Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.1a-11(c) or ss.240.1a-12
GULFWEST OIL COMPANY
(Name of Registrant as Specified In Its Charter)
GULFWEST OIL COMPANY
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
4) Proposed maximum aggregate value of transaction:
* Set forth amount on which the filing is calculated and state how it
was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
Notes:
<PAGE>
GULFWEST OIL COMPANY
2644 Sherwood Forest Plaza
Suite 229
Baton Rouge, Louisiana 70816
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on October 21, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of
GulfWest Oil Company (the "Company") will be held at the Gleneagles Country
Club, 5401 West Park Boulevard, Plano, Texas, on Tuesday, October 21, 1997 at
6:30 p.m., local time, for the following purposes:
(1) To elect seven members of the Board of Directors, which presently
consists of seven directors, for the term of one year or until the
next Annual Meeting of Shareholders.
(2) To transact such other business as may properly come before the
Meeting or any adjournments thereof.
The close of business on August 29, 1997 has been fixed as the record date
for determining shareholders entitled to notice of and to vote at the Annual
Meeting of Shareholders or any adjournments thereof. For a period of at least 10
days prior to the Annual Meeting, a complete list of shareholders entitled to
vote at the Annual Meeting will be open to the examination of any shareholder
during ordinary business hours at the offices of the Company at 2644 Sherwood
Forest Plaza, Suite 229, Baton Rouge, Louisiana 70816 or 16800 Dallas Parkway,
Suite 250, Dallas, Texas 75248.
Information concerning the matters to be acted upon at the Annual Meeting
is set forth in the accompanying Proxy Statement.
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING IN PERSON ARE
URGED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors
/s/Jim C. Bigham
-------------------------------------
Jim C. Bigham
Secretary
Baton Rouge, Louisiana
September 15, 1997
<PAGE>
GULFWEST OIL COMPANY
2644 Sherwood Forest Plaza
Suite 229
Baton Rouge, Louisiana 70816
PROXY STATEMENT
For
ANNUAL MEETING OF SHAREHOLDERS
To Be Held on October 21, 1997
This Proxy Statement is being first mailed on September 15, 1997 to
shareholders of GulfWest Oil Company (the "Company") by the Board of Directors
(the "Board") to solicit proxies (the "Proxies") for use at the Annual Meeting
of Shareholders (the "Meeting") to be held at the Gleneagles Country Club, 5401
West Park Boulevard, Plano, Texas, at 6:30 p.m., local time, on Tuesday, October
21, 1997, or at such other time and place to which the Meeting may be adjourned.
All shares represented by valid Proxies, unless the shareholder otherwise
specifies, will be voted (i) FOR the election of the persons named herein under
"Election of Directors" as nominees for election as directors of the Company for
the term described therein, and (ii) at the discretion of the Proxy holders with
regard to any other matter that may properly come before the Meeting or any
adjournments thereof.
Where a shareholder has appropriately specified how a Proxy is to be voted,
it will be voted accordingly. The Proxy may be revoked at any time by providing
written notice of such revocation to GulfWest Oil Company, 2644 Sherwood Forest
Plaza, Suite 229, Baton Rouge, Louisiana 70816, Attention: Jim Bigham. If notice
of revocation is not received by the Meeting date, a shareholder may
nevertheless revoke a Proxy if he attends the Meeting and desires to vote in
person.
RECORD DATE AND VOTING SECURITIES
The record date for determining the shareholders entitled to vote at the
Meeting is the close of business on Friday, August 29, 1997 (the "Record Date"),
at which time the Company had issued and outstanding 1,753,428 shares of Common
Stock, par value $.001 per share (the "Common Stock"). Common Stock is the only
class of outstanding voting securities of the Company.
QUORUM AND VOTING
The presence at the Meeting, in person or by proxy, of the holders of a
majority of the issued and outstanding shares of Common Stock is necessary to
constitute a quorum to transact business. Each share represented at the Meeting
in person or by proxy will be counted toward a quorum. In deciding all questions
and other matters, a holder of Common Stock on the Record Date shall be entitled
to cast one vote for each share of Common Stock registered in his or her name.
In order to be elected a director, a nominee must receive the affirmative vote
of the holders of a majority of the shares of Common Stock present in person or
by proxy at the Meeting. Abstentions and broker non-votes will not be counted in
the election of directors.
<PAGE>
ELECTION OF DIRECTORS
The Board of the Company presently consists of seven directors, four
elected and three appointed, all of whom have been nominated for re-election or
election. Each director shall serve until the next Annual Meeting of
Shareholders and until his successor is elected and qualified.
