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 Sec. 240.14a-11(c) or Sec. 240.14a-12
ARXA INTERNATIONAL ENERGY, 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):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) or 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 transactions 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:
____________________________________________________________________
[X] 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:
____________________________________________________________________
ARXA INTERNATIONAL ENERGY, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 13, 1996
To the shareholders of ARXA International Energy, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Arxa
International Energy, Inc. (the "Company") will be held at 1111 Bagby, 24th
Floor, Houston, Texas 77002, at 9:00 a.m., for the following purposes:
1. To elect six directors to serve until the next annual meeting of
shareholders of the Company and until their successors have been
duly elected and qualified;
2. To ratify McManus & Co., P.C. as independent auditors of the Company
for the fiscal year ending January 31, 1997;
3. To consider and act upon a proposal to establish a Stock Option
Plan;
4. To consider and act upon a proposal to amend the Certificate of
Incorporation with respect to the Preferred Stock; and
5. The transaction of such other business as may properly come before
the meeting.
Only shareholders of record at the close of business on June 17, 1996, are
entitled to notice of and to vote at the meeting, or any adjournment thereof.
Shareholders unable to attend the Annual Meeting in person are requested
to read the enclosed Proxy Statement and then complete and deposit the Proxy
together with the power of attorney or other authority, if any, under which it
was signed or a notarized certified copy thereof with the Company's transfer
agent, Olde Monmouth Stock Transfer Co., Inc., 22 Claridge Drive, Middletown,
New Jersey 07748, at least 48 hours (excluding Saturdays, Sundays and statutory
holidays) before the time of the Annual Meeting or adjournment thereof or with
the chairman of the Annual Meeting prior to the commencement thereof.
Unregistered shareholders who received the Proxy through an intermediary must
deliver the Proxy in accordance with the instructions given by such
intermediary.
BY ORDER OF THE BOARD OF DIRECTORS
William J. Bippus, President
July 25, 1996
THE PROXY STATEMENT WHICH ACCOMPANIES THIS NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS CONTAINS MATERIAL INFORMATION CONCERNING THE MATTERS TO BE
CONSIDERED AT THE MEETING, AND SHOULD BE READ IN CONJUNCTION WITH THIS NOTICE.
ARXA INTERNATIONAL ENERGY, INC.
1331 LAMAR, SUITE 1375
HOUSTON, TEXAS 77010
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
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INTRODUCTION
This Proxy Statement is being furnished to shareholders in connection with
the solicitation of proxies by the Board of Directors of Arxa International
Energy, Inc. (the "Company") for use at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held at 9:00 a.m. on Tuesday, August 13, 1996 at 1111
Bagby, 24th Floor, Houston, Texas 77002 and at any adjournments thereof for the
purpose of considering and voting upon the matters set forth in the accompanying
Notice of Annual Meeting of Shareholders (the "Notice"). This Proxy Statement
and the accompanying form of proxy are first being mailed to shareholders on or
about July 25, 1996. All costs of soliciting proxies will be borne by the
Company.
The close of business on June 17, 1996, has been fixed as the record date
for the determination of shareholders entitled to notice of and to vote at the
Annual Meeting and any adjournment thereof. As of the record date, there were
6,536,120 shares of the Company's common stock, $.001 par value ("common
stock"), issued and outstanding. The presence, in person or by proxy, of a
majority of the outstanding shares of common stock on the record date is
necessary to constitute a quorum at the Annual Meeting. Each nominee for
director named in Item 1 must receive a plurality of the votes of the shares of
common stock present in person or represented by proxy (and entitled to vote at
the Annual Meeting) in order to be elected. The affirmative vote of the majority
of the shares of common stock present or represented by proxy (and entitled to
vote at the Annual Meeting) is required for the approval of Items 2 through 5
set forth in the accompanying Notice.
All shares represented by properly executed proxies, unless such proxies
have been previously revoked, will be voted at the Annual Meeting in accordance
with the directions set forth on such proxies. If no direction is indicated, the
shares will be voted (i) FOR THE ELECTION OF THE NOMINEES NAMED HEREIN, (ii) FOR
THE APPROVAL OF THE INDEPENDENT PUBLIC ACCOUNTANTS, (iii) TO AMEND THE
CERTIFICATE OF INCORPORATION WITH RESPECT TO THE PREFERRED STOCK, (iv) FOR
APPROVAL OF A STOCK OPTION PLAN, AND (v) FOR ANY OTHER PROPOSAL WHICH SHALL COME
BEFORE THE SHAREHOLDERS DURING THE ANNUAL MEETING. IF THE ENCLOSED PROXY IS
SIGNED AND RETURNED WITH NO SPECIFIED DESIGNATION, IT WILL BE VOTED FOR THE
ABOVE CAPTIONED PROPOSALS.
