<PAGE> 1
- --------------------------------------------------------------------------------
FORM 10-K/A
AMENDMENT NO. 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________ to ___________
Commission file number 1-10762
BENTON OIL AND GAS COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 77-0196707
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
6267 CARPINTERIA AVENUE, SUITE 200, CARPINTERIA, CA 93013
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (805) 566-5600
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON
------------------- WHICH REGISTERED
----------------
COMMON STOCK, $.01 PAR VALUE NYSE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK PURCHASE WARRANTS, $11.00 EXERCISE PRICE NASDAQ
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Approximate aggregate market value of common stock held by non-affiliates of the
registrant: $86,412,117, computed on the basis of $3.00 per share, closing price
of the common stock on the NYSE on March 24, 2000.
There were 29,576,966 shares of the registrant's Common Stock, $.01 par value,
outstanding as of March 24, 2000.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
<PAGE> 2
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below is information regarding the Company's directors, executive
officers and certain key employees:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Michael B. Wray 64 Director, Office of the Chief Executive
Bruce M. McIntyre 72 Director, Office of the Chief Executive
E. Sven Hagen 42 Senior Vice President - Exploration and Production
David H. Pratt 50 Senior Vice President, Chief Financial Officer and Treasurer
Chris C. Hickok 42 Vice President - Controller, Chief Accounting Officer
Andrei E. Popov 36 Vice President - Business Development
A. E. Benton 57 Director
Richard W. Fetzner 70 Director
Garrett A. Garrettson 55 Director
</TABLE>
MICHAEL B. WRAY
Michael B. Wray was named to the Office of the Chief Executive in August 1999
upon the resignation of Mr. A.E. Benton, and was first elected Vice Chairman in
February 1998. Mr. Wray served as President of Benton from January 1996 to
February 1998. He served as Chief Financial Officer of Benton from January 1996
to August 1997. From January 1994 through December 1995, Mr. Wray served as a
consultant to Benton. From January 1992 until July 1993, Mr. Wray served as vice
president-finance and administration of Del Mar Operating, Inc. From 1985
through 1991, Mr. Wray served as an independent financial consultant to oil and
gas exploration and production companies. From 1979 to 1985, Mr. Wray served as
a senior financial officer of Guardian Oil Company, Huffco Petroleum Corporation
and May Petroleum, Inc. Prior to that time, Mr. Wray worked for over 15 years in
New York as an investment banker, security analyst and officer in various
investment firms including Donaldson, Lufkin & Jenrette, Inc., Drexel & Co. and
L.F. Rothschild & Co. Mr. Wray began his career as an attorney with Morgan,
Lewis & Bockius in Philadelphia. Mr. Wray holds a B.A. degree from Amherst
College and a L.L.B. degree from Columbia Law School.
BRUCE M. MCINTYRE
Bruce M. McIntyre was named to the Office of the Chief Executive in August 1999
upon the resignation of Mr. A.E. Benton, and is a private investor and a
consultant in the oil and gas industry. Mr. McIntyre also serves in a management
capacity with several small, private companies in the energy field. He currently
serves as a director of MSC Corp., a private company which manages oil wells in
Illinois. From 1981 to 1984, Mr. McIntyre served as president of Rocky Mountain
Exploration Company, ultimately negotiating its merger into Carmel Energy, Inc.,
on whose board of directors he served until March 1986. Prior to that time, Mr.
McIntyre held various management positions with C&K Petroleum, Inc. (now ENSTAR
Petroleum, Inc.), Jenney Oil Company and Sinclair Oil & Gas Company. Mr.
McIntyre holds a B.A. degree from Harvard College and a M.B.A. degree from the
Harvard University Graduate School of Business Administration.
