<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ERC Industries, 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] 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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
ERC INDUSTRIES, INC.
1441 PARK TEN BLVD.
HOUSTON, TEXAS 77084
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 15, 1998
To the Stockholders of
ERC INDUSTRIES, INC.
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders (the
"Annual Meeting") of ERC Industries, Inc., a Delaware corporation (the
"Company"), will be held at the Holiday Inn-Houston West, 14703 Park Row,
Houston, Texas 77079, on Monday, June 15, 1998 at 10:00 a.m. Houston time, for
the following purposes:
(1) To elect two Class II directors to serve until the Company's 2001
Annual Meeting of Stockholders or until their successors are duly
elected and qualified;
(2) To consider and vote upon the approval of a proposed amendment to
Article IV of the Certificate of Incorporation of the Company to
increase the number of authorized shares of common stock, par value
$.01 per share, of the Company from 30,000,000 to 40,000,000 shares.
(3) To ratify the appointment by the Board of Directors of Coopers &
Lybrand L.L.P. as the Company's independent public accountants for the
year ended December 31, 1998; and
(4) To transact any other proper business brought before the Annual Meeting
or any adjournments or postponements thereof.
The Board of Directors has fixed May 20, 1998, at the close of business, as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the Annual Meeting and any adjournment or postponement thereof.
Only holders of record of the Company's common stock on that date are entitled
to vote on matters coming before the Annual Meeting and any adjournment or
postponement thereof. A complete list of stockholders entitled to vote at the
meeting will be maintained in the Company's offices at 1441 Park Ten Blvd.,
Houston, Texas 77084, for ten days prior to the Annual Meeting.
Please advise the Company's transfer agent, American Stock Transfer & Trust
Company, 40 Wall Street, 46th Floor, New York, New York 10005 of any change in
your address.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING, PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE
PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED STATES. IF YOU
RECEIVE MORE THAN ONE PROXY CARD BECAUSE YOUR SHARES ARE REGISTERED IN DIFFERENT
NAMES OR AT DIFFERENT ADDRESSES, EACH SUCH PROXY CARD SHOULD BE SIGNED AND
RETURNED TO ENSURE THAT ALL OF YOUR SHARES WILL BE VOTED. THE PROXY CARD SHOULD
BE SIGNED BY ALL REGISTERED HOLDERS EXACTLY AS THE SHARES ARE REGISTERED. ANY
PERSON GIVING A PROXY HAS THE POWER TO REVOKE IT AT ANY TIME PRIOR TO ITS
EXERCISE AND, IF PRESENT AT THE MEETING, MAY WITHDRAW IT AND VOTE IN PERSON.
By Order of the Board of Directors,
Wendell R. Brooks, President
Houston, Texas
May 23, 1998
<PAGE>
ERC INDUSTRIES, INC.
1441 PARK TEN BLVD.
HOUSTON, TEXAS 77084
(281) 398-8901
--------------------------------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
--------------------------------------
TO BE HELD JUNE 15, 1998
SOLICITATION AND REVOCABILITY OF PROXIES
The accompanying proxy, mailed together with this Proxy Statement to
stockholders on or about May 23, 1998, is solicited by ERC Industries, Inc. (the
"Company") in connection with the Annual Meeting of Stockholders to be held on
June 15, 1998 (the "Annual Meeting").
As stated in the Notice to which this Proxy Statement is attached, matters
to be acted upon at the Annual Meeting include (1) election to the Board of
Directors of two persons to serve as Class II directors until the Company's 2001
Annual Meeting of Stockholders or until their successors are duly elected and
qualified; (2) to consider and vote upon the approval of a proposed amendment to
Article IV of the Certificate of Incorporation of the Company to increase the
number of authorized shares of common stock, par value $.01 (the "Common
Stock"), of the Company from 30,000,000 to 40,000,000 shares; (3) to ratify the
appointment by the Board of Directors of Coopers & Lybrand L.L.P. as the
Company's independent public accountants for the year ended December 31, 1998;
and (4) to transact any other proper business brought before the Annual Meeting
or any adjournments or postponements thereof.
All holders of record of shares of the Common Stock, at the close of
business on May 20, 1998 (the "Record Date") are entitled to notice of and to
vote at the Annual Meeting. On the Record Date, the Company had outstanding
27,498,272 shares of Common Stock. Each share of Common Stock is entitled to
one vote. The presence, in person or by proxy, of holders of a majority of the
outstanding shares of Common Stock entitled to vote as of the Record Date is
necessary to constitute a quorum at the Annual Meeting. A plurality of the
votes of the shares present in person or represented by proxy at the Annual
Meeting, provided a quorum is constituted, is required for the election of
directors. The proposal to amend the Company's Certificate of Incorporation
requires for its approval the affirmative vote of a majority of the shares of
Common Stock issued, outstanding and entitled to vote at the Annual Meeting.
The affirmative vote of holders of a majority of the shares of Common Stock
present in person or represented by proxy at the Annual Meeting, provided a
quorum is constituted, is required for ratification of the independent auditors.
With regard to the election of directors, votes may be cast in favor or
withheld. Votes that are withheld will be excluded entirely from the vote and
will have no effect. Abstentions may be specified on all other proposals and
will be counted as present for purposes of the item on which the abstention is
noted. Abstentions on the proposals to amend the Company's Certificate of
Incorporation and to ratify the appointment of the auditors will have the effect
of a negative vote because those proposals require the affirmative vote of
holders of a majority of shares present in person or by proxy and entitled to
vote. Under the rules of the Nasdaq Stock Market ("Nasdaq"), a broker is
entitled to vote on the election of directors, the amendment of the Company's
Certificate of Incorporation and the ratification of auditors if such broker
holds shares in street name for a customer who does not deliver voting
instructions. Under applicable Delaware law, a broker non-vote resulting from
the failure to deliver voting instructions to a broker will have no effect on
the outcome of the election of directors or the ratification of auditors.
However, a broker non-vote will have the same effect as a vote against the
proposed amendment to the Company's Certificate of Incorporation.