It is expected that the nominees named below will be able to accept such
nominations. If any of the below nominees for any reason is unable or is
unwilling to serve at the time of the Meeting, the Proxy holders will have
discretionary authority to vote the Proxy for a substitute nominee or nominees.
The following sets forth information as to the nominees for election at the
Meeting, including their ages, present principal occupations, other business
experience during the last five years, memberships on committees of the Board
and directorships in other publicly-held companies.
<TABLE>
<CAPTION>
Year First
Elected
Director
Name Age Position or Officer
<S> <C> <C> <C>
John E. Loehr(1)(2)(3) 51 Chairman of the Board, 1992
Chief Financial Officer and
Director
Marshall A. Smith III(1)(2) 49 President, Chief Executive 1989
Officer and Director
Jim C. Bigham 61 Executive Vice President, 1991
Secretary and Director
Ned W. Fowler(2)(3) 69 Director 1990
Charles D. Ledford 63 Director 1996
Henri M. Nevels 32 Director 1996
James L. Crowson(3) 58 Director
(1) Member of the Audit Committee.
(2) Member of the Budget Committee.
(3) Member of the Compensation Committee.
</TABLE>
John E. Loehr was elected chairman of the board on September 1, 1993 and
appointed Chief Financial Officer, effective November 22, 1996. Mr. Loehr was
formerly president of Star-Tex Asset Management, a commodity trading advisor, a
position he held from 1988 until 1992 when he sold his ownership interest. Mr.
Loehr is currently president and sole shareholder of ST Advisory Corporation and
vice-president of Star- Tex Trading Company. Mr. Loehr is a CPA and is a member
of the American Institute of Certified Public Accountants and Texas Society of
Certified Public Accountants.
2
<PAGE>
Marshall A. Smith III has served as an officer and a director of the
Company since July 1989. From July, 1989 to November 20, 1992, he served as
president and chairman of the Board. On November 20, 1992, he resigned as
president but continued as chief executive officer and chairman of the board.
Upon the resignation of Charles Major as president on September 1, 1993, Mr.
Smith assumed the duties as president and resigned the position of chairman of
the board. Prior to joining the Company, Mr. Smith served in various capacities
in a number of family controlled companies.
Jim C. Bigham is a retired United States Air Force Major. During his
career, he served in both command and staff officer positions in the
operational, intelligence and planning areas. Prior to joining the Company, Mr.
Bigham held management and sales positions in the real estate and printing
industries.
Ned W. Fowler currently serves as a special advisor to OGERD Corporation, a
company engaged in the marketing of equipment and supplies to the petroleum and
petrochemical industries worldwide. In December, 1994, Mr. Fowler retired as
executive vice president and a director of IRI International, Inc., positions he
had held since 1985. IRI International, Inc. manufactures, markets and services
oil well drilling rigs nationally and internationally. The company was formed in
1985 as a merger of the Ideco Division of Dresser Industries and Ingersoll-Rand
Oil Field Products Company. Mr. Fowler was president of Ideco- Dresser from 1982
until the merger with Ingersoll-Rand.
Charles D. Ledford was appointed a director on August 5, 1996 to serve
until the next annual shareholders' meeting. Mr. Ledford was chairman of the
board, chief executive officer and president of ECO2, Inc., from its inception
in 1991 until his resignation effective February 27, 1997. Since 1976, he has
been active in research and development and the study of the application of
pyrolysis in business. In 1992, he patented a process converting scrap rubber
tires into carbon black and fuel oil through the use of pyrolysis.
Henri M. Nevels was appointed a director of the Company on August 22, 1996
to serve until the next annual shareholders' meeting. Mr. Nevels has extensive
experience in international business and finance. For the past 7 years, he has
been a key advisor to a private European investor group with international
holdings, including those in the United States and China.
James L. Crowson was appointed a director of the Company on July 8, 1997.
Mr. Crowson is Deputy chancellor for Texas Tech University and Texas Tech
University Health Sciences Center, a position he assumed in 1996. He is
responsible for activities of the Board of Regents and is the direct
administrator over the Vice Chancellors for institutional advancement,
governmental relations, legal affairs, and fiscal affairs. From 1987 to 1995,
Mr. Crowson was employed by the Lomas Financial Group as Senior Vice President
and General Counsel until 1994 and as Executive Vice President in 1994-1995. Mr.
Crowson served in various positions from 1970 to 1980 in the University of Texas
System.
Meetings and Committees of the Board
The business of the Company is managed under the direction of the Board.