E. SVEN HAGEN
E. Sven Hagen was first appointed gulf coast geologist in March 1990, was
elected Vice President - Exploration and Development in July 1995 and was
elected Senior Vice President - Exploration and Production in October 1997. From
March 1987 to February 1990, Dr. Hagen was employed by Shell Oil Company as an
exploration geologist responsible for the technical evaluation of the oil and
gas potential of West Africa salt basins including Angola, Congo, Gabon and
Namibia. From December 1985 to February 1987, Dr. Hagen was employed by Standard
Oil Production Company as an Exploration Geologist. Dr. Hagen holds a B.A.
degree in geology from the University of California at Santa Barbara and a Ph.D.
in geology from the University of Wyoming.
2
<PAGE> 3
DAVID H. PRATT
David H. Pratt rejoined the Company as Senior Vice President of Finance and
Administration and Chief Financial Officer in January 2000. From July 1996 to
January 2000, Mr. Pratt was a financial consultant to the Company. From January
1996 to June 1996, Mr. Pratt was Vice President - International Finance. From
April 1989 to December 1995, Mr. Pratt served as Vice President-Finance, Chief
Financial Officer and Treasurer of the Company. From 1987 to 1989, Mr. Pratt was
a consultant in the accounting services and systems industry. From 1982 to 1987,
Mr. Pratt was employed by May Petroleum Inc., becoming assistant treasurer. He
also served as budget and planning manager, and managed corporate and
partnership investor relations and other administrative areas. From 1974 to
1982, Mr. Pratt was employed by Arthur Andersen & Co., and he became a Certified
Public Accountant in 1975. Mr. Pratt holds B.S. and M.B.A. degrees from Texas
Christian University.
CHRIS C. HICKOK
Chris C. Hickok was first appointed controller in November 1991 and was elected
Vice President - Controller and Chief Accounting Officer in January 1995. From
March 1979 to September 1991, Mr. Hickok was employed by Mission Resources, Inc.
and held various positions in the accounting and finance department including
financial analyst, assistant controller and controller. Mr. Hickok holds a B.S.
degree in business administration from California State University at Hayward
and is a Certified Management Accountant.
ANDREI E. POPOV
Andrei E. Popov was employed by the Company in May 1992 and in 1995 was
appointed manager of corporate business development. In May 1998 he was elected
Vice President - Corporate Business Development. From 1986 to 1992, Mr. Popov
was employed in various managerial and professional positions in Russia, most
recently as Deputy Director General of the Russian Canadian Joint Venture EMING,
managing operations of the joint venture on behalf of the Canadian party. Prior
to that he held research positions for the Russian Oil and Gas Geophysical
Association "Neftegeophysica," one of the largest geophysical contractors in
Russia, and the Academy of Science Institute of Physics in Moscow. Mr. Popov
received his M.S. degree in physics from the Moscow Engineering Physics
Institute.
A. E. BENTON
A. E. Benton, founder of the Company, resigned as Chief Executive Officer and
Chairman of the Board in August 1999, and in February 2000 he resigned as an
employee and became a consultant to the Company. Mr. Benton was elected
President of the Company in February 1998, and was first elected Chief Executive
Officer and Chairman of the Board of the Company in September 1988. Mr. Benton
has served as director of the Company since September 1988. From 1986 to October
1988, Mr. Benton was employed as president and director of Benton Petroleum
Company. From 1981 to 1986, Mr. Benton was employed by May Petroleum Inc.,
becoming its senior vice president of exploration. From 1979 to 1981, Mr. Benton
was employed by TransOcean Oil Company and, upon TransOcean's acquisition by
Mobil Oil Corporation, he was employed by another subsidiary of Mobil Oil
Corporation as manager of geophysics. He was employed from 1968 to 1979 by Amoco
Oil Company in various positions, including director of applied geophysical
research. Mr. Benton has a B.S. degree in geophysics from California State
University.
RICHARD W. FETZNER
In September 1997, Richard W. Fetzner retired as associate professor of business
administration at California Lutheran University in Thousand Oaks, California
where he had taught since 1989. From 1984 to 1989, Dr. Fetzner served in various
academic capacities at the University of Singapore and California Lutheran
University and was a consultant to the World Bank. From 1979 to 1984, Dr.
