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] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
<PAGE>
GULFWEST OIL COMPANY
16800 Dallas Parkway
Suite 250
Dallas, Texas 75248
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 28, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of
GulfWest Oil Company (the "Company") will be held at The University Club, 13350
Dallas Parkway, Suite 4000, Dallas, Texas 75240, on Thursday, May 28, 1998 at
11:00 a.m., local time, for the following purposes:
(1) To elect eight members of the Board of Directors, which presently
consists of eight directors, for the term of one year or until the next Annual
Meeting of Shareholders.
(2) To approve the amendment and restatement of the Company's 1994 Stock
Option and Compensation Plan.
(3) To transact such other business as may properly come before the Meeting
or any adjournments thereof.
The close of business on April 24, 1998 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 16800 Dallas
Parkway, Suite 250, Dallas, Texas 75248 or 2644 Sherwood Forest Plaza, Suite
229, Baton Rouge, Louisiana 70816.
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
Dallas, Texas
April 24, 1998
<PAGE>
GULFWEST OIL COMPANY
16800 Dallas Parkway
Suite 250
Dallas, Texas 75248
PROXY STATEMENT
For
ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 28, 1998
This Proxy Statement is being first mailed on April 24, 1998 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 University Club, 13350 Dallas
Parkway, Suite 4000, Dallas, Texas 75240, at 11:00 a.m., local time, on
Thursday, May 28, 1998, 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, (ii) FOR the amendment and restatement of the
Company's 1994 Stock Option and Compensation Plan and (iii) 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, 16800 Dallas Parkway,
Suite 250, Dallas, Texas 75248, 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, April 24, 1998 (the "Record Date"),
at which time the Company had issued and outstanding 1,759,185 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
In order to be validly approved by the shareholders, each proposal
described herein must be approved by the affirmative vote of a majority of the
shares represented and voting at the meeting at which a quorum is present. The
presence at the Annual Meeting, in person or by Proxy, of the holders of a
one-third of the issued and outstanding shares of Common Stock is necessary to
constitute a quorum to transact business. Each share represented at the Annual
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.
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Board presently consists of eight directors, all of whom have been
nominated to serve until the next Annual Meeting of Shareholders and until their
successors have been 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.
THE BOARD RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE NOMINEES.
<TABLE>
<CAPTION>
Year First
Elected
Director
Name Age Position or Officer
<S> <C> <C> <C>
John E. Loehr(1)(2)(3) 52 Chairman of the Board, 1992
Chief Financial Officer and
Director
Marshall A. Smith III(1)(2) 50 President, Chief Executive 1989
Officer and Director
Jim C. Bigham 62 Executive Vice President, 1991
Secretary and Director
Ned W. Fowler(2)(3) 70 Director 1990
Henri M. Nevels 33 Director 1996
James L. Crowson(3)(4) 59 Director 1997
Anthony P. Towell(4) 66 Director 1997
J. Virgil Waggoner(4) 70 Director 1997
(1) Member of the Audit Committee.
(2) Member of the Budget Committee.
(3) Member of the Compensation Committee.
(4) Member of the Benefits 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.
Henri M. 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 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.
Anthony P. Towell is a director of a number of public companies, both in
the United Kingdom and the United States, in the safety, environmental and
computer network industries. Mr. Towell has been in the petroleum business since
1957 and has held executive positions with various public oil and gas companies
including the Royal Dutch Shell group companies and Pacific Resources, Inc.
J. Virgil Waggoner's career in the petrochemical industry began in 1950 and
included senior management positions with Monsanto Company and El Paso Products
Company, the petrochemical and plastics unit of El Paso Company. Mr. Waggoner
served as president and chief executive officer of Sterling Chemicals, Inc. from
the firm's inception in 1986 until its sale and his retirement in 1996. Mr.
Waggoner continues to serve as non-executive vice chairman of the Board of
Directors of Sterling Chemicals, Inc. Mr. Waggoner is on the Board of Directors
of Kirby Corporation and is an advisory board director of First Commercial Bank
of Little Rock, Arkansas. He is currently president and chief executive officer
of JVW Investments, Ltd., a private company.
3
<PAGE>
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, 1997 ("1997").
The Board has four standing committees: the Audit Committee, the Finance
and Budget Committee, the Compensation Committee and the Benefits Committee. The
functions of these committees, their current members, and the number of meetings
held during 1997 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 1997.
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 met twice in 1997.
The function of the Compensation Committee is to fix the annual salaries
and other compensation for the officers and key employees of the Company. 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 1997.
The Benefits Committee was established on April 15, 1998 to make
recommendations to the Board concerning benefit programs offered by the Company
and to administer the Company's Stock Option and Compensation Plan. The Benefits
committee is comprised of Mr. J. Virgil Waggoner (Chairman), Mr. Anthony P.
Towell and Mr. James L. Crowson.
