PETROLEUM DEVELOPMENT CORPORATION
103 East Main Street
Bridgeport, West Virginia 26330
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
September 4, 1998
To the Stockholders of
PETROLEUM DEVELOPMENT CORPORATION:
Notice is hereby given that the Annual Meeting of Stockholders of
Petroleum Development Corporation (the "Company") will be held at the
office of the Company at 103 East Main Street, Bridgeport, West Virginia
26330, on September 4, 1998 at 10:00 A.M., West Virginia time, for the
following purposes, all as more fully described in the accompanying Proxy
Statement:
(1) To elect two directors to serve a term of three years or until
their successors shall be elected and shall qualify;
(2) To consider and approve the amendment and restatement of the
Company's Articles of Incorporation to increase the number of authorized
shares of the Company's Common Stock, to repeal the authorized but
unissued Class A Common Stock of the Company and to otherwise consolidate
and conform the Articles of Incorporation and all amendments thereto to
existing Nevada law.
(3) To consider and approve an amendment to the Company's Articles of
Incorporation to provide for certain limitations of personal liability of
directors and officers of the Company in the management of the Company's
business.
(4) To ratify and approve the selection of independent public
accountants for the Company for the fiscal year ending December 31, 1998.
The Board of Directors has fixed the close of business on July 6, 1998
as the record date for the determination of stockholders entitled to
notice of and to vote at the Annual Meeting. The presence in person or by
proxy of the holders of a majority of the outstanding shares of the
Company's Common Stock is required to constitute a quorum.
EACH STOCKHOLDER IS CORDIALLY INVITED TO BE PRESENT AND TO VOTE AT
THIS MEETING IN PERSON. STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND ARE
REQUESTED TO SIGN AND DATE THE ACCOMPANYING PROXY CARD AND RETURN IT
PROMPTLY IN THE ENCLOSED POSTPAID ENVELOPE.
By Order of the Board of Directors,
James N. Ryan
Chairman
Bridgeport, West Virginia
July 7, 1998<PAGE>
PETROLEUM DEVELOPMENT CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
September 4, 1998
INTRODUCTORY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of proxies for use at the Annual Meeting of
Stockholders of Petroleum Development Corporation (the "Company") to be
held on September 4, 1998, notice of which is attached, and at any
adjournment thereof.
Any stockholder giving the accompanying proxy has the power to revoke it
prior to its exercise by filing with the Secretary of the Company a
written notice of revocation or a duly executed proxy bearing a later
date. Giving the accompanying proxy will not affect your right to vote in
person should you find it convenient to attend the Annual Meeting. Shares
represented by proxy will be voted by the proxy holders in accordance with
your instructions unless you revoke your proxy or attend the meeting and
elect to vote in person. This Proxy Statement and the proxy were first
mailed to stockholders on July 7, 1998. The mailing address of the
principal executive offices of the Company is Petroleum Development
Corporation, P.O. Box 26, Bridgeport, West Virginia 26330.
The Annual Report to Stockholders for 1997, containing certified
financial and other information about the Company, accompanies this Proxy
Statement.
VOTING SECURITIES
The outstanding voting securities of the Company as of July 6, 1998,
consisted of 15,510,762 shares of $0.01 par value common stock ("Common
Stock"). Stockholders of record as of the close of business on July 6,
1998 are entitled to vote. Each stockholder is entitled to one vote for
each share of Common Stock held of record on this date. Stockholders are
not permitted to cumulate their votes for the election of directors.
Abstentions and broker non-votes will be counted in the number of shares
present in person or represented by proxy for purposes of determining
whether a quorum is present.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's By-Laws provide that the directors of the Company shall be
divided into three classes and that, at each annual meeting of
stockholders of the Company, successors to the class of directors whose
term expires at the annual meeting will be elected for a three-year term.
The classes are staggered so that the term of one class expires each year.
Mr. Ryan and Mr. D'Annunzio are members of the class whose term expires in
1998; Mr. Rettinger and Mr. Swoveland are members of the class whose term
expires in 1999; and Mr. Williams and Mr. Morgan are members of the class
whose term expires in 2000. There is no family relationship between any
director or executive officer and any other director or executive officer
of the Company. There are no arrangements or understandings between any
director or officer and any other person pursuant to which such person was
selected as an officer. Votes pursuant to the enclosed proxy will be
cast, unless authority is withheld, for the election of the two persons
named under "Nominees for Terms Expiring 2001" below, both of whom are
members of the present Board and both of whom are expected to be able to
serve on the Board to be elected at this meeting. If any of such persons
is unwilling or unable to act in such capacity, an event which is not now
anticipated, the enclosed proxy will be voted for such person or persons
as the Board of Directors may designate. During 1997, the Board of
Directors held six meetings. No director attended fewer than 75% of the
aggregate of all meetings of the Board and the committees, if any, upon
which such director served.
Vote Required
A plurality of the votes cast at the Annual Meeting in person or by
proxy, is required for the election of directors. Abstentions and broker
non-votes will not be considered as votes cast with respect to the
election of directors, and therefore any abstentions or broker non-votes
will not affect the election of the candidates receiving a majority of the
votes cast.<PAGE>
THE BOARD OF DIRECTORS RECOMMEND A VOTE "FOR" PROPOSAL 1
DIRECTORS OF THE COMPANY
NOMINEES FOR TERMS EXPIRING 2001
The following persons, both of whom are currently serving as directors,
have been nominated to serve as directors:
<TABLE>
<S> <S> <S>
Name and Principal Year First
Occupation Past Five Years Elected
and Other Directorships Age Director
JAMES N. RYAN served as President of the Company from 1969 to 1983 and
has served as director of the Company since 1969. Mr. Ryan was elected
Chairman and Chief Executive Officer of the Company in March 1983. Mr.
