<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
GARNET RESOURCES CORPORATION
- - - --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- - - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- - - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- - - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- - - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - - --------------------------------------------------------------------------------
(5) Total fee paid:
- - - --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / 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> 2
[LOGO]
GARNET RESOURCES CORPORATION
333 CLAY STREET, SUITE 4500
HOUSTON, TEXAS 77002
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 21, 1995
April 28, 1995
To the Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Garnet
Resources Corporation ("Garnet") will be held at the offices of Noel Group,
Inc., 667 Madison Avenue, 25th Floor, New York, New York 10021 on June 21, 1995
at 10:00 a.m. (local time) for the following purposes:
1. To elect seven directors to hold office for the term of one year and
until their successors are elected and qualified;
2. To consider and vote upon a proposal to amend the 1990 Stock Option
Plan to increase by 300,000 shares the number of shares of Garnet's
Common Stock available for options to be granted to officers,
employees, and certain other persons or entities performing
substantial services for or on behalf of Garnet or its subsidiaries;
and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed April 24, 1995 as the record date for the
determination of the shareholders entitled to notice of and to vote at such
meeting or any adjournment thereof, and only shareholders of record at the close
of business on that date are entitled to notice of and to vote at such meeting.
A copy of Garnet's 1994 Annual Report is enclosed herewith.
You are cordially invited to attend the meeting. Whether or not you plan to
attend the meeting, it is important that your shares be represented.
Accordingly, please complete, date and sign the enclosed proxy and return it
promptly.
By Order of the Board of Directors,
EDGAR A. MORTON
Secretary
- - - --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT.
TO ENSURE A QUORUM, PLEASE COMPLETE AND RETURN THE PROXY IN THE ENCLOSED
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND
THE MEETING, YOUR PROXY WILL BE RETURNED TO YOU UPON REQUEST TO THE SECRETARY OF
THE MEETING.
- - - --------------------------------------------------------------------------------
<PAGE> 3
[LOGO]
GARNET RESOURCES CORPORATION
333 CLAY STREET, SUITE 4500
HOUSTON, TEXAS 77002
---------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF SHAREHOLDERS
JUNE 21, 1995
---------------------
This Proxy Statement and accompanying form of proxy are furnished in
connection with the solicitation of proxies by the Board of Directors of Garnet
Resources Corporation, a Delaware corporation ("Garnet"), for use at the Annual
Meeting of Shareholders to be held on June 21, 1995 at 10:00 a.m. (local time)
at the offices of Noel Group, Inc., 667 Madison Avenue, 25th Floor, New York,
New York 10021, or any adjournment or postponement thereof (the "Meeting").
A proxy in the accompanying form, which is properly executed, duly returned
to the Board of Directors and not revoked, will be voted in accordance with the
instructions contained in the proxy. If no instructions are given with respect
to any matter specified in the Notice of Annual Meeting to be acted upon at the
Meeting, the proxy will vote the shares represented thereby in favor of Items 1
and 2 as set forth in the Notice of Annual Meeting and in accordance with his
judgment on any matters which may properly come before the Meeting. Each
shareholder who has executed a proxy and returned it to the Board of Directors
may revoke the proxy by notice in writing to the Secretary of Garnet, or by
attending the Meeting in person and requesting the return of the proxy, in
either case at any time prior to the voting of the proxy. Presence at the
Meeting does not by itself revoke the proxy. The cost of the solicitation of
proxies will be paid by Garnet. In addition to the solicitation of proxies by
the use of the mails, management and regularly engaged employees of Garnet may,
without additional compensation therefor, solicit proxies on behalf of Garnet by
personal interviews, telephone, telegraph or other means, as appropriate.
Garnet will, upon request, reimburse brokers and others who are only record
holders of Garnet's Common Stock, par value $.01 per share ("Common Stock"), for
their reasonable expenses in forwarding proxy material to, and obtaining voting
instructions from, the beneficial owners of such stock.
The Board of Directors has fixed the close of business on April 24, 1995 as
the record date for determining the shareholders entitled to notice of and to
vote at the Meeting (the "Record Date"). As of the Record Date, there were
11,492,162 shares of Common Stock issued and outstanding and entitled to vote.
Each share of Common Stock entitles the holder thereof to one vote. A
majority of the shares of Common Stock issued and outstanding and entitled to
vote constitutes a quorum. Abstentions and broker's non-votes are considered
present for purposes of determining whether the quorum requirement is met. A
broker's non-vote occurs when a nominee holds shares for a beneficial owner but
cannot vote on a proposal because the nominee does not have discretionary voting
power and has not received instructions from the beneficial owner. As directors
are elected by a plurality vote, the seven nominees receiving the highest vote
totals will be elected and the outcome of the vote for directors will not be
affected by abstentions or broker's non-votes. As the approval of the amendment
to the 1990 Stock Option Plan requires the affirmative vote of a majority of the
total votes cast on the proposal, the outcome of the vote will not be affected
by abstentions or broker's non-votes.
This Proxy Statement and the proxy in the accompanying form are being sent
on or about April 28, 1995 to shareholders of record as of the close of business
on the Record Date.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as of April 3, 1995 as
to each person who, to the knowledge of Garnet, was the beneficial owner of more
than five percent of the outstanding Common Stock of Garnet.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER OR GROUP BENEFICIAL OWNERSHIP(1) CLASS(2)
-------------------------- ------------------------ ----------
<S> <C> <C>
Rockefeller & Co., Inc. ................................ 1,121,723(3) 9.7%
30 Rockefeller Plaza
New York, New York 10112
Pecks Management Partners Ltd. ......................... 1,090,910(4) 8.7%
One Rockefeller Plaza
New York, New York 10020
Rockefeller University.................................. 881,639 7.7%
1230 York Avenue
New York, New York 10021
State Street Research & Management Company.............. 838,000(5) 7.3%
One Financial Center, 38th Floor
Boston, Massachusetts 02111-2690
Wellington Management Company........................... 703,300(6) 6.1%
75 State Street
Boston, Massachusetts 02109
R. B. Haave Associates, Inc. ........................... 597,300(7) 5.2%
270 Madison Avenue
New York, New York 10016
</TABLE>
- - - ---------------
(1) Except as set forth below, to the best knowledge of Garnet, each beneficial
owner has sole voting power and sole investment power.
(2) Based on 11,492,162 shares of Garnet's Common Stock issued and outstanding
on April 3, 1995. Treated as outstanding for the purpose of computing the
percentage ownership of each beneficial owner or group are shares
("Convertible Debenture Shares") issuable to such beneficial owner or group
upon conversion of Garnet's 9 1/2% convertible subordinated debentures
("Debentures") and shares issuable upon exercise of vested stock options
issued pursuant to Garnet's stock option plans.
(3) According to a Schedule 13G, as amended through February 8, 1995, by virtue
of serving as investment manager for seven limited partnerships, one private
foundation and certain individual clients, Rockefeller & Co., Inc. has sole
voting and dispositive power with respect to 1,046,723 shares. The indicated
number of shares also includes 75,000 shares issuable to Mr. Wendell W.
Robinson upon exercise of vested stock options issued pursuant to Garnet's
stock option plans. Pursuant to Mr. Robinson's employment with Rockefeller &
Co., Inc., all benefits of such options accrue to Rockefeller & Co., Inc.,
which may be deemed the beneficial owner of such shares. See footnote 9 on
page 3.
