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:
[X] Preliminary Proxy Statement
[ ] 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:
5) Total fee paid:
[ ] 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 SPECIAL MEETING OF SHAREHOLDERS
To Be Held on November 4, 1998
NOTICE IS HEREBY GIVEN that the Special Meeting of the holders of the
Common Stock (the "Shareholders") of GulfWest Oil Company (the "Company") will
be held at the Company's offices at 16800 Dallas Parkway, Suite 250, Dallas,
Texas, on Wednesday, November 4, 1998 at 1:00 P.M., local time, for the
following purposes:
(1) To authorize the issuance of shares of the Company's Series B
Redeemable Convertible Preferred Stock upon the conversion of
debentures issued through a placement agent whereby gross proceeds of
$1 million are expected to be raised.
(2) To (i) authorize the issuance of shares of the Company's Series BB
Redeemable Convertible Preferred Stock to a director of the Company
upon the conversion of a debenture and (ii) ratify the issuance of
Common Stock purchase warrants, all issued in exchange for $1 million
of funds previously advanced to the Company.
(3) To approve the offering, sale and issuance of up to 3,500,000 shares
of the Company's Common Stock through a proposed standby underwriting
with respect to a proposed rights offering to the Company's existing
shareholders at a price to be determined.
(4) To grant authority to the Board of Directors of the Company to take
any and all necessary actions to effect a 1 for 2 reverse split of the
Company's Common Stock through an amendment to the Company's Articles
of Incorporation in the event, and only in the event, that the Board
determines the action is advisable to maintain compliance with the
continued inclusion requirements for listing of the Company's Common
Stock on The Nasdaq Stock Market. The authority granted to the Board
will expire on the date of the Company's next annual meeting. All
numbers included in this Notice and in the accompanying Proxy
Statement do not reflect the reverse split, and upon such a split
would be adjusted accordingly.
(5) To transact such other business as may properly come before the
Meeting or any adjournments thereof.
The close of business on September 15, 1998 has been fixed as the record
date for determining Shareholders entitled to notice of and to vote at the
Special Meeting of Shareholders or any adjournments thereof. For a period of at
least 10 days prior to the Special Meeting, a complete list of Shareholders
entitled to vote at the Special 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 Special Meeting is set forth in the accompanying
Proxy Statement.
<PAGE>
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
Dallas, Texas
October 5, 1998
<PAGE>
GULFWEST OIL COMPANY
16800 Dallas Parkway
Suite 250
Dallas, Texas 75248
PROXY STATEMENT
For
SPECIAL MEETING OF SHAREHOLDERS
To Be Held on November 4, 1998
This Proxy Statement is being first mailed on or about October 5, 1998 to
shareholders of Common Stock (the "Shareholders") of GulfWest Oil Company (the
"Company") by the Board of Directors (the "Board") to solicit proxies (the
"Proxies") for use at the Special Meeting of Shareholders (the "Meeting") to be
held at the Company's offices at 16800 Dallas Parkway, Suite 250, Dallas, Texas,
at 1:00 P.M., local time, on Wednesday, November 4, 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 authorization of the issuance of shares of
the Company's Series B Redeemable Convertible Preferred Stock (the "Series B
Stock") upon the conversion of debentures through a placement agent (the
"Placement Agent") whereby gross proceeds of $1 million are expected to be
raised, (ii) FOR (A) the authorization of the issuance of shares of the
Company's Series BB Redeemable Convertible Preferred Stock (the "Series BB
Stock") upon the conversion of debentures and (B) the ratification of the
issuance of Common Stock purchase warrants to a director of the Company, all in
exchange for $1 million of funds previously advanced to the Company, (iii) FOR
the approval of the offering, sale and issuance of up to 3,500,000 shares of the
Company's Common Stock through a proposed standby underwriting with respect to a
proposed rights offering (the "Rights Offering") to the Company's existing
shareholders at a price to be determined, (iv) FOR the granting of authority to
the Board, until the Company's next annual meeting of Shareholders, to take any
and all necessary actions to effect a 1 for 2 reverse split of the Company's
Common Stock through an amendment to the Company's Articles of Incorporation in
the event, and only in the event, that the Board determines the action is
advisable to maintain compliance with the continued inclusion requirements for
listing of the Company's Common Stock on The Nasdaq Stock Market ("Nasdaq"), and
(v) 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 specified how a Proxy is to be voted, it will be
voted accordingly. The Proxy may be revoked at any time prior to the Meeting by
providing written notice of such revocation to GulfWest Oil Company, 16800
Dallas Parkway, Suite 250, Dallas, Texas 75248, Attention: Jim C. Bigham. If
notice of revocation is not received by the Meeting date, a Shareholder may
nevertheless revoke a Proxy if he or she 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 Tuesday, September 15, 1998 (the "Record
Date"), at which time the Company had issued and outstanding 2,963,517 shares of
Common Stock.