Ryan focuses on capital formation through the Company's drilling
partnerships. 66 1969
VINCENT F. D'ANNUNZIO a director since February 1989, has for the past
five years served as President of Beverage Distributors, Inc., located
in Clarksburg, West Virginia. Mr. D'Annunzio serves as a director of
Heritage Bank in Clarksburg, West Virginia. 45 1989
CONTINUING DIRECTORS TERMS EXPIRING IN 1999
DALE G. RETTINGER has served as Vice President and Treasurer of the
Company since July 1980. Additionally, Mr. Rettinger has served as
President of PDC Securities Incorporated since 1981. Mr. Rettinger
was elected director in 1985 and appointed Chief Financial Officer in
September 1997. Previously, Mr. Rettinger was a partner with KPMG
Main Hurdman, Certified Public Accountants, and served in that capacity
from 1976 until he joined the Company. 53 1985
JEFFREY C. SWOVELAND a director since March 1991, has been employed by
Equitable Resources, an oil and gas production, marketing and
distribution
company, since 1994 and presently serves as Treasurer. Mr. Swoveland
previously served as Vice President and a lending officer with Mellon
Bank, N.A. from July 1989 until 1994. 42 1991
CONTINUING DIRECTORS TERMS EXPIRING IN 2000
STEVEN R. WILLIAMS has served as President and director of the Company
since March 1983. Prior to joining the Company, Mr. Williams was
employed by Exxon as an engineer from 1973 until 1979. A 1981 graduate
of the Stanford Graduate School of Business, Mr. Williams was employed by
Texas Oil and Gas Company as a financial analyst from 1981 until July
1982, when he joined Exco Enterprises as Manager of Operations, and
served in that capacity until he joined the Company. 47 1983
ROGER J. MORGAN a director and Secretary of the Company since 1969,
has been a member of the law firm of Young, Morgan & Cann, Clarksburg,
West Virginia, for more that the past five years. Mr. Morgan is not
active in the day-to-day business of the Company, but his law firm
provides legal services to the Company. 71 1969<PAGE>
</TABLE>
Committees of the Board of Directors
The Company has three standing committees of the Board of Directors: the
Executive Committee; the Audit Committee; and the Stock Option and
Executive Compensation Committee. The Executive Committee is comprised of
Messrs. Ryan, Williams, and Rettinger. The Audit Committee is comprised
of Messrs. D'Annunzio, Ryan, and Swoveland. The Stock Option and
Executive Compensation Committee is comprised of Messrs. D'Annunzio and
Swoveland. The Company does not have a formal Nominating Committee, the
full Board of Directors handles these responsibilities.
The functions performed by the Executive Committee include handling
important Board of Directors matters that arise between Board of Directors
meetings, serving as a liaison between the Board of Directors and senior
management on important matters requiring Board of Directors attention and
recommending to the Board of Directors nominations for election of new and
existing members of the Board of Directors.
The Audit Committee is comprised of a majority of outside Directors of
the Company. The functions performed by the Audit Committee include
recommending the selection of independent accountants, reviewing with the
Company's independent accountants the results of audits performed by them
and overseeing and reviewing monthly and quarterly unaudited financial
statements. These reviews include the adequacy of cash flow and the
status of credit arrangements of the Company.
The Stock Option and Executive Compensation Committee is comprised
entirely of outside Directors of the Company. The functions performed by
this committee include recommending to the Board of Directors compensation
levels of senior management and directing and recommending levels of
corporate stock options and other benefit plans of the Company. In this
regard, the committee monitors trends to ensure the Company's compensation
levels are competitive in the oil and natural gas industry.
Compensation Committee Interlocks and Insider Participation
The members of the Stock Option and Executive Committee are Messrs.
D'Annunzio and Swoveland. There are no Stock Option and Executive
Committee interlocks.
Indemnification of Directors and Officers
The Company's By-Laws provide that the Company shall indemnify any
director, officer, employee, or other agent of the Company who is or was
a party, or is threatened to be made a party, to any proceeding (other
than an action by or in the right of the Company to procure a judgment in
its favor) by reason of the fact that such person is or was an agent of
the Company against expenses, judgments, fines, settlements, and other
amounts actually and reasonably incurred in connection with such
proceeding, if that person acted in good faith and in a manner that person
reasonably believed to be in the best interest of the Company, and in the
case of a criminal proceeding, had no reasonable cause to believe the
conduct of that person was unlawful.
The Company has entered into separate indemnification agreements with
each of its directors and officers whereby the Company has agreed to
indemnify the director or officer against all expenses, including
attorneys' fees, and other amounts reasonably incurred by the officer or
director in connection with any threatened, pending or completed civil,
criminal, administrative or investigative action or proceeding to which
such person is party by reason of the fact that he is or was a director or
officer, as the case may be, of the Company, if the person acted in good
faith and in a manner reasonably believed to be in or not opposed to the
best interests of the Company, and, with respect to any criminal action or
proceeding, the person had no reasonable cause to believe such conduct to
be unlawful. The agreements provide for the advancement of expenses and
that the Company has the right to purchase and maintain insurance on
behalf of the director or officer against any liability or liabilities
asserted against him, whether or not the Company would have the power to
indemnify the person against such liability under any provision of the
agreement. The Company has agreed to indemnify such person against
expenses actually and reasonably incurred in connection with any action in
which the person<PAGE>
has been successful on the merits or otherwise. Indemnification must also
be provided by the Company (unless ordered otherwise by a court) only as
authorized in the specific case upon a determination that the
indemnification of the person is appropriate because he has met the
applicable standard of conduct described in the agreement made by (i) the
Board of Directors, by a majority vote of a quorum consisting of directors
who are not parties to such action or proceeding, (ii) by independent
legal counsel in a written opinion or (iii) the shareholders of the
Company.
Director Compensation
Each non-salaried employee director and outside director of the Company
is paid an annual fee of $20,000. Each inside director is paid an annual
fee of $10,000.
EXECUTIVE COMPENSATION
The following table sets forth in summary form the compensation received
during each of the Company's last three fiscal years by the Chief
Executive Officer and by each other executive officer of the Company whose
salary and bonus exceeded $100,000 in 1997 (the "Named Executives").
<TABLE>
<S> <S> <S> <S> <S>
Summary Compensation Table
Annual Compensation Long Term Compensation
Other Securities
Annual Restricted underlying All Other
Name and Compen- stock award Options Compen-
Principal Position Year Salary($) Bonus (1)($) sation($)(2) (s)($)(3) (#)(4) ation($)(5)
James N. Ryan 1997 170,760 210,120 10,000 108,000 10,335
Chairman and Chief 1996 164,295 153,383 10,000 10,897
Executive Officer 1995 159,330 100,000 10,000 33,750 70,000 4,111
Steven R. Williams 1997 132,360 210,120 10,000 108,000 10,200
President 1996 125,895 153,383 10,000 10,862
and Director 1995 120,930 100,000 10,000 33,750 70,000 4,125
Dale G. Rettinger 1997 132,360 210,120 10,000 108,000 10,200
Executive Vice
President, Treasurer, 1996 125,895 153,383 10,000 10,862
and Director 1995 120,930 100,000 10,000 33,750 70,000 4,125
</TABLE>
[FN]
(1) During 1994, the Board of Directors approved a deferred compensation
arrangement for the Named Executives. See "Employment and Other
Agreements and Arrangements." Under the arrangements, each Named
Executive may choose to defer any portion of his bonus compensation
until retirement or separation from the Company. The Named Executives
voluntarily deferred $110,000 each in 1997; $80,000, $60,000 and
$60,000, respectively in 1996; and $30,000 each in 1995. In 1997,
1996 and 1995, $30,000 of the deferred bonus compensation of Messrs.