The enclosed proxy, even though executed and returned, may be revoked at
any time prior to the voting of the proxy (a) by the execution and submission of
a revised proxy, (b) by written notice to the Secretary of the Company or (c) by
voting in person at the Annual Meeting.
ITEM 1
ELECTION OF DIRECTORS
DIRECTOR NOMINEES
The directors are elected annually by the stockholders of the Company. The
Bylaws of the Company provide that the number of directors will be determined by
the Board of Directors, but shall not be less than six. The stockholders will
elect six directors for the coming year, and all the nominees (Messrs.
Schofield, Bippus, Fleschler, Stephens, Brovedani, and Abate) presently serve as
directors of the Company.
Although the Board of Directors of the Company does not contemplate that
any of the nominees will be unable to serve, if such a situation arises prior to
the Annual Meeting, the persons named in the enclosed Proxy will vote for the
election of such person(s) as may be nominated by the Board of Directors.
- 1 -
John O. Schofield (age 52) has served as chairman of the Board of
Directors since August 1995, and has served for over five years as president of
Duke Resources Corporation, Onyx Corp. and Schofield Oil Company. Mr. Schofield
has been active in the exploration and development of oil and gas properties for
more than 22 years. In 1977, Duke Resources Corporation, under the direction of
Mr. Schofield, received the "Wildcatter of the Year" award from the Illinois Oil
and Gas Association, and was again nominated to be a recipient for the same
award in 1991. Mr. Schofield is a certified petroleum engineer and is a member
of the Society of Petroleum Engineers. Mr. Schofield is currently a director of
the Illinois Oil and Gas Association and is a part director of the Independent
Producers Association of America for Indiana.
William J. Bippus (age 42) has served as president, chief executive
officer, and director of the Company since August 1995. Mr. Bippus was employed
by Marathon Petroleum Corporation from 1988 to July 1995. Most recently at
Marathon, Mr. Bippus had responsibilities in the world wide business development
unit evaluating acquisitions and entry opportunities in new areas. From 1992 to
1993, Mr. Bippus was responsible for Marathon's international non- operated
areas. From 1988 to 1992, Mr. Bippus worked for Marathon in Aberdeen, Scotland
and London, England as a senior geophysicist, reservoir development. From 1983
to 1987, Mr. Bippus was as senior geophysicist with Occidental Petroleum Corp.
in London. Mr. Bippus worked in the International Group of Cities Services
Petroleum Corp. from 1979 to 1983. Mr. Bippus holds Bachelor of Science and
Masters degrees in geology and geophysics from the University of Missouri-Rolla,
and is a Wyoming Board Registered Professional Geologist and the Society of
Exploration Geophysicists.
Sammy Fleschler (age 43) has served as secretary, treasurer and director
of the Company since August 1995. Mr. Fleschler has been a certified public
accountant since 1974. From 1974 to 1987, Mr. Fleschler was with Arthur Andersen
& Co., Seidman & Seidman BDO, and KMG Main Hurdman (since merged into KPMG Peat
Marwick). Since 1987, Mr. Fleschler has been a partner in Royall & Fleschler,
Certified Public Accountants, with Richard Royall, the chief financial officer
of the Company.
Gregory Stephens (age 35) has served as director of the Company since
August 1995. Mr. Stephens has been president and owner of Stephens Fabrication,
Inc. for over five years, and is a private investor.
Umberto Brovedani (age 60) has served as a director of the Company since
January 1995. Mr. Brovedani is an international oil and gas expert and has
served as a consultant based in Calgary, Alberta, Canada since 1993. From 1987
to 1993, Mr. Brovedani was general manager of the New Ventures and Exploration
Divisions of Canadian Occidental. During 1991, Mr. Brovedani was vice president
of Canadian Oxy Offshore Petroleum Ltd. Under Mr. Brovedani's leadership,
Canadian Occidental drilled a discovery well in a previously unexplored area of
Yeman. Today, this area is producing 150,000 barrels of oil per day, and is
estimated to contain in excess of 450 million barrels of oil. From 1986 to 1987,
Mr. Brovedani was resident manager of Occidental's Somalia operations. Political
problems forced Mr. Brovedani out of Somalia before his exploration program
could be completed. From 1986 to 1987, Mr. Brovedani was general manager of
CanOxy International Exploration. It was during this period that Mr. Brovedani
initiated the Yemen Permit acquisition. From 1983 to 1986, Mr. Brovedani was
senior exploration geologist, Occidental International Oil Company, London
responsible for North Sea activity. From 1974 to 1983, Mr. Brovedani held
various positions with AGIP SPA in Somalia, Italy, Nigeria, and Canada, and
Alaska. Mr. Brovedani has amassed over 35 years experience in international
exploration. Mr. Brovedani has worked almost every major oil producing basin in
the world. He has worked in many foreign countries, including many with
cultural, political, and economic difficulties. Mr. Brovedani was instrumental
in acquiring the Company's Tunisian interest. Mr. Brovedani is fluent in four
languages including Arabic. Mr. Brovedani is active in many exploration
professional societies and holds a Doctor of Geological Sciences degree from the
University of Milan, Italy.
