed and dated
Proxy, it is the intention of the persons named in such Proxy to
nominate and to vote the shares of Common Stock represented by
such Proxy for the election of the nominees listed in the
preceding table for the office of Director of the Company.
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<PAGE> 7
The Board of Directors recommends that the shareholders vote
FOR the proposal to elect its nominees to the Board of Directors.
Other Information
The Board of Directors held one meeting during the year
ended March 31, 1995 at which all Directors were present. The
Directors also took action by unanimous written consent on six
occasions.
The Company does not have a standing nominating committee.
The review of recommendations for nominees for Directors is made
by the Board of Directors.
In December, 1994, the Board of Directors established an
Audit Committee and appointed Donald L. Evans and David N.
Fitzgerald as members of the committee. The Audit Committee was
created for the purposes of recommending the firm to be employed
by the Company as its independent auditors, consulting with the
persons chosen to be the independent auditors with regard to the
plan of audit, reviewing and consulting with the independent
auditors the report of audit and management letters, if any,
consulting with the independent auditors with regard to the
adequacy of internal accounting controls and performing such
other duties as may be advised or requested from time to time by
the Board of Directors of the Company. As of March 31, 1995, the
Audit Committee had not held any meetings.
The Company's Compensation Committee, which consists of
Messrs. Evans and Fitzgerald, oversees and is responsible for the
administration of the Company's stock option plans. Members of
the Compensation Committee are appointed annually by the Board of
Directors. Members serve at the pleasure of the Board of
Directors and may be appointed or removed by the Board of
Directors at will. The Compensation Committee did not hold any
meetings during the year ended March 31, 1995.
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<PAGE> 8
EXECUTIVE COMPENSATION
Summary of Annual Compensation
The following table sets forth for each of the three fiscal
years ended March 31, 1995, a summary of the types and amounts of
compensation paid to the Chief Executive Officer of the Company
and the only other executive officer of the Company whose salary
and bonuses for the fiscal year ended March 31, 1995 exceeded
$100,000.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term Compensation
---------------------------------
Annual Compensation Awards Payouts
------------------------- ----------------------- -------
Other Securities All
Annual Restricted Underlying Other
Compen- Stock Options/ LTIP Compen-
Name and Salary Bonus sation Awards SARs Payouts sation
Principal Position Year ($) ($) ($) ($) (#) ($) ($)
---------------------- ---- ------- ----- ------- ---------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Thomas C. Brown, 1995 72,000 0 <F7> 0 0 0 0
Chairman of the Board 1994 72,000 0 <F7> 0 0 0 0
of Directors and Chief 1993 72,000 0 <F7> 0 0 0 0
Executive Officer
Joe G. Roper, 1995 150,398 0 <F7> 0 0 0 234,146<F8>
President and Director 1994 144,913 0 <F7> 0 95,000 0 229,087<F8>
1993 134,241 0 <F7> 0 0 0 229,087<F8>
_________________
<FN>
<F7> The named executive officers of the Company were also provided certain
non-cash compensation and personal benefits. However, the aggregate
amount of such other compensation did not exceed $50,000 or 10% of the
named executive officer's salary during such fiscal year.
<F8> Includes insurance premiums paid by the Company in the amounts of (i)
$29,386 for the year ended March 31, 1995 and $24,327 for the years
ended March 31, 1994 and 1993 for an insurance policy on the life of Mr.