Williams and Rettinger was utilized to pay the premiums of split-
dollar life insurance policies for Messrs. Williams and Rettinger.
(2) The respective Named Executives receive fees as directors of the
Company in the amount of $10,000 per year.
(3) In 1995, the Company granted a restricted stock award of 30,000 shares
of Common Stock to each of the Named Executives at the grant date
market price of $1.125 per share. These shares will vest upon a Named
Executive's retirement or involuntary separation from employment with
the Company, or upon a change of control of the Company. The
aggregate value of the holdings of each individual as of December 31,
1997 was $157,500.
<PAGE>
(4) The exercise price of the options granted in 1995 is $1.125 per share.
In 1997, the Company granted each Named Executive options to purchase
108,000 shares of Common Stock at an exercise price of $5.125 per
share, the fair market value of such shares of Common Stock at the
date of grant. The options may be exercised with respect to one-half
of the shares granted thereunder on or after July 15, 1998 and with
respect to one-half of the shares granted thereunder on or after July
15, 1999, provided that the grantee is employed with the Company on
the exercise date. Such options expire on July 15, 2007.
(5) This amount includes contributions made by the Company under the
Company's Employee Profit Sharing Plan and 401(k) plan. In 1997,
1996, and 1995 the Company contributed $15,500, $50,000, and $28,500,
respectively, to the Employee Profit Sharing Plan. Of these
contributions, each of the Named Executives was credited $952 in 1997,
$3,071 in 1996; $1,815 in 1995. The Company provided a matching of
401(k) contribution based upon varying rates of the Named Executives'
respective contributions. Of the total Company matching contribution
of $171,300, $139,800 and $71,800 in 1997, 1996 and 1995, the Named
Executives were credited with matching contributions of $9,383,
$9,248, and $9,248, respectively in 1997; $7,826, $7,791 and $7,791,
respectively in 1996; and $4,111, $4,125 and $4,125, respectively, in
1995.
</FN>
Compensation Committee Report
The Compensation Committee is composed of two outside directors. The
committee's responsibility is to develop the Company's compensation policy
to enable the Company to hire, retain and motivate high performing
employees. The committee also administers the Company's Savings and
Protection Plan (the "401(k) Plan"), various Employee Stock Option Plans,
and the Company's Profit Sharing Plan. The committee reviews the
performance and compensation of the
Chief Executive Officer, and the two executive officers of the Company.
Final approval of all contracts with company executives is reserved to the
full Board of Directors.
Compensation paid to the CEO, Mr. Ryan, and to the executive officers
of the Company is based on several factors, including the terms of their
employment contracts, the earnings of the Company, the evaluation of the
Board of the performance of the employees, as well as compensation paid to
similarly situated employees with other similar firms.
As CEO, Mr. Ryan received a salary of $170,760 in 1997, which reflected
cost of living increases from his salary in 1996. Also during 1997 Mr.
Ryan earned a cash bonus of $210,120 based on Company earnings. Both the
salary increase and the bonus were based on provisions in Mr. Ryan's
employment contract.
The Company also contributed $9,383 in 1997 to Mr. Ryan's 401(k) account
in accordance with the plan's matching provisions to all participating
employees.
The compensation of the two executive officers of the Company is also
comprised of a salary and a performance based bonus. Salaries of both
were increased by a cost of living adjustment and bonuses were paid based
on the Company's earnings, both as provided in the executive's employment
agreements. Both executives also received a share of Company matching
contributions to the Company 401(k) plan.
During 1997 the Company reviewed the employment contracts of the CEO and
the executive officers of the Company, and determined that no changes were
required. The Compensation Committee believes the Company has made
substantial progress over the past several years despite adverse industry
and economic conditions, and that the progress is attributable in large
measure to the efforts of the CEO and the executive officers.
Compensation Committee
Vincent F. D'Annunzio, Chair
Jeffrey C. Swoveland
<PAGE>
OPTIONS GRANTED IN LAST FISCAL YEAR
The following table sets forth stock options granted in 1997 under the
Employee Incentive Stock Option Plan to the persons named in the Summary
Compensation table.
<TABLE>
<S> <S> <S> <S> <S> <S>
% of Total
Number of Options Granted to
Options Employees during Exercise Expiration Grant Date
Granted the fiscal year Price($) Date Value($)
James N. Ryan 108,000 22% 5.125 7/15/07 356,400
Steven R. Williams 108,000 22% 5.125 7/15/07 356,400
Dale G. Rettinger 108,000 22% 5.125 7/15/07 356,400
</TABLE>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
The following table provides certain information with respect to options
exercised during 1997 by the persons named in the summary compensation
under the Company's stock option plans. The table also represents
information as to the number of options outstanding as of December 31,
1997 with respect to options granted pursuant to the Company's Employee
Stock Option Plans.
<TABLE>
<S> <S> <S> <S> <S> <S> <S>
Number Value of Unexercised
of Shares Value Number of Unexercised Options In-The-Money Options
Exercised Realized ($) at Year-end at Year-End(1)($)
Exercisable Unexercisable Exercisable Unexercisable
James N. Ryan - - 401,000 108,000 1,716,187 13,500
Steven R. Williams - - 391,000 108,000 1,673,062 13,500
Dale G. Rettinger - - 391,000 108,000 1,673,062 13,500
</TABLE>
[FN]
(1) For all unexercised options held as of December 31, 1997, the
aggregate dollar value is equal to the excess of the market value of
the stock underlying those options over the exercise price of those
unexercised options. On December 31, 1997, the closing sales price
of the Common Stock was $5.25 per share.