Fetzner served as group vice president of Sun Company, Inc. and president of Sun
Exploration and Production Company in Dallas, Texas. From 1958 to 1979, he
served in various management and professional positions with Sun Oil Company and
its subsidiaries including president of Sun International, Inc. and Sun Marine
Transport, Inc. Dr. Fetzner holds a B.A. from Augustana College, an M.S. in
geology from the University of Wisconsin, a Ph.D. in geology and economics from
the University of Wisconsin and an M.B.A. from Drexel University.
GARRETT A. GARRETTSON
Garrett A. Garrettson was elected chief executive officer and president of
Spectrian Corporation, a publicly held company, in 1996. Spectrian is a leading
independent supplier of high-power amplifiers to the wireless communications
industry. From 1993 to 1996, Dr. Garrettson served as president and chief
executive officer of Censtor Corporation. From 1989 to 1993, Dr. Garrettson
served as Vice President of Seagate Technology; and from 1986 to 1989, Dr.
Garrettson served as vice president of Imprimis Technology, a wholly-owned
subsidiary of Control Data Corporation. Prior to that time, after serving in the
United States Navy and Naval Reserves, Dr. Garrettson held various positions
with Hewlett Packard Company, including laboratory director, department manager,
project manager, and research engineer. Dr. Garrettson serves on the board of
directors of Spectrian Corporation and Redlake Imaging. Dr. Garrettson holds
B.S. and M.S. degrees in engineering physics and a Ph.D. in mechanical
engineering from Stanford University.
3
<PAGE> 4
ITEM II. EXECUTIVE COMPENSATION
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------------- -----------------
OTHER ALL OTHER
NAME AND SALARY BONUS COMPENSATION OPTIONS/SARS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
A. E. Benton, 1999 $485,000 $150,000 (2) 325,000 $1,545(3)
President and Chief Executive 1998 485,000 50,000 90,000 1,963
Officer (1) 1997 485,000 200,000 200,000 1,935
Michael B. Wray, 1999 203,077 40,000 (2) 175,000 2,478(3)
Office of the Chief Executive (4) 1998 400,000 0 48,000 3,233
1997 400,000 50,000 30,000 3,019
Bruce M. McIntyre, 1999 0 0 $11,000 60,000 46,250(5)
Office of the Chief Executive (5) 1998 0 0 0 10,000 38,250
1997 0 0 0 10,000 35,250
E. Sven Hagen, 1999 250,000 40,000 (2) 225,000 353(3)
Senior Vice President - 1998 250,000 0 20,000 445
Exploration and Production 1997 170,000 50,000 50,000 439
James M. Whipkey, 1999 250,000 40,000 (2) 225,000 353(3)
Senior Vice President - 1998 250,000 0 20,000 445
Chief Financial Officer 1997 108,100 150,000 100,000 16
and Treasurer (6)
Chris C. Hickok, 1999 150,000 0 (2) 115,000 353(3)
Vice President - Controller 1998 150,000 0 5,000 445
1997 122,000 25,000 10,000 433
Andrei Popov, 1999 150,000 0 (2) 115,000 262(3)
Vice President - Business 1998 140,385 0 10,000 288
Development 1997 104,000 20,000 20,000 170
</TABLE>
(1) Mr. Benton resigned as President and Chief Executive Officer on August
31, 1999. In February 2000, Mr. Benton resigned as an employee and
entered into a consulting agreement with the Company. See "Certain
Relationships and Related Party Transactions".
(2) The aggregate amount of additional compensation reported is less than
the lesser of $50,000 or 10% of the total annual salary and bonus
reported for the named executive officer. No other annual compensation
was paid or payable to the named executive officers in the years
indicated.
(3) Represents premiums paid by Benton with respect to term life insurance
on behalf of the named executive officers.