The Board meets on a regularly scheduled basis to review significant
developments affecting the Company and to act on matters requiring Board
approval. It also holds special meetings when an important matter requires Board
action between scheduled meetings. The Board met eight times during the calendar
year ended December 31, 1996 ("1996").
3
<PAGE>
The Board has three standing committees: the Audit Committee, the Finance
and Budget Committee and the Compensation Committee. The functions of these
committees, their current members, and the number of meetings held during 1996
are described below.
The Audit Committee was established to review the professional services and
independence of the Company's independent auditors, and the Company's accounts,
procedures and internal controls. The Audit Committee is comprised of Mr. John
E. Loehr (Chairman) and Mr. Marshall A. Smith III. The Audit Committee met twice
in 1996.
The Finance and Budget Committee was established to make recommendations to
the Board in the areas of financial planning, strategies and business
alternatives. The Finance and Budget Committee is comprised of Mr. John E. Loehr
(Chairman), Mr. Ned W. Fowler and Mr. Marshall A. Smith III. The Finance and
Budget Committee did not meet in 1996.
The function of the Compensation Committee is to fix the annual salaries
and other compensation for the officers and key employees of the Company. It
also approves and administers the Company's Stock Option Plan. The Compensation
Committee is comprised of Mr. Ned W. Fowler (Chairman), Mr. John E. Loehr and
Mr. James L. Crowson. The Compensation Committee met twice in 1996.
The Company does not have a nominating committee. The functions customarily
performed by a nominating committee are performed by the Board as a whole.
Compensation of Directors
The Company does not pay fees to directors for their Board activities. The
Company has paid travel and entertainment expenses incurred by certain
directors.
On May 11, 1995, the Board granted Mr. John E. Loehr, chairman, the right
and option to acquire equity securities of the Company as long-term compensation
for his services to the Company and as an incentive to assist the Company in
arranging an underwriting of a private placement debenture. The rights granted
to Mr. Loehr were vested upon the successful close of the private placement
debenture and were retroactive to May 11, 1995. With respect to each issuance by
the Company of equity securities, Mr. Loehr shall have the right to receive or
acquire equity securities in a quantity which would enable him to acquire ten
percent (10%) of the aggregate equity securities issued, sold, or granted by the
Company in connection with the issuance at the same price and under the same
conditions, except that Mr. Loehr shall be entitled to exercise his rights to
acquire such securities for a period of ten years following issuance. The rights
were terminated as to future issuances by agreement on August 30, 1996. Under
the agreement, Mr. Loehr may acquire warrants to purchase 170,000 shares of
Common Stock at an exercise price of $3.00 per share. The warrants were issued
on December 1, 1996.
4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of September 15, 1997,
regarding the beneficial ownership of Common Stock by each person known by the
Company to own 5% or more of the outstanding Common Stock, each director of the
Company, certain named executive officers, and the directors and executive
officers of the Company as a group. The persons named in the table have sole
voting and investment power with respect to all shares of Common Stock owned by
them, unless otherwise noted.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership Percent
<S> <C> <C>
John E. Loehr 460,402(1)(2) 21.2%
Marshall A. Smith III 321,337(2)(3) 15.5%
Jim C. Bigham 157,750(2)(4) 8.3%
A. Van Nguyen 25,000(5) 1.4%
Ned W. Fowler 45,833(6) 2.6%
Charles D. Ledford 0.00 0.00
Henri M. Nevels 11,430(7) *
James L. Crowson 0.00 0.00
All current directors and officers 1,033,117(8) 38.3%
as a group (8 persons)
Senior Drilling Company 230,482(9)(10) 12.0%
HS Energy Private Rig 216,667(11)(12) 11.0%
Partnership 1981, Ltd.
Anaconda Opportunity Fund, 305,988(13)(14)(15) 14.9%
L.P. c/o Anaconda Capital
American High Growth 152,994(13)(16)(17) 8.0%
Retirement Trust
Donald & Co. Securities, Inc. 150,625(18)(19) 8.1%
Carlin Equities Corporation 191,242(13)(20)(21) 9.8%
Delaware Charter Guaranty 89,884(13)(22)(23) 4.9%
and Trust, FBO B. Leon Skinner
Madisonville Partnership, Ltd. 200,000(24)(25) 10.2%
Renier Nevels 530,000(26)(27) 23.4%
NR Atticus, Ltd. 168,293(13)(28)(29) 8.8%
SPAGS N.V, 206,000(30)(31) 10.5%
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership Percent
<S> <C> <C>
VJW, Inc. 350,000(32)(33) 16.6%
Internet Financial Relations 100,500(34)(35) 5.5%
</TABLE>
* Less than 1%
1 Includes 388,158 shares subject to presently
exercisable warrants and options and 20,494 shares held
directly, 30,000 shares subject to presently
exercisable warrants and 19,750 shares held by ST
Advisory Corporation, and 2,000 shares held by the
Joanna Drake Loehr Trust. Mr. Loehr is president and
sole shareholder of ST Advisory Corporation.