<PAGE>
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.
Certain of the Company's shareholders, representing approximately 51% of the
Company's outstanding stock, are expected to execute a voting agreement (the
"Voting Agreement"), together with the Company and the Placement Agent, whereby
such shareholders will covenant to vote their shares to approve each proposal
described herein. The Company has placed stop-transfer instructions with its
transfer agent with respect to all shares held by shareholders who are party to
the Voting Agreement. Although it is expected that each such shareholder will
vote his or her shares pursuant to the terms of the Voting Agreement, and
accordingly each proposal described herein will be approved, there can be no
assurance that (i) such shareholders will vote their shares accordingly or (ii)
the Company will be successful in its efforts to ensure that holders of 51% of
the Company's outstanding stock will execute the Voting Agreement. Further, the
Placement Agent may waive the terms of the Voting Agreement.
The presence at the 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 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.
Abstentions and broker non-votes will each be included in determining whether a
quorum is present. Abstentions will have the same effect as a vote against a
proposal. Broker non-votes will not be counted for any purpose in determining
whether any proposal has been approved.
<TABLE>
SECURITIES OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth information as of September 15, 1998,
regarding the beneficial ownership of Common Stock by each person known by the
Company to own beneficially 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.
<CAPTION>
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership Percent
------------------- -------------------- -------
<S> <C> <C>
John E. Loehr 563,315 1,2 16.3%
Marshall A. Smith III 347,520 2,3 10.7%
Jim C. Bigham 199,735 2,4 6.4%
A. Van Nguyen 35,000 2,5 1.2%
Ned W. Fowler 72,242 2,6 2.4%
Richard L. Creel 35,000 2,7 1.2%
Henri M. Nevels 31,430 2,8 1.1%
James L. Crowson 20,000 2,9 *
2
<PAGE>
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership Percent
------------------- -------------------- -------
Anthony P. Towell 98,461 2,10 3.2%
J. Virgil Waggoner 733,884 2,11 24.8%
All current directors and officers 2,156,995 12 51.4%
as a group (10 persons)
Senior Drilling Company 230,482 13 7.4%
HS Energy Private Rig 216,667 14 6.9%
Partnership 1981, Ltd.
Anaconda Opportunity Fund, 400,000 15,16 11.9%
L.P. c/o Anaconda Capital
American High Growth 175,000 15,17 5.6%
Retirement Trust
Carlin Equities Corporation 250,000 15,18 7.8%
Madisonville Partnership, Ltd. 200,000 19 6.4%
Renier Nevels 615,000 20 17.3%
NR Atticus, Ltd. 220,000 15,21 6.9%
SPAGS N.V. 181,000 22 5.8%
- ---------------------
* Less than 1%
</TABLE>
1 Includes 378,159 shares subject to presently exercisable warrants and
options and 20,494 shares held directly; 36,000 shares subject to presently
exercisable warrants, 76,923 shares issuable upon conversion of a
debenture, 24,489 shares issuable upon conversion of presently convertible
preferred stock, and 25,250 shares held by ST Advisory Corporation; and
2,000 shares held by his daughter's trust, the Joanna Drake Loehr Trust.
Mr. Loehr is president and sole shareholder of ST Advisory Corporation.
2 Shareholder's address is 16800 Dallas Parkway, Suite 250, Dallas, Texas
75248.
3 Includes 304,000 shares subject to presently exercisable warrants and
options and 40,104 shares owned directly, 83 shares owned by Joyce Smith,
the wife of Mr. Smith, and 3,333 shares owned by Marshall A. Smith IV and
Mark Shelton, sons of Mr. Smith. Mr. Smith III disclaims beneficial
ownership of the shares of and warrants owned by Senior Drilling Company,
which is controlled by Mitchell D. Smith, the brother of Mr. Smith III.