Any stockholder has the unconditional right to revoke his proxy at any
time before it is voted. Any proxy given may be revoked either by a written
notice duly signed and delivered to the Secretary of the Company prior to the
exercise of the proxy, by execution of a subsequent proxy or by voting in person
at the Annual Meeting (although attending the Annual Meeting without executing a
ballot or executing a subsequent proxy will not constitute revocation of a
proxy). Where a stockholder's duly executed proxy specifies a choice with
respect to a voting matter, the shares will be voted accordingly. If no such
specification is made, the shares will be voted (1) FOR the nominees for
director identified below, (2) FOR the proposal to amend Article IV of the
Certificate of Incorporation of the Company to increase the number of authorized
shares of Common Stock of the Company from 30,000,000
<PAGE>
to 40,000,000 shares and (3) FOR the proposal to ratify the appointment of
Coopers & Lybrand L.L.P. as the Company's independent auditors.
-2-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of April 30, 1998, by (i) each
director, nominee for director and the Chief Executive Officer of the Company,
(ii) all executive officers and directors of the Company as a group, and (iii)
all persons who are known by the Company to be beneficial owners of 5% or more
of the Company's outstanding Common Stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OWNED /(1)/ PERCENT OF CLASS
- ----------------------------------------------- ------------------ ----------------
<S> <C> <C>
John Wood Group PLC/(1)/ 24,337,702/(1)/ 88.5%/(1)/
Allister G. Langlands/(2)/ 0 *
Jorge E. Estrada M. 0 *
Wendell R. Brooks 0 *
John Derek Prichard-Jones/(2)/ 0 *
George W. Tilley 0 *
Anthony Howells 0 *
Directors and Executive Officers 0 *
as a group (9 persons)
</TABLE>
_______________________________
*Less than 1%
Except as otherwise indicated, the persons named in the table possess sole
voting and investment power with respect to all shares of Common Stock shown as
beneficially owned by them. Includes shares of Common Stock held by spouses and
minor children of such persons and corporations in which such persons hold a
controlling interest.
/(1)/ The address of John Wood Group PLC, a corporation registered in Scotland
and incorporated under the laws of the United Kingdom ("Wood Group"), is John
Wood House, Greenwell Road, East Tullos, Aberdeen, Scotland AB1 4AX.
/(2)/ The directors of Wood Group, which include Messrs. Prichard-Jones and
Langlands, and Sir Ian Wood C.B.E., L.L.D., Chairman and Managing Director of
Wood Group, may be deemed the beneficial owners of the Company's Common Stock
owned by Wood Group.
DIRECTORS AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS
The Board of Directors of the Company presently consists of five directors.
These directors are divided into three classes: Class I (two directors), Class
II (two directors) and Class III (one director). The term of the Class II
directors expires at this Annual Meeting, the term of the Class III director
expires at the Annual Meeting to be held in 1999 and the term of the Class I
directors will expire at the Annual Meeting to be held in 2000. John Derek
Prichard-Jones and Anthony Howells will stand for election at this Annual
Meeting for three-year terms of office expiring at the 2001 Annual Meeting of
Stockholders or until their successors are duly elected and qualified.
The following table sets forth certain information as to the nominees for
director of the Company:
<TABLE>
<CAPTION>
Director
Name and Age Positions and Offices With the Company Since
- -------------------------------- -------------------------------------- --------
<S> <C> <C>
John Derek Prichard-Jones, 62 Chairman and Director 1993
Anthony Howells, 61 Director 1996
</TABLE>
-3-
<PAGE>
JOHN DEREK PRICHARD-JONES was elected Chairman of the Company in
February 1993. Since 1991, Mr. Jones has served as President of Wood Group USA,
Inc., and serves in various other capacities for other subsidiaries and
affiliates of Wood Group. From 1990 to 1991, Mr. Jones served as Vice President
- - Manufacturing of Western Atlas Inc., a well logging and seismic company
headquartered in Houston, Texas. Mr. Jones served as President of Computalog
USA, Inc., an oilfield services company having its principal executive offices
located in Houston, Texas, from 1989 to 1990. He has been a Director of Wood
Group since 1986.
ANTHONY HOWELLS was appointed to serve as a director of the Company in
1996. He has extensive experience in the oil and gas service business, both
domestically and internationally. A graduate of Oxford University, Mr. Howells
began his career with Schlumberger Overseas, in Paris, France. From 1966 to
1991, Mr. Howells was employed by Dresser Atlas in various senior management
positions. Since 1992, Mr. Howells has served as a management consultant to oil
and gas service companies specializing in facilitating better business practices
and implementing programs to improve organizational effectiveness.
While it is not anticipated that either nominee will be unable to
serve, if either nominee should decline or become unable to serve as a director
for any reason, votes will be cast instead for a substitute nominee designated
by the Board of Directors or, if none is so designated, will be cast according
to the judgment of the person or persons voting the proxy.
DIRECTORS CONTINUING IN OFFICE
The following table sets forth certain information as to the directors
continuing in office:
<TABLE>
<CAPTION>
Director
Name and Age Positions and Offices With the Company Since
- ---------------------------- -------------------------------------- --------
<S> <C> <C>
Allister G. Langlands, 40 Director 1993
(Class III)
Jorge E. Estrada M., 50 Director 1998
(Class I)
Wendell R. Brooks, 48 President and Director 1995
(Class I)
</TABLE>
ALLISTER G. LANGLANDS is a Qualified Chartered Accountant. He has been
Group Financial Director of Wood Group since August 1991. From 1989 to August
1991, Mr. Langlands was a partner in the international accounting firm of
Coopers & Lybrand Deloitte and its predecessor Deloitte Haskins & Sells.
JORGE E. ESTRADA M. joined the Company as a director in March of 1998.
Since 1987, Mr. Estrada has been President and Chief Executive Officer of JEMPSA
Media & Entertainment, a company which he founded that specializes in the
Spanish and Latin American entertainment industry. Since 1993, Mr. Estrada has
been a director of Pride International, Inc., a public energy drilling and
workover service company based in Houston, Texas. He also serves as a director
for Production Operators, Inc., a Delaware corporation, which is engaged in
compression and other gas handling services in the oil field services industry.