(4) Mr. Wray was elected President of Benton in January 1996. Mr. Wray
resigned as President of Benton and was appointed Vice Chairman of the
Board in February 1998. Mr. Wray was named to the Office of the Chief
Executive on August 31, 1999. See "Certain Relationships and Related
Party Transactions."
(5) Mr. McIntyre was named to the Office of Chief Executive on August 31,
1999. He received $11,000 in consulting fees during 1999 for serving in
this capacity. Mr. McIntyre received directors fees of $46,250, $38,250
and $35,250 in 1999, 1998 and 1997, respectively. Mr. McIntyre is not
an employee.
(6) Mr. Whipkey was elected Senior Vice President of Benton in August 1997.
In connection with his employment with Benton, Mr. Whipkey was
reimbursed an aggregate of $5,465 for relocation expenses (not
reflected in this table). Of the 1997 bonus reported, $100,000 reflects
the signing bonus paid to Mr. Whipkey upon employment with Benton. Mr.
Whipkey resigned from Benton in January 2000. In connection with his
resignation, the company entered into a separation agreement with Mr.
Whipkey and paid him a lump sum severance payment of $126,923 (not
reflected in this table).
4
<PAGE> 5
The following table shows information concerning options to purchase Common
Stock granted to certain individuals during 1999.
<TABLE>
<CAPTION>
% OF TOTAL
OPTIONS/SARS
GRANTED TO
EMPLOYEES IN EXERCISE OR GRANT DATE
OPTIONS/SARS FISCAL BASE PRICE EXPIRATION PRESENT VALUE
NAME GRANTED YEAR ($/SHARE) DATE ($)(1)
---- ------------ ------------ ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
A.E. Benton 300,000 11.95% $2.750 1/13/09 $667,480
25,000 1.00% 2.125 11/12/09 43,632
Michael B. Wray 50,000 1.99% 2.750 1/13/09 111,247
125,000 4.98% 2.125 11/12/09 218,160
Bruce M. McIntyre 10,000 (2) 2.688 9/24/09 22,051
50,000 (2) 2.125 11/12/09 87,264
E. Sven Hagen 100,000 3.98% 2.750 1/13/09 222,493
125,000 4.98% 2.125 11/12/09 218,160
James M. Whipkey 100,000 3.98% 2.750 1/13/09 222,493
125,000 4.98% 2.125 11/12/09 218,160
Chris C. Hickok 35,000 1.39% 2.750 1/13/09 77,873
80,000 3.19% 2.125 11/12/09 139,623
Andrei Popov 50,000 1.99% 2.750 1/13/09 111,247
65,000 2.59% 2.125 11/12/09 113,443
</TABLE>
(1) To calculate the present value of option/SAR grants, the Company has
used the Black-Scholes option pricing model. The actual value, if any,
an executive may realize will depend on the excess of the stock price
over the exercise price on the date the option is exercised, so that
there is no assurance the value realized by an executive will be at or
near the value estimated by the Black-Scholes model. The estimated
values under that model for the stock options granted on January 13,
September 24 and November 12 are based on assumptions that include (i)
a stock price volatility of 72.71%, (ii) a risk-free rate of return
based on a 10-year U.S. Treasury rate at the time of grant of 5.13%,
6.23% and 6.31%, respectively, and (iii) an option exercise term of ten
years. No adjustments were made for the non-transferability of the
options or to reflect any risk of forfeiture prior to vesting. The
Securities and Exchange Commission requires disclosure of the potential
realizable value or present value of each grant. The Company's use of
the Black-Scholes model to indicate the present value of each grant is
not an endorsement of this valuation, which is based on certain
assumptions, including the assumption that the option will be held for
the full ten-year term prior to exercise.
(2) Mr. McIntyre is not an employee and his option grants have not been
included in the percentage calculation.
5
<PAGE> 6
The following table provides information regarding the exercise of stock
options during 1999 by certain individuals and the year-end value of unexercised
options for certain individuals.