4 Includes 157,800 shares subject to presently exercisable warrants and
options, and 40,935 shares held directly, and 1,000 shares held by Jeff G.
Gray, son of Mr. Bigham.
5 Includes 35,000 shares subject to presently exercisable options.
6 Includes 30,200 shares subject to presently exercisable warrants and
options.
7 Includes 30,000 subject to presently exercisable options.
8 Includes 31,430 shares subject to presently exercisable warrants and
options. Mr. Nevels disclaims beneficial ownership of the shares and
warrants owned by his father, Renier Nevels.
3
<PAGE>
9 Includes 20,000 shares subject to presently exercisable options.
10 Includes 20,000 shares issuable upon conversion of presently convertible
Preferred Stock, 35,000 shares subject to presently exercisable warrants
and options, and 38,461 shares issuable upon conversion of a debenture.
11 Includes 20,000 shares subject to presently exercisable options. Excludes
all shares of Series BB Preferred Stock and related Common Stock purchase
warrants which may be issued to Mr. Waggoner upon approval of Proposal No.
2.
12 Includes 1,257,870 shares subject to presently exercisable warrants,
options and convertible securities.
13 Includes 166,754 shares subject to presently exercisable warrants. 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.
14 Includes 200,000 shares subject to presently exercisable warrants. The
general partner of HS Energy Private Rig Partnership 1981, Ltd. is HS
Energy, Inc. whose president is Ray Holifield. Shareholder's address is
3150 Premier Drive, Suite 126, Irving, Texas 75063.
15 The number of shares issuable upon conversion of the Class AAA Preferred
Stock is based upon $1.25 per share of Common Stock (the greater of 70% of
the closing bid price of $.94 per share as quoted on Nasdaq on September
15, 1998 or $1.25).
16 Includes 320,000 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.
17 Includes 140,000 shares issuable upon conversion of presently convertible
Preferred Stock and 35,000 shares subject to presently exercisable
warrants. Shareholder's address is 725 Fifth Avenue, 24th Floor, New York,
New York 10022.
18 Includes 200,000 shares issuable upon conversion of presently convertible
Preferred Stock and 50,000 shares subject to presently exercisable
warrants. Shareholder's address 250 Park Avenue, 12th Floor, New York, New
York 10017.
19 Includes 200,000 shares subject to presently exercisable warrants.
Shareholder's address is 3838 Oak Lawn Avenue, Suite 1220, Dallas, Texas
75219.
20 Includes 195,000 shares issuable upon conversion of presently convertible
Preferred Stock at a price per share of Common Stock of $5.00, and 405,000
shares subject to presently exercisable warrants. Shareholder's address is
P. O. Box 1, 3680 Maaseik, Belgium.
21 Includes 176,000 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.
22 Includes 181,000 shares subject to presently exercisable warrants.
Shareholder's address is P. O. Box 744, Curacao, Netherlands, Antilles.
PROPOSAL NO. 1
AUTHORIZATION OF THE ISSUANCE OF THE SERIES B STOCK
UPON CONVERSION OF DEBENTURES
The Shareholders are requested at the Meeting to approve the issuance of
2,000 shares of the Company's Series B Stock at a price of $500 per share upon
conversion of debentures issued together with Common Stock purchase warrants to
purchase 400,000 shares of the Company's Common Stock in a private placement to
accredited investors through the Placement Agent whereby gross proceeds of $1
million are expected to be raised.
4
<PAGE>
The private placement is expected to close upon receipt of proxies representing
51% of the outstanding Common Stock voting in favor of this proposal. The
Company will pay the Placement Agent compensation of 10% of the gross proceeds
of the offering in connection with the offering. The debentures are payable on
demand at any time after November 5, 1998, and bear interest at the rate of 15%,
increasing to 20% if Shareholder approval is not obtained by December 31, 1998
and 24% if Shareholder approval is not obtained by June 30, 1999. The issuance
of the Series B Stock is subject to the approval of the Shareholders as
solicited hereby. The offering is a private placement to "accredited investors"
as such term is defined in Regulation D promulgated under the Securities Act of
1933, as amended (the "Securities Act") and is accordingly exempt from the
registration requirements of the Securities Act.