Previously, Mr. Estrada served as President-Worldwide Drilling Division of
Geosource, and Vice President of Geosource Exploration Division-Latin America.
WENDELL R. BROOKS was elected President and Director in August 1995. Mr.
Brooks has over 20 years of general management experience in the oil and gas
service industry. He has been involved in business development activities,
including acquisitions and mergers for the Drilling and Production Services
Division of John Wood Group USA, Inc., a Houston-based, indirect wholly-owned
subsidiary of Wood Group performing administrative services for Wood Group's
U.S. operations. Prior to joining John Wood Group USA, Inc., Mr. Brooks served
for nine years
-4-
<PAGE>
as President and Chief Executive Officer of Del Norte Technology, Inc., an
international supplier of equipment and services to the offshore oil and gas
industry.
EXECUTIVE OFFICERS
See "Directors Continuing in Office" above for information concerning
Wendell R. Brooks, the Company's President and Director. See "Election of
Directors" above for information concerning John Derek Prichard-Jones, the
Company's Chairman.
JAMES E. KLIMA joined the Company in October 1995 as Vice President and
Chief Financial Officer. Mr. Klima has over 20 years of financial management
experience and international expertise in the oil and gas industry with such
companies as Combustion Engineering, Gray Tool, Vetco Gray and CTC
International.
D. PATRICK GEIGER joined the Company in January 1995 as Vice President,
General Manager. Mr. Geiger has been in the wellhead and valve business for over
15 years with such companies as Cameron, Gray Tool, Vetco Gray and CTC
International. In January 1998, Mr. Geiger was promoted to Executive Vice
President, International and Drilling Products.
HEINRICH LANG joined the Company in July 1996 in the position of Vice
President, Engineering and Business Development. Mr. Lang has over 25 years of
experience in the wellhead and valve industry with such companies as Gray Tool,
Vetco Gray and Ingram-Cactus.
ALAN SENN joined the Company in 1978. He has served in all levels of
operations including management positions within the Company's U.S. Operations.
In January 1998, Mr. Senn was promoted to Sr. Vice President, U.S. Operations
with areas of responsibility including North American operations and
manufacturing.
There are no family relationships between any director, executive officer,
or person nominated or chosen by the Company to become a director or executive
officer.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors has established an Audit Committee. The Company has
no committee to nominate persons for election to the Board of Directors.
The Audit Committee, currently composed of Messrs. Howells, Estrada and
Langlands, met one time during the fiscal year ended December 31, 1997. This
committee recommends to the Board of Directors the appointment of independent
auditors, reviews the plan and scope of audits, reviews the Company's
significant accounting policies and internal controls, and has general
responsibility for related matters.
The Board of Directors held four meetings during the fiscal year ended
December 31, 1997. None of the directors attended fewer than 75% of the
meetings of the Board of Directors and its committees on which they served that
were held during their respective terms of service as director.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the 1934 Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than ten-percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
-5-
<PAGE>
Based solely upon a review of Forms 3, 4 and 5 and amendments thereto
provided to the Company pursuant to Rule 16a-3(e), the Company believes that all
reports required by Section 16(a) of the 1934 Act were filed on a timely basis
by the required persons during the fiscal year ended December 31, 1997.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the total compensation paid or accrued by
the Company for services rendered during the years ended December 31, 1997,
December 31, 1996 and December 31, 1995 to the Company's Chief Executive Officer
and the other executive officers of the Company who received total annual salary
and bonus in excess of $100,000 for the fiscal years ended December 31, 1997,
December 31, 1996, and December 31, 1995 (the "Named Executive Officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------------ -----------------------------------
AWARDS PAYOUTS
------------------------- -------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING
NAME & COMPENSA STOCK OPTIONS/ LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS TION AWARDS SARS PAYOUTS COMPENSATION
- ----------------------------- ----- ---------- -------- ---------- ----------- ---------- --------- -------------
($) ($) ($) ($)/(3)/ (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Wendell R. Brooks /(1)/ 1997 $156,058 $36,305 -- -- -- -- --
President 1996 138,966 28,592 -- -- -- -- --
1995 75,000/(2)/ -- -- -- -- -- --
Patrick Geiger/(5)/ 1997 $103,269 $19,102 -- -- -- -- --
Executive Vice 1996 103,210 9,000 -- -- -- -- $23,684/(4)/
President-International 1995 88,365 -- -- -- -- -- 5,853
Operations
James E. Klima/(6)/ 1997 $ 96,950 $22,530 -- -- -- -- --
Vice President & 1996 88,925 -- -- -- -- -- --
Chief Financial Officer 1995 20,671 -- -- -- -- -- --
Heinrich Lang/(7)/ 1997 $ 95,885 $ 9,577 -- -- -- -- --
Vice President- 1996 45,000 -- -- -- -- -- --
Engineering & Business 1995 -- -- -- -- -- -- --
Development
Alan D. Senn 1997 $ 96,625 $19,667 -- -- -- -- --
Vice President- 1996 78,647 8,000 -- -- -- -- --
U.S. Operations 1995 72,827 -- -- -- -- -- --
</TABLE>
_______________________
(1) Mr. Brooks joined the Company in August 1995.
(2) Mr. Brooks served as the Company's President from August 1995 to the
present. During 1995, Mr. Brooks served the Company as a consultant
pursuant to which he was paid $75,000 for his services. Effective January
1, 1996, Mr. Brooks became a salaried employee of the Company.
(3) The Company had no stock option, restricted stock, stock bonus or other
equity compensation plans in effect during the fiscal years covered by this
table.
(4) Amount paid for expenses relating to moving from Shawnee, Oklahoma to
Houston, Texas.
-6-
<PAGE>
(5) Mr. Geiger joined the Company in January 1995.
(6) Mr. Klima joined the Company in October 1995.
(7) Mr. Lang joined the Company in July 1996.