(4) According to a Schedule 13G dated February 9, 1995 filed by Pecks Management
Partners Ltd. ("Pecks"), as a registered investment adviser, the indicated
number of shares consists of Convertible Debenture Shares issuable to three
investment advisory clients of Pecks upon conversion of Debentures owned by
such clients. One such client, Delaware State Employees' Retirement Fund,
would acquire more than 5% of Garnet's Common Stock, if its Debenture were
converted. Pecks has sole investment and dispositive power with respect to
the Convertible Debentures Shares issuable to its clients and the discretion
to convert the Debentures owned by them.
(5) According to Schedules 13G dated February 13, 1995 filed by State Street
Research & Management Company ("State Street") and Metropolitan Life
Insurance Company, the parent holding company, the indicated number of
shares is owned by various clients of State Street and State Street
disclaims any beneficial interest therein. State Street is an investment
adviser registered under the Investment Advisers
2
<PAGE> 5
Act of 1940 and, pursuant to the Schedules 13G, has sole voting power with
respect to 660,000 shares and sole dispositive power with respect to 838,000
shares.
(6) According to a Schedule 13G dated February 3, 1995, the indicated number of
shares are owned by various investment advisory clients of Wellington
Management Company, which has shared voting power with respect to 614,000
shares and shared dispositive power with respect to 703,300 shares.
(7) According to a Schedule 13G dated January 13, 1995, the indicated number of
shares are held by R. B. Haave Associates, Inc., an investment adviser
registered under the Investment Advisers Act of 1940, which has sole voting
and dispositive powers with respect to such shares.
The following table sets forth certain information as of April 3, 1995
concerning the shares of Common Stock of Garnet owned beneficially by each
director, by each of the Named Executive Officers in the Summary Compensation
Table, and by directors and officers of Garnet as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OF BENEFICIAL OF BENEFICIAL PERCENT OF
OWNER OR GROUP OWNERSHIP(1) CLASS(2)
--------------------------------------------------------- ----------------- -----------
<S> <C> <C>
W. Kirk Bosche........................................... 121,633(3) 1.0%
Robert J. Cresci......................................... 45,000(4) *
Douglas W. Fry........................................... 128,080(5) 1.1%
Montague H. Hackett, Jr.................................. 190,000(6) 1.6%
Alastair Manson.......................................... 110,000(3) *
Edgar A. Morton.......................................... 123,633(7) 1.1%
George M. Nevers......................................... 234,752(8) 2.0%
Wendell W. Robinson...................................... 79,200(9) *
Arthur L. Swanson........................................ 69,000(10) *
John V. Tunney........................................... 89,000(11) *
Directors and officers of Garnet as a group (10
persons)............................................... 1,190,298(12) 9.5%
</TABLE>
- - - ---------------
* Less than 1%
(1) Except as noted below, each beneficial owner has sole voting power and sole
investment power.
(2) Based on 11,492,162 shares of Garnet's Common Stock issued and outstanding
on April 3, 1995. Treated as outstanding for the purpose of computing the
percentage ownership of each director, each executive officer and all
directors and executive officers as a group are shares issuable upon
exercise of vested stock options issued pursuant to Garnet's stock option
plans.
(3) Consists solely of shares issuable upon exercise of vested stock options
issued pursuant to Garnet's stock option plans.
(4) Consists solely of shares issuable upon exercise of vested stock options
issued pursuant to Garnet's stock option plans. Does not include shares
beneficially owned by Pecks, a New York corporation, of which Mr. Cresci is
a managing director. For information with respect to such shares, see
footnote 4 on page 2.
(5) Consists of 13,868 shares held directly by Mr. Fry and 114,212 shares
issuable upon exercise of vested stock options issued pursuant to Garnet's
stock option plans.
(6) Consists of 75,000 shares held directly by Mr. Hackett, 10,000 shares held
by a trust for the benefit of Mr. Hackett's minor child and 105,000 shares
issuable upon exercise of vested stock options issued pursuant to Garnet's
stock option plans.
(7) Consists of 4,000 shares held directly by Mr. Morton and 119,633 shares
issuable upon exercise of vested stock options issued pursuant to Garnet's
stock option plans.
(8) Consists of 12,500 shares held directly by Mr. Nevers, 2,100 shares held by
Mr. Nevers' wife and 220,152 shares issuable upon exercise of vested stock
options issued pursuant to Garnet's stock option plans. Mr. Nevers
disclaims beneficial ownership of the shares held by his wife.
(9) Consists of 3,100 shares held directly by Mr. Robinson, 1,100 shares held
by Mr. Robinson's wife and minor children, as to which Mr. Robinson
disclaims beneficial ownership, and 75,000 shares issuable
3
<PAGE> 6
upon exercise of vested stock options issued pursuant to Garnet's stock
option plans. Pursuant to Mr. Robinson's employment with Rockefeller & Co.,
Inc., all benefits of such options accrue to Rockefeller & Co., Inc., which
may be deemed the beneficial owner of such shares. See footnote 3 on page
2.
(10) Consists of 24,000 shares held directly by Mr. Swanson and 45,000 shares
issuable upon exercise of vested stock options issued pursuant to Garnet's
stock option plans.
(11) Consists of 4,000 shares held by a trust for the benefit of Mr. Tunney's
family, of which Mr. Tunney is a co-trustee, and 85,000 shares issuable
upon exercise of vested stock options issued pursuant to Garnet's stock
option plans.
(12) Includes 149,668 shares beneficially owned and 1,040,630 shares issuable
upon exercise of vested stock options issued pursuant to Garnet's stock
option plans.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors has nominated the seven individuals whose names are
set forth below for election to the Board of Directors, each to hold office
until the next Annual Meeting of Shareholders and until their successors are
duly elected and qualified. Unless otherwise specified, the enclosed proxy will
be voted in favor of the persons named below, all of whom are now directors of
Garnet. If events not now known or anticipated make any of the nominees unable
to serve, it is intended that votes will be cast pursuant to the accompanying
proxy for such substitute nominees as the Board of Directors may designate
unless the Board of Directors reduces the number of directors. The directors are
to be elected by vote of the holders of a plurality of shares of Common Stock
entitled to vote and present in person or represented by proxy at the Meeting.
The information set forth below, furnished to the Board of Directors by the
respective individuals, shows as to each nominee and each director of Garnet his
name, age and principal position with Garnet.
<TABLE>
<CAPTION>
NAME AGE POSITION
- - - ----------------------------------- --- --------------------------------------------------
<S> <C> <C>
Montague H. Hackett, Jr. .......... 62 Chairman of the Board, Chairman of the Executive
Committee and a Director
George M. Nevers................... 62 President, Chief Executive Officer and a Director
Robert J. Cresci................... 51 Director
Alastair Manson.................... 65 Director
Wendell W. Robinson................ 54 Director
Arthur L. Swanson.................. 37 Director
John V. Tunney..................... 60 Director
</TABLE>
The following sets forth the periods during which directors have served as
such and a brief account of the business experience of such persons during the
past five years.
Montague H. Hackett, Jr. Mr. Hackett has been employed as Chairman of the
Board of Garnet since January 1995 and has served as a director of Garnet since
April 1987. Mr. Hackett is also employed by Noel Group, Inc. ("Noel"), a
publicly-traded company which conducts its principal operations through small
and medium-sized companies in which Noel holds controlling or other significant
equity interests, and was a director and President of Wood River Capital
Corporation, a Small Business Investment Company, from November 1988 and October
1989, respectively, through June 1994. Mr. Hackett is also a director and
Co-Chairman of International Gold Resources Corporation.