If this proposal is approved, the debentures will immediately and
automatically convert into shares of the Series B Stock. A summary of the terms
of the Series B Stock and warrants, including dividend rate, voting rights and
other rights, preferences and restrictions are as set forth in Exhibit A
attached to this Proxy Statement and are identical to the terms of the Series BB
Stock except that the warrants issued in connection with the debentures
convertible into shares of the Series BB Stock are not exercisable until
Shareholder ratification is obtained. The warrants issued in connection with the
debentures convertible into Series B Stock do not require Shareholder approval.
The Company expects to use the net proceeds of $900,000 from the offering and
sale of the debentures to fund its exploitation and development program for its
currently owned oil and gas properties and for general corporate purposes.
On an as converted basis, assuming a conversion price of $.70 per share,
the Company estimates that upon the consummation of the offering and approval of
the conversion of the debentures the holders of the Series B Stock will hold 33%
of the outstanding stock of the Company prior to the Rights Offering and without
giving effect to the exercise of the warrants. During the 12 months preceding
the date hereof, the closing price of the Common Stock as reported on Nasdaq has
ranged from a low of $.84 per share to a high of $3.25 per share. On October 1,
1998, the closing price of the Company's Common Stock as reported by Nasdaq was
$____ per share.
The Company is required by Nasdaq to obtain Shareholder approval of this
proposal before issuing the shares of Series B Stock upon the conversion of the
debentures. If Shareholder approval is not obtained, the Company's Common Stock
may be subject to delisting by Nasdaq.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
AUTHORIZATION OF THE ISSUANCE OF THE SERIES B STOCK UPON CONVERSION OF THE
DEBENTURES.
5
<PAGE>
PROPOSAL NO. 2
AUTHORIZATION OF THE ISSUANCE OF THE SERIES BB STOCK AND
RATIFICATION OF THE ISSUANCE OF COMMON STOCK PURCHASE WARRANTS
The Shareholders are requested at the Meeting to (i) approve the issuance
of 2,000 shares of the Company's Series BB Stock at a price of $500 per share
upon conversion of a debenture and (ii) ratify the issuance of Common Stock
purchase warrants to purchase 400,000 shares of the Company's Common Stock. The
debenture and the warrants were issued in a private placement to J. Virgil
Waggoner, a director of the Company, in exchange for $1 million of funds
previously advanced to the Company. The private placement is expected to close
upon receipt of proxies representing 51% of the outstanding Common Stock voting
in favor of this proposal. The debentures are payable on demand at any time
after November 5, 1998, and bear interest at the rate of 15%, increasing to 20%
if Shareholder approval is not obtained by December 31, 1998 and 24% if
Shareholder approval is not obtained by June 30, 1999. The issuance of the
Series B Stock and the exercisability of the warrants are subject to the
approval of the Shareholders as solicited hereby. The offering is a private
placement to an "accredited investor" as such term is defined in Regulation D
promulgated under the Securities Act and is accordingly exempt from the
registration requirements of the Securities Act. There was no placement agent
for the issuance of the debenture and warrants to Mr. Waggoner.
If this proposal is approved, the debenture will immediately and
automatically convert into shares of the Series BB Stock. A summary of the terms
of the Series BB Stock and warrants, including dividend rate, voting rights and
other rights, preferences and restrictions are as set forth in Exhibit A
attached to this Proxy Statement and are identical to the terms of the Series B
Stock except that the warrants issued in connection with the debentures
convertible into shares of the Series BB Stock are not exercisable until
Shareholder ratification is obtained pursuant to this proposal. The Company has
used the $1 million advanced by Mr. Waggoner to fund its exploitation and
development program for its currently owned oil and gas properties and for
general corporate purposes.
On an as converted basis, assuming a conversion price of $.70 per share,
Mr. Waggoner's beneficial ownership of the Company's Common Stock will increase
from 24% to 53% upon the consummation of the offering (prior to the Rights
Offering and without giving effect to the exercise of the warrants). During the
12 months preceding the date hereof, the closing price of the Common Stock as
reported on Nasdaq has ranged from a low of $.84 per share to a high of $3.25
per share. On October 1, 1998, the closing price of the Company's Common Stock
as reported by Nasdaq was $____ per share.