Thomas M. Abate (age 58) has served as a director since March 1994. Mr.
Abate is chairman of the board of Mega Holding Corp., the firm which was
instrumental in arranging for the acquisition of ARXA USA, Inc. by the Company
and the revitalization of the Company. Previously, Mr. Abate was a vice
president of Orvis Brothers, a stock brokerage firm which was a member of the
New York Stock Exchange. Mr. Abate has been in the stock brokerage business for
over five years.
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BOARD OF DIRECTORS, COMMITTEES AND MEETINGS
The Board of Directors held two meetings during the fiscal year ended
January 31, 1996, and each director of the Company attended at least 75% of all
Board meetings. The Company maintains a Compensation Committee and each member
attended the committee meeting. Messrs. Abate, Bippus and Fleschler presently
serve as members of the Compensation Committee.
The Compensation Committee reviews and approves the remuneration
arrangements for the officers and directors of the Company and reviews and
recommends new executive compensation or stock plans in which the officers
and/or directors are eligible to participate.
DIRECTORS' FEES
Directors were not paid for attendance at Board of Directors meetings
during the fiscal year ending January 31, 1996. The Company does not compensate
any of its directors for their services to the Company, as directors. All
directors are entitled to reimbursement for reasonable travel expenses incurred
in attending such meetings.
REPORTS
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own beneficially more than ten percent of
the common stock of the Company, to file reports of ownership and changes of
ownership with the Securities and Exchange Commission. Copies of all filed
reports are required to be furnished to the Company pursuant to Section 16(a).
Based solely on the reports received by the Company, the Company believes that
the directors, executive officers, and greater than ten percent beneficial
owners complied with all applicable filing requirements during the fiscal year
ended January 31, 1996, except as follows. In August 1995, Sammy Fleschler
purchased 50,000 shares of common stock from William J. Bippus, and Richard R.
Royall purchased 25,000 shares of common stock from each of Messrs. Bippus and
Schofield. These transactions were not timely reported on Form 4 or Form 5. In
August 1995, Thomas M. Abate was issued 14,418 shares of common stock, a five
year warrant to purchase 13,840 shares of common stock at an exercise price of
$2.00 per share, and a five year warrant to purchase 13,840 shares of common
stock at an exercise price of $2.00 per share. These transactions were not
timely reported on Forms 3, 4 or 5. In January 1996, (i) Mr. Fleschler was
issued 144,541 shares of common stock and a five year warrant to purchase 41,703
shares of common stock at an exercise price of $2.00 per share for services
rendered, (ii) Mr. Royall was issued 144,541 shares of common stock and a five
year warrant to purchase 41,703 shares of common stock at an exercise price of
$2.00 per share for services rendered, (iii) Umberto Brovedani was issued
144,541 shares of common stock and a five year warrant to purchase 41,703 shares
of common stock at an exercise price of $2.00 per share for services rendered,
and (iv) Mr. Schofield sold 50,000 shares of common stock. These transactions
were not timely reported on Form 4 or Form 5.
VOTE REQUIRED
Approval of Item 1 requires the affirmative vote of a plurality of the
Company's outstanding shares of common stock present or represented by proxy
(and entitled to vote).
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
VOTE "FOR" THE ELECTION OF THE ABOVE DIRECTORS.
ITEM 2
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors wishes to obtain from the shareholders a
ratification of the Board's action in appointing McManus & Co., P.C., as
independent public accountants of the Company, for the fiscal year ending
January 31, 1997.
The engagement of McManus & Co., P.C. for audit services has been approved
by the Board of Directors.
- 3 -
In the event the appointment of McManus & Co., P.C., as independent
auditors for fiscal year 1997, is not ratified by the shareholders, the adverse
vote will be considered as a direction to the Board of Directors to select other
auditors for the following year. However, because of the difficulty in making
any substitution of auditors so long after the beginning of the current year, it
is contemplated that the appointment for the fiscal year 1997 will be permitted
to stand unless the Board finds other good reason for making a change.