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
In the past, the Company has not paid directors for their Board activities,
except for travel expenses incurred by certain directors. Pending shareholder
approval of Proposal 2 which follows, payment to directors will be made pursuant
to the terms of the Company's Stock Option and Compensation Plan.
4
<PAGE>
PROPOSAL 2
AMENDMENT AND RESTATEMENT OF THE COMPANY'S
1994 STOCK OPTION AND COMPENSATION PLAN
The shareholders are requested at the Annual Meeting to approve the
amendment and restatement of the Company's 1994 Stock Option and Compensation
Plan, attached hereto as Exhibit A and incorporated herein (the "Plan"), with an
effective date of April 15, 1998 (the "Effective Date").
The Company has amended and restated the Plan for the purposes of (i)
increasing the number of shares of Common Stock of the Company available for
issuance pursuant to options granted under the Plan ("Options"); (ii) clarifying
the availability of incentive stock options, or ISOs (within the meaning of
Section 422 of the Internal Revenue Code), under the plan and certain
limitations regarding ISOs; (iii) incorporating certain favorable administrative
provisions available under the federal securities and tax laws; and (iv)
approving a one-time grant of 20,000 Options to each director in office on the
Effective Date and a provision for payment of reasonable fees to directors.
Prior to the amendment, the Plan provided that a maximum of 200,000 shares of
Common Stock were available for issuance pursuant to Options. Following the
amendment, the Plan provides that a maximum of 1,000,000 shares of Common Stock
are available for issuance pursuant to Options. Other material provisions of the
Plan, which have not been amended, are as follows: key employees (including
officers), employee and nonemployee directors, and advisors of the Company are
eligible to receive Options. The Plan is administered by a committee appointed
by the Board. The committee has the sole discretion, subject only to the terms
of the Plan, to determine the persons to whom Options are granted, the terms of
Options, and the construction and application of the Plan. Options may be either
ISOs, which afford the optionee certain favorable federal income tax
consequences, or options that are not ISOs. ISOs may be issued only to
employees. Approval of the Plan amendment by the Company's shareholders is
necessary for Options that are intended to qualify as ISOs to qualify as such.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" THE APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE COMPANY'S
1994 STOCK OPTION AND COMPENSATION PLAN.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of April 23, 1998, 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 532,4131,2 23.7%
Marshall A. Smith III 341,3372,3 16.3%
5
<PAGE>
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership Percent
Jim C. Bigham 177,7502,4 9.2%
A. Van Nguyen 25,0005 1.4%
Ned W. Fowler 64,8332,6 3.6%
Henri M. Nevels 31,4302,7 1.7%
James L. Crowson 20,0002,8 1.1%
Anthony P. Towell 80,0332,9 4.4%
J. Virgil Waggoner 590,0002,10 25.9%
All current directors and officers 1,862,79611 53.8%
as a group (9 persons)
Senior Drilling Company 230,48212 12.0%
HS Energy Private Rig 216,66713 11.1%
Partnership 1981, Ltd.
Anaconda Opportunity Fund, 348,45614,15 16.5%
L.P. c/o Anaconda Capital
American High Growth 174,22814,16 9.0%
Retirement Trust
Donald & Co. Securities, Inc. 150,62517 8.1%
Carlin Equities Corporation 217,78514,18 11.0%
Delaware Charter Guaranty 102,35914,19 5.5%
and Trust, FBO B. Leon Skinner
Madisonville Partnership, Ltd. 200,00020 10.2%
Renier Nevels 530,00021 23.3%
NR Atticus, Ltd. 191,65114,22 9.8%
SPAGS N.V, 206,00023 10.5%
Internet Financial Relations 100,50024 5.4%
</TABLE>
1 Includes 408,158 shares subject to presently exercisable warrants and
options and 20,494 shares held directly, 30,000 shares subject to presently
exercisable warrants, 46,511 shares issuable upon conversion of a debenture
and 25,250 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 20,000 Options granted pursuant to and subject to shareholders'
approval of the Plan. Shareholder' address is 16800 Dallas Parkway, Suite
250, Dallas, Texas 75248.
3 Includes 337,588 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.
6
<PAGE>
4 Includes 167,800 shares subject to presently exercisable warrants and
options, and 9,950 shares held directly.
5 Includes 25,000 shares subject to presently exercisable options.
Shareholder's address is 16800 Dallas Parkway, Suite 250, Dallas, Texas
75248.
6 Includes 40,200 shares subject to presently exercisable warrants and 24,633
shares held directly.
7 Includes 31,430 shares subject to presently exercisable warrants. Mr.
Nevels disclaims beneficial ownership of the shares and warrants owned by
his father, Renier Nevels.
8 Includes 20,000 shares subject to presently exercisable warrants.
9 Includes 16,778 shares issuable upon conversion of presently convertible
Preferred Stock, 35,000 shares subject to presently exercisable warrants
and 23,255 shares issuable upon conversion of a debenture.