Roper and (ii) $204,760 for premiums under a split-dollar life insurance
plan maintained by the Company on behalf of Mr. Roper, of which $16,868,
$15,543 and $13,675 is attributable to term life insurance for the
fiscal years ended March 31, 1995, 1994 and 1993, respectively. During
the years ended March 31, 1995, 1994 and 1993, and pursuant to the terms
of the split-dollar agreement, the Company borrowed aggregate amounts of
$316,655, $126,453 and $303,595, respectively, against the cash value of
such insurance policy to pay the policy premiums and a portion of the
accrued interest on the cumulative amount of such borrowings. The
remaining portion of the accrued interest on such borrowings is paid
annually by the Company. At March 31, 1995, 1994 and 1993, the
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<PAGE> 9
outstanding loan balances were $2,834,530, $2,517,875 and $2,391,422,
respectively. The interest expense paid by the Company for the fiscal
years ended March 31, 1995, 1994 and 1993 was $89,309, $78,307 and
$78,130, respectively. A portion of the death benefit of the split-
dollar policy equal to the Company's net premium outlay is payable to
the Company upon the death of Mr. Roper, and the aggregate loan amount
is deducted from the insurance proceeds payable to the beneficiaries of
the policy. The balance of the proceeds are payable to Mr. Roper's
beneficiaries. The Company is not the beneficiary of either insurance
policy.
</FN>
</TABLE>
Stock Options
The Company has in the past utilized stock options as part
of its overall compensation of Directors, officers and employees.
However, no options were granted during the fiscal year ended
March 31, 1995 to either of the executive officers named in the
preceding Summary Compensation Table.
The following table sets forth certain information with
respect to stock option exercises during the fiscal year ended
March 31, 1995 by the named executive officers of the Company,
and the value of each such officer's unexercised stock options at
March 31, 1995.
Aggregated Option/SAR Exercises in
Last Fiscal Year and Fiscal Year - End Option/SAR Values
<TABLE>
<CAPTION>
Number of Value of
Securities Underlying Unexercised
Shares Unexercised in-the-Money
Acquired Options/SARs Options/SARs
on Value at Fiscal Year-End (#) at Fiscal Year-End ($)<F9>
Exercise Realized --------------------------- ---------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
----------- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
T. C. Brown - - 462,000 - $2,829,750 -
J. G. Roper - - 423,750 71,250 $2,523,031 $219,094
_________
<FN>
<F9> Value of in-the-money options is equal to the fair market value of a
share of Common Stock at fiscal year-end less the exercise price, based
on the last sale price of the Company's Common Stock.
</FN>
</TABLE>
-7-
<PAGE> 10
Compensation of Directors
The Company has, from time to time, paid fees to its
Directors for attending Directors' meetings and reimbursed
Directors for their expenses incurred in connection with
attending meetings. However, no such fees or reimbursements were
paid to any Director of the Company during the fiscal year ended
March 31, 1995.
In order to attract, retain and reward qualified Directors
for the successful conduct of the Company's business, the Company
has in the past granted stock options to its Directors. No
options were granted to any of the Company's Directors during the
fiscal year ended March 31, 1995.
Change of Control Arrangements
The Company's 1984 Stock Option Plan and its option
agreements with Messrs. Brown and Roper provide that if (a) the
Company is not the surviving corporation in any merger or
consolidation, (b) the Company sells all or substantially all of
its assets, (c) the ownership of more than 50% of the outstanding
shares of Common Stock changes as a result of a concerted action
by one or more persons, or if an attempt is made to effect such a
change of ownership, or (d) the Company is dissolved and
liquidated (a "Corporate Change"), then the Board of Directors of
the Company or the Compensation Committee may (i) accelerate the
time at which outstanding options may be exercised, (ii) provide
for the purchase, before or after such Corporate Change, of the
options then outstanding for an amount of cash equal to the
excess of the fair market value of the shares subject to the
option over the aggregate option price of such shares, (iii) make
such adjustment to the options as the Board of Directors of the
Company or the Compensation Committee deems appropriate to
reflect such Corporate Change, or (iv) cause the options to be
assumed, or new options substituted therefor, by any surviving
corporation in such Corporate Change.
1984 Stock Option Plan
The Board of Directors authorized and adopted the TMBR/Sharp
Drilling, Inc. Stock Option Plan (the "1984 Plan") in August,
1984. Although the 1984 Plan expired by its own terms on August
8, 1994, options granted under the 1984 Plan prior to August 8,
1994 will remain outstanding until such options are exercised or
expire by their own terms, and will continue to be subject to all
terms and conditions of the 1984 Plan. No additional options may
be granted under the 1984 Plan. Options granted under the 1984
Plan are either incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or options which do not constitute incentive stock
options. Options granted under the 1984 Plan have been, as
provided in the 1984 Plan, granted only to key employees
(including officers and Directors who were also key employees) of
the Company.