George M. Nevers. Mr. Nevers has served as President and a director of
Garnet since its inception, and as Chief Executive Officer of Garnet since
January 1995. From 1983 through 1985, Mr. Nevers was an executive officer and
director of Marquest Resources Corporation and Buchanan Oil Corporation, both of
which were independent oil and gas producers. Prior to 1983, he was an executive
of Coastal Corporation.
4
<PAGE> 7
Robert J. Cresci. Mr. Cresci has served as a director of Garnet since
December 1993. Mr. Cresci has been a Managing Director of Pecks Management
Partners Ltd., an investment management firm, since September 1990. From 1985 to
September 1990, Mr. Cresci was vice president of Alliance Capital Management
L.P. Mr. Cresci currently serves on the boards of Serv-Tech, Inc., EIS
International, Inc., Sepracor, Inc., Vestro Natural Foods, Inc., Olympic
Financial, Ltd., GeoWaste, Inc., Hitox, Inc., HarCor Energy, Inc., Meris
Laboratories, Inc., and several private companies.
Alastair Manson. Mr. Manson has served as a director of Garnet since July
1987. From 1978 through 1985, Mr. Manson was the President of BP North America,
Inc., the company responsible for the activities of British Petroleum in the
United States. Through 1985, and for several years prior thereto, Mr. Manson
served as a member of the board of directors of Standard Oil and BP Canada.
During 1986, Mr. Manson participated in the organization of Keep Able, Ltd.,
which provides services and equipment to the elderly and disabled. Mr. Manson
served as Chairman of the Board of Directors of Keep Able, Ltd. from December
1986 through July 1988. Mr. Manson currently serves as a member of the Board of
Governors of the Royal Brompton National Heart and Lung Hospital of London,
England and as chairman of its Finance and Investment Committees, and as a
director of Keep Able, Ltd.
Wendell W. Robinson. Mr. Robinson has served as a director of Garnet since
December 1991. Since January 1990, Mr. Robinson has been the Manager of Private
Investments for Rockefeller & Co., Inc., a registered investment adviser. From
1984 through 1989, Mr. Robinson was a consultant to Rockefeller & Co., Inc. in
the area of oil and natural gas investments. Mr. Robinson is also a director of
Noel, Gwalia Consolidated, Ltd., an Australian natural resource company,
Consolidated Nevada Goldfields Corp., a western North America gold mining
company, and several private companies.
Arthur L. Swanson. Mr. Swanson has served as a director of Garnet since
December 1993. Since 1986, Mr. Swanson has served as President and Chief
Executive Officer, and is the principal stockholder, of Ricks Exploration, Inc.,
an independent oil and gas company with interests in Oklahoma, Texas, Kansas and
the Mid Continent Basin.
John V. Tunney. Mr. Tunney has served as a director of Garnet since April
1987. Mr. Tunney has been Chairman of the Board of Logan Manufacturing Co., the
manufacturer of wide track, light weight snow grooming and utility equipment,
since February 1993, and Chairman of the Board of Cloverleaf Group, Inc., a real
estate development company, since 1981. From 1977 to 1987, Mr. Tunney was a
senior partner of the law firm of Manatt, Phelps, Rothenberg, Tunney & Phillips.
From 1971 to 1977, Mr. Tunney served as United States Senator from the State of
California and as a Member of the United States House of Representatives from
1965 to 1971. Mr. Tunney is also a director of The Prospect Group, Inc., The
Forschner Group, Inc. and Illinois Central Corporation.
Under the terms of its 9 1/2% Convertible Subordinated Debentures, Garnet
includes a candidate selected by the purchasers of the Debentures in
management's slate of nominees for election as directors and solicits proxies
for such candidate if the purchasers continue to own at least 30% in aggregate
principal amount of the Debentures originally issued. Mr. Cresci is the
candidate selected by the purchasers of the Debentures.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of Garnet held four meetings during 1994. All
directors attended at least 75% of the total of the meetings of the Board of
Directors and the committees of which they were members.
The Executive Committee, the Audit Committee and the Stock Option and
Compensation Committee are the only standing committees of the Board of
Directors. Garnet does not have a formal nominating committee; the Board of
Directors or the Executive Committee performs this function.
The Executive Committee, which is comprised of Mr. Hackett, its Chairman,
and Messrs. Nevers and Robinson, has all the powers of the Board of Directors in
the management of the business affairs of Garnet, except as such powers are
limited by the Delaware General Corporation Law. During 1994, the Executive
Committee held one meeting and also took action once by unanimous written
consent.
5
<PAGE> 8
The Audit Committee, which is comprised of Mr. Manson, its Chairman, and
Messrs. Cresci and Swanson, consults with the independent accountants of Garnet
and such other persons as the members deem appropriate, reviews the preparations
for and scope of the audit of Garnet's annual financial statements, makes
recommendations as to the engagement and fees of the independent accountants,
and performs such other duties relating to the financial statements of Garnet as
the Board of Directors may assign from time to time. The Audit Committee met
three times during 1994.
The Stock Option and Compensation Committee, which is currently comprised
of Mr. Hackett, its Chairman, and Messrs. Manson and Tunney, has all of the
powers of the Board of Directors in respect of any matters relating to the
administration of Garnet's stock option plans and the compensation of officers,
employees and other persons performing substantial services for Garnet,
including the authority to issue stock or other securities of Garnet. The Stock
Option and Compensation Committee met once in 1994.
DIRECTORS' FEES
Pursuant to the 1990 Directors' Stock Option Plan, each Garnet director who
was not a full time employee of Garnet or its subsidiaries received, in April
1994, an option to purchase 20,000 shares of Garnet Common Stock at an exercise
price of $4.05 per share, which represented the average of the fair market value
of a share of Garnet Common Stock on the ten business days preceding the date of
grant.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
earned in each of the last three fiscal years by the Chairman of the Board and
Chief Executive Officer and by each additional executive officer of Garnet
(collectively, the "Named Executive Officers"):
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION AWARDS
------------------------------- ---------------------- PAYOUTS ALL
OTHER RESTRICTED ------- OTHER
ANNUAL STOCK LTIP COMPEN-
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPEN- AWARD(S) OPTIONS/ PAYOUTS SATION
POSITION YEAR ($) ($) SATION ($) SARS(#) ($) ($)(1)
- - - --------------------------------- ------ -------- -------- ------- ---------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Albert E. Whitehead.............. 1994 $242,000 $100,000 none none none none $67,794
Chairman of the Board 1993 $220,000 $100,000 none none 56,250 none $65,166
and Chief Executive Officer 1992 $200,000 $100,000 none none 5,352 none $69,177
George M. Nevers................. 1994 $193,600 $ 80,000 none none none none $ 5,240
President 1993 $176,000 $ 80,000 none none 56,250 none none
1992 $160,000 $ 80,000 none none 5,352 none none
Edgar A. Morton.................. 1994 $ 70,400 $ 50,000 none none none none none
Vice President and 1993 $140,800 $ 64,000 none none 37,500 none none
Secretary 1992 $128,000 $ 64,000 none none 5,352 none none
W. Kirk Bosche................... 1994 $163,300 $ 67,000 none none none none $ 1,060
Vice President and 1993 $148,500 $ 67,000 none none 37,500 none none
Treasurer 1992 $135,000 $ 67,000 none none 5,352 none none
Douglas W. Fry................... 1994 $145,200 $ 61,000 none none none none none
President of Argosy Energy 1993 $132,000 $ 61,000 none none 37,500 none none
Incorporated, a subsidiary 1992 $120,000 $ 61,000 none none 5,354 none none
</TABLE>
- - - ---------------
(1) Amounts reported for Mr. Whitehead include (a) $6,640 in 1994 which
represents the premium paid on a term life insurance policy for his benefit
and (b) principal and interest which was forgiven by Garnet pursuant to the
terms of a loan made by Garnet to Mr. Whitehead in 1987, consisting of
$57,143 in principal each year and $4,011, $8,023 and $12,034 in interest in
1994, 1993 and 1992, respectively. Amounts reported for Messrs. Nevers and
Bosche represent premiums paid on term life insurance policies for the
benefit of each of them.