2 Shareholder's address is 16800 Dallas Parkway, Suite
250, Dallas, Texas 75248.
3 Includes 317,588 shares subject to presently
exercisable warrants and options and 333 shares owned
directly, 83 shares owned by Joyce Smith, the wife of
Mr. Smith, and 3,333 shares owned by Marshall A. Smith
IV and Mark Shelton, sons of Mr. Smith. Mr. Smith III
disclaims beneficial ownership of the shares of and
warrants owned by Senior Drilling Company, which is
controlled by Mitchell D. Smith, the brother of Mr.
Smith III.
4 Includes 147,800 shares subject to presently
exercisable warrants and options, and 9,950 shares held
directly.
5 Includes 25,000 shares subject to presently exercisable
options.
6 Includes 20,200 shares subject to presently exercisable
warrants and 25,633 shares held directly.
7 Includes 11,430 shares subject to presently exercisable
warrants. Mr. Nevels disclaims beneficial ownership of
the shares and warrants owned by his father, Renier
Nevels.
8 Includes 940,176 shares subject to presently
exercisable options and 92,941 shares held directly or
indirectly.
9 Includes 166,754 shares subject to presently
exercisable warrants and 63,728 shares held directly.
Senior Drilling Company is controlled by Mitchell D.
Smith, the brother of the president of the Company.
10 Shareholder's address is 8126 One Calais Avenue, Suite
2-C, Baton Rouge, Louisiana 70809.
11 Includes 200,000 shares subject to presently
exercisable warrants and 16,667 shares held directly.
The general partner of HS Energy Private Rig
Partnership 1981, Ltd. is HS Energy, Inc. whose
president is Ray Holifield.
12 Shareholder's address is 6309 N. O'Connor Blvd., Bldg.
II, Suite 210, Irving, Texas 75039.
13 The number of shares issuable upon conversion of
Preferred Stock is based upon a price per share of
Common Stock of $1.77 which is 70% of the average
closing bid price of the Common Stock for the fifteen
trading days ended September 15, 1997.
14 Includes 225,988 shares issuable upon conversion of
immediately convertible Preferred Stock and 80,000
shares subject to presently exercisable warrants.
15 Shareholder's address is 730 Fifth Avenue, 15th Floor,
New York, New York 10019.
16 Includes 112,994 shares issuable upon conversion of
immediately convertible Preferred Stock and 40,000
shares subject to presently exercisable warrants.
17 Shareholder's address is 725 Fifth Avenue, 24th Floor,
New York, New York 10022.
18 Includes 45,625 shares and 105,000 shares subject to
presently exercisable options.
19 Shareholder's address is 65 East 55th Avenue, 12th
Floor, New York, New York 10022.
6
<PAGE>
20 Includes 141,242 shares issuable upon conversion of
immediately convertible Preferred Stock and 50,000
shares subject to presently exercisable warrants.
21 Shareholder's address 250 Park Avenue, 12th Floor, New
York, New York 100177.
22 Includes 66,384 shares issuable upon conversion of
immediately convertible Preferred Stock and 23,500
shares subject to presently exercisable warrants.
23 Shareholder's address is P. O. Box 8963, Wilmington,
Delaware 19899-8963.
24 Includes 200,000 shares subject to presently
exercisable warrants.
25 Shareholder's address is 3838 Oak Lawn Avenue, Suite
1220, Dallas, Texas 75219.
26 Includes 15,000 shares, 200,000 shares subject to
immediately convertible Preferred Stock at a price per
share of Common Stock of $5.00, and 315,000 shares
subject to presently exercisable warrants.
27 Shareholder's address is P. O. Box 1, 3680 Maaseik,
Belgium.
28 Includes 124,293 shares issuable upon conversion of
immediately convertible Preferred Stock and 44,000
shares subject to presently exercisable warrants.
29 Shareholder's address is c/o Atticus Capital, 153 East
53rd St., 43rd Floor, New York, New York 10022.
30 Includes 206,000 shares subject to presently
exercisable warrants.
31 Shareholder's address is P. O. Box 744, Curacao,
Netherlands, Antilles.
32 Includes 250,000 shares subject to presently
exercisable options.