Representatives of McManus & Co., P.C. are expected to be present at the
meeting, will have an opportunity to make a statement if they so desire, and are
expected to be available to respond to appropriate questions.
VOTE REQUIRED
Approval of Item 2 requires the affirmative vote of a majority of the
Company's outstanding shares of common stock present or represented by proxy
(and entitled to vote).
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
VOTE "FOR" THE APPROVAL OF MCMANUS & CO., P.C. AS INDEPENDENT AUDITORS OF THE
COMPANY.
ITEM 3
APPROVAL OF AN AMENDMENT TO THE CERTIFICATE OF INCORPORATION
WITH RESPECT TO THE PREFERRED STOCK
INTRODUCTION
The Company's Board of Directors has approved, and recommends that the
Company's shareholders approve a proposal which provides for an amendment to the
Certificate of Incorporation creating a "blank check" preferred stock.
The present Certificate of Incorporation provides for issuance of
2,000,000 shares of preferred stock. Article Four of the Certificate of
Incorporation requires certain restrictions when the Company issues preferred
stock. These restrictions include: (i) the payment of cumulative preferential
dividends, (ii) restrictions on the payment of dividends for common stock, (iii)
certain redemption provisions, (iv) certain liquidation provisions, and (v)
restrictions on corporate actions while the preferred stock is outstanding. The
Board of Directors proposes to eliminate these restrictions, thereby giving it
more flexibility in the issuance of preferred stock. Specifically, the Board of
Directors believes that the creation of a "blank check" preferred stock will
provide the Company greater flexibility to raise capital. The creation of a
"blank check" preferred stock may prevent a takeover or make a takeover more
difficult through the issuance of additional preferred stock with super-voting
rights or other provisions aimed to preclude or render more difficult a takeover
attempt. The Board of Directors has no present plans, nor has it made or
accepted any proposals, to issue any additional shares of preferred stock in
connection with any acquisition, transaction or otherwise. The Amended Article,
as proposed, is attached hereto as Exhibit A.
VOTE REQUIRED
Approval of Item 3 requires the affirmative vote of a majority of the
Company's outstanding shares of common stock present or represented by proxy
(and entitled to vote).
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
VOTE "FOR" THE ADOPTION OF AN AMENDMENT TO THE CERTIFICATE OF INCORPORATION
WITH RESPECT TO THE PREFERRED STOCK.
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ITEM 4
APPROVAL OF A STOCK OPTION PLAN
INTRODUCTION
The Company's Board of Directors has approved, and recommends that the
Company's shareholders approve a proposal which provides for the creation of a
stock option plan (the "Plan"), attached hereto as Exhibit B. The Board of
Directors believes that the Plan will foster and promote the financial success
of the Company and materially increase stockholder value by enabling eligible
key employees and others to participate in the long-term growth and financial
success of the Company.
The Company's Board of Directors adopted and approved the Plan in May
1996, subject to shareholder approval. A total of 1,000,000 shares of Common
Stock are currently reserved for issuance under the Plan. Upon shareholder
approval, the Plan will become effective.
At the Annual Meeting, the stockholders are being requested to approve the
Plan and the reservation for the shares thereunder.
The principal features of the Plan are described below:
GENERAL. The Plan authorizes the Compensation Committee to grant options
and rights to purchase shares of common stock ("Shares"). Options granted under
the Plan may either be "incentive stock options" as defined in Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), or nonqualified
stock options, as determined by the Compensation Committee.
STOCK SUBJECT TO THE STOCK PLAN. Subject to other provisions of the Stock
Plan, the maximum aggregate number of shares of common stock which may be
optioned and sold under the Stock Plan shall be 1,000,000 shares.
ADMINISTRATION. The Plan shall be administered by the Compensation
Committee. The Compensation Committee shall have the authority to: (i) determine
the employees and others to whom the awards shall be granted, (ii) make awards
in such form and amounts as it shall determine, (iii) impose such limitations
and conditions upon such awards as it shall deem appropriate, (iv) interpret the
Plan, prescribe, amend and rescind rules and regulations relating to it, (v)
determine the terms and provisions of the respective participants' agreements
(which need not be identical), and (vi) make such other determinations as it
deems necessary or advisable for the administration of the Plan.
ELIGIBILITY. The Plan provides that options may be granted to employees,
consultants and non-employee directors of the Company and its subsidiaries.
TERMS AND CONDITIONS OF OPTIONS. Each option is to be evidenced by a stock
option agreement between the Company and the employee, consultant or
non-employee director to whom such option is granted, and is subject to the
following additional terms and conditions.