10 Includes 520,000 shares subject to presently exercisable warrants and
options.
11 Includes 1,701,720 shares subject to presently exercisable warrants,
options or convertible securities.
12 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.
Shareholder's address is 8126 One Calais Avenue, Suite 2-C, Baton Rouge,
Louisiana 70809.
13 Includes 200,000 shares subject to presently exercisable warrants and
16,667 shares held directly. Shareholder's address is 3150 Premier Drive,
Suite 126, Irving, Texas 75063.
14 The number of shares issuable upon conversion of Preferred Stock is based
upon $1.49 per share which is 70% of the closing price of the Common Stock
as quoted on the Nasdaq Stock Market on April 23, 1998 of $2.13 per share.
15 Includes 268,456 shares issuable upon conversion of presently convertible
Preferred Stock and 80,000 shares subject to presently exercisable
warrants. Shareholder's address is 730 Fifth Avenue, 15th Floor, New York,
New York 10019.
16 Includes 134,228 shares issuable upon conversion of presently convertible
Preferred Stock and 40,000 shares subject to presently exercisable
warrants. Shareholder's address is 725 Fifth Avenue, 24th Floor, New York,
New York 10022.
17 Includes 105,000 shares subject to presently exercisable options and 45,625
shares held directly. Shareholder's address is 65 East 55th Avenue, 12th
Floor, New York, New York 10022.
18 Includes 167,785 shares issuable upon conversion of presently convertible
Preferred Stock and 50,000 shares subject to presently exercisable
warrants. Shareholder's address is 250 Park Avenue, 12th Floor, New York,
New York 100177.
19 Includes 78,859 shares issuable upon conversion of presently convertible
Preferred Stock and 23,500 shares subject to presently exercisable
warrants. Shareholder's address is P. O. Box 8963, Wilmington, Delaware
19899-8963.
20 Includes 200,000 shares subject to presently exercisable warrants.
Shareholder's address is 3838 Oak Lawn Avenue, Suite 1220, Dallas, Texas
75219.
21 Includes 15,000 shares held directly, 200,000 shares issuable upon
conversion of presently convertible Preferred Stock at a price per share of
Common Stock of $5.00, and 315,000 shares subject to presently exercisable
warrants. Shareholder's address is P. O. Box 1, 3680 Maaseik, Belgium.
22 Includes 147,651 shares issuable upon conversion of presently convertible
Preferred Stock and 44,000 shares subject to presently exercisable
warrants. Shareholder's address is c/o Atticus Capital, 153 East 53rd St.,
43rd Floor, New York, New York 10022.
7
<PAGE>
23 Includes 206,000 shares subject to presently exercisable warrants.
Shareholder's address is P. O. Box 744, Curacao, Netherlands, Antilles.
24 Includes 83,500 shares subject to presently exercisable warrants and 17,000
shares held directly. Shareholder's address is 575 South Anaheim Hills Rd.,
Anaheim, California 92807.
EXECUTIVE COMPENSATION
<TABLE>
Summary Compensation Table
The following table sets forth information regarding compensation paid to
the Company's executive officers whose total annual compensation is $100,000 or
more during each of the last three years.
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
Year Other Annual All Other
Name and Principal Position End Salary($) Bonus($) Compensation($) Options(#) Compensation($)
<S> <C> <C> <C> <C> <C> <C>
Marshall A. Smith 1997 125,000(1) - - - -
President and Chief 1996 100,000 - - 270,000 158,400
Executive Officer 1995 100,000 - - - -
John E. Loehr 1997 150,000(1) - - - -
Chief Financial Officer 1996 - - - 270,000 158,400
Jim C. Bigham 1997 75,000(1) - - - -
Executive Vice President 1996 66,000 - - 106,000 66,650
and Secretary 1995 60,000 - - - -
- ------------------------
</TABLE>
(1) Includes deferred compensation of $25,000 payable to Mr. Smith, $50,000
payable to Mr. Loehr and $4,500 payable to Mr. Bigham.
Long Term Compensation includes warrants issued to each of Mr. Smith and
Mr. Loehr each to acquire 200,000 shares of Common Stock at an exercise price of
$3.00 per share, 50,000 shares of Common Stock at an exercise price of $5.00 per
share, and 20,000 shares of Common Stock at an exercise price of $5.75 per
share. Mr. Bigham was issued warrants to acquire 2,750 shares of Common Stock at
an exercise price of $.50, 500 shares of Common Stock at an exercise price of
$1.75, 100,000 shares of Common Stock at an exercise price of $3.00 and 2,750
shares of Common Stock at an exercise price of $5.00. The value of warrants
issued was derived utilizing the Black-Sholes pricing model.
8
<PAGE>
Option Grants During 1997
There were no options granted to the named executive officers during the
year ended December 31, 1997.