The Company is required by Nasdaq to obtain Shareholder approval of this
proposal before issuing the shares of Series BB Stock upon the conversion of the
debentures. If Shareholder approval is not obtained, the Company's Common Stock
may be subject to delisting by Nasdaq.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" (I) THE
AUTHORIZATION OF THE ISSUANCE OF THE SERIES B STOCK UPON CONVERSION OF THE
DEBENTURES AND (II) THE RATIFICATION OF THE ISSUANCE OF THE WARRANTS.
Dissenters' Right of Appraisal
Because the offerings involved the issuance of shares of Preferred Stock
convertible into Common Stock by the Company for cash, there are no rights of
appraisal or similar rights with respect to the proposed offering and sale of
the stock under the Texas Business Corporation Act.
6
<PAGE>
PROPOSAL NO. 3
APPROVAL OF OFFERING, SALE AND ISSUANCE
OF THE COMPANY'S COMMON STOCK
The Shareholders are requested at the Meeting to approve the offering, sale
and issuance of up to 3,500,000 shares of the Company's Common Stock (the
"Shares") through a proposed standby underwriting (the "Standby Underwriting")
with respect to a proposed Rights Offering to the Company's existing
shareholders at a price to be determined, which price is expected to be at a
discount from the price of the Company's Common Stock as reported by Nasdaq at
the time of the Rights Offering. The Company expects to use the proceeds of the
Rights Offering, after underwriter's fees and expenses of the Rights Offering,
to fund its exploitation and development program for its currently owned oil and
gas properties and for general corporate purposes.
Through the proposed Rights Offering, the Company will offer holders of the
Company's Common Stock non-transferable rights to subscribe for an aggregate of
up to 3,500,000 Shares on a pro rata basis in accordance with the ownership
interest of each Shareholder as of the record date established in connection
with the Rights Offering. The length of the subscription period has not yet been
determined. Any Shares not subscribed for will be sold at the subscription price
to the underwriter, who may resell Shares to the public in the Standby
Underwriting. The Standby Underwriting, which is subject to the Shareholder
approval requested herein, will be conducted through an underwriter retained by
the Company and is anticipated to take place within the next 180 days. The
Company has executed a letter of intent with the Placement Agent to act as the
underwriter of the Rights Offering. There can be no assurance that the Placement
Agent will serve as the underwriter in connection with the Rights Offering or
that an underwriter will be obtained for the Rights Offering.
The Company estimates that, upon consummation of the Rights Offering and
Standby Underwriting, the purchasers of the Shares will hold in the aggregate
38% of the outstanding number of shares of the Company's Common Stock if the
full 3,500,000 shares are sold in the Rights Offering. The actual terms of the
Rights Offering and the subscription price per share will be negotiated between
the Company and the standby underwriter. The estimated gross proceeds to the
Company is subject to the outcome of such negotiations. There can be no
assurance that the Rights Offering or the Standby Underwriting will be
successfully consummated. During the twelve months preceding the date hereof,
the closing price of the Common Stock as reported by Nasdaq has ranged from a
low of $.84 per share to a high of $3.25 per share. On October 1, 1998, the
closing price of the Company's Common Stock as reported by Nasdaq was $____ per
share.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE OFFERING,
SALE AND ISSUANCE OF THE COMPANY'S COMMON STOCK.
PROPOSAL NO. 4
APPROVAL TO GRANT THE BOARD THE AUTHORITY
TO EFFECT A 1 FOR 2 REVERSE STOCK SPLIT
IF ADVISABLE TO MAINTAIN NASDAQ LISTING
The Shareholders are requested at the Meeting to approve this proposal
granting authority to the Board to take any and all necessary actions to effect
a 1 for 2 reverse split of the Company's Common Stock through an amendment to
the Company's Articles of Incorporation in the event, and only in the event,
that the Board
7
<PAGE>
determines the action is advisable to maintain compliance with the continued
inclusion requirements for listing of the Company's Common Stock on Nasdaq.
Nasdaq has certain minimum requirements which the Company must maintain in order
for its Common Stock to continue to be listed. The authority granted to the
Board by approval of this proposal will expire on the date of the Company's next
annual meeting. All numbers included in this Proxy Statement do not reflect the
reverse split, and upon such a split would be adjusted accordingly.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE APPROVAL
TO GRANT THE BOARD AUTHORITY TO EFFECT A 1 FOR 2 REVERSE SPLIT BUT ONLY IF
ADVISABLE TO MAINTAIN NASDAQ LISTING.