(a) EXERCISE PRICE. The exercise price of any non-qualified stock option
granted under the Plan shall be such price as the Compensation Committee shall
determine on the date on which such non-qualified stock option is granted;
provided, that such price may not be less than 85% of the fair market value of a
share of common stock on the date the option is granted. The exercise price of
any incentive stock option shall not be less than 100% of the fair market value
of a share of common stock on the date on which such incentive stock option is
granted; provided however, that incentive stock options may not be granted to
any owner of 10% or more of the total combined voting power of the Company and
its subsidiaries unless the exercise price is at least 110% of the fair market
value of a share of common stock on the date the option is granted, and (ii) the
option by its terms is not exercisable after the expiration of five years from
the date such incentive stock option is granted.
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(b) TERM OF THE OPTION. Each stock option agreement will specify the term
of the option and the date when the option is to become exercisable. No option
shall be exercisable ten years from the date the option was granted. No
incentive stock option granted to a 10% shareholder shall be exercisable after
the expiration of five years from the date of the grant of said incentive stock
option. Each option shall be subject to earlier termination, expiration or
cancellation as provided under the Plan. No option may be exercised by any
person after the expiration of its term.
(c) TERMINATION OF EMPLOYMENT. (i) If the employment or consulting,
service or similar relationship of a participant with the Company shall
terminate for any reason other than cause, "permanent and total disability"
(within the meaning of Section 22(e)(3) of the Code) or the death of the
participant (a) options granted to such participant, to the extent that they
were exercisable at the time of such termination, shall remain exercisable until
the expiration of one month after such termination, on which date they shall
expire, and (b) options granted to such participant, to the extent that they
were not exercisable at the time of such termination, shall expire at the close
of business on the date of such termination; PROVIDED, HOWEVER, that no option
shall be exercisable after the expiration of its term.
(ii) If the employment or consulting, service or similar relationship of a
participant with the Company shall terminate on account of the "permanent and
total disability" (within the meaning of Section 22(e)(3) of the Code) or the
death of the participant (a) options granted to such participant, to the extent
that they were exercisable at the time of such termination, shall remain
exercisable until the expiration of one year after such termination, on which
date they shall expire, and (b) options granted to such participant, to the
extent that they were not exercisable at the time of such termination, shall
expire at the close of business on the date of such termination; PROVIDED,
HOWEVER, that no option shall be exercisable after the expiration of its term.
(iii) In the event of the termination of a participant's employment or
other relationship for cause, all outstanding options granted to such
participant shall expire at the commencement of business on the date of such
termination.
(d) NONTRANSFERABILITY OF OPTIONS. During the lifetime of a participant,
any option granted to him shall be exercisable only by him or by his guardian or
legal representative. No option shall be assignable or transferable, except by
will, by the laws of descent and distribution, or pursuant to certain domestic
relations orders. The granting of an option shall impose no obligation upon the
holder thereof to exercise such option or right.
(e) VALUE LIMITATION. To the extent that the aggregate fair market value
of common stock subject to incentive stock options exercisable for the first
time by a participant during any calendar year exceeds $100,000, such options
shall be treated as non-qualified stock options.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The aggregate number or type
of shares of common stock with respect to which options may be granted
hereunder, the number or type of shares of common stock subject to each
outstanding option, and the exercise price per share for each such option may
all be appropriately adjusted, as the Compensation Committee may determine, for
any increase or decrease in the number of shares of issued common stock
resulting from a subdivision or consolidation of shares whether through
reorganization, recapitalization, consolidation, payment of a share dividend, or
other similar increase or decrease.
A. Subject to any required action by the stockholders, if the Company
shall be a party to a transaction involving a sale of substantially
all its assets, a merger, or a consolidation, any option granted
hereunder shall pertain to and apply to the securities to which a
holder of common stock would be entitled to receive as a result of
such transaction; PROVIDED, HOWEVER, that all unexercised options
under the Plan may be cancelled by the Company as of the effective
date of any such transaction by giving notice to the holders of such
options of its intention to do so, and by permitting the exercise of
such options during the 30-day period immediately after the date
such notice is given.
B. In the case of dissolution of the Company, every option outstanding
hereunder shall terminate; PROVIDED, HOWEVER, that each option
holder shall have 30 days' prior written notice of such event,
during which time he shall have a right to exercise his partly or
wholly unexercised options.
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C. On the basis of information known to the Company, the Compensation
Committee shall make all determinations under this Section 8,
including whether a transaction involves a sale of substantially all
the Company's assets; and all such determinations shall be
conclusive and binding on the Company and all other persons.