<TABLE>
Option Exercises During 1997 and
Year End Option Values (1)
<CAPTION>
Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Options Options
at FY-End (#) at FY-End ($)
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
<S> <C> <C>
Marshall A. Smith 14,000(2) -0-
-0- -0-
John E. Loehr 56,000(2) -0-
-0- -0-
Jim C. Bigham 15,000 -0-
-0- -0-
</TABLE>
(1) Since no options were exercised by the above-named executives in 1997, 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.
9
<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, 1997 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, 1992 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.
<TABLE>
COMPARISON OF FIVE-YEAR CUMULATIVE
TOTAL RETURN
AMONG COMPANY, NASDAQ INDEX & NASDAQ NON-FINANCIAL STOCK INDEX
<CAPTION>
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
NASDAQ Index 100.000 114.796 112.214 158.699 195.192 239.527
Non Financial 100.000 115.450 111.015 154.711 187.971 220.766
GulfWest 100.000 47.826 47.826 39.130 52.174 43.478
</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 until April 1, 1997, when 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.
10
<PAGE>
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".)
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.
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.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On May 31, 1994, the Company executed a $40,000 note bearing interest at
the rate of 10% per annum, payable to Star-Tex Trading Company. This note is now
a subordinated promissory note and the principal and interest is still
outstanding. 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 still outstanding.
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 is still
outstanding. 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.
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.
On January 7, 1997, the Company established a $2,000,000 revolving
line-of-credit with Southwest Bank of Texas, with part of the proceeds to be
used for payment of short-term notes incurred for acquisitions made during the
fourth quarter of 1996. The line-of-credit is guaranteed by Mr. J. Virgil
Waggoner, a director of the Company, in exchange for options to purchase 250,000
shares of the Company's Common Stock at an exercise price of $2.88 per share.
The Company used the Black-Sholes option pricing model to estimate the fair
value of the options, resulting in a $40,000 non-cash interest expense amortized
over one year, with $10,000 recorded each quarter.
On July 2, 1997, the Company's revolving line-of-credit was increased to
$2,750,000 with the additional funds to be used for acquisitions and further
enhancements of the Company's West Texas properties. In connection with the
increase in the line of credit, the guarantor, Mr. Waggoner, received additional
options to purchase 100,000 shares of the Company's Common Stock at an exercise
price of $2.56 per share. The Company used the Black-Sholes option pricing model
to estimate the fair value of the options, resulting in a $15,000 non-cash
interest expense amortized over six months, with $7,500 recorded each quarter.
On December 15, 1997, the Company obtained a drilling loan from Mr. J.
Virgil Waggoner, a director of the Company, in the amount of $1,000,000 maturing
on December 15, 1998 and bearing interest at the floating Prime Rate, which was
8.5% at the time of the loan, to drill seventeen developmental wells in the
Vaughn Field. Mr. Waggoner received options to purchase 150,000 shares of the
Company's Common Stock at an exercise price of $2.62 per share. The Company used
the Black-Sholes option pricing model to estimate the fair value of the options,
resulting in a $30,000 non-cash interest expense amortized over one year.
12
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During 1997, the Company paid consulting fees to Gulf Coast Exploration,
Inc. ("GCX") in the amount of $62,500 for services rendered in the
identification, evaluation, acquisition and operation of the 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 James L. Crowson and J.
Virgil Waggoner, directors, who were each late filing one report.
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 1999
Annual Meeting of Shareholders, such proposals must be received by the Company
not later than December 24, 1998. Such proposals should be directed to GulfWest
Oil Company, 16800 Dallas Parkway, Suite 250, Dallas, Texas 75248, 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.
MISCELLANEOUS
All costs incurred in the solicitation of Proxies will be borne by the
Company. In addition to
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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, 1997, 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
Dallas, Texas
April 24, 1998
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GULFWEST OIL COMPANY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 28, 1998
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 May 28, 1998, 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 Ned W. Fowler Henri M. Nevels James L. Crowson
Marshall A. Smith III Jim C. Bigham Anthony P. Towell J. Virgil Waggoner
FOR all persons listed (except as marked to the contrary below.)
Withhold authority to vote for all nominees
Withhold authority to vote for nominee(s), named below:
(2) To approve the amendment and restatement of the Company's 1994 Stock
Option Compensation Plan.
For
Against
Abstain
(3) In the discretion of the Proxy holder, 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), (2) and (3) 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: , 1998
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.
<PAGE>
EXHIBIT A
GULFWEST OIL COMPANY
1994 STOCK OPTION AND COMPENSATION PLAN
(Amended and Restated as of April 15, 1998)
ARTICLE I
GENERAL
1.1 Name. This plan will be known as the "GulfWest Oil Company 1994 Stock
Option and Compensation Plan." Capitalized terms used herein are defined in
Article V hereof.