33 Shareholder's address 1111 Bagby, Suite 2420, Houston,
Texas 77702.
34 Includes 17,000 shares and 83,500 shares subject to
presently exercisable warrants.
35 Shareholder's address is 575 South Anaheim Hills Rd.,
Anaheim, California 92807.
7
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information regarding compensation paid to
the Company's executive officers whose total annual compensation is $100,000 or
more during each of the last three years.
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
Year Other Annual All Other
Name and Principal Position End Salary($) Bonus($) Compensation($) Options(#) Compensation($)
<S> <C> <C> <C> <C> <C> <C>
Marshall A. Smith 1996 100,000 - - - 158,400
President and Chief 1995 100,000 - - - -
Executive Officer 1994 100,000 - - 30,000 -
John E. Loehr 1996 - - - - 158,400
Chief Financial Officer
Jim C. Bigham 1996 66,000 - - - 66,650
Executive Vice President 1995 60,000 - - - -
1994 60,000 - - 15,000 -
</TABLE>
All Other Compensation includes warrants issued to Mr. Smith and Mr. Loehr
each to acquire 200,000 shares at an exercise price of $3.00 per share, 50,000
shares at an exercise price of $5.00 per share, and 20,000 shares at an exercise
price of $5.75 per share. Mr. Bigham was issued warrants to acquire 2,750 shares
at an exercise price of $.50, 500 shares at an exercise price of $1.75, 100,000
shares at an exercise price of $3.00 and 2,750 at an exercise price of $5.00.
The value of warrants issued was derived utilizing the Black-Sholes pricing
model.
Option Grants During 1996
There were no options granted to the named executive officers during the
year ended December 31, 1996.
<TABLE>
Option Exercises During 1996 and
Year End Option Values (1)
<CAPTION>
Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Options Options
at FY-End (#) at FY-End ($)
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
<S> <C> <C>
Marshall A. Smith 14,000(2) -0-
-0- -0-
Jim C. Bigham 15,000 -0-
-0- -0-
(1) Since no options were exercised by the above-named
executives in 1996, no shares were acquired or value
realized upon the exercise of options of such person in
the last fiscal year.
(2) Mr. Smith transferred 16,000 unexercised options to Mr.
Loehr during 1995.
8
<PAGE>
Stock Performance Chart
The following chart compares the yearly percentage change in the cumulative
total shareholder return on the Company's Common Stock during the five years
ended December 31, 1995 with the cumulative total return on The Nasdaq Stock
Market Index and The Nasdaq Non-Financial Stock Index. The comparison assumes
$100 was invested on December 31, 1990 in the Company's Common Stock and in each
of the foregoing indices and assumes reinvestment of dividends. The Company paid
no dividends during such five- year period.
COMPARISON OF FIVE-YEAR CUMULATIVE
TOTAL RETURN
AMONG COMPANY, NASDAQ INDEX & NASDAQ NON-FINANCIAL STOCK INDEX
<S> <C> <C> <C> <C> <C> <C>
NASDAQ Index 100.00 116.378 133.595 130.587 184.784 227.164
Non Financial 100.00 109.390 126.300 121.440 169.240 205.360
GulfWest 100.00 191.666 91.666 91.666 74.990 100.000
</TABLE>
Report of the Compensation Committee of the
Board on Executive Compensation
The Board approved an annual salary for the CEO of $100,000 on July 1, 1991
and it remained at that level through 1996. The salary for the CEO was not set
pursuant to a specific formula but was the result of negotiations between the
Board and the CEO. Effective April 1, 1997, the Compensation Committee
recommended and the Board approved increasing the annual salary of the CEO to
$125,000.
On April 16, 1993, the Board established the Compensation Committee and
authorized it to develop and administer an executive compensation system which
will enable the Company to attract and retain qualified executives. Compensation
for the CEO and other executive officers is determined by the Compensation
Committee which functions under the philosophy that compensation of executive
officers, specifically including that of the CEO, should be directly and
materially linked to the Company's performance.
9
<PAGE>
On May 11, 1995, the Compensation Committee recommended and the Board
granted to Mr. Marshall A. Smith III, president and CEO, the right to acquire
equity securities of the Company as long-term compensation for his past
performance to the Company and for efforts in arranging a successful
underwriting of the Company's private placement debenture. The rights granted to
Mr. Smith are for 10 years, were vested upon the successful close of the private
placement debenture and were retroactive to May 11, 1995. With respect to each
issuance by the Company of equity securities, Mr. Smith shall have the right to
acquire ten percent (10%) of the aggregate equity securities issued, sold, or
granted by the Company in connection with the issuance at the same price and
under the same conditions, except that Mr. Smith shall be entitled to exercise
his rights to acquire such securities for a period of 10 years following
issuance. The rights were terminated as to future issuances by agreement on
August 30, 1996. Under the agreement Mr. Smith may acquire warrants to purchase
170,000 shares of Common Stock at an exercise price of $3.00 per share. The
warrants were issued on December 1, 1996.