6
<PAGE> 9
OPTION GRANTS DURING 1994
No stock options were granted to the Named Executive Officers during 1994.
No stock appreciation rights have been issued by Garnet.
OPTION EXERCISES DURING 1994 AND YEAR END OPTION VALUES
The following table provides information related to options exercised by
the Named Executive Officers during 1994 and the number and value of options
held at year-end. No stock appreciation rights have been issued by Garnet.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES FY-END (#) AT FY-END($)(1)
ACQUIRED ON VALUE ----------------------------- -----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - - -------------------- -------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Albert E.
Whitehead......... none none 262,164 35,891 $91,875 none
George M. Nevers.... none none 210,152 35,891 $70,000 none
Edgar A. Morton..... none none 114,633 24,641 $37,188 none
W. Kirk Bosche...... none none 114,633 24,641 $37,188 none
Douglas W. Fry...... none none 108,212 24,642 $17,500 none
</TABLE>
- - - ---------------
(1) The values set forth herein represent the aggregate amount of the excess of
$3.375, the fair market value of a share of Garnet Common Stock at December
31, 1994, over the relevant exercise prices of all "in-the money" options.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions regarding compensation of Garnet's executive officers are made by
the Stock Option and Compensation Committee of the Board of Directors. Pursuant
to rules adopted by the Securities and Exchange Commission, the following report
is submitted by the members of the Committee.
Compensation Policies Regarding Executive Officers. The Committee's
executive compensation policies are intended to provide competitive levels of
compensation in order to attract and retain qualified executives, to recognize
individual contributions to the successful achievement of Garnet's business
objectives, and to align management's and shareholders' interests over the long
term. In 1994, Garnet's executive officers earned a base salary and a bonus.
Garnet's business strategy is to acquire, explore and develop potentially
significant oil and gas properties located outside of the United States. Because
of the inherent risks in such business strategy and in the exploration for oil
and gas in general, the Committee believes it is inappropriate to rely upon
mechanistic performance criteria such as profitability, revenue growth, return
on equity, market share, or operating budget performance to determine the
appropriate compensation for its executive officers, including its Chief
Executive Officer. In determining such compensation, the Committee relies
heavily on the success of management in fulfilling Garnet's business strategy
and the individual contributions which each executive has made and can be
expected to make in the future. In reviewing the annual salaries and bonuses for
1994, the Committee reviewed a number of events and developments in Garnet's
business in 1994 including Garnet's activities in Colombia, its negotiations
with a seven company consortium to drill a $10 million test well in Papua New
Guinea, its success in arranging additional joint ventures with four other
companies to drill two exploratory tests in Turkey, and its successful
completion of the first stage of its $9.2 million loan commitment from Overseas
Private Investment Corporation. The Committee also considered, on an informal
basis, the prevailing levels of compensation paid by companies with which Garnet
may be deemed to compete, the small, streamlined nature of Garnet's management
team, the savings resulting from one executive's decision to commence part-time
employment, the fact that the Company has no pension, retirement or
profit-sharing plans, information relating to standard cost-of-living
adjustments, and the bonuses and salary increases approved in 1993.
7
<PAGE> 10
The Committee believes that stock-based performance compensation
arrangements are beneficial in aligning management's and shareholders' interests
over the long-term. In prior years, the Committee has utilized Garnet's stock
option plans as an element in Garnet's compensation packages for its executive
officers. In 1994, no options were available for grant under the stock option
plans applicable to officers and employees of Garnet. As a result of the
resignation of the Chairman and Chief Executive Officer of Garnet in January
1995, additional shares became available for issuance under such stock option
plans. In February 1995, the Committee approved the issuance of additional
options to the officers and employees of the Corporation including options which
entitle Messrs. Hackett, Nevers, Morton, Bosche and Fry to purchase 100,000,
50,000, 25,000, 35,000 and 30,000 shares, respectively. Options granted pursuant
to the stock option plans have had exercise prices equal to the market price of
Garnet's Common Stock on the date the options were granted, in the case of
executive officers typically vest over a four-year period, and remain
exercisable for a period of 10 years and 30 days after the date of grant unless
the optionee resigns, retires or dies, in which case the right to exercise the
option is limited. Thus, amounts which may be realized by an executive officer
upon exercise of options result directly from appreciation in Garnet's stock
price during the particular executive officer's tenure with Garnet.
1994 Compensation of the Chief Executive Officer. In determining the 1994
compensation payable to Garnet's Chief Executive Officer, the Committee applied
the same factors and analyses as it applied to executive officers in general.
Accordingly, there is no direct relationship between the amount of such
compensation and measurable objective criteria of Garnet's performance in 1994.
The subjective factor given the most weight in determining Mr. Whitehead's 1994
compensation was the perceived necessity for providing him with a total
compensation package which the Committee believed was competitive.
SUBMITTED BY THE STOCK OPTION AND COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS:
Vincent D. Farrell, Jr. Montague H. Hackett, Jr. John V. Tunney
Alastair Manson
Mr. Farrell participated in the decisions of the Committee which were made prior
to his resignation as a director of Garnet in December 1994. Mr. Manson was
appointed as a member of the Committee in January 1995.
8
<PAGE> 11
PERFORMANCE GRAPH
The Securities and Exchange Commission requires the inclusion in this proxy
statement of a line-graph presentation comparing five year cumulative
shareholder returns on an indexed basis with a broad equity market index and
either a published industry index or an index of peer companies selected by
Garnet. Garnet has selected as a broad equity market index the CRSP Total Return
Index for the Nasdaq Stock Market (US Companies) and as a published industry
index the CRSP Index for companies with Standard Industrial Classification Code
Nos. 1310-1319 traded on the New York Stock Exchange, the American Stock
Exchange, and the Nasdaq Stock Market.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
GARNET COMMON STOCK, CRSP INDEX FOR THE NASDAQ STOCK MARKET (US COMPANIES), AND
CRSP INDEX
FOR NYSE/AMEX/NASDAQ (SIC 1310-1319 US) CRUDE PETROLEUM AND NATURAL GAS**
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) GARNET MARKET INDUSTRY
<S> <C> <C> <C>
12/31/89 100.0 100.0 100.0
12/31/90 62.1 84.9 82.2
12/31/91 86.2 136.3 89.9
12/31/92 41.4 158.6 99.8
12/31/93 39.1 180.9 115.8
12/31/94 31.0 176.9 112.3
</TABLE>
Assumes $100 invested on January 1, 1990 in Garnet Common Stock, CRSP Index for
The Nasdaq Stock Market (US Companies), and CRSP Index for NYSE/AMEX/Nasdaq (SIC
1310-1319 US) Crude Petroleum and Natural Gas.
* Total return assumes reinvestment of dividends.