</FN>
Employment and Other Agreements and Arrangements
The Company has entered into employment agreements with each of the
Named Executives, each of which has a term that has been extended to
December 31, 2000. Pursuant to the respective terms of the employment
agreements, each of the Named Executives is entitled to receive the basic
annual salary set forth therein that is subject to increase, but not
decrease (unless dire economic circumstances as declared by the Board of
Directors requires a reduction for all senior executive employees of the
Company), as the Board of Directors may determine to reflect changes in
the cost of living, the financial success of the Company and the
performance of such Named Executive. For 1997, the basic salary has been
set by the Board of Directors under the respective agreements as $170,760
for Mr. Ryan, $132,360 for Mr. Williams and $132,360 for Mr. Rettinger.
Each Named Executive is also entitled to be paid an annual bonus equal to
2.5% of the Company's net pre-tax earnings for any year in which the
Company's net pre-tax earnings exceed $300,000. The Company has been
required to establish a deferred compensation plan, described below, for
the Named Executives and to fund such plan with an annual contribution of
$30,000 commencing in 1994, subject to adjustment for inflation.
In the event of a change in control of the Company, each Named Executive
has the right within six months after such change of control to elect to
terminate his employment under his employment agreement and receive
severance compensation equal to the sum of his basic salary plus an amount
equal to the average bonus paid to him over the preceding three years as
provided in the agreement multiplied by the remaining years of the
employment agreement,<PAGE>
provided, however, that the minimum severance compensation must not be
less than the amount equal to three years of basic compensation plus an
amount equal to three times the average bonus paid to such person over the
preceding three-year period.
Each employment agreement also provides that if the Company obtains the
right to sell working interests in any drilling program, the Named
Executive is entitled to participate as an investor in such oil and gas
drilling project subject to the prior approval by the Board of Directors
of the terms of any such participation.
Each employment agreement contains a standard non-disclosure covenant.
Each employment agreement also provides that the Named Executive is
prohibited during the term of his employment and for a period of one year
following his termination from engaging in any business that is
competitive with the Company's oil and gas drilling business in West
Virginia, unless his termination results from a change of control of the
Company. During any period for which the non-competition provision
prohibits the officer from pursuing activities that would compete with the
Company's business as provided in the agreement following termination of
the agreement, the Company is required to pay the officer his basic salary
and bonus as provided in the agreement.
In the event of termination under the terms of the agreement, the
Company will be required to loan to the officer funds equal to the
exercise price of all options held by the Named Executive under the
Company's stock option plans, which loan, if made, must be repaid within
nine months and will bear interest at the prime rate then in effect.
Each employment agreement may be terminated for cause for willful
misfeasance or malfeasance, disregard of the Named Executive's duties or
negligence related to the performance of his duties, if so determined by
a court of competent jurisdiction. Also, the Company may terminate the
employment agreement without cause, in which case the Company must either
(i) reassign the Named Executive to a comparable executive position or
designate him as a consultant for the remaining term of his agreement (ii)
pay him liquidated damages in an amount equal to his then basic salary for
the remaining term of the employment agreement, with a minimum payment
equal to twelve months of basic salary.
The Company has entered into stock redemption agreements with each of
the Named Executives. The agreements require the Company to maintain life
insurance policies on each of them in the amount of $1 million. At the
election of the Named Executive's estate or heirs made within one year of
such person's death, the Company must utilize the proceeds from such
insurance policies to purchase from his estate or heirs all or a portion
of his shares of the Company's Common Stock owned by him, including shares
subject to outstanding stock options or warrants owned by such Named
Executive at the time of his death, up to an aggregate sale price of $1
million. The purchase price for such shares of Common Stock will be based
upon the average closing asked price for the Company's Common Stock as
quoted by Nasdaq during a specified period. The Company is not required
to purchase any shares in excess of the amount provided by such insurance
policies. If the Named Executive's estate or heirs elect not to sell any
or all of the shares to the Company, the estate or heirs will be precluded
from selling the shares to anyone for a period of two years after the date
of the person's death, except that the shares may be transferred into the
names of the decedent's heirs and beneficiaries and the stock sold
pursuant to Rule 144 under the Securities Act. If the Named Executive
terminates his employment with the Company or disposes of all of all or
substantially all of his shares of Common Stock in the Company, the Named
Executive has the right to purchase his respective insurance policy for a
price equal to the cash surrender value of the policy as of the date of
such event. If the Named Executive fails to purchase the policy within
ninety days after such event, the Company may cancel all policies covering
the life of the Name Executive. The stock redemption agreements will
terminate upon bankruptcy or cessation of business by the Company.
Mr. Ryan, Mr. Williams and Mr. Rettinger are also the participants in
the Company's deferred bonus compensation plan. Under this plan, the
Company's Board of Directors must declare a year-end bonus for each
participant, the receipt of which is automatically deferred pursuant to
the plan, unless prior to the beginning of a particular year, the
participant enters into a voluntary bonus compensation agreement under
which he irrevocably elects to receive his year-end bonus as cash
compensation, payable as soon as practicable following the end of the
year. The amount of the participant's year-end<PAGE>
bonus is a minimum of $30,000 or such greater amount as may be declared by
the Board of Directors. The participant also has the right to elect to
defer receipt of his other bonus compensation under this plan. Any bonus
compensation deferred under this plan will not be paid until such
participant's retirement, or upon termination of employment, disability or
death or upon hardship, as provided in the plan. A trustee selected by
the Board of Directors maintains accounts for each participant under the
plan. The Company has reserved the right to terminate the deferred bonus
compensation plan, in whole or in part, at any time and without liability
for such termination or discontinuance.
Stock Option Plans
Under the Company's incentive stock option plans, options to purchase
shares of Common Stock of the Company may be granted to certain officers
and key employees of the Company, which options are intended to qualify as
incentive stock options under the provisions of the Internal Revenue Code.
Under the plan adopted in 1997, the Company granted options for an
aggregate of 500,000 shares of Common Stock at an exercise price of 100%
of the fair market value per share of the Company's Common Stock on the
date of grant. The options may be exercised with respect to one-half of
the shares granted on or after the first anniversary of the date of grant
and with respect to the other one-half of the shares granted on or after
the second anniversary of the date of grant. Options will expire ten
years from the date of grant if not exercised. A dissolution or
liquidation of the Company or a merger or consolidation in which the
Company is not the surviving corporation will cause each outstanding
option to terminate, provided that each optionee, in such event, will have
the right immediately prior to said dissolution or liquidation or merger
or consolidation to exercise his option in whole or in part without regard
to any installment vesting provisions with respect to such options.