1.2 Purpose. The purpose of the Plan is to promote the growth and general
prosperity of the Company by permitting the Company to grant to its key
employees, directors, and Advisors-Options to purchase Common Stock of the
Company and to pay its directors fees for their services as such. The Plan is
designed to help the Company attract and retain superior personnel for positions
of substantial responsibility and to provide employees, directors, and Advisors
with an additional incentive to contribute to the success of the Company.
1.3 Effective Date. The Plan will be effective as of the date of its
adoption by the Board.
1.4 Eligibility to Participate. Any of the Company's key employees
(including officers), directors, or Advisors will be eligible to participate in
the Plan.
1.5 Maximum Number of Shares of Common Stock Subject to Options and
Director Fees. The shares of Common Stock subject to Options granted and
director fees paid pursuant to the Plan may be either authorized and unissued
shares or shares issued and thereafter acquired by the Company. Subject to
adjustment pursuant to the provisions of Section 4.2, and subject to any
additional restrictions elsewhere in the Plan, the maximum aggregate number of
shares of Common Stock that may be issued from time to time pursuant to the
exercise of Options or the payment of director fees shall be one million
(1,000,000). The maximum number of shares of Common Stock with respect to which
Options may be granted and director fees may be paid to any participant in the
Plan during the term of the Plan is 500,000. Plan Shares with respect to which
an Option has been exercised or a director fee paid will not again be available
for grant hereunder. If Options terminate for any reason without being wholly
exercised, new Options may be granted hereunder covering the number of Plan
Shares to which such Option termination relates.
1.6 Administration. The Plan will be administered by the Board or by a
committee of directors (the "Stock Option Committee") appointed by the Board. As
used herein, unless otherwise indicated, "Committee" shall mean the Board or the
duly appointed Stock Option Committee, as applicable. Subject to the provisions
of the Plan, the Committee will have the sole discretion and authority to
determine from time to time the employees, directors and Advisors to whom
Options will be granted and the number of Plan Shares subject to each Option, to
interpret the Plan, to prescribe, amend and rescind any rules and regulations
necessary or appropriate for the administration of the Plan, to determine and
interpret the details and provisions of each Option Agreement, to modify or
amend any Option Agreement or waive any conditions or restrictions applicable to
any Option or the exercise thereof, and to make all other determinations
necessary or advisable for the administration of the Plan. Except when the
Committee consists of the entire Board, the Committee shall consist solely of
two or more persons who are both "nonemployee directors" within the meaning of
Rule 16b-3 under the Exchange Act and "outside directors" within the meaning of
Section 162(m) of the Code and the regulations promulgated thereunder.
AMENDED AND RESTATED 1994 STOCK OPTION AND COMPENSATION PLAN - Page 1
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A majority of the members of the Committee will constitute a quorum, and
any action taken by a majority present at a meeting at which a quorum is present
or any action taken without a meeting evidenced by a writing executed by all
members of the Committee will constitute the action of the Committee.
1.7 Conditions Precedent. The Company will not issue or deliver any Option
Agreement or any certificate for Plan Shares pursuant to the Plan prior to
fulfillment of all of the following conditions:
(a) The admission of the Plan Shares to listing on all stock exchanges
on which the Common Stock is then listed, unless the Committee determines
in its sole discretion that such listing is neither necessary nor
advisable;
(b) The completion of any registration or other qualification of the
sale of the Plan Shares under any federal or state law or under the rulings
or regulations of the Securities and Exchange Commission or any other
governmental regulatory body that the Committee in its sole discretion
deems necessary or advisable; and
(c) The obtaining of any approval or other clearance from any federal
or state governmental agency that the Committee in its sole discretion
determines to be necessary or advisable.
1.8 Reservation of Shares of Common Stock. During the term of the Plan, the
Company will at all times reserve and keep available such number of shares of
Common Stock as may be necessary to satisfy the requirements of the Plan as to
the number of Plan Shares. In addition, the Company will from time to time, as
is necessary to accomplish the purposes of the Plan, use its best efforts to
obtain from any regulatory agency having jurisdiction any requisite authority
necessary to issue Plan Shares hereunder. The inability of the Company to obtain
from any regulatory agency having jurisdiction the authority deemed by the
Company's counsel to be necessary for the lawful issuance of any Plan Shares
will relieve the Company of any liability in respect of the nonissuance of Plan
Shares as to which the requisite authority has not been obtained.
1.9 Tax Withholding.
(a) Condition Precedent. The issuance, delivery or exercise of any
Options or Plan Shares under the Plan is subject to the condition that if
at any time the Committee determines, in its discretion, that the
satisfaction of withholding tax or other withholding liabilities under any
federal, state or local law is necessary or desirable as a condition of, or
in connection with, the issuance, delivery or exercise of the Options or
Plan Shares, then the issuance, delivery or exercise thereof will not be
effective unless the withholding has been effected or obtained in a manner
acceptable to the Committee.