** Fiscal year ending December 31.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
INDEBTEDNESS OF MANAGEMENT
As part of its management incentive program, in April 1987 Garnet loaned
$400,000 to Mr. Whitehead, who served as the Chairman and Chief Executive
Officer of Garnet from April 1987 through January 1995. Pursuant to the terms of
the loan, the outstanding principal due thereunder was payable in seven annual
installments of approximately $57,143 commencing on April 29, 1988. Interest
accrued on the unpaid principal amount at the rate of 7.02% per annum. As Mr.
Whitehead was employed by Garnet on each annual payment date for principal and
interest thereon, the obligation to make the payment of principal and interest
was waived. During 1994, the largest aggregate amount outstanding under the loan
was $61,154, of which
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<PAGE> 12
$57,143 represented principal and $4,011 represented accrued interest. The final
installment of principal and interest was waived on April 29, 1994.
The loan to Mr. Whitehead was granted as an incentive for his assumption of
the office of Chairman of the Board and Chief Executive Officer of Garnet and,
hence, was on terms more favorable than those available from unaffiliated third
parties. Future loans to officers will be for purposes related to the ordinary
course of Garnet's business, including for compensation purposes, or will be on
terms no less favorable to Garnet than those that would be obtained in a
transaction with a non-affiliate and, in each case, will be on terms approved by
the Stock Option and Compensation Committee.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires officers,
directors and holders of more than 10% of Garnet's Common Stock (collectively,
"Reporting Persons") to file reports of ownership and changes in ownership of
the Common Stock with the Securities and Exchange Commission within certain time
periods and to furnish Garnet with copies of all such reports. Based solely on
its review of the copies of such reports furnished to Garnet by such Reporting
Persons or on the written representations of such Reporting Persons, Garnet
believes that, during the year ended December 31, 1994, all of the Reporting
Persons complied with their Section 16(a) filing requirements.
PROPOSAL NO. 2
PROPOSED AMENDMENT OF 1990 STOCK OPTION PLAN
In order to attract, retain and motivate officers, employees, and other
persons who perform substantial services on behalf of Garnet, Garnet has issued
stock options under its 1987 Stock Option Plan and its 1990 Stock Option Plan
(the "1990 Plan") and has assumed the obligations of its subsidiary, Argosy
Energy Incorporated, under its 1988 Stock Option Plan. However, only a small
number of additional options are currently issuable under these plans. As the
Stock Option and Compensation Committee (the "Committee") believes stock-based
performance compensation arrangements are beneficial in aligning management's
and shareholders interests over the long term, the Board has adopted, and
recommends that the shareholders of Garnet approve the adoption of, an amendment
to the 1990 Plan to increase the number of shares of Garnet Common Stock which
may be issued upon exercise of options issued thereunder from 700,000 shares to
1,000,000 shares. The following description of the 1990 Plan is qualified in its
entirety by reference to the copy of the 1990 Plan, as proposed to be amended,
which is annexed hereto as Appendix A.
DESCRIPTION OF THE 1990 PLAN
The general purpose of the 1990 Plan is to provide an incentive to
employees and other persons who perform substantial services for or on behalf of
Garnet, its subsidiaries and affiliates and thereby enable such persons to share
in the future growth of the business of Garnet. The Committee believes that the
granting of stock options promotes continuity of management and increases
incentive and personal interest in the welfare of Garnet by those who are or may
become primarily responsible for shaping and carrying out the long-range plans
of Garnet and securing its growth and financial success.
If the amendment is approved, an aggregate of 300,000 shares of Common
Stock, with an aggregate fair market value of approximately $900,000 as of April
19, 1995, may be issued and sold pursuant to additional options to be granted
under the 1990 Plan. "Incentive stock options" ("Incentive Options") within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), may be granted to employees (eight persons), including officers whether
or not they are members of the Board of Directors (five persons), and
non-incentive stock options ("Non-incentive Options") may be granted to any such
employee and to other persons who perform substantial services for or on behalf
of Garnet, its subsidiaries or affiliates. Incentive Options and Non-incentive
Options are collectively referred to herein as "Options."
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<PAGE> 13
The Committee is vested with authority to administer and interpret the 1990
Plan, to determine the terms upon which Options may be granted, to prescribe,
amend and rescind such interpretations and determinations and to grant Options.
As the Committee has not determined the number of Options which may be granted,
if any, to each of the Named Executive Officers, employees or others, the
benefits to such persons, if the amendment is approved, are not determinable at
this time. The Board of Directors has the power to terminate or amend the 1990
Plan from time to time in such respects as it deems advisable, except that no
termination or amendment shall materially adversely affect any outstanding
Option without the consent of the grantee, and the approval of Garnet's
shareholders is required in respect of any amendment which would (i) increase
the total number of shares to the 1990 Plan, or (ii) change the designation or
class of employees or other persons eligible to receive the Options. In 1995,
the Board of Directors reconstituted the Stock Option and Compensation Committee
to include all five non-employee directors, who are ineligible to receive stock
options under the 1990 Plan. The Board also amended the 1990 Plan to clarify
that the remaining two directors, Messrs. Hackett and Nevers, who also serve as
officers of Garnet, are eligible to receive options under the 1990 Plan and to
delete the requirement that the members of the Committee be persons who are
"disinterested persons" as defined in Regulation 16b-3 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended, as no
directors of Garnet currently qualify under that definition due to the amendment
to the 1990 Directors' Stock Option Plan approved by the stockholders last year.
The price at which shares covered by an Option may be purchased pursuant
thereto is determined on the date of grant by the Committee but shall be no less
than the par value of such shares and, in the case of Incentive Options, no less
than the fair market value of such shares on the date of grant (the "Fair Market
Value"). The Fair Market Value is equal to the last sale price quoted for shares
of Garnet Common Stock on the Nasdaq Stock Market on the date of grant or, it
there is no such report on the date of grant, the average of the last sale price
on the day next preceding and succeeding such day, for which there was a report.
The purchase price of shares issuable upon exercise of an Option may be
paid in cash or by delivery of shares with a value equal to the exercise price
of the Option. The number of shares covered by an Option is subject to
adjustment for stock splits, mergers, consolidations, combinations of shares,
reorganizations and recapitalizations. Options are generally non-transferable
except by will or by the laws of descent and distribution, and in the case of
employees, with certain exceptions, may be exercised only so long as the
optionee continues to be employed by Garnet. The Committee has determined that
the right to exercise Options issued to employees vests over a period of four
years, so that 20% of the Option is exercisable immediately, and an additional
20% of the Option becomes exercisable on each anniversary of the date of the
grant. The Committee has also provided that Options will vest immediately if the
employee dies, become disabled or in the event of the dissolution, liquidation,
merger, consolidation or sale of all or substantially all of the assets of
Garnet. Non-incentive Options may be exercised within a period not exceeding 10
years and 30 days from the date of grant or within one year of the date of death
or disability, if longer.
The Committee may designate all or a part of an Option as an Incentive
Option. Incentive Options may be exercised within a period not exceeding 10
years after the date of grant, except that the term of Incentive Options granted
to a person possessing more than 10% of the total combined voting power of all
shares of stock of Garnet, its parents or subsidiaries may not exceed five years
from the date of grant and the exercise price thereof shall be no less than 110%
of the Fair Market Value on the date of grant. In addition, the aggregate Fair
Market Value (determined as of the date of grant) of shares subject to Incentive
Options which first become exercisable during any calendar year under all stock
option plans of Garnet, its parents and subsidiaries, may not exceed $100,000.