Key-Man Life Insurance
The Company maintains key-man life insurance policies on the lives of
Messrs. Ryan, Williams and Rettinger in the amounts of $5.0 million, $1.0
million, and $1.0 million, respectively. The Company is the beneficiary
of each policy.
Employee 401k and Profit Sharing Plan
In 1987, the Company established a retirement plan qualified under
Section 401(k) of the Internal Revenue Code. The plan is funded by
employee contributions and a company matching contribution.
Administrative costs of the plan are borne by the Company. The employees
choose from four investment programs and, therefore, the amount of an
individual's plan assets depends on the amount of their contributions and
the performance by their chosen investments.
In 1992, the Company began a Profit Sharing Retirement plan to
supplement the 401(k) Plan. Contributions are dependent on corporate
profitability and are at the discretion of the Board of Directors of the
Company. The Company filed and qualified the plan with the Internal
Revenue Service.
<PAGE>
Stockholder Performance Graph
The following graph illustrates the performance of Petroleum Development
Corporation common stock over a five year period compared to the
performance of the NASDAQ Index and a peer group index. The peer group
index consists of 184 Crude Petroleum and Natural Gas Companies. The
table includes the cumulative shareholder return assuming the reinvestment
of dividends.
<TABLE>
<S> <S> <S> <S> <S> <S> <S>
Petroleum Development Corporation
Stock Performance Graph
500.0
400.0
300.0
200.0
100.0
0.0
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
Petroleum
Development
Corporation 100.0 150.00 105.56 144.44 372.22 466.67
Industry Index 100.0 119.15 124.87 137.33 182.60 185.09
Broad Market
Index 100.0 119.95 125.94 163.35 202.99 248.30
</TABLE>
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding ownership of
the Company's Common Stock as of March 31, 1998 by (a) each person known
by the Company to own beneficially more than 5% of the outstanding shares
of Common Stock; (b) each director of the Company; (c) each Named
Executive; (d) all directors and executive officers as a group.
<TABLE>
<S> <S> <S>
Beneficial Ownership (1)
Name and Address Number Percent
Fidelity Management . . . . . . . . . . . . . . . . . . . . . . . . . . .1,255,000 8.1
82 Devonshire Street
Boston, MA 02109
James N. Ryan(2). . . . . . . . . . . . . . . . . . . . . . . . . . . 951,251 6.0
103 East Main Street
Bridgeport, WV 26330
Steven R. Williams(3) . . . . . . . . . . . . . . . . . . . . . . . . . . .542,987 3.4
103 East Main Street
Bridgeport, WV 26330
Dale G. Rettinger(3). . . . . . . . . . . . . . . . . . . . . . . . . . . .498,261 3.2
103 East Main Street
Bridgeport, WV 26330
Roger J. Morgan(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . .132,504 *
Vincent F. D'Annunzio(5). . . . . . . . . . . . . . . . . . . . . . . . . . 53,600 *
Jeffrey C. Swoveland(6) . . . . . . . . . . . . . . . . . . . . . . . . . . 22,094 *
All directors and executive officers as a
group (6 persons)(7) . . . . . . . . . . . . . . . . . . . . . . . . . .2,200,697 13.4
* Less than 1%
</TABLE>
[FN]
(1) Includes shares over which the person currently holds or shares voting
or investment power. Unless otherwise indicated in the footnotes to
this table, the persons named in this table have sole voting and
investment power with respect to the shares beneficially owned.
(2) Includes 200,000 shares owned jointly with Mr. Ryan's wife, 200,369
shares owned by Mr. Ryan's wife and 64,258 shares owned by Mr. Ryan's
wife as guardian for their minor grandchildren. The balance of the
shares are owned solely by Mr. Ryan. Also includes options to
purchase 290,667 shares of Common Stock that Mr. Ryan can currently
exercise or that will become exercisable within 60 days. Excludes
108,000 shares underlying options granted on July 15, 1997 exercisable
after such 60-day period.
(3) Includes options to purchase 284,000 shares that such person can
currently exercise or that will become exercisable within 60 days.
Excludes 108,000 shares underlying options granted to such person on
July 15, 1997 exercisable after such 60-day period.
(4) Includes options to purchase 47,500 shares that Mr. Morgan can
currently exercise or that will become exercisable within 60 days.
(5) Includes options to purchase 13,600 shares that Mr. D'Annunzio can
currently exercise or that will become exercisable within 60 days.
(6) Includes options to purchase 3,550 shares that Mr. Swoveland can
currently exercise or that will become exercisable within 60 days.
(7) Includes options to purchase 923,317 shares that such persons can
currently exercise or that will become exercisable within 60 days.<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
</FN>
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a Company's equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Officers, directors and holders of
more than 10% of the Common Stock are required by regulations promulgated
by the Commission pursuant to the Exchange Act to furnish the Company with
copies of all Section 16(a) forms they file. The Company assists officers
and directors, and will assist beneficial owners, if any, of more than 10%
of the Common Stock, in complying with the reporting requirements of
Section 16(a) of the Exchange Act.
Based solely on its review of the copies of such forms received by it,
the Company believes that since January 1, 1997, all Section 16(a) filing
requirements applicable to its directors, officers and greater than 10%
beneficial owners were met.
PROPOSAL 2
AMENDMENT AND RESTATEMENT OF THE COMPANY'S ARTICLES OF
INCORPORATION
Description of the Amended and Restated Articles of Incorporation
At the Annual Meeting, the stockholders will be asked to consider and
vote upon a proposal to approve the amendment and restatement of the
Company's existing Articles of Incorporation (the "Articles") to: (i)
increase the number of authorized shares of Common Stock of the Company
from 22,250,000 shares to 50,000,000 shares; (ii) remove from the Articles
the Company's authorized, but unissued, 2,750,000 shares of non-voting
Class A Common Stock; and (iii) make other technical changes to other
provisions of the Company's Articles, in conformity with current Nevada
law. The stockholders are being asked separately under Proposal 3 below
to consider and vote upon an amendment to the Articles of Incorporation to
add a provision limiting personal liability of directors and officers of
the Company for monetary damages as permitted by Nevada law, which
amendment will be also included in the amended and restated Articles of
Incorporation if Proposal 3 is approved by the stockholders at the Annual
Meeting.