On May 7, 1996, the Compensation Committee recommended entering into an
Employment Agreement with John E. Loehr, effective June 1, 1996, for a period of
five years. Mr. Loehr served as a consultant until he assumed the duties of
Chief Financial Officer, as of November 22, 1996.
On September 9, 1997, the Compensation Committee recommended entering into
Employment Agreements with Mr. Marshall A. Smith III, president and CEO, Mr. Jim
C. Bigham, executive vice president and secretary, and Mr. Richard L. Creel,
controller, for a period of three years. (See: "Employment and Change of Control
Agreements".)
Effective December 1, 1996, the Compensation Committee approved the
issuance of warrants to Mr. Marshall A. Smith III, president and CEO, and John
E. Loehr, Chairman of the Board and Chief Financial Officer, each to acquire
30,000 shares at an exercise price of $3.00, 50,000 shares at an exercise price
of $5.00 and 20,000 shares at an exercise price of $5.75. The committee also
approved the issuance of warrants to Mr. Jim C. Bigham, executive vice president
and secretary, to acquire 100,000 shares at an exercise price of $3.00. These
warrants were issued as compensation for past services to the Company.
This report is submitted by the members of the Compensation Committee:
Compensation Committee:
Ned W. Fowler, Chairman
John E. Loehr
James L. Crowson
Employment and Change of Control Agreements
On May 7, 1996, the Board approved entering into an Employment and Change
of Control Agreement with John E. Loehr, effective June 1, 1996, for a period of
five years. Mr. Loehr served as a consultant until he assumed the duties of
Chief Financial Officer, as of November 22, 1996. Under the Agreement, Mr. Loehr
will receive a base annual salary of $150,000, increasing a minimum of 15%
annually, with deferred compensation in the form of cash or stock as determined
by the Board. Any common stock received by Mr. Loehr under the Agreement shall
be based at 60% of the average bid price for the Company's common stock for the
20 days preceding issuance. In the event of a change of control, Mr. Loehr will
have the option to continue as an employee of the Company under the terms of the
agreement or receive a lump-sum cash severance payment equal to 300% of his
annual base salary for the year following the change of control.
10
<PAGE>
Effective September 9, 1997, the Company entered into Employment Agreements
with Mr. Marshall A. Smith III, president and CEO, Mr. Jim C. Bigham, executive
vice president and secretary, and Mr. Richard L. Creel, controller, for a period
of three years. Under the Agreements, Mr. Smith will receive a base annual
salary of $125,000, Mr. Bigham $75,000 and Mr. Creel $50,000, all increasing a
minimum of 15% annually. In the event of a change of control, Mr. Smith, Mr.
Bigham and Mr. Creel will have the option to continue as employees of the
Company under the terms of the agreement or receive a lump-sum cash severance
payment equal to 300% of their annual base salary for the year following the
change of control.
A "change of control" is defined in the above Agreements as: (i) an
acquisition (other than from the Company) by an individual, entity or a group
(excluding the Company, its subsidiaries, a related employee benefit plan or a
corporation the voting stock of which is beneficially owned following such
acquisition 50% or more by the Company's stockholders in substantially the same
proportions as their holdings in the Company prior to such acquisition) of
beneficial ownership of 20% or more of the Company's voting stock; (ii) a change
in a majority of the Board (excluding any persons approved by a vote of at least
a majority of the incumbent Board other than in connection with a proxy
contest); (iii) the approval by the stockholders of a reorganization, merger or
consolidation (other than a reorganization, merger or consolidation in which all
or substantially all of the stockholders of the Company receive 50% or more of
the voting stock of the surviving company); or (iv) a complete liquidation or
dissolution of the Company or the sale of all, or substantially all, of its
assets.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 1, 1992, Ray Holifield and Associates, Inc. executed an
unsecured promissory note to the Company for $118,645 with interest at 10% per
annum, due on October 1, 1993. At December 31, 1993, the note was still
outstanding. During 1994, the Company entered into an agreement with the
Holifield Trust in which Holifield will make payments on the past due note from
future oil and gas revenue. During 1995, $10,995 of interest payments were
received. No principal payments were received during 1996 or 1995. At December
31, 1996 the unsecured promissory note has been partially reserved. Ray
Holifield is a general partner of HS Energy Private Rig Partnership 1981, Ltd.,
a beneficial owner of more than 5% of the Company's common stock.