If, as a result of accelerated vesting provisions, Incentive Options valued at
(as of the date of grant) in excess of $100,000 vest in any calendar year, the
excess will be considered a Non-incentive Option.
Garnet believes that under present Federal tax laws the grant of an Option
will create no tax consequences for a grantee or Garnet. The grantee will
generally have no taxable income upon exercising an Incentive Option (except
that the alternative minimum tax may apply) and Garnet will receive no deduction
when an Incentive Option is exercised. The grantee will generally have no
taxable income even if shares are applied in payment of the exercise price of an
Incentive Option, unless such shares were acquired by exercise of an Incentive
Option and are applied in payment of the exercise price before the applicable
Incentive Option
11
<PAGE> 14
holding periods have been satisfied. The grantee must recognize a specified
amount of ordinary income with respect to the exercise of a Non-incentive Option
and Garnet will generally be entitled to a deduction for the same amount.
Grantees who utilize shares in payment of the exercise price of a Non-incentive
Option will generally not recognize gain or loss to the extent that on the date
of payment the Fair Market Value of the shares received is equal to the Fair
Market Value of the shares surrendered. The tax treatment to a grantee of a
disposition of shares acquired under the 1990 Plan depends on how long the
shares have been held, whether the shares were acquired by exercising an
Incentive Option or a Non-incentive Option, and whether shares were used in
payment of the exercise price. Generally, there will be no tax consequence to
Garnet in connection with a disposition of shares acquired under an Option
except that Garnet will generally be entitled to a deduction in the case of a
disposition of shares acquired under an Incentive Option before the applicable
Incentive Option holding periods have been satisfied.
VOTE REQUIRED FOR APPROVAL
Approval of the amendment to the 1990 Plan requires the affirmative vote of
a majority of total votes cast on the proposal.
RECOMMENDATION OF THE BOARD OF DIRECTORS
Garnet's Board of Directors recommends a vote FOR Proposal No. 2.
AUDITORS
The Board of Directors has selected Arthur Andersen LLP, independent public
accountants, to audit the consolidated financial statements of Garnet for the
year ending December 31, 1995. Representatives of Arthur Andersen LLP are
expected to be present at the Meeting and, while they are not expected to make a
statement, they will have the opportunity to do so if they desire. They will
also be available to respond to appropriate questions.
DEADLINE FOR SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the next annual meeting
of shareholders, to be held in 1996, must be received by Garnet at 333 Clay
Street, Suite 4500, Houston, Texas 77002 on or before December 30, 1995 to be
included in the proxy statement and form of proxy relating to that meeting.
ANNUAL REPORT ON FORM 10-K
Garnet's Annual Report on Form 10-K, as filed with the Securities and
Exchange Commission, is available on request and may be obtained by writing to:
Garnet Resources Corporation, 333 Clay Street, Suite 4500, Houston, Texas 77002,
Attention: Edgar A. Morton.
12
<PAGE> 15
OTHER BUSINESS
The Board of Directors does not know of any matter to be brought before the
Meeting other than the matters specified in the Notice of Annual Meeting
accompanying this Proxy Statement. The persons named in the form of proxy by the
Board of Directors will vote all proxies which have been properly executed. If
any matters not set forth in the Notice of Annual Meeting are properly brought
before the Meeting, such persons will vote thereon in accordance with their
judgment.
By Order of the Board of Directors,
EDGAR A. MORTON
Secretary
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<PAGE> 16
APPENDIX A
GARNET RESOURCES CORPORATION
1990 STOCK OPTION PLAN, AS PROPOSED TO BE AMENDED
SECTION 1. Establishment. There is hereby established the Garnet Resources
Corporation 1990 Stock Option Plan ("Plan"), pursuant to which employees and any
other persons who perform substantial services for or on behalf of GARNET
RESOURCES CORPORATION (the "Company"), its subsidiaries and certain other
entities may be granted options to purchase shares of common stock of the
Company, par value $.01 per share ("Common Stock"), and thereby share in the
future growth of the business. Notwithstanding the foregoing, any director who
is not an employee of the Company or any subsidiary of the Company shall be
ineligible to receive options under this Plan. The subsidiaries of the Company
included in this Plan (the "Subsidiaries") shall be any subsidiary of the
Company as defined in Section 425 of the Internal Revenue Code of 1986, as
amended (the "Code").
SECTION 2. Status of Options. The options which may be granted pursuant to
this Plan will constitute either incentive stock options within the meaning of
Section 422A of the Code ("Incentive Stock Options") or options which are not
Incentive Stock Options ("Non-incentive Stock Options"). Incentive Stock Options
and Non-incentive Stock Options shall be collectively referred to herein as
"Options".
SECTION 3. Eligibility. All employees of the Company or any of its
Subsidiaries (including officers, whether or not they are members of the Board
of Directors) who are employed at the time of the adoption of this Plan or
thereafter, and any other persons who perform substantial services for or on
behalf of the Company or any of its Subsidiaries, affiliates or any entity in
which the Company has an interest (collectively, the "Grantees") shall be
eligible to be granted Non-incentive Stock Options to purchase shares of Common
Stock under this Plan. All employees of the Company or any of its Subsidiaries
who are employed at the time of adoption of this Plan or thereafter shall be
eligible to be granted Incentive Stock Options under this Plan.
SECTION 4. Number of Shares Covered by Options; No Preemptive Rights. The
total number of shares which may be issued and sold pursuant to Options granted
under this Plan shall be 1,000,000 shares of Common Stock (or the number and
kind of shares of stock or other securities which, in accordance with Section 9
of this Plan, shall be substituted for such shares of Common Stock or to which
said shares shall be adjusted; hereinafter, all references to shares of Common
Stock are deemed to be references to said shares or shares so adjusted.) The
issuance of shares upon exercise of an Option shall be free from any preemptive
or preferential right of subscription or purchase on the part of any
stockholder. If any outstanding Option granted under this Plan expires or is
terminated, for any reason, the shares of Common Stock subject to the
unexercised portion of the Option will again be available for Options issued
under this Plan.
SECTION 5. Administration.
(a) This Plan shall be administered by the committee (the "Committee")
referred to in paragraph (b) of this Section. Subject to the express provisions
of this Plan, the Committee shall have complete authority, in its discretion, to
interpret this Plan, to prescribe, amend and rescind rules and regulations
relating to it, to determine the terms and provisions of the respective option
agreements (which need not be identical), to determine the Grantees to whom, and
the times and the prices at which, Options shall be granted, the option periods,
the number of shares of the Common Stock to be subject to each Option and
whether each Option shall be an Incentive Stock Option or a Non-incentive Stock
Option, and to make all other determinations necessary or advisable for the
administration of the Plan. Each Option shall be clearly identified at the time
of grant as to its status. In making such determinations, the Committee may take
into account the nature of the services rendered by the respective Grantees,
their present and potential contributions to the success of the Company and such
other factors as the Committee, in its discretion, shall deem relevant. Nothing
contained in this Plan shall be deemed to give any Grantee any right to be
granted an Option to purchase shares of Common Stock except to the extent and
upon such terms and conditions as may be determined by the Committee. The
Committee's determination on all of the matters referred to in this Section 5
shall be conclusive.
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<PAGE> 17
(b) The Committee shall consist of from three (3) to five (5) individuals
who may, but need not, be members of the Board. The Committee shall be appointed
by the Board, which may at any time, and from time to time, remove any member of
the Committee, with or without cause, appoint additional members to the
Committee and fill vacancies, however caused, in the Committee. A majority of
the members of the Committee shall constitute a quorum and all determinations of
the Committee shall be made by a majority of such quorum. Any decision or
determination of the Committee reduced to writing and signed by all of the
members of the Committee shall be fully as effective as if it had been made at a
meeting duly called and held.