<TABLE>
<CAPTION>
AGGREGATED OPTIONS/SAR EXERCISES IN 1999 AND YEAR-END OPTION/SAR VALUES
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY
YEAR-END (#) OPTIONS/SARS($)
SHARES ACQUIRED VALUE ----------------------------- ------------------------------
ON EXERCISE REALIZED
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ ------ ------------------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
A.E. Benton 0 0 1,348,333 451,667 0 0
Michael B. Wray 0 0 326,000 217,000 0 0
Bruce M. McIntyre 0 0 100,000 50,000 0 0
E. Sven Hagen 0 0 155,000 255,000 0 0
James M. Whipkey 0 0 73,334 271,666 0 0
Chris C. Hickok 0 0 53,334 121,666 0 0
Andrei Popov 0 0 46,666 135,000 0 0
</TABLE>
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with certain officers and key
employees of the Company (the "Employment Agreements"), which contain severance
provisions in the event of a change in control of the Company. Pursuant to some
of the Employment Agreements, in the event of a proposed change in control (as
defined in the Employment Agreements), the employee has agreed to remain with
the Company until the earliest of (a) 180 days from the occurrence of such
proposed change in control, (b) termination of the employee's employment by
reason of death or disability (as defined in the Employment Agreement), or (c)
the date on which the employee first becomes entitled to receive benefits under
the Employment Agreement by reason of disability or termination of his
employment following a change in control. In other Employment Agreements there
is no requirement for the employee to remain with the Company for 180 days from
the occurrence of the proposed change of control. Except for the requirement for
some employees to so remain employed by the Company, as discussed above, the
Company or the employee may terminate the employee's employment prior to or
after a change in control either immediately or after certain notice periods,
subject to the Company's obligation to provide benefits specified in the
Employment Agreements.
In the event of a change in control, the term of the Employment Agreements will
continue in effect for an additional 24 months after such change in control,
subject to certain exceptions described therein. Following a change in control
of the Company and for a period of 24 months following such event, if the
employee is terminated without cause (as defined in the Employment Agreement) or
if employment is terminated by the employee for good reason (as defined in the
Employment Agreement), the employee is entitled to a cash severance payment
equal to a multiple of his annual base salary at the rate in effect prior to
termination. For each of Messrs. Hagen and Pratt, such multiple is three times
his annual base salary. For Mr. Wray and Mr. Hickok, such multiple is one and
two times their annual base salary, respectively. Mr. Benton has entered into a
consulting agreement with the Company, which also provides for severance
payments in the event of a change in control, equal to three times his annual
consulting payments. The employee, and his dependents, will also be entitled to
participate in all life, accidental death, medical and dental insurance plans of
the Company in which the employee was entitled to participate at termination for
a period of up to two years (and up to seven years in certain circumstances).
However, such amounts will not be payable if termination is (a) due to death,
normal retirement, permanent disability, or voluntary action of the employee
other than for good reason (as defined), (b) by the Company for cause (as
defined in the Employment Agreement) or (c) if such payment is not deductible by
the Company as a result of the operation of Section 280G of the Internal Revenue
Code.
In January 2000, Mr. Wray entered into an employment agreement for a term of one
year, with an annual base salary of $300,000. In January 2000, Mr. Pratt and in
February 2000, Dr. Hagen each entered into employment agreements for three year
terms, each with an annual base salary of $250,000. In June 1998, Mr. Hickok
entered into an employment agreement, which may be terminated by either party
with proper notice, with a current annual base salary of $180,000. Salaries are
reviewed annually and bonuses are within the discretion of the Board of
Directors.
6
<PAGE> 7
REMUNERATION OF DIRECTORS
Directors are elected at the annual stockholders' meeting and hold office until
the next annual stockholders' meeting and until their successors are elected and
qualified. Directors who are not Company officers are paid an annual retainer of
$20,000 and are paid a fee of $2,000 for each Board meeting attended, $500 for
each committee meeting attended and $250 for participation in telephonic
meetings. Directors are reimbursed for all travel and related expenses.