(b) Manner of Satisfying Withholding Obligation. When a person is
required to pay to the Company an amount required to be withheld under
applicable income tax laws in connection with the exercise of an Option or
the payment of a director fee, such payment may be made (i) in cash, (ii)
by check, (iii) through the withholding by the Company ("Company
Withholding") of a portion of the Plan Shares acquired upon the exercise of
the Option having a Fair Market Value on the date the amount of tax to be
withheld is to be determined equal to the amount required to be withheld or
(iv) in any other form of valid consideration, as permitted by the
Committee in its discretion; provided that a person who is required to file
reports under Section 16 of the Exchange Act shall not be permitted to
elect to satisfy his withholding obligation through Company Withholding;
provided further, however, that the Committee, in its sole discretion, may
require that such person's withholding obligation be satisfied through
Company Withholding.
AMENDED AND RESTATED 1994 STOCK OPTION AND COMPENSATION PLAN - Page 2
<PAGE>
1.10 Exercise of Options.
(a) Method of Exercise. Each Option will be exercisable in accordance
with the terms of the Option Agreement pursuant to which the Option was
granted. Any Option will be deemed to be exercised for purposes of the Plan
when written notice of exercise has been received by the Company at its
principal office from the person entitled to exercise the Option and
payment for the Plan Shares with respect to which the Option is exercised
has been received by the Company in accordance with paragraph (b) below. No
Option may be exercised for a fraction of a Plan Share.
(b) Payment of Purchase Price. The purchase price of any Plan Shares
purchased will be paid at the time of exercise of the Option either (i) in
cash, (ii) by certified or cashier's check, (iii) by cash or certified or
cashier's check for the par value of the Plan Shares plus a promissory note
for the balance of the purchase price, which note will contain such terms
and provisions as the Committee may permit, including without limitation
the right to repay the note partially or wholly with Common Stock, (iv) by
delivery of a copy of irrevocable instructions from the Optionee to a
broker or dealer, reasonably acceptable to the Company, to sell certain of
the Plan Shares purchased upon exercise of the Option or to pledge them as
collateral for a loan and promptly deliver to the Company the amount of
sale or loan proceeds necessary to pay such purchase price or (v) in any
other form of valid consideration, as permitted by the Committee. If any
portion of the purchase price or a note given at the time of exercise is
paid in shares of Common Stock, those shares will be valued at the then
Fair Market Value.
1.11 Acceleration of Right of Exercise of Options. In the case of an Option
not otherwise exercisable in full, the Committee may accelerate the
exercisability of such Option in whole or in part at any time. Notwithstanding
the provisions of any Option Agreement regarding the time for exercise of an
Option, the following provisions will apply:
(a) Mergers and Reorganizations. If the Company or its shareholders
enter into an agreement to dispose of all or substantially all of the
assets of the Company by means of a sale, merger or other reorganization,
liquidation or otherwise in a transaction in which the Company is not the
surviving corporation, any Option will become immediately exercisable with
respect to the full number of shares subject to that Option during the
period commencing as of the date of the agreement to dispose of all or
substantially all of the assets of the Company and ending when the
disposition of assets contemplated by that agreement is consummated or the
Option is otherwise terminated in accordance with its provisions or the
provisions of the Article pursuant to which it was granted, whichever
occurs first; provided that no Option will be immediately exercisable under
this section on account of any agreement of merger or other reorganization
when the shareholders of the Company immediately before the consummation of
the transaction will own at least fifty percent of the total combined
voting power of all classes of stock entitled to vote of the surviving
entity immediately after the consummation of the transaction. The Option
will not become immediately exercisable if the transaction contemplated in
the agreement is a merger or reorganization in which the Company will
survive.
(b) Change in Control. In the event of a change in control or
threatened change in control of the Company, all Options granted prior to
the change in control or threatened change in control will become
immediately exercisable. The term "change in control" for purposes of this
section refers to the acquisition of 25% or more of the voting securities
of the Company by any person or by persons acting as a group within the
meaning of Section 13(d)(3) of the Exchange Act (other than an acquisition
by a person or group meeting the requirements of clauses (i) and (ii) of
Rule 13d- 1(b)(1) promulgated under the Exchange Act); provided that no
change in control or threatened change in control will be deemed to have
occurred if prior to the acquisition of, or offer to acquire, ten percent
or more of the voting securities of the Company, the full Board has adopted
by not less than two-thirds vote a resolution specifically approving such
acquisition or offer. The term "person" for purposes of this section refers
to an individual or a corporation, partnership, trust, association, joint
venture, pool, syndicate, sole proprietorship, unincorporated organization
or any other form of entity not specifically listed herein. Whether a
change in control is threatened will be determined solely by the Committee.