D. Upon the occurrence of a change in control, the Compensation
Committee (as constituted immediately prior to the change in
control) shall determine, in its absolute discretion, whether each
option granted under the Plan and outstanding at such time shall
become fully and immediately exercisable and shall remain
exercisable until its expiration, termination or cancellation
pursuant to the terms of the Plan or whether each such option shall
continue to vest according to its terms.
AMENDMENT AND TERMINATION OF THE PLAN. The Board of Directors may at any
time suspend or discontinue the Plan or revise or amend it in any respect
whatsoever, PROVIDED, HOWEVER, that without approval of the holders of a
majority of the outstanding shares of common stock present in person or by proxy
at an annual or special meeting of stockholders, no revision or amendments shall
(i) increase the number of shares of common stock that may be issued under the
Plan, (ii) materially increase the benefits accruing to individuals holding
options granted pursuant to the Plan, or (iii) materially modify the
requirements as to eligibility for participation in the Plan.
VOTE REQUIRED
Approval of Item 4 requires the affirmative vote of a majority of the
Company's outstanding shares of common stock present or represented by proxy
(and entitled to vote).
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE CREATION OF AN INCENTIVE STOCK OPTION PLAN.
STOCK OWNERSHIP
The following table and notes thereto set forth certain information
regarding beneficial ownership of the Company's common stock as of June 17,
1996, by (i) each person known by the Company to beneficially own more than five
percent of the Company's common stock, (ii) each of the Company's directors,
(iii) all of the directors and the officers of the Company as a group, and (iv)
each named executive officer.
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NAME AND ADDRESS SHARES OF COMMON STOCK PERCENT OF VOTING POWER
- ---------------- ---------------------- -----------------------
John O. Schofield 2,366,2501 33.5%
820 York Road,
Evansville, Indiana 47715
William J. Bippus 2,384,4382 33.8%
1331 Lamar, Suite 1375
Houston, Texas 77010
Gregory Stephens 700,0003 10.5%
411 Pebble Court
Russiaville, Indiana 46979
Sammy Fleschler 336,2444 5.0%
1331 Lamar, Suite 1375
Houston, Texas 77010
Umberto Brovedani 226,0825 3.4%
1311 Lamar, Suite 1375
Houston, Texas 77010
Robert J. Leslie 50,0006 *
1311 Lamar, Suite 1375
Houston, Texas 77010
Thomas M. Abate 66,9787 *
278-A New Drop Lane
Staten Island, New York 10306
All officers and directors
as a group (eight persons) 6,466,2368 79.1%
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* Less than one percent.
1. Includes a warrant for the purchase of 523,125 shares of common stock at a
purchase price of $2.00 per share, which expires in August 2000.
2. Includes a warrant for the purchase of 527,344 shares of common stock at a
purchase price of $2.00 per share, which expires in August 2000.
3. Includes a warrant for the purchase of 150,000 shares of common stock at a
purchase price of $2.00 per share, which expires in August 2000.
4. Includes a warrant for the purchase of 41,703 shares of common stock at a
purchase price of $2.00 per share which expires in January 2001, and a warrant
for the purchase of 100,000 shares of common stock of the Company at a purchase
price of $2.00 per share which expires in August 2000.
5. Includes a warrant for the purchase of (i) 40,000 shares of common stock at a
purchase price of $2.00 per share which expires in August 2000 and (ii) 41,703
shares of common stock at a purchase price of $2.00 per share which expires in
January 2001.
6. Includes a warrant to purchase 50,000 shares of common stock at a purchase
price of $2.00 per share which expires in August 2000.
7. Includes warrants for the purchase of 27,680 shares of common stock at a
purchase price of $2.00 per share.
- 8 -
8. Includes warrants to purchase 1,643,258 shares of Company stock.
EXECUTIVE COMPENSATION
The following table sets forth the information with respect to the chief
executive officer. No executive officer received total annual salary and bonus
for the fiscal year ended January 31, 1996, in excess of $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------- -----------------------
NAME AND PRINCIPAL FISCAL OTHER ANNUAL STOCK ALL OTHER
POSITION(1) YEAR SALARY COMPENSATION ISSUANCES OPTIONS COMPENSATION
- ------------------ ------ ------ ------------ --------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
William J. Bippus, 1996 $75,000 - - - -
Chief Executive
Officer 1995 - - - - -
________________ 1994 - - - - -
</TABLE>
- ------------
(1) Mr. Bippus served as chief executive officer from August 1995. Prior
thereto, the Company was dormant and there was no chief executive officer during
the last three years.
The Company has entered into a five year employment contract with William
J. Bippus, its president and chief executive officer, at an annual salary of
$180,000. In addition, Mr. Bippus has been granted preemptive rights to acquire
any securities which may be issued by the Company. The employment agreement may
be terminated for cause.