The Company has a defined contribution 401(k) profit sharing plan. The plan
covers substantially all employees subject to certain length of service
requirements. Contributions are made at the discretion of the Board of
Directors. The Company paid $27,000 during 1995 for contributions accrued at
December 31, 1994. No contributions were paid or accrued for the year ended
December 31, 1995. In June 1996, the Company began matching employee's
contributions up to 6% of their eligible compensation at a rate of 25% of
employee contributions. The Company's matching contributions totaled
approximately $53,000 in 1996 and $130,000 in 1997.
LONG TERM INCENTIVE PROGRAM
In November 1994, the Company's Board of Directors approved a long term
incentive plan (the "1994 Plan") pursuant to which certain key employees of the
Company may receive cash incentives based upon the Company's earnings in given
years. Awards may be granted under the 1994 Plan up to an aggregate of
1,386,366 units (the "Units") (such number being subject to antidilution
adjustments under certain circumstances) at prices determined by the Board of
Directors. 1994 Plan participants, awards to participants, exercise prices and
performance measurement periods are determined by the Company's Board of
Directors.
Units granted under the 1994 Plan may be exercised and converted into cash
at such times and in such amounts as set forth in the applicable agreement
entered into in connection with the grant (but in no event earlier than three
years after the grant of the Units or later than seven years after the grant).
In general, the 1994 Plan participants can exercise up to 20% of the Units in
any grant in each of years three through seven after the date of grant. Holders
of Units electing to exercise must irrevocably elect in writing to exercise the
Units within 30 days after the employee receives the annual statement of
Current Value of the Units (the "Window Period"). Such irrevocable election
must be delivered to and received by the Board of Directors during such Window
Period.
Upon exercise, holders shall be entitled to receive an amount of cash,
within 30 days of notice of exercise, equal to the excess of (A) the aggregate
Current Value (hereinafter defined) of the Units so exercised over (B) the
aggregate price for the Units (as set forth in the individual agreement with
holders) so exercised. The Company shall pay to the holder, within 30 days
after the exercise date, the cash amount payable to such holder. The Current
Value of a Unit shall be determined as of the end of the Company's fiscal year
preceding the exercise date (the "Valuation Date"). "Current Value" of a Unit
shall mean the average net consolidated pre-tax earnings of the Company and its
subsidiaries and affiliated entitites for the two (2) years ending prior to the
Window Period in which the holder gives notice of his or her election to
exercise Units pursuant to the 1994 Plan and the applicable agreement,
multiplied by a factor of five (5) and this result shall be the Current Value of
the entire Company as of the Valuation Date, and such Current Value shall be
divided by the sum of (x) the number of issued and outstanding shares of the
Common Stock on the Valuation Date, plus (y) the number of Units which are
issued and outstanding on the Valuation Date. For purposes of determining the
Company's net consolidated pre-tax earnings, the earnings will be determined
after (1) subtracting all exceptional income and costs and (2) adjusting for the
pre-tax impact of minority equity interests.
The Company's Board of Directors shall administer the 1994 Plan and may,
from time to time, amend, suspend or discontinue the 1994 Plan, or amend any
Units granted thereunder; provided, that without the written consent of a
holder, no amendment or suspension of the 1994 Plan shall substantially impair
any Units.
During the year ended December 31, 1997, the Board granted 491,000 Units to
employees of the Company under the 1994 Plan, 140,000 of which were granted to
the Named Executive Officers as follows:
-7-
<PAGE>
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
NAME & NUMBER OF PERFORMANCE OR NON-STOCK PRICE-BASED PLANS
PRINCIPAL POSITION SHARES, UNITS OR OTHER PERIOD UNTIL ---------------------------------
OTHER RIGHTS MATURATION OR THESHOLD TARGET MAXIMUM
(#) PAYOUT ($)/(1)/ ($)/(2)/ ($)/(3)/
- -------------------------------------- ------------------- ------------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Wendell R. Brooks -- -- -- -- --
President
Patrick Geiger 35,000 7-1-1997 to .40 .38 --
Executive Vice Pesident- 7-1-2004
International Operations
James E. Klima 35,000 7-1-1997 to .40 .38 --
Vice President & Chief 7-1-2004
Financial Officer
Heinrich Lang 35,000 7-1-1997 to .40 .38 --
Vice President-Engineering & 7-1-2004
Business Development
Alan D. Senn 35,000 7-1-1997 to .40 .38 --
Vice President-U.S. Operations 7-1-2004
</TABLE>
_________________________
(1) Represents the price per Unit (described above).
(2) Represents the Current Value per Unit (described above).
(3) Currently, none of the awards have a Current Value in excess of the price
per Unit. However, the 1994 Plan has no maximum amount that can be realized
upon an award.
DIRECTOR COMPENSATION
The only directors who receive fees for their services as directors are
Messrs. Estrada and Howells, who are not employed by either the Company or Wood
Group. Messrs. Howells and Estrada receive $2,500 for each meeting of the Board
of Directors that they attend.
Mr. George W. Tilley resigned from the Board of Directors as of November 1,
1997. As a non-employee director, he received $10,000 for his service on the
Board of Directors for 1997 ($2,500 per meeting attended).
BOARD OF DIRECTORS INTERLOCKS AND INSIDER PARTICIPATION
Compensation decisions with respect to the executive officers of the Company
are made by the Board of Directors, which includes John Derek Prichard-Jones,
Chairman of the Board, and Wendell R. Brooks, President. Mr. Jones does not
receive compensation from the Company for his service as Chairman. Mr. Brooks
did not participate in any deliberations or votes with respect to his
compensation during fiscal 1997.
BOARD OF DIRECTORS' REPORT ON EXECUTIVE COMPENSATION
GENERAL
Decisions regarding executive compensation for fiscal 1997 and prior years
were made by the Board of Directors as discussed below. The Board of Directors
is committed to ensuring that the executive compensation policies and practices
of the Company support the Company's achievement of its business objectives.