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<PAGE> 11
The 1984 Plan is administered by the Compensation Committee
of the Board of Directors. Members of the Compensation Committee
were not eligible for selection as a person to whom options could
be granted pursuant to the 1984 Plan, and were not eligible to
participate in the 1984 Plan or any other stock plan of the
Company during the one year period prior to their appointment to
the Compensation Committee. Options granted under the 1984 Plan
have exercise prices equal to the fair market value of the shares
at the time the options were granted, as determined by the
Compensation Committee. Options granted under the 1984 Plan are
exercisable for such periods as have been approved by the
Compensation Committee, except that such options are not
exercisable, in any event, for a period in excess of ten years
from the date of grant.
An aggregate of 475,000 shares of the Company's Common
Stock, $.10 par value, are authorized to be issued under the 1984
Plan. Common Stock issued under the 1984 Plan may be from
authorized but unissued shares of Common Stock or previously
issued shares reacquired by the Company. The shares of Common
Stock with respect to which options have been granted are subject
to adjustment upon the occurrence of certain corporate
reorganizations or recapitalizations, including stock splits or
stock dividends.
As required by the terms of the 1984 Plan, for an option
granted under the 1984 Plan to qualify as an incentive stock
option, the aggregate fair market value (determined at the time
of grant) of the stock with respect to which the incentive stock
option was exercisable for the first time by an employee during
any calendar year could not exceed $100,000 and could not be
issued to an employee if, at the time the option was granted,
such employee owned stock possessing more than 10% of the
combined voting power of all classes of the Company's outstanding
stock, unless (i) at the time the option was granted the exercise
price of such option was at least 110% of the fair market value
of the Common Stock on the date of grant and (ii) such option was
not exercisable after five years from the date of grant.
All or part of an option may be exercised by tendering cash
or shares of Common Stock having a fair market value equal to the
option price, or a combination of shares and cash. At the
discretion of the Compensation Committee, an option agreement may
provide for the right to surrender an option in return for a
payment in cash and/or shares of Common Stock equal to the excess
of the fair market value of the shares with respect to which the
option is surrendered over the option price therefor, on such
terms and conditions as the Compensation Committee shall
determine.
At July 21, 1995, there were outstanding under the 1984 Plan
incentive stock options to purchase a total of 128,000 shares of
Common Stock.
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<PAGE> 12
1994 Stock Option Plan
In July, 1994, the Board of Directors adopted the Company's
1994 Stock Option Plan (the "1994 Plan"), which was ratified and
adopted by the Company's shareholders at the 1994 annual meeting
of shareholders held on August 30, 1994. Options granted under
the 1994 Plan may be either incentive stock options within the
meaning of Section 422 of the Code, or options which do not
constitute incentive stock options. Key employees (including
officers and Directors who are also key employees) of the Company
are eligible to receive options under the 1994 Plan.
The 1994 Plan is administered by the Compensation Committee,
none of whom are eligible to participate in the 1994 Plan. The
Compensation Committee has the sole authority to select the
employees who are to be granted options and to establish the
number of shares issuable under each option. Options granted to
an employee contain such terms and conditions and may be
exercisable for such periods as may be approved by the
Compensation Committee. The purchase price of Common Stock
issued under each option will not be less than the fair market
value of the stock subject to the option at the time of grant.
The Compensation Committee, in its discretion, may provide for
the payment of the option price, in whole or in part, (i) in cash
at the time of such exercise, (ii) by the delivery of a number of
shares of Common Stock (plus cash if necessary) having a fair
market value on the date of delivery equal to such option price,
or (iii) any combination of cash and stock.