On December 1, 1992, Parkway Petroleum Company, a Ray Holifield related
company, executed an unsecured promissory note to the Company for $54,616 with
interest at 10% per annum, due on October 1, 1993. The note was issued for
amounts due from contract drilling services provided by the Company. At December
31, 1993, the note was still outstanding. During 1994, the Company entered into
an agreement with the Holifield Trust in which Holifield will make payments on
the past due note from future oil and gas revenue. During 1995, $6,250 of
interest payments were received. No principal payments were received during 1994
or 1995. At December 31, 1996, the unsecured promissory note has been partially
reserved.
On January 10, 1994, the Company entered into a consulting agreement with
Williams Southwest Drilling Co., Inc. ("Williams") whereby the Company would
provide management and accounting services for $25,000 per month for a period of
one year. The Company received $97,140 in consulting fee payments during 1994.
Effective January 1, 1995, the Company received a promissory note from Williams
for consulting fees of $202,860, bearing interest at the rate of 10% per annum
and payable in quarterly installments of principal and interest. During 1995 and
1996, the Company received no payments on this note. Subsequent to the October
1, 1993 sale of GulfWest Drilling Company to Williams, Mr. Marshall A. Smith III
and Mr. John E. Loehr, both officers and directors of the Company, were elected
directors of Williams.
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It is the intention of Mr. Smith and Mr. Loehr to serve as directors of
Williams as long as there is an outstanding indebtedness of Williams to the
Company.
On March 31, 1994, the Company extended a line of credit to Wilco Drilling
and Exploration, Inc. ("Wilco") in the amount of $100,000 bearing interest at
10% per annum. The line of credit was secured by the borrower's equity in a
lease/purchase agreement on drilling equipment and was further secured by a
guaranty of 70% of the net cash flow from its interests in oil and gas
properties. The principal was paid in full on May 26, 1995. During 1996, the
Company purchased oil and gas properties from Wilco for $71,000 and incurred
$200,000 in commissions to Wilco in connection with the purchase of $10.5
million of oil properties in West Texas. Star-Tex Trading Company ("Star-Tex")
and MAS Partners, Inc. ("MAS") are major shareholders of Wilco. Mr. John E.
Loehr, an officer and director of the Company and a director of Wilco, is
vice-president of Star-Tex. Mr. Marshall A. Smith, Jr., president of MAS, is the
father of the president of the Company. Mr. Marshall A. Smith III, president and
director of the Company, is also a director of Wilco.
On May 31, 1994, the Company executed a $40,000 note bearing interest at
the rate of 10% per annum, payable to Star-Tex, a related entity owned by a
shareholder of the Company. This note is now a subordinated promissory note and
the principal and interest is due on April 23, 1998. Mr. John E. Loehr, an
officer and director of the Company, is vice-president of Star-Tex.
On January 17, 1995, the Company borrowed $20,000 from Marshall A. Smith,
Sr., grandfather of the president of the Company, in the form of a note payable
bearing interest at a rate of 10% and was originally due one year from the date
of the note. This note is now a subordinated promissory note and the principal
and interest is due on April 23, 1998.
On February 6, 1995, the Company borrowed $50,000 from ST Advisory
Corporation ("ST") in the form of a note bearing interest at 10% per annum and
was originally due one year from the date of the note. This note is now a
subordinated promissory note and the principal and interest is due on April 23,
1998. Additionally, the Company has accrued consulting fees to ST totaling
$12,500 for services performed in connection with economic evaluations and
nonrecourse financing arrangements for future acquisitions of oil and gas
properties and other corporate development opportunities. Mr. John E. Loehr, an
officer and director of the Company, is president and sole shareholder of ST
Advisory Corporation.
During 1995, the Company issued 13,100 shares of common stock and warrants
to purchase 48,000 shares of common stock at a price of $5.00 per share in
connection with notes payable to other related parties. On March 27, 1996, these
parties agreed to extend payment of principal and interest on their outstanding
notes to April 1, 1997. These notes are now subordinated promissory notes and
the principal and interest is due on April 23, 1998.
On March 27, 1996, the Company entered into agreements with two of its
officers to convert deferred compensation in the amount of $47,340 to notes
payable due April 1, 1997. These notes are now subordinated promissory notes and
the principal and interest is due on April 23, 1998. As of December 31, 1996,
accrued compensation to one officer totaled $10,500.