1.12 Compliance with Securities Laws. Plan Shares will not be issued with
respect to any Option or director fee unless the exercise of the Option (if
applicable) and the issuance and delivery of the Plan Shares complies with all
relevant provisions of federal and state law, including without limitation the
Securities Act, the rules and regulations promulgated thereunder and the
requirements of any stock exchange upon which the Plan Shares may then be
listed, and will be further subject to the approval of counsel for the Company
with respect to such compliance. The Committee may also require an Optionee or
director fee recipient to furnish evidence satisfactory to the Company,
including without limitation a written and signed representation letter and
consent to be bound by any transfer restrictions imposed by law, legend,
condition or otherwise, that the Plan Shares are being acquired only for
investment and without any present intention to sell or distribute the shares in
violation of any federal or state law, rule or regulation. Further, each
Optionee or director fee recipient will consent to the imposition of a legend on
the certificate representing the Plan Shares issued upon the exercise of the
Option or the payment of a director fee, restricting their transferability as
required by law or by this section.
1.13 Employment of Optionee. Nothing in the Plan or in any Option granted
hereunder will confer upon any Optionee any right to continued employment by the
Company or any of its subsidiaries or limit in any way the right of the Company
or any subsidiary at any time to terminate or alter the terms of that
employment.
1.14 Transferability of Options. The Committee may, in its discretion,
provide in any Option Agreement that Options granted hereunder may be
transferred by the holder thereof upon five days prior written notice to the
Company, subject to compliance with applicable securities laws; provided,
however, that an Incentive Option shall not be transferable other than by will
or the laws of descent and distribution.
1.15 Information to Optionees. The Company will furnish to each Optionee
copies of annual reports, proxy statements and all other reports sent to the
Company's shareholders. Upon written request, the Company will furnish to each
Optionee a copy of its most recent Annual Report on Form 10-K and each quarterly
report to shareholders issued since the end of the Company's most recent fiscal
year.
1.16 Plan Binding on Successors. The Plan will be binding upon the
successors and assigns of the Company and any of its subsidiaries that adopt the
Plan.
ARTICLE II
TERMS OF OPTIONS
2.1 Nature of Options. Options may be either Incentive Options or
Nonqualified Options; provided, however, that Incentive Options may be issued
only to persons who are employees of the Company or a parent or subsidiary of
the Company.
AMENDED AND RESTATED 1994 STOCK OPTION AND COMPENSATION PLAN - Page 3
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2.2 Duration of Options. Each Option granted under this Article and all
rights thereunder will expire on the date determined by the Committee, but in no
event will any Option granted under this Article expire later than ten years
after the date on which the Option is granted, and in no event will any
Incentive Option granted to a Ten-Percent Shareholder expire later than five
years after the date on which the Incentive Option is granted. In addition, each
Option will be subject to early termination as provided elsewhere in the Plan.
2.3 Rights Upon Termination of Employment or Service as a Director or
Advisor. The Committee shall have discretion to include in each Option Agreement
such provisions regarding exercisability of Options following the termination of
an Optionee's employment or service as a director or Advisor as the Committee,
in its sole discretion, deems to be appropriate.
2.4 Purchase Price. The purchase price for Plan Shares acquired pursuant to
the exercise, in whole or in part, of any Option may not be less than the Fair
Market Value of the Plan Shares at the time of the grant of the Option;
provided, that the purchase price for Plan Shares acquired pursuant to the
exercise, in whole or in part, of an Incentive Option granted to a Ten-Percent
Shareholder may not be less than 110 percent of the Fair Market Value of the
Plan Shares at the time of the grant of the Incentive Option.
2.5 Individual Option Agreements. Each Optionee will be required to enter
into a written Option Agreement with the Company. In such Option Agreement, the
Employee will agree to be bound by the terms and conditions of the Plan and such
other matters as the Committee deems appropriate.
2.6 Maximum Amount of Incentive Options First Exercisable in a Year. The
aggregate Fair Market Value of Plan Shares (determined at the time an Incentive
Option is granted) with respect to which Incentive Options are exercisable for
the first time by a person during any calendar year under all incentive stock
option plans of the Company and its subsidiaries and affiliates shall not exceed
$100,000. Any portion of an Incentive Option that exceeds this limitation shall
be considered to be a Nonqualified Option.
2.7 One-Time Grant to Directors. The Committee shall issue a Nonqualified
Option to each person who is a member of the Board on April 15, 1998. Each such
Nonqualified Option shall be for the purchase of 20,000 shares of Common Stock
at an exercise price per share equal to the Fair Market Value of a share of
Common Stock on April 15, 1998; shall be immediately exercisable; and shall
expire on April 1, 2008, subject to earlier termination as provided elsewhere in
the Plan.
ARTICLE III
DIRECTOR FEES
3.1 Provision for Payment. The Committee shall have the authority to
provide for the payment of reasonable fees to directors for their attendance at
meetings of the Board. Subject to Section 3.2, the amount of any such fees, the
time when they become payable, and all other terms pertaining to such fees shall
be determined by the Committee in its sole discretion.