The aggregate number of shares of Common Stock which may be
issued pursuant to the exercise of stock options granted under
the 1994 Plan may not exceed 750,000 shares, subject to
adjustment in the number of shares with respect to options and
purchase prices therefor in the event of stock splits or stock
dividends, and for equitable adjustments in the event of certain
recapitalizations, mergers, consolidations or acquisitions. If
any outstanding option granted under the 1994 Plan expires or
terminates prior to its exercise in full, the shares allocable to
the unexercised portion of such option may be subsequently
granted under the 1994 Plan.
The 1994 Plan provides that to the extent the aggregate fair
market value of the Common Stock (determined at the time of
grant) with respect to which incentive options are exercisable
for the first time by an individual during any calendar year
under all incentive stock option plans of the Company exceeds
$100,000, such incentive stock options shall be treated as
options which do not constitute incentive stock options. The
Compensation Committee determines, in accordance with applicable
provisions of the Code, which of an optionee's incentive stock
options will not constitute incentive stock options because of
such limitation. No incentive stock option may be granted to an
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<PAGE> 13
individual if, at the time the option is granted, such individual
owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company, unless (i) at the
time such option is granted the option price is at least 110% of
the fair market value of the stock subject to the option and (ii)
such option by its terms is not exercisable after the expiration
of five years from the date of grant.
An option may be granted in exchange for an individual's
right and option to purchase shares of Common Stock pursuant to
the terms of an agreement that existed prior to the date such
option is granted ("Prior Option"). An option agreement that
grants an option in exchange for a Prior Option must provide for
the surrender and cancellation of the Prior Option. The purchase
price of Common Stock issued under an option granted in exchange
for a Prior Option shall be determined by the Compensation
Committee and, such purchase price may, without limitation, be
equal to the price for which the optionee could have purchased
Common Stock under the Prior Option.
The Board of Directors of the Company may amend or terminate
the 1994 Plan at any time, but may not in any way impair the
rights of an optionee under an outstanding option without the
consent of such optionee. In addition, in order to obtain the
benefits provided by Section 422 of the Code and Rule 16b-3 under
the Securities Exchange Act of 1934, as amended, the Board of
Directors will determine at the time of making each amendment
whether or not it is necessary to submit the amendment to the
shareholders for approval. Generally, however, no amendment may
be made without shareholder approval if such amendment would
materially increase the benefits accruing to employee optionees
under the 1994 Plan; materially increase the number of securities
issuable under the 1994 Plan; or materially modify the
requirements as to eligibility for participation in the 1994
Plan. Unless earlier terminated, the 1994 Plan will terminate
upon and no further options may be granted after the expiration
of ten years from the date of its adoption by the Board of
Directors.
Change of Control Arrangements
The Company's 1984 and 1994 stock option plans, and its
stock option agreements with Messrs. Brown and Roper and other
employees of the Company, contain provisions which, upon the
occurrence of certain events, could result in additional
compensation to such option holders, including Mr. Brown and Mr.
Roper. Such events include the following: if (i) the Company is
not the surviving entity in any merger or consolidation, (ii) the
Company sells, leases or exchanges or agrees to sell, lease or
exchange all or substantially all of its assets, (iii) the
Company is to be dissolved and liquidated, (iv) any person or
entity, including a "group" as contemplated by Section 13(d)(3)
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<PAGE> 14
of the Securities Exchange Act of 1934, as amended, acquires or
gains ownership or control of more than 50% of the outstanding
shares of Common Stock, or (v) as a result of or in connection
with a contested election of directors, the persons who were
directors of the Company before such election shall cease to
constitute a majority of the Board (each such event is referred
to herein as a "Corporate Change"), then the Compensation
Committee shall effect one or more of the following alternatives
with respect to the then outstanding options held by employees,
which may vary among individual employee optionees: (1)
accelerate the time at which such options may be exercised so
that such options may be exercised in full for a limited period
of time on or before a specified date (before or after such
Corporate Change) fixed by the Compensation Committee, after
which specified date all unexercised options and all rights of
employee optionees thereunder shall terminate, (2) require the
mandatory surrender to the Company by selected optionees of some
or all of such options as of a date specified by the Compensation
Committee, in which event the Compensation Committee shall cancel
such options and pay to each optionee an amount of cash per share
equal to the excess of the fair market value, or in the case of
stock options granted under the 1994 stock option plan the
"Change of Control Value" of the shares subject to such option,
over the exercise price(s) under such options for such shares,
(3) make such adjustments to such options as the Compensation
Committee deems appropriate to reflect such Corporate Change or
(4) provide that thereafter upon any exercise of an option
theretofore granted the optionee shall be entitled to purchase
under such option, in lieu of the number of shares of Common
Stock as to which such option shall then be exercisable, the
number and class of shares of stock or other securities or
property to which the optionee would have been entitled pursuant
to the terms of the agreement of merger, consolidation or sale of
assets and dissolution if, immediately prior to such merger,
consolidation or sale of assets and dissolution the optionee had
been the holder of record of the number of shares of Common Stock
as to which such option is then exercisable.