At a Board meeting on May 7, 1996, a majority of the disinterested
directors approved a resolution whereby the Company may grant loans, if
requested, to directors (other than disinterested directors), officers and
employees to exercise warrants and/or options beneficially owned.
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During 1996, the Company paid consulting fees to Gulf Coast Exploration,
Inc. ("GCX") in the amount of $40,445 for services rendered in the
identification, evaluation, acquisition and operation of Company' oil and gas
properties. The president of GCX is Marshall A. Smith, Jr., the father of
Company's president.
SECTION 16 REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission (the "SEC"). Such persons are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it with
respect to 1995, or written representations from certain reporting persons, the
Company believes that its officers, directors and persons who own more than 10%
of a registered class of the Company's equity securities have complied with all
applicable filing requirements, with the exception of Charles D. Ledford, a
director, who was late filing his Form 3.
INDEPENDENT AUDITORS
The Board has engaged Weaver & Tidwell, L.L.P. as independent auditors to
examine the Company's accounts.
SHAREHOLDERS' PROPOSALS
Shareholders may submit proposals on matters appropriate for shareholder
action at subsequent annual meetings of the Company consistent with Rule 14a-8
promulgated under the Securities Exchange Act of 1934, as amended. For such
proposals to be considered in the Proxy Statement and Proxy relating to the 1998
Annual Meeting of Shareholders, such proposals must be received by the Company
not later than December 31, 1997. Such proposals should be directed to GulfWest
Oil Company, 2644 Sherwood Forest Plaza, Suite 229, Baton Rouge, Louisiana
70816, Attn: Secretary.
OTHER BUSINESS
The Board knows of no matter other than those described herein that will be
presented for consideration at the Meeting. However, should any other matters
properly come before the Meeting or any adjournments thereof, it is the
intention of the persons named in the accompanying Proxy to vote in accordance
with their best judgment in the interest of the Company.
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MISCELLANEOUS
All costs incurred in the solicitation of Proxies will be borne by the
Company. In addition to solicitation by mail, the officers and employees of the
Company may solicit Proxies by telephone, telegraph or personally, without
additional compensation. The Company may also make arrangements with brokerage
houses and other custodians, nominees and fiduciaries for the forwarding of
solicitation materials to the beneficial owners of shares of Common Stock held
of record by such persons, and the Company may reimburse such brokerage houses
and other custodians, nominees and fiduciaries for their out-of-pocket expenses
incurred in connection therewith. The Company has not engaged a proxy solicitor.
The Annual Report to Shareholders of the Company, including financial
statements for the year ended December 31, 1996, accompanies this Proxy
Statement. The Annual Report is not to be deemed part of this Proxy Statement.
By Order of the Board
\s\Jim C. Bigham
------------------------------------------
Jim C. Bigham
Secretary
Baton Rouge, Louisiana
September 15, 1997
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GULFWEST OIL COMPANY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD OCTOBER 21, 1997
The undersigned hereby appoints Jim C. Bigham proxy of the undersigned,
with power of substitution, to vote all shares of Common Stock of the Company
held by the undersigned which are entitled to be voted at the Annual Meeting of
Shareholders to be held October 21, 1997, and any adjournment(s) thereof as
effectively as the undersigned could do if personally present.
(1) To elect the following persons as directors, each to
serve until the next Annual Meeting of Shareholders,
and until his successor is duly elected and qualified:
John E. Loehr Henri M. Nevels
Marshall A. Smith III Charles D. Ledford
Ned W. Fowler James L. Crowson
Jim C. Bigham
For all persons listed (except as marked to the
contrary below.) Withhold authority to vote for all nominees
Instructions: To withhold authority to vote for any individual nominees(s),
write the name(s) of the Nominee(s) on the line below:
2) In the discretion of the proxy, on any other matter
that may properly come before the meeting or any
adjournments thereof.
The shares represented by this proxy will be voted as directed. WHERE NO
DIRECTION IS GIVEN, THE SHARES WILL BE VOTED FOR MATTERS (1) and (2) above.
The undersigned hereby revokes any proxy or proxies heretofore given to
vote or act with respect to the Common Stock of the Company and hereby ratifies
and confirms all that the proxy, or his substitutes, or any of them, may
lawfully do by virtue hereof.
Please sign below, date, and return promptly in the enclosed envelope.
Dated:_______________________, 1997
IMPORTANT: Please date this proxy and sign your name exactly
as it appears to the left. When signing on behalf of a
corporation, partnership, estate, trust or in other
representative capacity, please sign name and title.
Where there is more than one owner, each owner must
sign.