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.
INDEPENDENT AUDITORS
The Board has engaged Weaver & Tidwell, L.L.P. as independent auditors to
examine the Company's accounts. Representatives of Weaver & Tidwell, L.L.P. are
expected to be present at the Meeting with the opportunity to make a statement
if they desire to do so and to be available to answer appropriate questions.
SHAREHOLDERS' PROPOSAL
Shareholders may submit proposals on matters appropriate for shareholder
action at annual meetings of the Company consistent with Rule 14a-8 promulgated
under the Securities 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.
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.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a later
date or by attending the meeting and voting in person.
8
<PAGE>
The Company's Quarterly Report on Form 10-Q, including financial statements
for the three and six- month periods ended June 30, 1998, accompany this Proxy
Statement. The Company's Annual Report, including financial statements for the
year ended December 31, 1997, is incorporated herein by reference.
By Order of the Board
/s/Jim C. Bigham
Jim C. Bigham
Secretary
Dallas, Texas
October 5, 1998
9
<PAGE>
GULFWEST OIL COMPANY
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD NOVEMBER 4, 1998
The undersigned hereby appoints each of Jim C. Bigham and Marshall A. Smith
III, or either of them, 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 Special Meeting of Shareholders to be held November
4, 1998, and any adjournment(s) thereof as effectively as the undersigned could
do if personally present.
(1) To authorize the issuance of shares of the Company's Series B
Redeemable Convertible Preferred Stock upon the conversion of
debentures issued through a placement agent whereby gross proceeds of
$1 million are expected to be raised.
For ____
Against ____
Abstain ____
(2) To (i) authorize the issuance of shares of the Company's Series BB
Redeemable Convertible Preferred Stock to a director of the Company
upon the conversion of a debenture and (ii) ratify the issuance of
Common Stock purchase warrants, all issued in exchange for $1 million
of funds previously advanced to the Company.
For ____
Against ____
Abstain ____
(3) To approve the offering, sale and issuance of up to 3,500,000 shares
of the Company's Common Stock through a proposed standby underwriting
with respect to a proposed rights offering to the Company's existing
shareholders at a price to be determined.
For ____
Against ____
Abstain ____
<PAGE>
(4) To grant authority to the Board of Directors to take any and all
necessary actions to effect a 1 for 2 reverse split of the Company's
Common Stock through an amendment to the Company's Articles of
Incorporation in the event, and only in the event, that the Board
determines the action is advisable to maintain compliance with the
continued inclusion requirements for listing of the Company's Common
Stock on The Nasdaq Stock Market. The authority granted to the Board
will expire on the date of the Company's next annual meeting of
shareholders.
For ____
Against ____
Abstain ____
(5) 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), (3) and (4)
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
TERMS OF THE SERIES B AND SERIES BB PREFERRED STOCK
ISSUABLE UPON CONVERSION OF THE DEBENTURES
The following sets forth the terms of the Series B and Series BB Preferred Stock
(collectively, the "Subject Stock") issuable upon conversion of the debentures
issued by GulfWest Oil Company ("Company") through a private placement. The
terms of the Series B and Series BB Preferred Stock are identical (with the
exceptions that (i) the offering of the debentures convertible into Series B
Preferred Stock is made through a placement agent and compensation in an amount
equal to 10% of the gross proceeds of the offering of the debentures convertible
into Series B Preferred Stock will be paid to the placement agent and (ii) the
warrants issued in connection with the debentures convertible into shares of
Series B Preferred Stock are not exercisable until Shareholder ratification of
such issuance is obtained). References to the "Rights Offering" refer to the
Company's proposed public rights offering of up to 3,500,000 shares of common
stock to the Company's existing shareholders, with an underwriter acting as the
standby underwriter.
Amount: $1,000,000
Designation: Series B (or Series BB) Redeemable Convertible Preferred
Stock, $.01 par value per share.