For purposes of the 1994 stock option plan, the "Change of
Control Value" is an amount determined as follows, whichever is
applicable: (i) the per share price offered to shareholders of
the Company in any such merger, consolidation, sale of assets or
dissolution transaction, (ii) the price per share offered to
shareholders of the Company in any tender offer or exchange offer
whereby a Corporate Change takes place, or (iii) if such
Corporate Change occurs other than pursuant to a tender or
exchange offer, the fair market value per share of the shares
into which such options being surrendered are exercisable, as
determined by the Compensation Committee as of the date
determined by the Compensation Committee to be the date of
cancellation and surrender of such options. If the consideration
offered to shareholders of the Company consists of anything other
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<PAGE> 15
than cash, the Compensation Committee shall determine the fair
cash equivalent of the portion of the consideration offered which
is other than cash.
Compensation Committee Interlocks and Insider Participation
Thomas C. Brown, the Chairman of the Board of Directors and
Chief Executive Officer of the Company, is a Director of Tom
Brown, Inc. and Donald L. Evans, the Chairman of the Board of
Directors, Chief Executive Officer and President of Tom Brown,
Inc., is a Director of the Company and serves on the Compensation
Committee of the Company's Board of Directors.
Certain Transactions
Until September, 1984, the Company was a wholly owned
subsidiary of Tom Brown, Inc. ("TBI"). In September, 1984, TBI
distributed the Common Stock of the Company to the stockholders
of TBI. Mr. Brown, the Chairman of the Board of Directors and
Chief Executive Officer of the Company, is also a Director of TBI
and Mr. Evans, a Director of the Company, is the Chairman of the
Board of Directors, Chief Executive Officer and President of TBI.
Following the spin-off of the Company, TBI and the Company have
each made available to the other certain personnel, office
services and records with each party being reimbursed for any
costs and expenses incurred in connection therewith. During the
fiscal year ended March 31, 1995, TBI charged the Company
approximately $65,200 for such services provided by TBI.
Historically, the Company has provided contract drilling and
other related oil and gas services to TBI in connection with
TBI's oil and gas exploration and development activities, and it
is anticipated that the Company will continue to perform similar
services for TBI in the future. Such services are provided in
instances where the Company and TBI both own, for their separate
accounts, interests in oil and gas leases being drilled, as well
as in instances where only TBI and other third parties own
interests. During the fiscal year ended March 31, 1995, the
Company billed TBI the aggregate amount of approximately
$1,684,000 for TBI's pro rata share of contract drilling
expenses, lease acquisition costs and operating expenses, all of
which was paid to the Company during the year ended March 31,
1995. At March 31, 1995, TBI was not indebted to the Company for
any such expenses. The largest aggregate amount owed by TBI to
the Company at one time during the fiscal year ended March 31,
1995 was approximately $484,300. TBI and the Company participate
on the same or similar terms afforded non-affiliated third
parties.