The full text of the proposed amended and restated Articles (the
"Amended and Restated Articles of Incorporation") is attached hereto as
Exhibit A. If Proposal 2 is adopted, the provision limiting personal
liability of directors and officers will be included in the Amended and
Restated Articles of Incorporation only if Proposal 3 is also adopted. If
Proposal 2 is not adopted but Proposal 3 is adopted, the provision
limiting personal liability of directors and officers will be added by
amendment to the existing Articles.
The Board of Directors believes it is advisable to amend and restate
the Articles pursuant to this Proposal 2 for the following reasons: (i)
the Company should have additional shares of Common Stock available for
various corporate programs and purposes; (ii) no authorized shares of
Class A Common Stock are needed and none are currently outstanding; (iii)
the Articles should be conformed to current provisions of Nevada law; and
(iv) consolidating the Articles into a single document will facilitate
their use and avoid confusion.
Capital Stock
The authorized capital stock of the Company is 22,250,000 shares
of Common Stock and 2,750,000 shares of non-voting Class A Common Stock.
As of July 6, 1998, there were 15,510,762 shares of Common Stock issued
and outstanding and no shares of Class A Common Stock were issued and
outstanding. An additional 1,693,317 authorized but unissued shares of
Common Stock have been reserved for issuance under the Company's stock
option plans for employees and directors or pursuant to warrants to
purchase Common Stock granted by the Company. Holders of Common Stock and
Class A Common Stock do not have preemptive rights to subscribe to
additional securities that may be issued by the Company.
Increase in Authorized Shares of Common Stock and Removal of Authorized
Shares of Class A Common Stock
The increase in the authorized number of shares of the Company's Common
Stock is being proposed because the Board of Directors believes that it is
advisable to have a greater number of authorized but unissued shares of
Common Stock available for various corporate programs and purposes. The
Company may from time to time consider acquisitions, stock dividends or
stock splits, and public or private financings to provide the Company and
its subsidiaries with capital, all of which may involve the issuance of
additional shares of Common Stock or securities convertible into Common
Stock. Also, additional shares of Common Stock may be necessary to meet
anticipated future obligations under the Company's <PAGE>
employee benefit plans. The Board of Directors believes that having
authority to issue additional shares of Common Stock will avoid the
possible delay of calling and holding a special meeting of stockholders to
increase its authorized capital stock at the time a transaction may be
proposed, so as to enhance the Company's ability to take prompt advantage
of market conditions and to respond promptly to any future acquisition
opportunities.
The Company has no present plan, understanding or arrangement to issue
any of the additional shares of Common Stock that will be authorized if
the amendment is approved.
If the proposal is approved, the Board of Directors will not solicit
stockholder approval to issue the additional authorized shares except to
the extent that such approval may be required by law or the rules of The
Nasdaq Stock Market, and subject to such requirements, such shares may be
issued for such consideration, cash or otherwise, at such times, for such
purposes and in such amounts as the Board of Directors in its discretion
may determine, without further action by the stockholders. The future
issuance by the Company of shares of Common Stock may dilute the equity
ownership position of current holders of Common Stock. Under the rules of
The Nasdaq Stock Market applicable to the Company, stockholder approval
must be obtained prior to the issuance of shares for certain purposes,
including the issuance of shares in an amount equal to or in excess of 20%
of the Company's then outstanding shares in connection with a future
acquisition by the Company.
Although the Board of Directors currently intends to utilize the
additional shares of Common Stock solely for the purposes set forth above,
such shares could also be used by the Board of Directors to dilute the
stock ownership of persons seeking to obtain control of the Company,
thereby possibly discouraging or deterring a non-negotiated attempt to
obtain control of the Company and making removal of incumbent management
more difficult. The proposal, however, is not a result of, nor does the
Board of Directors have knowledge of, any effort to accumulate the
Company's capital stock or to obtain control of the Company by means of a
merger, tender offer, solicitation in opposition to the Board of Directors
or otherwise.
The Class A Common Stock was authorized by the Board of Directors and
approved by the stockholders of the Company in 1991 in connection with a
debt restructuring. The Company's principal bank lender had required the
authorization of the Class A Common Stock and was issued warrants for the
purchase of 2,750,000 shares of Class A Common Stock. These warrants were
redeemed by the Company in 1993. Because neither the warrants nor any
shares of Class A Common Stock are outstanding, the Board of Directors
believes that the authorization of the Class A Common Stock should be
deleted and removed from the Company's Existing Articles in connection
with their amendment and restatement.
Consolidation and Restatement of Articles of Incorporation
Since the formation of the Company in 1955, the Nevada Revised Statutes
("NRS") have undergone a number of amendments and revisions, and the
Company has amended the Articles from time to time. Therefore, in order
to conform the Articles to current provisions of the NRS and to
consolidate and restate the Articles to facilitate their use, the
following technical changes are proposed in addition to the increase in
authorized shares of Common Stock and the removal of the authorized shares
of Class A Common Stock: (i) shortening the purpose clause of the Articles
to provide that the Company is permitted to engage in any lawful activity
permitted under the NRS; (ii) eliminating the provision permitting the
directors to amend or repeal the articles of incorporation inasmuch as the
NRS generally requires stockholder approval in addition to approval by the
Board of Directors; (iii) eliminating the provisions providing for
additional powers of the directors and officers to be set forth in the
Company's By-Laws and permitting the Board of Directors, committees of
directors and stockholders to take action by written consent, as these
provisions are permitted under the NRS and are not required to be set
forth in articles of incorporation; and (iv) updating the Articles to
include the Company's current registered office and agent. Conforming the
Articles to the NRS as currently in effect and consolidating the Articles
by the adoption of the Amended and Restated Articles of Incorporation will
provide ease of use of the Company's charter documents and will serve to
avoid confusion.
Vote Required
Approval of the proposed Amended and Restated Articles of Incorporation
under this Proposal 2 will require the affirmative vote of the holders of
a majority of the shares of the Company's Common Stock outstanding and
entitled to vote. Abstentions and broker non-votes are considered shares
of stock outstanding and entitled to vote and are counted in determining
the number of votes necessary for a majority. An abstention or broker
non-vote will therefore have the practical effect of voting against
approval of the Amended and Restated Articles of Incorporation because it
represents one less vote for the approval of the Amended and Restated
Articles of Incorporation.
