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 June 12, 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 Thursday, June 12, 1997 at 6:00
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 May 3, 1996 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
Jim C. Bigham
Secretary
Baton Rouge, Louisiana
May 12, 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 June 12, 1997
This Proxy Statement is being first mailed on May 12, 1997 to shareholders
of GulfWest Oil Company (the "Company") by the Board of Directors 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 6:00 p.m., local time, on Thursday, June 12, 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 Monday, April 20, 1997 (the "Record Date"),
at which time the Company had issued and outstanding 1,683,654 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 Directors of the Company presently consists of seven
directors, five elected and two appointed, all of whom have been nominated for
re-election or election. On February 15, 1996, the Board of Directors approved
eventually increasing the number of board members to nine. Mr. James L. Crowson
has been nominated by the Board of Directors to become the eighth director. 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 of
Directors 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
Alan J. Ostrowe(2)(3) 56 Director 1990
Charles D. Ledford 63 Director 1996
Henri M. Nevels 32 Director 1996
James L. Crowson 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.
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 of directors. 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
2
<PAGE>
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.
Alan J. Ostrowe, M.D., F.A.C.A. is a physician practicing in Baton Rouge,
Louisiana. He is on the Board of Directors and is currently the Medical Director
of Amedisys Mobile Health Case Services, Inc. He is also president and a
director of General Anesthesia Services, Inc., a firm which he and two
associates founded in 1987 for the purpose of supplying medical anesthesiology
services in southern Mississippi and Louisiana. He is also vice-president of
Nursing Enterprises, Inc., a position he has held since 1988.
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 has been nominated to become the eighth director. 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 of Directors
The business of the Company is managed under the direction of the Board of
Directors. 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 of Directors met eight times during
the calendar year ended December 31, 1996 ("1996").
The Board of Directors 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.
3
<PAGE>
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 of Directors in the areas of financial planning, strategies and
business alternatives. The Finance and Budget Committee is comprised of Dr. Alan
J. Ostrowe (Chairman), Mr. Ned W. Fowler, Mr. John E. Loehr 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
Dr. Alan J. Ostrowe. 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 of Directors 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 of Directors 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.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of April 20, 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 428,402(1) 20.5%
16800 Dallas Parkway
Suite 210
Dallas, TX 75248
4
<PAGE>
Marshall A. Smith III 321,837(2) 16.0%
2644 Sherwood Forest Plaza
Suite 229
Baton Rouge, LA 70816
Jim C. Bigham 155,000(3) 8.4%
1051 Hatchell Lane
Denham Springs, LA 70726
A. Van Nguyen 15,000(4) *
2222 Via Del Norte
Carrollton, TX 75006
Ned W. Fowler 45,833(5) 2.7%
360 Masterson
Beaumont, TX 77707
Alan J. Ostrowe, M.D. 27,415(6) 1.6%
3029 S. Sherwood Forest
Suite 310
Baton Rouge, LA 70816
Charles D. Ledford 0 0
20001 S. E. Hawthorne Road
Hawthorne, FL 32640
Henri M. Nevels 11,430(7) *
5928 Chalet Court #4113
Dallas, TX 75205
All current directors and officers 1,004,917(8) 38.5%
as a group (8 persons)
Senior Drilling Company 230,482(9) 12.4%
8126 One Calais Avenue
Suite 2-C
Baton Rouge, LA 70809
HS Energy Private Rig 216,667(10) 11.4%
Partnership 1981, Ltd.
6309 N. O'Connor Blvd.
Bldg. II, Suite 210
Irving, TX 75039
Anaconda Opportunity Fund, 302,222(11)(12) 15.1%
L.P. c/o Anaconda Capital
730 Fifth Avenue, 15th Floor
New York, NY 10019
American High Growth 161,111(11)(13) 8.7%
Retirement Trust
725 Fifth Avenue, 24th Floor
New York, NY 10022
Donald & Co. Securities, Inc. 150,625(14) 8.4%
65 East 55th Avenue, 12th Floor
New York, NY 10022
5
<PAGE>
Carlin Equities Corporation 161,111(11)(15) 8.7%
250 Park Avenue, 12th Floor
New York, NY 10177
Delaware Charter Guaranty 88,778(11)(16) 5.0%
and Trust
Trustee: FBO B. Leon Skinner
P. O. Box 8963
Wilmington, DE 19899-8963
ECO2, Inc. 202,954(17) 11.6%
20005 S. E. Hawthorne Road
Hawthorne, FL 32640
Madisonville Partnership, Ltd. 200,000(18) 10.5%
3838 Oak Lawn Avenue
Suite 1220
Dallas, TX 75219
Renier Nevels 505,000(19) 23.1%
P. O. Box 1
3680 Maaseik, Belgium
NR Atticus, Ltd. 166,222(11)(20) 8.9%
Atticus Capital
153 East 53rd St., 43rd. Floor
New York, NY 10022
SPAGS N.V, 246,000(21) 12.7%
P. O. Box 744
Curacao
Netherland, Antilles
VJW, Inc. 250,000(22) 12.8%
1111 Bagby, Suite 2420
Houston, TX 77702
</TABLE>
* Less than 1%
1 Includes 428,402 shares subject to presently exercisable warrants
and options and 20,494 shares held directly, 30,000 shares
subject to presently exercisable warrants and 17,750 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 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 3,833 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.