-8-
<PAGE>
Base Salary
The Company President's base salary is reviewed annually by the Chairman of
the Board of Directors. In determining (a) whether salary increases are merited
for executive officers who are not subject to an employment agreement or (b)
whether an employment agreement should be renewed and/or whether the base salary
thereunder should be increased, the Board of Directors considers a number of
factors. The primary factor considered is the Company's return on capital
employed compared to the Company's goals and compared to comparable companies in
the Company's marketplace. Other factors are the executive officer's
performance on the job, the executive officer's level of responsibility,
experience and expertise; internal compensation equity; and pay practices for
executives of comparable companies. Based upon these factors, Mr. Brooks'
salary was set at $150,000 for 1997 and was increased to $175,000 per year in
October 1997. Mr. Brooks was paid $138,966 in 1996. During 1995, Mr. Brooks
served the Company as a consultant pursuant to which he was paid $75,000 for his
services.
BONUS
Bonuses were based on the Company's performance for each of the fiscal years
ended December 31, 1997, December 31, 1996, and December 31, 1995. All bonuses
are approved by the Board of Directors. Based upon its review of the Company's
exceptional performance, the Company awarded a bonus of $36,305 to Mr. Brooks
and bonuses of $19,102, $22,530, $9,577 and $19,667 to Messrs. Geiger, Klima,
Lang and Senn, respectively for the fiscal year ended December 31, 1997.
LONG TERM INCENTIVES
In an effort to provide a means by which the Company could grant long term
incentives to its key employees, the Board of Directors adopted the 1994 Plan in
November 1994. Pursuant to the 1994 Plan, the Board may grant units to key
employees, exercisable for cash payments based upon the Company's net earnings.
See "Executive Compensation - Long Term Incentive Program." During the year
ended December 31, 1997, the Board granted 491,000 Units under the 1994 Plan,
including 35,000 Units to Mr. Geiger, 35,000 Units to Mr.Klima, 35,000 Units to
Mr. Lang and 35,000 Units to Mr. Senn. Mr. Brooks received no grants under the
1994 Plan during 1997.
This report is submitted by the members of the Board of Directors:
John Derek Prichard-Jones Anthony Howells Allister G. Langlands
Jorge E. Estrada M. Wendell R. Brooks
The Board of Directors' Report on Executive Compensation shall not be
deemed incorporated by reference by any general statement incorporating by
reference this proxy statement into any filing under the Securities Act of 1933
or the Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates such report by reference, and shall not otherwise be
deemed filed under such Acts.
COMPARISON OF TOTAL SHAREHOLDER RETURN
The following performance graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, or the Securities
Exchange Act of 1934 except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
The following performance graph compares the yearly percentage change in
the cumulative total stockholder return on the Common Stock (as measured by
dividing (i) the difference between the Common Stock share price at the end and
the beginning of the measurement period by (ii) the Common Stock share price at
the beginning of the measurement period) with the cumulative total return
assuming reinvestment of dividends of (1) the Media General Financial Services
Oil and Gas Field Services Industry Group Index (the "Industry Index") and (2)
the
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NASDAQ National Market Composite Index (the "Broad Market") over the period
beginning January 1, 1992 and ending December 31, 1997.
[CHART APPEARS HERE]
1993 1993 1994 1995 1996 1997
ERC Industries 100 180 140 140 280 320
Industry Index 100 114.44 102.3 151.21 224.16 337.38
Broad Market 100 118.7 124.63 161.66 200.88 245.72
CERTAIN TRANSACTIONS
On September 8, 1997, the Company and Wood Group entered into an Investment
Agreement (the "Investment Agreement") pursuant to which the Company agreed to
issue and sell, and Wood Group agreed to purchase, 6,250,000 shares (the
"Shares") of Common Stock. The aggregate purchase price for the Shares was
$10,000,000, or $1.60 per Share. Such transaction (the "Transaction") was
consummated on September 8, 1997.
Prior to the consummation of the Transaction, Wood Group owned
approximately 85% of the outstanding shares of the Company's Common Stock.
Prior to the negotiation and consummation of the transaction, the Company's
Board of Directors formed a special committee of its outside independent
directors (the "Special Committee") to evaluate and negotiate the Transaction.
The Special Committee engaged an investment banking firm, as its financial
advisor to assist it in evaluating and determining the fairness of the
Transaction to the Company's stockholders. On September 5, 1997, the investment
banking firm delivered an opinion stating that the terms of the consideration to
be received by the Company in the Transaction were fair to the Company's
stockholders from a financial point of view.
In connection with the Investment Agreement, as part of the consideration
for the purchase of the Shares, the Company granted certain registration rights
to Wood Group pursuant to a Registration Rights Agreement, dated as of September
8, 1997 (the "Registration Rights Agreement"). Under the terms of the
Registration Rights Agreement, the Company granted to Wood Group and its
assignees the right to require the Company to register the offer and sale of the
Shares up to two times, subject to certain deferral and cutback provisions. In
addition, the Company also granted to Wood Group and its assignees, certain
incidental or "piggyback" registration rights, which allow Wood Group to
participate in certain underwritten public offerings initiated by the Company,
subject to certain limitations and conditions set forth therein. Under the
terms of the Registration Rights Agreement, the ability of Wood Group to
exercise the rights granted thereunder may not be subordinated or subject to
registration rights of any other person or entity. The rights granted under the
Registration Rights Agreement terminate on the earlier of (i) the fifth
anniversary of the Registration Rights Agreement, or (ii) such time as the
Shares may be immediately sold under Rule 144 under the Securities Act of 1933,
as amended, during any 90-day period.
As a result of the consummation of the Transaction, as of September 8,
1997, Wood Group owned an aggregate of 24,337,702 shares of Common Stock,
representing approximately 88.5% of the outstanding shares of Common Stock.
In June 1996, the Company and Wood Group entered into a substantially
similar transaction pursuant to which Wood Group purchased an aggregate of
7,384,616 shares of Common Stock for an aggregate purchase price of
$6,000,000.50 ($0.8125 per share).
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The Company and Wood Group have agreed to an annual provision for
administrative and financial services fees in amounts to be determined on an
annual basis. The Company paid or accrued $389,000 in such fees for the fiscal
year ended December 31, 1997.
PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK FROM 30,000,000 TO 40,000,000 SHARES
THE PROPOSAL
The Board seeks stockholder approval to amend Article IV of the Company's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock of the Company from 30,000,000 to 40,000,000 shares. This
proposal has been adopted by the Board subject to approval by the stockholders
of the Company, and is attached hereto as Appendix A and made a part hereof.
Of the 30,000,000 shares of Common Stock authorized for issuance under the
Certificate of Incorporation, there are only 2,501,728 shares unissued and
unreserved. As of the Record Date, 27,498,272 shares of Common Stock were
outstanding and no shares of Common Stock were reserved for issuance under the
Company's existing equity incentive plans.
The proposed amendment increases the number of authorized shares of Common
Stock by 10 million. This proposed increase has been recommended by the Board
to assure that an adequate supply of authorized and unissued shares is available
for general corporate needs, such as employee benefit plans, any future stock
dividends and other distributions to stockholders, raising additional capital
and other financing arrangements, the conversion of any other securities (such
as warrants and Serial Preferred Stock, as defined hereinafter) that may be
issued by the Company, and acquisitions by the Company of other businesses if
favorable opportunities become available. It is important for the Company's
Board of Directors to have the flexibility to act promptly to address future
business needs as they arise. Except for issuances of shares of Common Stock
pursuant to the Company's existing and proposed stock option and equity
incentive plans disclosed in this Proxy Statement, the Company has no present
plans, agreements, commitments or understandings to issue any additional shares
of Common Stock. In addition, from time to time, the Company considers
opportunities to acquire other businesses in which it may use shares of Common
Stock as consideration. If the Company were to pursue any such opportunity
prior to the approval of the proposed amendment to the Company's Certificate of
Incorporation, it is contemplated that the aggregate number of shares to be
issued in such acquisitions would not exceed the number of currently unreserved
and otherwise uncommitted shares of Common Stock.
If approved by the stockholders, the additional authorized shares of Common
Stock would be available for issuance at the discretion of the Board of
Directors without further stockholder approval (subject to applicable Delaware
law and Nasdaq rules), and without the delay and expense incident to the holding
of a special meeting of stockholders to consider any specific issuance. The
rules of the Nasdaq require stockholder approval (i) in connection with the
acquisition of certain stock or assets, including another business, from a
director, officer or substantial stockholder, or from an entity in which one of
such persons has a substantial direct or indirect interest, (ii) in a
transaction or a series of transactions (except for a public offering of Common
Stock for cash) that would result in an increase in the number of shares or
voting power of the outstanding shares by 20% or more, (iii) where the issuance
of Common Stock would result in a change of control of the Company or (iv) in
connection with a stock option or stock purchase plan under which stock may be
acquired by officers or directors.
While the Board of Directors is of the opinion that the proposed amendment
is in the best interests of the Company and its stockholders, the Board
recognizes that there may be some disadvantages to the stockholders. The
authorized but unissued shares of Common Stock could be used by incumbent
management to make more difficult a change in control of the Company. Under
certain circumstances, such shares could be used to frustrate persons seeking to
effect a takeover or otherwise gain control of the Company. The increase in
authorized shares of
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Common Stock might have the effect of discouraging an attempt by another person,
through the acquisition of a substantial number of shares of Common Stock, to
acquire control of the Company with a view to imposing a merger, a sale of all
or any part of the Company's assets or a similar transaction, since the issuance
of any shares could be used to dilute the stock ownership of shares of the
Company's voting stock held by that person. Any transaction which may be so
discouraged could be a transaction that the Company's stockholders might
consider to be in their best interests. The Board of Directors does have a
fiduciary duty to act in the best interests of the Company's stockholders at all
times. See also "Potential Anti-Takeover Effects."
The Company's Board of Directors has not proposed the amendment to the
Certificate of Incorporation as an anti-takeover measure. Any actions taken by
the Company to discourage an attempt to acquire control of the Company may
result in stockholders not being able to participate in any possible premiums
which may arise in the absence of anti-takeover provisions, as well as may be
used to entrench management's position even if such change in control may be
beneficial to stockholders.
The approval of the amendment to Article IV of the Certificate of
Incorporation will not of itself cause any change in the capital stock or
surplus of the Company. However, any future issuance of shares of Common Stock
could have a dilutive effect on the Company's per share earnings and the
stockholders' voting power in the Company.
DESCRIPTION OF CAPITAL STOCK
The Common Stock for which authorization is sought would become part of the
existing class of Common Stock. The new shares, when issued, would have the
same rights and privileges as the shares of Common Stock now outstanding.
Holders of Common Stock are entitled to such dividends as may be declared
from time to time by the Board of Directors out of funds legally available
therefor. Dividends in such amounts as may be determined by the Board of
Directors may be declared and paid on the Common Stock from time to time,
provided that the holders of shares of Serial Preferred Stock (as defined
herein) and of any other class of capital stock of the Company senior to the
Common Stock with respect to the right to receive dividends, receive the
preferential amounts to which they are entitled under the Certificate of
Incorporation or in any certificates of designation, rights and preferences for
any series of Serial Preferred Stock or such shares of capital stock ranking
senior to the Common Stock with respect to dividends.
No holder of Common Stock of the Company has any preemptive right to
subscribe for or purchase any of the shares of Common Stock. Holders of the
Common Stock have no redemption, conversion or sinking fund rights. Holders of
Common Stock are entitled to one vote per share on all matters submitted to a
vote of holders of Common Stock and do not have any cumulative voting rights.
In the event of a liquidation, dissolution or winding-up of the Company, the
holders of Common Stock are entitled to all of the remaining assets of the
Company, if any, after the payment of all debts and liabilities of the Company
and the liquidation preference of any outstanding Serial Preferred Stock.
The Board of Directors is authorized to provide for the issuance of serial
preferred stock, par value $1.00 per share (the "Serial Preferred Stock"), of
the Company in one or more series and to fix the designations, preferences,
powers and relative, participating, optional or other rights and restrictions
thereof, including without limitation, the dividend rate, conversion rights,
voting rights, redemption price and liquidation preference, to fix the number of
shares constituting any such series and to increase and decrease the number of
shares of such series. The Board of Directors of the Company, without obtaining
stockholder approval, may issue shares of Serial Preferred Stock with voting
rights or conversion rights which could adversely affect the voting power of the
holders of Common Stock. The Company's Certificate of Incorporation currently
authorizes the Company to issue up to 10,000,000 shares of Serial Preferred
Stock. The proposed amendment would effect no change in the Company's
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Serial Preferred Stock authorized for issuance. No shares of Serial Preferred
Stock have ever been issued, and the Company has no present plans to issue any
shares of Serial Preferred Stock.