OFFICERS AND KEY EMPLOYEES
NAME AGE OFFICE
---- --- ------
William J. Bippus 42 President and Chief Executive Officer of
the Company
Richard R. Royall 50 Chief Financial Officer of the Company
Sammy Fleschler 43 Secretary and Treasurer
Richard R. Royall has served as chief financial officer of the Company
since August 1995. Mr. Royall has been a certified public accountant since 1971.
From 1971 to 1985, Mr. Royall was with Haskins & Sells, Laventhol & Horwath, and
Bracken, Krutilek & Royall. In 1986, Mr. Royall practiced accounting as a sole
practitioner. Since 1987, Mr. Royall has been a partner in Royall & Fleschler,
certified public accountants, with Sammy Fleschler, a director, secretary and
treasurer of the Company. In addition to the foregoing, since 1978, Mr. Royall
has been actively involved in various aspects of oil and gas exploration in
privately held companies and trusts.
Messrs. Bippus' and Fleschler's biographies are set forth in Item 1,
Election of Directors.
CERTAIN TRANSACTIONS
In August 1995, the Company (then named Major League Enterprises, Inc.)
and the stockholders of ARXA USA, Inc. ("ARXA") executed a stock exchange
agreement whereby holders of all of the issued and outstanding shares of the
capital stock in ARXA exchanged such securities for 5,500,000 shares of the
common stock of the Company and five-year warrants for the purchase of 1,500,000
shares of the common stock of the Company for a purchase price of $2 per share
("Warrants"). The stockholders of ARXA included all of the directors of the
Company, except Thomas M. Abate and Sammy Fleschler. Pursuant to the terms of
the exchange, the following transactions occurred. Messrs. Bippus and Schofield
each received 2,062,500 shares of common stock of the Company for nominal
consideration, and
- 9 -
Warrants to purchase 562,000 shares of common stock of the Company for services
rendered in connection with the exchange. Mr. Abate received a fee of $71,000.
Mr. Abate and his affiliate, Mega Holding Corp., each received Warrants for the
purchase of 13,840 shares of common stock for services rendered in connection
with the exchange. Mr. Royall purchased 25,000 shares of common stock from each
of Messrs. Bippus and Schofield for nominal consideration, and the Company
issued Mr. Royall five-year warrants to purchase 100,000 shares of common stock
at a purchase price of $2.00 per share of the Company for services rendered in
connection with the exchange. Mr. Fleschler purchased 50,000 shares of common
stock from Mr. Bippus for nominal consideration and the Company issued Mr.
Fleschler five-year warrants to purchase 100,000 shares of common stock of the
Company at a purchase price of $2.00 per share for services rendered in
connection with the exchange. Mr. Leslie received Warrants for the purchase of
50,000 shares of the common stock for services rendered in connection with the
exchange. Mr. Brovedani was issued a Warrant to purchase 40,000 shares of common
stock for services rendered.
In January 1996, (i) Mr. Fleschler was issued 144,541 shares of common
stock and a five year warrant to purchase 41,703 shares of common stock at an
exercise price of $2.00 per share for services rendered, (ii) Mr. Royall was
issued 144,703 shares of common stock and a five year warrant to purchase 41,541
shares of common stock at an exercise price of $2.00 per share for services
rendered, and (iii) Mr. Brovedani was issued 144,541 shares of common stock and
a five year warrant to purchase 41,703 shares of common stock at an exercise
price of $2.00 per share for services rendered.
Pursuant to non-competition agreements dated August 1995, by and between
ARXA and Gregory Stephens and Duke Resources Corporation, an affiliate of Mr.
Schofield, each of Mr. Stephens and Duke Resources Corporation agreed that for a
period of two years from the date thereof within the States of Michigan and
North Dakota they shall not lease oil and gas properties or generate oil or gas
prospects. The consideration for such agreements was a promissory note in favor
of Gregory Stephens in the amount of $102,662.94 and a promissory note in favor
of Duke Resources Corporation in the amount of $136,995.49. These promissory
notes were exchanged for 426,943 shares of the class A preferred stock January
1996, which preferred stock has a stated value of $1.00.
In August 1995, Duke Resources Corporation assigned to ARXA certain oil
and gas leases located in Calhoun County, Michigan and Billings County, North
Dakota, in exchange for promissory notes in the amount of $317,876.19 due
January 1996. Moveover, the Company is indebted to Gregory Stephens in the
amount of $56,693.95 due January 1996, as a result of the purchase of an
interest in the oil and gas lease located in Michigan and sold by Duke Resources
Corporation to the Company. To secure the obligations of the Company under these
promissory notes, the Company executed an escrow agreement and assignments of
oil and gas leases covering the oil and gas leases located in Billings County,
North Dakota and Calhoun County, Michigan. In January 1996, these promissory
notes were exchanged for 187,285 shares of the class A preferred stock and
promissory notes in the amount of $158,938 and $28,347, both due in July 1996
and bearing interest at the rate of eight percent per annum.