THE BOARD OF DIRECTORS RECOMMEND A VOTE "FOR" PROPOSAL 2.<PAGE>
PROPOSAL 3
APPROVAL OF AN AMENDMENT TO THE COMPANY'S ARTICLES OF
INCORPORATION TO PROVIDE FOR LIMITATION OF
PERSONAL LIABILITY OF DIRECTORS AND OFFICERS
Description of Amendment to Provide for Limitation of Personal Liability
for Directors and Officers
At the Annual Meeting, the stockholders will be asked to vote on a
proposal to approve an amendment to the Company's Articles of
Incorporation to include a provision limiting personal liability of the
Company's directors and officers for monetary damages in the management of
the Company's business, as authorized pursuant to provisions of the NRS.
The amendment will be included in the Company's Amended and Restated
Articles of Incorporation if both this Proposal 3 and Proposal 2 above are
approved by the stockholders at the Annual Meeting. If this Proposal 3 is
adopted but Proposal 2 is not adopted, this proposed article will be added
as amendment to the existing Articles. Please refer to Article Ninth of
the proposed Amended and Restated Articles of Incorporation, attached
hereto as Exhibit A for the text of the proposal limitation of personal
liability amendment.
Background of Proposal 3
Subsequent to the formation of the Company, amendments to the NRS in
1987, 1991 and 1993 permit a Nevada corporation to include in its articles
of incorporation a provision that eliminates the personal liability of
directors and officers to the corporation and its stockholders for
monetary damages for violations of fiduciary duty except for (i) acts or
omissions that involve intentional misconduct, fraud or knowing violations
of law or (ii) the payment of illegal dividends. The limitation of
personal liability under the proposed amendment affects only the potential
liability of directors and officers for monetary damages and does not
permit the elimination or limitation of the availability of equitable
remedies, such as an injunction or rescission against a director or
officer, for violations of fiduciary duty. The NRS provisions limiting
such personal liability represent a legislative response to changes in the
market for directors and officers liability insurance, including sharp
increases in premiums and in some cases the unavailability of traditional
coverage. The availability of liability insurance is a relatively
standard condition of employment of officers and the appointment of
directors unaffiliated with the management of corporations, and in some
cases directors and officers of certain corporations have resigned when
such coverage has become unavailable. In other cases, the absence of
available insurance may deter directors and officers from making
entrepreneurial decisions. This situation was perceived by the Nevada
legislature as a threat to the quality and stability of the governance of
Nevada corporations. Therefore, these limitations on personal liability
provisions were enacted into Nevada law to allow Nevada corporations to
provide substitute protection for directors and officers and to limit
their personal liability for monetary damages under certain circumstances.
Effect of Amendment to Provide for Limitation of Liability
The proposed amendment, if approved, will eliminate or limit the
personal liability of directors and officers in the management of the
Company's business to the full extent currently or hereafter permitted by
Nevada law. If the amendment limiting personal liability is adopted,
neither the Company nor a stockholder will be able to sue a director or
officer for monetary damages for negligence or gross negligence in the
performance of his or her fiduciary duties. Actions for monetary damages
may be brought, however, if there can be shown that the director or
officer engaged in intentional misconduct, fraud or a knowing violation of
law, or approved or participated in an illegal dividend. The provision
will not preclude the Company or a stockholder from seeking an injunction,
rescission or other non-monetary relief in the event of a breach of
fiduciary duty by a director or officer. Also, the limitation on personal
liability applies only to claims against a director or officer in his or
her capacity as such, and not to any claims arising out of his or her role
in any other capacity. Further, the limitation of personal liability will
not apply to acts or omissions of directors or officers occurring prior
to the time of adoption and will not have any effect on the remedies of
stockholders under federal securities laws. No suits are currently
pending, or to the knowledge of the Company, threatened against its
directors or officers alleging a violation of their fiduciary duty to the
Company or its stockholders.
Although members of the Board of Directors have a personal interest in
approval of the limitation of personal liability provision, the Board of
Directors strongly believes this provision is in the best interests of the
Company and its stockholders. While the existing members of the Board of
Directors and officers have not indicated an intention to resign if the
limitation of personal liability provision is not approved, the Company
believes the approval of the provision is important to its ability to
recruit and retain competent directors and officers. In addition, the
Company believes that effective functioning of the Board of Directors and
officers might be impaired if directors and officers are not assured of
the traditional protection against lawsuits that challenge the prudence of
good faith business judgments.<PAGE>
Vote Required
Approval of the proposed amendment to the Articles under this Proposal
3 will require the affirmative vote of the holders of a majority of the
shares of the Company's Common Stock outstanding and entitled to vote.
Abstentions and broker non-votes are considered shares of stock
outstanding and entitled to vote and are counted in determining the number
of votes necessary for a majority. An abstention or broker non-vote will
therefore have the practical effect of voting against approval of the
proposed amendment because it represents one less vote for the approval of
the proposed amendment.
THE BOARD OF DIRECTORS RECOMMEND A VOTE "FOR" PROPOSAL 3.
PROPOSAL #4
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
At the Meeting, the Stockholders of the Company will be asked to ratify
the Board of Directors' selection of KPMG Peat Marwick as the Company's
certified public accountants for the fiscal year ended December 31, 1998.
KPMG Peat Marwick conducted the audit for the fiscal year ended December
31, 1997. A representative of KPMG Peat Marwick will be present at the
Meeting, will have an opportunity to make statements if he so desires, and
will be available to respond to appropriate questions.
Vote Required
A majority of the votes cast at the Annual Meeting, in person or by
proxy, is required for the ratification of the Board of Directors'
selection of independent accountants. Abstentions and broker non-votes
will not be considered as votes cast with respect to the ratification of
the Board of Directors' selection of independent accountants.
THE BOARD OF DIRECTORS RECOMMEND A VOTE "FOR" PROPOSAL #4
OTHER BUSINESS
As of the date of this Proxy Statement, management of the Company is not
aware of any matters to be brought before the Annual Meeting other than
the matters set forth in this Proxy Statement. However, if other matters
properly come before the Meeting, it is the intention of the proxy holders
named in the enclosed form of proxy to vote in accordance with their
discretion on such matters pursuant to such proxy.
General
The enclosed Proxy is solicited by the Company's Board of Directors.
The Company expects to solicit proxies primarily by mail, but solicitation
may also be made personally, by telephone or by telegraph, by regularly
employed officers and employees of the Company who will receive no extra
compensation for doing so.
The Company will request brokers and other custodians, nominees and
fiduciaries to forward proxy soliciting material to, and obtain
instructions from, the beneficial owners of shares held by record by such
persons and will reimburse reasonable out-of-pocket expenses. The Company
will bear all costs of proxy solicitation.