POTENTIAL ANTI-TAKEOVER EFFECTS
The additional shares of Common Stock proposed to be authorized would be
available for issuance by the Board of Directors in opposing an attempt by
another Company or individual to acquire or to take control of the Company which
management may consider to not be in the best interests of the Company. For
example, the Company might seek to frustrate a takeover attempt by making a
private sale of a large block of shares to a third party who was opposed to such
an attempt or by issuing shares of Serial Preferred Stock or stock rights to
stockholders, which shares or rights would acquire certain characteristics (such
as conversion or redemption rights) upon an unfriendly takeover.
The provisions of the Company's Certificate of Incorporation and By-laws
summarized below may be considered to have an anti-takeover effect and may
delay, defer or prevent a tender offer or takeover attempt that a stockholder
might consider to be in his or her best interests, including those that might
result in a premium over the market price for the shares.
The Board of Directors of the Company is divided into three classes that
are elected for staggered three-year terms. Stockholders may remove a director,
or the entire Board of Directors with or without cause, by a majority of the
voting power of the Voting Shares, as defined in Article VIII of the Certificate
of Incorporation. A vacancy may be filled by resolution adopted by the
affirmative vote of a majority of directors then in office, whether or not such
majority constitutes less than a quorum, or by a sole remaining director.
Pursuant to the Certificate of Incorporation, the Company's Board of
Directors by resolution may establish one or more series of Serial Preferred
Stock having such number of shares, designations, relative voting rights,
dividend rates, liquidation and other rights, preferences and limitations as may
be fixed by the Board of Directors without any further stockholder approval.
These include, among other things, each share having more than one vote, voting
as a class on certain matters, and special conversion rights or redemption
features. Such rights, preferences, powers and limitations as may be
established could have the effect of impeding or discouraging the acquisition of
control of the Company.
The Company is subject to Section 203 of the Delaware General Corporation
Law ("Section 203") which contains certain restrictions on the ability of an
"interested stockholder" (defined as a stockholder owning 15% or more of a
corporation's voting stock) to engage in a "business combination" with such
corporation. For purposes of Section 203, "business combination" is defined
broadly to include mergers, asset sales and other transactions resulting in a
financial benefit to the interested stockholder.
The Company's By-laws provide generally that they may be amended by the
Board of Directors or by the affirmative vote of stockholders holding not less
than a majority of the voting power of the Voting Shares (as defined in the
Company's By-laws) then entitled to vote. The Certificate of Incorporation may
only be amended by an affirmative vote of stockholders holding not less than a
majority of the voting power of the voting shares (as defined in the Certificate
of Incorporation) then entitled to vote on such issue. Except that not less
than a majority of the Board of Directors may determine certain issues regarding
the issuance of Serial Preferred Stock, Common Stock and dividends and business
combinations as specified in the Certificate of Incorporation.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE APPROVAL OF THE
PROPOSED AMENDMENT TO ARTICLE IV OF THE COMPANY'S CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK TO 40,000,000.
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PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, upon recommendation of the Audit Committee, has
appointed Coopers & Lybrand L.L.P. as the independent auditors of the Company
for the fiscal year ending December 31, 1998.
Representatives of Coopers & Lybrand L.L.P. are expected to be present at
the meeting with the opportunity to make a statement if they desire to do so and
to be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS FOR 1998.
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STOCKHOLDER PROPOSALS
In order for stockholder proposals to receive consideration for inclusion
in the Company's Proxy Statement for its 1998 Annual Meeting of Stockholders,
such proposals must be received at the Company's offices at 1441 Park Ten Blvd.,
Houston, Texas 77084, Attention: Secretary, by January 23, 1999.
The Company's By-Laws contain a provision which requires that a stockholder
may nominate a person for election as a director only if written notice of such
stockholder's intent to make such nomination has been given to the Secretary of
the Company not later than 45 nor more than 60 days prior to an annual meeting.
This provision also requires that the notice set forth, among other things, the
name and address of the stockholder giving the notice, as it appears on the
Company's books and records, and the class and number of shares of capital stock
of the Company held of record, held beneficially and represented by proxy by
such stockholder. Such notice must also contain such other information
regarding the nominee as would be required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange Commission had
the nominee been nominated by the Board. Such notice must also be accompanied
by the written consent of the person being nominated to serve as a director if
elected. The chairman of the annual meeting shall, if facts warrant, determine
and declare to the annual meeting that a nomination has not been made in
accordance with these procedures and if the chairman should so determine, he or
she shall so declare to the annual meeting, and the defective nomination shall
be disregarded. No stockholder has nominated a candidate for election to the
Board of Directors at the Annual Meeting.
SOLICITATION OF PROXIES
The Company will pay the expenses of this proxy solicitation. In addition
to the solicitation by mail, some of the officers and regular employees of the
Company may solicit proxies personally or by telephone, if deemed necessary.
The Company will request brokers and other fiduciaries to forward proxy
soliciting material to the beneficial owners of shares which are held of record
by the brokers and fiduciaries, and the Company may reimburse them for
reasonable out-of-pocket expenses incurred by them in connection therewith.