(c) The Committee may at its election provide in any option agreement
covering the grant of Options under this Plan that, upon the exercise of such
Options, the Company will loan to the holder thereof such amount as shall equal
the purchase price of the shares of Common Stock issuable upon such exercise,
such loan to be on terms and conditions deemed appropriate by the Committee.
(d) Notwithstanding any provision hereof to the contrary, the Committee
shall have sole and exclusive authority with respect to the grant of Options to
directors.
SECTION 6. Terms of Incentive Stock Options. Each Incentive Stock Option
granted under this Plan shall be evidenced by an Incentive Stock Option
Agreement which shall be executed by the Company and by the person to whom such
Incentive Stock Option is granted, and shall be subject to the following terms
and conditions:
(a) The price at which shares of Common Stock covered by each
Incentive Stock Option may be purchased pursuant thereto shall be
determined in each case on the date of grant by the Committee, but shall be
an amount not less than the par value of such shares and not less than the
fair market value of such shares on the date of grant. For purposes of this
Section, the fair market value of shares of Common Stock on any day shall
be (i) in the event the Common Stock is not publicly traded, the fair
market value on such day as determined in good faith by the Committee or
(ii) in the event the Common Stock is publicly traded, the last sale price
of a share of Common Stock as reported by the principal quotation service
on which the Common Stock is listed, if available, or, if last sale prices
are not reported with respect to the Common Stock, the mean of the high bid
and low asked prices of a share of Common Stock as reported by such
principal quotation service, or, if there is no such report by such
quotation service for such day, such fair market value shall be the average
of (i) the last sale price (or, if last sale prices are not reported with
respect to the Common Stock, the mean of the high bid and low asked prices)
on the day next preceding such day for which there was a report and (ii)
the last sale price (or, if last sale prices are not reported with respect
to the Common Stock, the mean of the high bid and low asked prices) on the
day next succeeding such day for which there was a report, or as otherwise
determined by the Committee in its discretion pursuant to any reasonable
method contemplated by Section 422A of the Code and any regulations issued
pursuant to that Section.
(b) The option price of the shares to be purchased pursuant to each
Incentive Stock Option shall be paid in full in cash, or by delivery (i.e.
surrender) of shares of Common Stock of the Company then owned by the
Grantee, at the time of the exercise of the Incentive Stock Option. Shares
of Common Stock so delivered will be valued on the day of delivery for the
purpose of determining the extent to which the option price has been paid
thereby, in the same manner as provided for the purchase price of Incentive
Stock Options as set forth in paragraph (a) of this Section, or as
otherwise determined by the Committee, in its discretion, pursuant to any
reasonable method contemplated by Section 422A of the Code and any
regulations issued pursuant to that Section.
(c) Each Incentive Stock Option Agreement shall provide that such
Incentive Stock Option may be exercised by the Grantee, in such parts and
at such times as may be specified in such Agreement, within a period not
exceeding ten years after the date on which the Incentive Stock Option is
granted (hereinafter called the "Incentive Stock Option Period") and, in
any event, only during the continuance of the employee's employment by the
Company or any of its Subsidiaries or during the period of three months
after the termination of such employment to the extent that the right to
exercise such Incentive Stock Option had accrued at the date of such
termination; provided, however, that if Incentive Stock Options as to 100
or more shares are held by a Grantee, then such Incentive Stock Options may
not be exercised for
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<PAGE> 18
less than 100 shares at any one time, and if Incentive Stock Options for
less than 100 shares are held by a Grantee, then Incentive Stock Options
for all such shares must be exercised at one time; and provided, further,
that, if the Grantee, while still employed by the Company or any of its
Subsidiaries, shall die within the Incentive Stock Option Period, the
Incentive Stock Option may be exercised, to the extent specified in the
Incentive Stock Option Agreement, and as herein provided, but only prior to
the first to occur of:
(i) the expiration of the period of one year after the date of the
Grantee's death, or
(ii) the expiration of the Incentive Stock Option Period, by the
person or persons entitled to do so under the Grantee's will, or, if the
Grantee shall fail to make testamentary disposition of said Incentive
Stock Option, or shall die intestate, by the Grantee's legal
representative or representatives.
(d) Each Incentive Stock Option granted under this Plan shall by its
terms be non-transferable by the Grantee except by will or by the laws of
descent and distribution.
(e) Notwithstanding the foregoing, if an Incentive Stock Option is
granted to a person at any time when such person owns, within the meaning
of Section 425(d) of the Code, more than 10% of the total combined voting
power of all classes of stock of the employer corporation (or a parent or
subsidiary of such corporation within the meaning of Section 425 of the
Code) the price at which each share of Common Stock covered by such
Incentive Stock Option may be purchased pursuant to such Incentive Stock
Option shall not be less than 110% of the fair market value (determined as
in paragraph (a) of this Section) of the shares of Common Stock at the time
the Incentive Stock Option is granted, and such Incentive Stock Option must
be exercised within a period specified in the Incentive Stock Option
Agreement which does not exceed five years after the date on which such
Incentive Stock Option is granted.
(f) The Incentive Stock Option Agreement entered into pursuant hereto
may contain such other terms, provisions and conditions not inconsistent
herewith as shall be determined by the Committee including, without
limitation, provisions (i) requiring the giving of satisfactory assurances
by the Grantee that the shares are purchased for investment and not with a
view to resale in connection with a distribution of such shares, and will
not be transferred in violation of applicable securities laws, (ii)
restricting the transferability of such shares during a specified period
and (iii) requiring the resale of such shares to the Company at the option
price if the employment of the employee terminates prior to a specified
time. In addition, the Committee, in its discretion, may afford to holders
of Incentive Stock Options granted under this Plan the right to require the
Company to cause to be registered under the Securities Act of 1933, as
amended, for public sale by the holders thereof, shares of Common Stock
subject to such Incentive Stock Options upon such terms and subject to such
conditions as the Committee may determine to be appropriate.
(g) In the discretion of the Committee, a single Stock Option
Agreement may include both Incentive Stock Options and Non-incentive Stock
Options, or those options may be included in separate stock option
agreements.
SECTION 7. Terms of Non-incentive Stock Options. Each Non-incentive Stock
Option granted under this Plan shall be evidenced by a Non-incentive Stock
Option Agreement which shall be executed by the Company and by the person to
whom such Non-incentive Stock Option is granted, and shall be subject to the
following terms and conditions:
(a) The price at which shares of Common Stock covered by each
Non-incentive Stock Option may be purchased pursuant thereto shall be an
amount not less than the par value of such shares.
(b) Each Non-incentive Stock Option Agreement shall provide that such
Non-incentive Stock Option may be exercised by the Grantee, in such parts
and at such times as may be specified in such
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<PAGE> 19
Agreement, within a period up to and including ten years and thirty days
after the date on which the Non-incentive Stock Option is granted.
(c) Each Non-incentive Stock Option granted under this Plan shall by
its terms be non-transferable by the optionee except by will or by the laws
of descent and distribution or pursuant to a qualified domestic relations
order as defined by the Code or Title I of the Employee Retirement Income
Security Act, or the rules thereunder.
(d) The Non-incentive Stock Option Agreement entered into pursuant
hereto may contain such other terms, provisions and conditions not
inconsistent herewith as shall be determined by the Committee, in its sole
discretion, including without limitation the terms, provisions and
conditions set forth in Section 6(f) with respect to Incentive Stock Option
Agreements.