Price Per Share: $500
Rank:On parity with the Series AA, Series AAA, Series C and Series B (or
Series BB) Preferred Stock; senior as to Common Stock and any equity
securities not yet authorized or designated; provided that the Company
may, without the consent of the holders of the Subject Stock,
designate and issue preferred stock on parity with such stock with
respect to the payment of dividends and to the distribution of assets
upon the liquidation, dissolution or winding up of the Company.
Optional Redemption: Commencing two years after the date of issuance, at
option of Company, Subject Stock may be redeemed for 110% of the
original purchase price per share of Subject Stock, along with payment
of accrued and unpaid dividends, if Common Stock price exceeds, for a
period of 20 consecutive trading days, 250% of the then effective
conversion price. Prior to date of redemption, holders of the Subject
Stock may convert shares, plus accrued and unpaid dividends, into
Common Stock, at then applicable conversion rate.
Voting: Each share of the Subject Stock shall entitle the holder thereof to
vote on an as-converted basis on all matters as to which holders of
Common Stock shall be entitled to vote.
Pre-Emptive Rights: None.
Liquidation Transaction: Upon a liquidation event, each share of the
Subject Stock shall entitle the holder thereof to receive the original
purchase price per share, plus any accrued but unpaid dividends (the
"Liquidation Preference").
Page 1
<PAGE>
Upon the election of holders of a majority of the Subject Stock, in
the event of a liquidation transaction involving certain
consolidations or mergers, instead of the Liquidation Preference, each
holder shall instead be entitled to receive the securities or property
receivable by holders of the number of shares of Common Stock issuable
upon conversion of the Subject Stock.
Dividend Rate: Fifteen (15%) percent per annum payable quarterly commencing
December 30, 1998; upon an event of default, the dividend rate shall
be eighteen (18%) percent until such default is cured, at which time
the dividend rate shall return to fifteen (15%) percent. During the
first 36 months after the date of issuance, dividends shall be
payable, at the prior annual election of the Board of Directors of the
Company, in either cash or Common Stock. If dividends are payable in
Common Stock, the number of shares payable shall equal the next
largest whole number obtained by dividing (i) the dollar amount of the
accrued and payable dividend by (ii) the quotient of the average of
the closing bid price of the Common Stock for the ten business days
prior to the relevant dividends payment date, multiplied by 70%. After
36 months following the date of issuance, dividends shall be payable
only in cash.
Conversion Price into Common Stock: After the closing of the Rights
Offering, or one year after the date of issuance, whichever is
earlier, the Subject Stock shall be convertible into Common Stock at a
conversion price as follows:
a) prior to the date of the Rights Offering, a price equal to
70% of the average of the closing bid price of the Common
Stock for the ten business days prior to the issuance of the
Subject Stock; and
b) after the date of the Rights Offering, a price equal to 80%
of the price of the common stock sold in the Rights Offering
(the "Rights Offering Price"). The Rights Offering Price is
expected to be at a discount from the price of the common
stock as reported by Nasdaq at the time of the Rights
Offering.
The Common Stock issuable upon conversion of the Subject
Stock is not transferable until December 31, 1999, or if the
Rights Offering closes prior to December 31, 1999, one (1)
year following the closing of the Rights Offering.
Warrant Features: Each $50,000 of the debentures will also provide five (5)
year warrants each to purchase 20,000 shares of the Company's Common
Stock. The exercise price of the warrant will equal (i) the average of
the closing bid price of the Common Stock for the ten business days
prior to the issuance of the Subject Stock, if exercised prior to the
Rights Offering; (ii) if exercised during the three year period
Page 2
<PAGE>
following the effective date of the Rights Offering, the Rights
Offering Price; and (iii) 120% of the Rights Offering Price if
exercised thereafter. The warrants issued in connection with the
debentures convertible into shares of Series BB Preferred Stock shall
not be exercisable until receipt of Shareholder ratification of the
issuance. Warrants are redeemable for $.05 per share at the option of
the Company commencing one year after closing of Rights Offering if
the Common Stock price exceeds, for a period of 20 consecutive trading
days, the greater of $4.00 per share or (i) during years two and
three, 250% of Rights Offering price and (ii) thereafter, 300% of
Rights Offering price.
Registration Rights: Warrants and Preferred Stock - none.
Common Stock underlying Preferred Stock - none.
Common Stock underlying Warrants - one (1) demand
after one year at Company expense; unlimited
piggybacks on customary terms.
Page 3