3 Includes 147,800 shares subject to presently exercisable warrants
and options, and 7,200 shares held directly.
4 Includes 15,000 shares subject to presently exercisable options.
6
<PAGE>
5 Includes 20,200 shares subject to presently exercisable warrants
and 25,633 shares held directly.
6 Includes 11,800 shares subject to presently exercisable warrants
and 15,615 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 911,976 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 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.
11 The number of shares issuable upon conversion of Preferred Stock
is based upon a price per share of Common Stock of $1.40 which is
70% of the average closing bid price of the Common Stock for the
fifteen trading days ended April 20, 1997.
12 Includes 222,222 shares issuable upon conversion of immediately
convertible Preferred Stock and 80,000 shares subject to
presently exercisable warrants.
13 Includes 111,111 shares issuable upon conversion of immediately
convertible Preferred Stock and 50,000 shares subject to
presently exercisable warrants.
14 Includes 45,625 shares and 105,000 shares subject to presently
exercisable options.
15 Includes 111,111 shares issuable upon conversion of immediately
convertible Preferred Stock and 50,000 shares subject to
presently exercisable warrants.
16 Includes 65,278 shares issuable upon conversion of immediately
convertible Preferred Stock and 23,500 shares subject to
presently exercisable warrants.
17 Includes 152,954 shares and 50,000 shares subject to presently
exercisable warrants.
18 Includes 200,000 shares subject to presently exercisable
warrants.
19 Includes 15,000 shares and 200,000 shares subject to immediately
convertible Preferred Stock at a price per share of Common Stock
of $5.00.
20 Includes 122,222 shares issuable upon conversion of immediately
convertible Preferred Stock and 44,000 shares subject to
presently exercisable warrants.
21 Includes 246,000 shares subject to presently exercisable
warrants.
22 Includes 250,000 shares subject to presently exercisable options.
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 - - - 62,000
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 100,000
shares at an exercise price of $3.00. The value of warrants issued was derived
utilizing the Black-Sholes pricing model.
Option Grants During 1996
There were no options granted to the named executive officers during the
year ended December 31, 1996.
<TABLE>
Option Exercises During 1996 and
Year End Option Values (1)
<CAPTION>
Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Options Options
at FY-End (#) at FY-End ($)
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
<S> <C> <C>
Marshall A. Smith 14,000(2) -0-
-0- -0-
Jim C. Bigham 15,000 -0-
</TABLE>
-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
<TABLE>
<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 of Directors on Executive Compensation
The Board of Directors approved an annual salary for the CEO of $100,000 on
July 1, 1991 and it has 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 of Directors and the CEO.
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.
On May 11, 1995, the Compensation Committee recommended and the Board of
Directors 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
5 years. Mr. Loehr served as a consultant until he assumed the duties of Chief
Financial Officer, as of November 22, 1996. (See: "Employment and Change of
Control Agreements".)
9
<PAGE>
Effective December 1, 1996, the Compensation Committee approved the
issuance of warrants to Mr. Marshall A. Smith III, President, 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 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
Alan J. Ostrowe
Employment and Change of Control Agreements
Effective July 1, 1995, the Company entered into employment agreements with
Mr. Marshall A. Smith III, the president and CEO of the Company, and Mr. Jim C.
Bigham, secretary of the Company. The agreements provide for the following while
the officers are employed during the three-year employment period after a change
of control; (i) a monthly base salary at least equal to the officer's highest
monthly salary earned in the twelve-month period preceding the change of
control, plus salary increases commensurate with those of peer executives of the
Company; (ii) an annual bonus at least equal to the lesser of the average annual
bonus for the three years preceding the change of control or 100% of current
annual base salary; and (iii) pension, welfare and fringe benefits, perquisites,
and a title and level of responsibility at least equal to those in effect before
the change of control. The agreements also provide that the officers would be
entitled to severance benefits if their employment terminates under certain
circumstances during the employment period, including a lump sum cash severance
payment equal to 250% of their annual base salaries.
On May 7, 1996, the Board of Directors approved entering into an Employment
and Change of Control Agreement with John E. Loehr, effective June 1, 1996, for
a period of 5 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 of Directors. 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.
A "change of control" is defined in the 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 of Directors (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.
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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. 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.
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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 of Directors 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.
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's 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 one Form 3 reporting two transactions.
INDEPENDENT AUDITORS
The Board of Directors has engaged Weaver & Tidwell, L.L.P. as independent
auditors to examine the Company's accounts.
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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 of Directors 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.
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 of Directors
Jim C. Bigham
Secretary
Baton Rouge, Louisiana
May 12, 1997
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GULFWEST OIL COMPANY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JUNE 12, 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 June 12, 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 Jim C. Bigham Ned W. Fowler
Marshall A. Smith III Alan J. Ostrowe Charles D. Ledford
Henri M. Nevels James L. Crowson
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.