3.2 Form of Payment. Upon the Committee's providing for the payment of
director fees pursuant to Section 3.1, the fees shall be payable in cash, in
Common Stock, or in Options, as elected by each director to whom the fees are
payable.
AMENDED AND RESTATED 1994 STOCK OPTION AND COMPENSATION PLAN - Page 4
<PAGE>
ARTICLE IV
AMENDMENT, TERMINATION AND ADJUSTMENT
4.1 Amendment and Termination. The Plan will terminate on February 11,
2004. No Options will be granted under the Plan after that date of termination.
The Committee may at any time amend or revise the terms of the Plan, including
the form and substance of the Option Agreements to be used in connection
herewith. No amendment, suspension, or termination of the Plan may, without the
consent of the Optionee who has received an Option hereunder, alter or impair
any of that Optionee's rights or obligations under any Option granted under the
Plan prior to that amendment, suspension, or termination.
4.2 Adjustment. If the outstanding Common Stock is increased, decreased,
changed into or exchanged for a different number or kind of shares or securities
through merger, consolidation, combination, exchange of shares, other
reorganization, recapitalization, reclassification, stock dividend, stock split
or reverse stock split, an appropriate and proportionate adjustment will be made
in the maximum number and kind of Plan Shares as to which Options may be granted
and director fees paid under the Plan. A corresponding adjustment will be made
in the number or kind of shares allocated to and purchasable under unexercised
Options or portions thereof granted prior to any such change. Any such
adjustment in outstanding Options will be made without change in the aggregate
purchase price applicable to the unexercised portion of the Option, but with a
corresponding adjustment in the price for each share purchasable under the
Option. The foregoing adjustments and the manner of application of the foregoing
provisions will be determined solely by the Committee, and any such adjustment
may provide for the elimination of fractional share interests.
ARTICLE V
DEFINITIONS
As used herein with initial capital letters, the following terms have the
meanings hereinafter set forth unless the context clearly indicates to the
contrary:
5.1 "Advisor" means any person performing advisory or consulting services
for the Company, with or without compensation, to whom the Company chooses to
grant Options in accordance with the Plan, provide that bona fide services must
be rendered by such person and such services shall not be rendered in connection
with the offer or sale of securities in a capital raising transaction.
5.2 "Board" means the Board of Directors of the Company.
5.3 "Code" means the Internal Revenue Code of 1986, as from time to time
amended.
5.4 "Committee" shall have the meaning set forth in Section 1.6.
5.5 "Common Stock" means the Class A Common Stock, par value $0.001 per
share, of the Company or, in the event that the outstanding shares of such
Common Stock are hereafter changed into or exchanged for shares of a different
stock or security of the Company or some other corporation, such other stock or
security.
5.6 "Company" means Gulfwest Oil Company, a Texas corporation.
5.7 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
5.8 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
AMENDED AND RESTATED 1994 STOCK OPTION AND COMPENSATION PLAN - Page 5
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5.9 "Fair Market Value" means such value as will be determined by the
Committee on the basis of such factors as it deems appropriate; provided that if
the Common Stock is traded on a national securities exchange or transactions in
the Common Stock are quoted on the NASDAQ National Market System, such value
will be determined by the Committee on the basis of the last reported sale price
for the Common Stock on the date for which such determination is relevant, as
reported on the national securities exchange or the NASDAQ National Market
System, as the case may be. If the Common Stock is not listed and traded upon a
recognized securities exchange or on the NASDAQ National Market System, the
Committee will make a determination of Fair Market Value on the basis of the
closing bid and asked quotations for such stock on the date for which such
determination is relevant (as reported by a recognized stock quotation service)
or, in the event that there will be no bid or asked quotations on the date for
which such determination is relevant, then on the basis of the mean between the
closing bid and asked quotations on the date nearest preceding the date for
which such determination is relevant for which such bid and asked quotations
were available.
5.10 "Incentive Option" means an Option that qualifies as an incentive
stock option under Section 422 of the Code.
5.11 "Nonqualified Option" means an Option that is not an Incentive Option.
5.12 "Option" means a stock option granted under the Plan.
5.13 "Optionee" means an employee, director or Advisor to whom an Option
has been granted hereunder.
5.14 "Option Agreement" means an agreement between the Company and an
Optionee with respect to one or more Options.
5.15 "Plan" means the GulfWest Oil Company 1994 Stock Option and
Compensation Plan, as amended from time to time.
5.16 "Plan Shares" means shares of Common Stock issuable pursuant to the
Plan.
5.17 "Securities Act" means the Securities Act of 1933, as amended.
5.18 "Ten-Percent Shareholder" means a person who, at the time an Option is
granted, owns shares of stock possessing more than ten percent of the total
combined voting power of all classes of stock of the Company or any subsidiary
or affiliate of the Company within the meaning of Section 422 of the Code.
AMENDED AND RESTATED 1994 STOCK OPTION AND COMPENSATION PLAN - Page 6