SECTION 8. Limit on Option Amount. Notwithstanding any provision contained
herein, the aggregate fair market value (determined under Section 6(a) as of the
time such Incentive Stock Options are granted) of the shares of Common Stock
with respect to which Incentive Stock Options are first exercisable by any
employee during any calendar year (under all stock option plans of the
employee's employer corporation and its parent and subsidiary corporation within
the meaning of Section 425 of the Code) shall not exceed $100,000. An option may
be granted which exceeds this $100,000 limitation, as long as under then
applicable law only the portion of such an option which is exercisable for
shares of Common Stock in excess of the $100,000 limitation shall be treated as
a Non-incentive Stock Option. The limit in this paragraph shall not apply to
options which are designated as Non-incentive Stock Options, and, except as
otherwise provided herein, there shall be no limit on the amount of such options
which may be first exercisable in any year.
SECTION 9. Adjustment of Number of Shares. In the event that a dividend
shall be declared upon the shares of Common Stock payable in shares of Common
Stock, the number of shares of Common Stock then subject to any Option granted
hereunder, and the number of shares reserved for issuance pursuant to this Plan
but not yet covered by an Option, shall be adjusted by adding to each of such
shares the number of shares which would be distributable thereon if such share
had been outstanding on the date fixed for determining the stockholders entitled
to receive such stock dividend. In the event that the outstanding shares of
Common Stock shall be changed into or exchanged for a different number or kind
of shares of stock or other securities of the Company or of another corporation,
whether through reorganization, recapitalization, stock split-up, combination of
shares, merger or consolidation, then there shall be substituted for each share
of Common Stock subject to any such Option and for each share of Common Stock
reserved for issuance pursuant to the Plan but not yet covered by an Option, the
number and kind of shares of stock or other securities into which each
outstanding share of Common Stock shall be so changed or for which each such
share shall be exchanged; provided, however, that in the event that such change
or exchange results from a merger or consolidation, and in the judgment of the
Board of Directors such substitution cannot be effected or would be
inappropriate, or if the Company shall sell all or substantially all of its
assets, the Company shall use reasonable efforts to effect some other adjustment
of each then outstanding Option which the Board of Directors, in its sole
discretion, shall deem equitable. In the event that there shall be any change,
other than as specified above in this Section 9, in the number or kind of
outstanding shares of Common Stock or of any stock or other securities into
which such shares of Common Stock shall have been changed or for which they
shall have been exchanged, then, if the Board of Directors shall determine that
such change equitably requires an adjustment in the number or kind of shares
theretofore reserved for issuance pursuant to the Plan but not yet covered by an
Option and of the shares then subject to an Option or Options, such adjustment
shall be made by the Board of Directors and shall be effective and binding for
all purposes of this Plan and of each stock option agreement. Notwithstanding
the foregoing, if any adjustment in the number of shares which may be issued and
sold pursuant to Options is required by the Code or regulations issued pursuant
thereto to be approved by the stockholders in order to enable the Company to
issue Incentive Stock Options pursuant to this Plan, then no such adjustment
shall be made without the approval of the stockholders. In the case of any such
substitution or adjustment as provided for in this Section, the option price in
each stock option agreement for each share covered thereby prior to such
substitution or adjustment will be the total option price for all shares of
stock or other securities which shall have been substituted for each such share
or to which such share shall
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<PAGE> 20
have been adjusted pursuant to this Section 9. No adjustment or substitution
provided for in this Section 9 shall require the Company, in any stock option
agreement, to sell a fractional share, and the total substitution or adjustment
with respect to each stock option agreement shall be limited accordingly.
Notwithstanding the foregoing, in the case of Incentive Stock Options, if the
effect of the adjustments or substitution is to cause the Incentive Stock Option
to fail to continue to qualify as an Incentive Stock Option or to cause a
modification, extension or renewal of such Incentive Stock Option within the
meaning of Section 425 of the Code, the Board of Directors shall use reasonable
efforts to effect such other adjustment of each then outstanding option as the
Board of Directors, in its sole discretion, shall deem equitable.
SECTION 10. Amendments. This Plan may be terminated or amended from time to
time by vote of the Board of Directors; provided, however, that no such
termination or amendment shall materially adversely affect or impair any then
outstanding Option without the consent of the Grantee thereof and no amendment
which shall (i) change the total number of shares which may be issued and sold
pursuant to Options granted under this Plan, or (ii) change the designation of
employees eligible to receive Incentive Stock Options or the class of employees
or other persons eligible to receive Options, shall be effective without the
approval of the stockholders. Notwithstanding the foregoing, the Plan may be
amended by the Committee to incorporate any amendments made to the Code which
the Committee deems to be necessary or desirable to preserve incentive stock
option status for outstanding Incentive Stock Options and to preserve the
ability to issue Incentive Stock Options pursuant to this Plan.
SECTION 11. Termination. Except to the extent necessary to govern
outstanding Options, this Plan shall terminate on, and no additional Options
shall be granted after, ten years from the date the Plan is adopted, or ten
years from the date the Plan is approved by the stockholders, whichever is
earlier.
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<PAGE> 21
/X/ Please mark
your votes
as shown.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR ALL NOMINEES" IN PROPOSAL NO. 1
AND "FOR" PROPOSAL NO. 2.
_______________
COMMON
FOR all
Nominees listed
(except as marked WITHHELD FOR
to the right) all nominees
1 Election of the following nominees / / / /
as Directors: Messrs.: Cresci, Hackett,
Manson, Nevers, Robinson, Swanson
and Tunney.
Withheld for the following only:
(Write the name(s) of the nominee(s) in the space below.)
____________________________________________________________
FOR AGAINST ABSTAIN
2 Approval of the amendment to / / / / / /
increase the number of shares
issuable under the 1990 Stock
Option Plan from 700,000 to
1,000,000.
Please mark, date and sign as your name appears to
the left and return in the enclosed envelope. If the
signer is a corporation, please sign the full
corporate name by duly authorized officer. If the
signer is a partnership, please sign in partnership
name by an authorized person. If shares are held
jointly, each shareholder named should sign.
SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
Signature(s) ______________________________ Date _______________ ___ , 1995
<PAGE> 22
GARNET RESOURCES CORPORATION
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JUNE 21, 1995
The undersigned shareholder of Garnet Resources Corporation, a Delaware
corporation (the "Company"), hereby appoints Montague H. Hackett, Jr., George M.
Nevers and Edgar A. Morton, or any of them, acting singly in the absence of the
others, attorneys and proxies, with full power of substitution and revocation,
to vote as designated below, all of the shares of Common Stock of the Company
which the undersigned is entitled to vote at the Annual Meeting of Shareholders
of the Company to be held at the offices of Noel Group, Inc., 667 Madison
Avenue, 25th Floor, New York, New York, 10021 on June 21, 1995, at 10:00 a.m.
(local time) or any adjournment or postponement thereof. In their discretion,
the proxies are authorized to vote upon such other business as may properly
come before the meeting.
The proxy is solicited on behalf of the Board of Directors of the
Company and when properly executed will be voted in the manner directed herein
by the undersigned shareholder. IF NO DIRECTION IS MADE, IT WILL BE VOTED "FOR
ALL NOMINEES" IN PROPOSAL NO. 1 AND "FOR" PROPOSAL NO. 2.
(Continued and to be signed and dated on reverse side)