OTHER MATTERS
The Annual Report to Stockholders for the fiscal year ended December 31,
1997, which includes financial statements, is enclosed herewith. The Annual
Report does not form a part of this Proxy Statement or the materials for the
solicitation of proxies to be voted at the annual meeting.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K WILL BE FURNISHED AT NO
CHARGE TO EACH PERSON TO WHOM A PROXY STATEMENT IS DELIVERED UPON RECEIPT OF A
WRITTEN REQUEST OF SUCH PERSON ADDRESSED TO ERC INDUSTRIES, INC., ATTN: WENDELL
R. BROOKS, 1441 PARK TEN BLVD., HOUSTON, TEXAS 77084, TELEPHONE (281) 398-8901.
THE COMPANY WILL ALSO FURNISH SUCH ANNUAL REPORT ON FORM 10-K TO ANY "BENEFICIAL
OWNER" OF SUCH SECURITIES AT NO CHARGE UPON RECEIPT OF A WRITTEN REQUEST,
ADDRESSED TO MR. BROOKS CONTAINING A GOOD FAITH REPRESENTATION THAT, AT THE
RECORD DATE, SUCH PERSON WAS A BENEFICIAL OWNER OF SECURITIES OF THE COMPANY
ENTITLED TO VOTE AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 15, 1998.
COPIES OF ANY EXHIBIT TO THE FORM 10-K WILL BE FURNISHED UPON THE PAYMENT OF A
REASONABLE FEE.
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The Board of Directors is not aware of any matter, other than the matters
described above, to be presented for action at the meeting. However, if any
other proper items of business should come before the meeting, it is the
intention of the person or persons acting under the enclosed form of proxy to
vote in accordance with their best judgment on such matters.
Certain information contained in the Proxy Statement relating to the
occupations and security holdings of directors and officers of the Company is
based upon information received from the individual directors and officers.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD AT YOUR EARLIEST
CONVENIENCE IN THE ENCLOSED RETURN ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES. A PROMPT RETURN OF YOUR PROXY CARD WILL BE APPRECIATED AS
IT WILL SAVE THE EXPENSE OF FURTHER MAILINGS.
By Order of the Board of Directors,
Wendell R. Brooks
President
Houston, Texas
May 23, 1998
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APPENDIX A
AMENDMENT
TO
INCREASE AUTHORIZED SHARES
Following is the text of the proposed amendment to Article IV of the
Certificate of Incorporation of the Company:
Article IV, Section 1 of the Company's Certificate of Incorporation is amended
so that, as amended, Article IV, Section 1 shall be and read as follows:
"Section 1. The aggregate number of shares of all classes of capital stock
which the Corporation is authorized to issue (hereinafter collectively
referred to as the "Capital Stock") is 50,000,000 shares, of which: (i)
10,000,000 shares shall be Serial Preferred Stock, $1.00 par value per share
(hereinafter referred to as the "Serial Preferred Stock"), and (ii) 40,000,000
shares shall be common stock, $0.01 par value per share (hereinafter referred
to as the "Common Stock")."
Article IV, Section 2.2(A) of the Company's Certificate of Incorporation is
amended so that, as amended, Article IV, Section 2.2(A) shall be and read as
follows:
"(A) Designation and Amount. The authorized number of shares of Common
Stock shall be 40,000,000."
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APPENDIX B
REVOCABLE PROXY
PROXY ERC INDUSTRIES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR for the Annual Meeting of Shareholders of ERC Industries, Inc.
To Be Held at
ANNUAL the Holiday Inn-Houston West
14703 Park Row, Houston, Texas 77079
Monday, June 15, 1998 at 10:00 a.m. Central Time
MEETING
The undersigned hereby appoint(s) Wendell R. Brooks and
James E. Klima, and each or either of them, with full power
OF of substitution, as proxies of the undersigned to vote the
Common Stock of the undersigned in ERC Industries, Inc. at
the above Annual Meeting and at any and all adjournments and
STOCKHOLDERS postponements thereof, including (without limiting the
generality of the foregoing) to vote and act as follows on
the reverse side.
The shares represented by this Proxy will be voted as herein
JUNE 15, 1998 specified. IF A CHOICE IS NOT SPECIFIED, SUCH SHARES WILL BE
VOTED "FOR" THE ELECTION OF THE NOMINEES FOR DIRECTOR NAMED
ON THE REVERSE SIDE AND "FOR" PROPOSALS 2 AND 3. This Proxy
hereby revokes all prior proxies given with respect to the
shares of the undersigned.
(CONTINUED ON REVERSE SIDE)
<PAGE>
1. [ ] For [ ] Withheld Election of Directors: The election of the following
nominees to the Board of Directors as Class II Directors unless otherwise
indicated below:
Nominees: JOHN DEREK PRICHARD-JONES ANTHONY HOWELLS
IN THE EVENT THE UNDERSIGNED WISHES TO WITHHOLD AUTHORITY TO VOTE FOR ANY
PARTICULAR NOMINEE OR NOMINEES LISTED ABOVE, PLEASE SO INDICATE BY
CLEARLY AND NEATLY LINING THROUGH OR STRIKING OUT THE NAME OF ANY SUCH
NOMINEES OR NOMINEES.
2. [ ] For [ ] Against [ ] Abstain The proposal to amend the Corporation's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock from 30,000,000 shares to 40,000,000 shares.
3. [ ] For [ ] Against [ ] Abstain The Proposal to ratify the appointment of
Coopers & Lybrand L.L.P. as the independent certified public accountants of
the Corporation for 1998.
4. [ ] For[ ] Against [ ] Abstain In their discretion, upon such other matters
as may properly come before the meeting or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED FOR MAILING IN THE UNITED STATES.
Stockholder's Signature........................ Dated ............, 1998
Stockholder's Signature if Jointly Owned..................................
Print Name...........................................
IMPORTANT: Please date the Proxy and sign exactly as your name appears on the
Proxy. If shares are held by joint tenants, EACH joint owner should sign.
Executors, administrators, trustees, guardians, and attorneys should indicate
the capacity in which they sign. Attorneys should submit powers of attorney.
Dear Stockholder:
Enclosed you will find material relative to the Corporation's 1998 Annual
Meeting of Stockholders. The Notice of Annual Meeting and Proxy Statement
describe the formal business to be transacted at the meeting, as summarized on
the attached proxy card.
Whether or not you expect to attend the Annual Meeting, please complete and
return promptly the attached proxy card in the accompanying envelope, which
requires no postage if mailed in the United States. As a stockholder, please
remember that your vote is important to us. We look forward to hearing from
you.
ERC Industries, Inc.