OTHER MATTERS
Management is not aware of any other matters to be presented for action at
the meeting. However, if any other matter is properly presented, it is the
intention of the persons named in the enclosed form of proxy to vote in
accordance with their best judgment on such matter.
GENERAL
A copy of the Annual Report on Form 10-K filed by the Company with the
Securities and Exchange Commission for its last fiscal year is available without
charge to shareholders upon written request to Mr. Fleschler, Secretary, 1331
Lamar, Suite 1375, Houston, Texas 77010.
COST OF SOLICITATION
The Company will bear the cost of the solicitation of proxies from its
shareholders. In addition to the use of mail, proxies may be solicited by
directors, officers and regular employees of the Company in person or by
telephone or other means of communication. The directors, officers and employees
of the Company will not be compensated additionally for the solicitation, but
may be reimbursed for out-of-pocket expenses in connection with this
solicitation.
- 10 -
Arrangements are also being made with brokerage houses and any other custodians,
nominees and fiduciaries for the forwarding of solicitation material to the
beneficial owners of the Company, and the Company will reimburse the brokers,
custodians, nominees and fiduciaries for the reasonable out-of-pocket expenses.
SHAREHOLDER PROPOSALS FOR NEXT MEETING
Proposals of shareholders intended to be presented at the next annual
meeting must be received by the Company for inclusion in the Company's proxy
statement and form of proxy relating to that meeting before February 25, 1997.
BY ORDER OF THE BOARD OF DIRECTORS
William J. Bippus, President
July 25, 1996
- 11 -
PROXY
ARXA INTERNATIONAL ENERGY, INC.
ANNUAL MEETING OF STOCKHOLDERS
------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ARXA
INTERNATIONAL ENERGY, INC. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
IN ACCORDANCE WITH THE CHOICES SPECIFIED BELOW.
The undersigned stockholder of ARXA INTERNATIONAL ENERGY, INC. (the "Company")
hereby appoints William J. Bippus and Sammy Fleschler the true and lawful
attorneys, agents and proxies of the undersigned with full power of substitution
for and in the name of the undersigned, to vote all the shares of Common Stock
of ARXA INTERNATIONAL ENERGY, INC. which the undersigned may be entitled to vote
at the Annual Meeting of Stockholders of ARXA INTERNATIONAL ENERGY, INC. to be
held at 9:00 a.m. on Tuesday, August 13, 1996 at 1111 Bagby, 24th Floor,
Houston, Texas 77002, and any and all adjournments thereof, with all of the
powers which the undersigned would possess if personally present, for the
following purposes:
1. Approval of the election of six Directors (the Board of
Directors recommends a vote FOR).
FOR WITHHOLD
John O. Schofield [ ] [ ]
William J. Bippus [ ] [ ]
Sammy Fleschler [ ] [ ]
Gregory Stephens [ ] [ ]
Umberto Brovedani [ ] [ ]
Thomas M. Abate [ ] [ ]
FOR AGAINST ABSTAIN
2. Ratification of the selection of [ ] [ ] [ ]
McManus & Co., P.C. as independent
accountants of the Company for the
fiscal year ending January 31, 1997
(the Board of Directors recommends a
vote FOR).
3. Amendment to the Certificate of [ ] [ ] [ ]
Incorporation with respect to the
preferred stock (the Board of Directors
recommends a vote FOR).
4. Creation of a Stock Option Plan [ ] [ ] [ ]
(the Board of Directors recommends a
vote FOR).
5. The proxies are authorized to vote as
they determine in their discretion
upon such other business as may properly
come before the meeting.
THIS PROXY WILL BE VOTED FOR THE CHOICES SPECIFIED. IF NO CHOICE IS SPECIFIED
FOR ITEMS 1, 2, 3 AND 4, THIS PROXY WILL BE VOTED FOR THESE ITEMS.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting and
Proxy Statement dated July 25, 1996, as well as the Annual Report for the fiscal
year ended January 31, 1996.
PLEASE MARK, SIGN AND DATE THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
DATED:_______________________ ___________________________________
(Signature)
___________________________________
(Signature if jointly held)
___________________________________
(Printed Name)
Please sign exactly as name appears
on stock certificate(s). Joint
owners should each sign. Trustees
and others acting in a
representative capacity should
indicate the capacity in which they
sign.