Stockholder Proposals for 1999 Annual Meeting
Stockholder proposals must be received by the Company at its principal
executive office on or prior to March 1, 1999 in order to be included in
the Company's proxy statement for the 1999 annual meeting of stockholders.
By Order Of The Board of Directors
James N. Ryan
Chairman
Dated: July 7, 1998<PAGE>
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO ANY PERSON WHO IS A RECORD OR
BENEFICIAL HOLDER OF COMMON STOCK OF THE COMPANY, ON WRITTEN REQUEST OF
SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1997 INCLUDING FINANCIAL STATEMENTS AND
SCHEDULES THERETO, WHICH THE COMPANY FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION. COPIES MAY BE OBTAINED BY WRITING TO CORPORATE
COMMUNICATIONS DEPARTMENT, PETROLEUM DEVELOPMENT CORPORATION, P.O. BOX 26,
BRIDGEPORT, WEST VIRGINIA 26330.<PAGE>
EXHIBIT A
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
PETROLEUM DEVELOPMENT CORPORATION
FIRST. The name of the Corporation is PETROLEUM DEVELOPMENT
CORPORATION.
SECOND. The Corporation's registered office in the State of
Nevada is located at One East First Street, Reno, Nevada 89501. The name
of the Corporation's resident agent at such address is The Corporation
Trust Company of Nevada.
THIRD. The number of shares of capital stock the Corporation is
authorized to issue is 50,000,000 shares of Common Stock, par value $0.01
per share.
FOURTH. The governing board of the Corporation shall be known as
directors, and the number of directors shall not be less than three (3)
nor more than nine (9).
FIFTH. The purpose of the Corporation is to engage in any lawful
activity permitted under the Nevada Revised Statutes.
SIXTH. The stock of the Corporation shall be fully paid and
nonassessable. No stockholder of the Corporation shall by reason of his
holding shares of any class have any preemptive or preferential right to
purchase or subscribe to any shares of any class of the Corporation, now
or hereafter to be authorized, or any shares or other securities
convertible into or carrying options or warrants to purchase shares of any
class, now or hereafter to be authorized, whether or not the issuance of
any such shares or other securities would adversely affect the dividend or
voting rights of such holders, other than such rights, if any, as the
Board of Directors, in its discretion from time to time may grant, and at
such price as the Board of Directors in its discretion may fix; and the
Board of Directors may issue shares of any class of the Corporation or
other securities convertible into or carrying options or warrants to
purchase shares of any class without offering any such shares of any
class, either in whole or in part, to the existing stockholders of any
class.
SEVENTH. The Corporation may from time to time determine whether
and to what extent, and the times and places and upon what conditions, the
books, records and assets of the Corporation, or any of them (other than
the stock ledger), shall be open to inspection by the stockholders, and no
stockholder shall have any right to inspect any account, book or document
of the Corporation, except as conferred by law or by resolution of the
Board of Directors or stockholders.
EIGHTH. The Corporation shall have perpetual existence.
NINTH. No director or officer of the Corporation shall be
personally liable to the Corporation or any of its stockholders for
monetary damages for breach of fiduciary duty as a director or officer,
except that this Article does not eliminate or limit the liability of a
director or officer for: (i) an act or omission that involves intentional
misconduct, fraud or a knowing violation of the law; (ii) an act or
omission for which the liability of a director or officer is expressly
provided for by an applicable statute, including the liability for payment
of distributions in violation of Section 78.300 of the Nevada Revised
Statutes; or (iii) any other act, omission, transaction or breach of duty
as to which any applicable statute, rule or regulation provides that the
liability of directors or officers may not be eliminated or limited. If
the Nevada Revised Statutes or other applicable laws (collectively,
"Laws") hereafter are amended to authorize the further elimination or
limitation of the liability of directors or officers, then the liability
of a director or officer of the Corporation, in addition to the limitation
on personal liability provided herein, shall be limited to the fullest
extent permitted by the amended Laws. No amendment to or repeal of this
Article shall apply to or have any effect on the liability or alleged
liability of any director or officer of the Corporation for or with
respect to any acts or omissions of such director or officer occurring
prior to such amendment or repeal.
<PAGE>
Petroleum Development Corporation
Proxy Solicited by the Board of Directors For Annual Meeting of Stockholders
The undersigned hereby appoints JAMES N. RYAN and DALE G. RETTINGER or
either of them, proxies, each with full power to act without the other and
with full power of substitution for and in the name of the undersigned at
the Annual Meeting of Stockholders of Petroleum Development Corporation
(the "Company") to be held on September 4, 1998 at 10:00 A.M. and at any
adjournment thereof to vote all shares of the Common Stock of the Company,
held by the undersigned with respect to the following questions and on
such other matters as may properly come before the meeting.
(1) ELECTION OF DIRECTORS
FOR all nominees listed below (except as marked to the
contrary below)
WITHHOLD AUTHORITY to vote for all nominees listed below
James N. Ryan, Vincent F. D'Annunzio
(INSTRUCTION: To withhold authority to vote for any nominee, circle that
nominee's name above.
(2) To consider and approve the amendment and restatement of the
Company's Articles of Incorporation to increase the number of
authorized shares of the Company's Common Stock, to repeal the
authorized but unissued Class A Common Stock of the Company and to
otherwise consolidate and conform the Articles of Incorporation and
all amendments thereto to existing Nevada law.
FOR AGAINST ABSTAIN
(3) To consider and approve an amendment to the Company's Articles of
Incorporation to provide for certain limitations of personal
liability of directors and officers of the Company in the management
of the Company's business.
FOR AGAINST ABSTAIN
FOR AGAINST ABSTAIN
(4) To ratify and approve the selection of independent public accountants
for the Company for the fiscal year ending December 31, 1998.
FOR AGAINST ABSTAIN
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders and Proxy Statement for such meeting dated
September 4, 1998 and a copy of the Company's 1997 Annual Report.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE
REVOKED PRIOR TO ITS EXERCISE. THIS PROXY, WHEN PROPERLY EXECUTED AND
RETURNED, WILL BE VOTED AS DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER.
IF NO DIRECTION IS INDICATED, IT WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND
4.
, 1998
(Please sign EXACTLY as your name appears hereon)
when signing as a representative capacity, please
give full title.
IMPORTANT INFORMATION IS CONTAINED ON OTHER SIDE OF THIS CARD, PLEASE READ
BOTH SIDES OF THIS CARD, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE
ENCLOSED ENVELOPE.