From time to time, the Company acquires interests in leases
from TBI and participates with TBI and other interest owners in
the drilling and development of such leases where TBI acts as
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<PAGE> 16
operator. The Company participates in such drilling ventures
under standard form operating agreements on the same or similar
terms afforded by TBI to unaffiliated third parties. TBI
invoices all working interest owners, including the Company, on a
monthly basis for their respective share of operating and
drilling expenses. During the year ended March 31, 1995, TBI
billed the Company approximately $100,000 for the Company's
proportionate share of drilling costs and related expenses
incurred on properties operated by TBI. The largest amount owed
by the Company to TBI at any one time during the fiscal year
ended March 31, 1995 for its share of drilling costs and related
expenses and for services provided by TBI was approximately
$56,600, and at March 31, 1995 the Company owed TBI approximately
$8,100 for lease operating expenses and security expenses.
INDEPENDENT AUDITORS
Arthur Andersen LLP has served as the Company's independent
auditor since March, 1990 and will continue as the Company's
independent auditor for the current year. Representatives of
Arthur Andersen LLP are expected to be present at the Annual
Meeting and will have the opportunity to make a statement to the
shareholders if they desire to do so, and to respond to
appropriate questions.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 1996
Annual Meeting of Shareholders must be received by the Company
for possible inclusion in its Proxy Statement and form of Proxy
relating to such meeting no later than April 4, 1996.
OTHER MATTERS
The Board of Directors of the Company knows of no matters,
other than those stated above, which are to be brought before the
Annual Meeting. If any other matter properly comes before the
meeting, however, it is intended that the persons named in the
enclosed Proxy may, in the absence of instructions to the
contrary, vote the Proxy in accordance with their best judgment.
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<PAGE> 17
The 1995 Annual Report to Shareholders, which includes the
Company's Annual Report on Form 10-K for the year ended March 31,
1995, including audited financial statements, is enclosed
herewith.
A copy of the Company's Annual Report on Form 10-K will be
furnished at no charge to each "beneficial owner" of securities
of the Company upon receipt of a written request of such person
addressed to: Secretary, TMBR/Sharp Drilling, Inc., 4607 West
Industrial Blvd., Midland, Texas 79703, containing a good faith
representation that, as of July 21, 1995, such person was a
beneficial owner of securities of the Company entitled to vote at
the Annual Meeting of Shareholders to be held August 31, 1995.
<TABLE>
<S> <C>
BY ORDER OF THE BOARD OF DIRECTORS
James M. Alsup
Secretary
Midland, Texas
July 26, 1995
</TABLE>
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<PAGE> 18
[Front of Card]
TMBR/SHARP DRILLING, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Thomas C. Brown, Donald L.
Evans and Joe G. Roper and each of them, attorneys, agents and
proxies, with full power of substitution, to represent and to
vote all shares of common stock of TMBR/SHARP DRILLING, INC. held of
record by the undersigned on July 21, 1995, at the Annual Meeting
of Shareholders of TMBR/SHARP DRILLING, INC. to be held on August 31,
1995, and at any adjournments or postponements thereof, in
accordance with the instructions on the reverse side.
(Continued and to be signed on reverse side)
SEE REVERSE
SIDE
<PAGE> 19
[Back of Card]
Please mark your
/ / votes as in this
example.
<TABLE>
<S> <C> <C> <C> <C>
WITHHOLD Nominees: Thomas C. Brown
1. Election of FOR all nominees AUTHORITY Donald L. Evans
Directors listed at right to vote for all David N. Fitzgerald
nominees listed Joe G. Roper
at right
/ / / /
</TABLE>
* To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below:
________________________________________________________
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SHARE-
HOLDER'S SPECIFICATION HEREON. IN THE ABSENCE OF SUCH
SPECIFICATION, THE PROXY WILL BE VOTED FOR THE NOMINEES FOR
DIRECTORS NAMED ON THIS PROXY CARD AND IN THE DISCRETION OF
THE PERSONS NAMED AS PROXIES ON THE REVERSE HEREOF, WITH
RESPECT TO ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE
THE MEETING OR ANY ADJOURNMENT(S) HEREOF.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE.
<TABLE>
<S> <C> <C> <C>
SIGNATURE ____________________ DATE ___________ SIGNATURE ____________________ DATE ___________
</TABLE>
NOTE: Please sign exactly as name appears hereon. Joint owners
should each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