Additionally, the Company's Director Stock Option Plan provides that each person
who is elected to serve as a non-employee director of the Company is annually
and automatically granted an option to purchase 10,000 shares of Common Stock at
an exercise price equal to the market price on September 26 of each year.
7
<PAGE> 8
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to (i) each person known
to the Company to be the beneficial owner of more than five percent of the
issued and outstanding shares of Common Stock of the Company as of April 30,
2000, (ii) the directors, (iii) certain of the executive officers, and (iv) all
officers and directors as a group. The Common Stock ownership information
includes current stockholdings, Common Stock subject to options under the
Company's stock option plans which are currently exercisable or exercisable
within 60 days and securities which are convertible into shares of Common Stock
within 60 days. No schedules 13D were filed with the Securities and Exchange
Commission reporting ownership of 5% or more as of December 31, 1999.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF SHARES BENEFICIALLY PERCENTAGE OF SHARES
BENEFICIAL OWNER OWNED BENEFICIALLY OWNED (1)
-------------------------------------------------- ----------------------------------- ----------------------------
<S> <C> <C> <C>
Heartland Advisors 7,081,900(2) Direct 14.20%
790 North Milwaukee Street
Milwaukee, WI 53202
A.E. Benton 600,000 Direct 6.91%
1,448,333 Vested Options
Michael B. Wray 59,300 Direct 1.22%
302,667 Vested Options
James M. Whipkey 73,667 Vested Options *
E. Sven Hagen 188,333 Vested Options *
David H. Pratt 80,000 Direct *
143,333 Vested Options
Chris C. Hickok 500 Direct *
65,001 Vested Options
Andrei Popov 300 Direct *
66,667 Vested Options
Bruce M. McIntyre 15,900 Direct *
90,000 Vested Options
Richard W. Fetzner 1,667 Direct *
90,000 Vested Options
Garrett A. Garrettson 14,000 Direct *
40,000 Vested Options
All directors and executive officers as a group 771,667 Direct 10.81%
(10 persons) 2,434,334 Vested Options
</TABLE>
*Less than 1%
(1) The percentage of Common Stock is based upon 29,661,633 shares of
Common Stock outstanding as of April 30, 2000.
(2) This information is based upon a Schedule 13D filed with the Securities
and Exchange Commission on January 18, 2000.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and the New York Stock Exchange. Officers, directors and greater than
ten-percent shareholders are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file.
8
<PAGE> 9
The Company believes that during fiscal 1999, its officers, directors and 10%
stockholders complied with all Section 16(a) filing requirements. In making this
statement, Benton has relied upon the written representations of its directors
and officers.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
On December 31, 1993, the Company guaranteed a loan made to Mr. Benton, its then
Chief Executive Officer, for $300,000. In January 1994, the Company loaned
$800,000 to Mr. Benton with interest at prime plus 1.0%; in September 1994, Mr.
Benton made a payment of $207,014 against this loan. In December 1995, the
Company purchased a home from Mr. Benton for $1,725,000, based on two
independent appraisals, and from the proceeds Mr. Benton repaid the balance owed
to the Company of $592,986 plus accrued interest and the $300,000 loan
guaranteed by the Company. The Company sold the home in 1996 for $1,500,000.
In 1996, 1997 and November 1998, the Company made certain unsecured loans to its
then Chief Executive Officer, A. E. Benton. Each of these loans was evidenced by
a promissory note bearing interest at the rate of 6% per annum. At December 31,
1997 and September 30, 1998, the aggregate outstanding amounts of the loans were
$2.0 million and $4.4 million, respectively. In the fourth quarter of 1998, the
Company loaned Mr. Benton an additional $1.1 million to enable him to pay in
full certain margin account obligations owed to third parties that had obtained
a pledge from Mr. Benton of his shares of Company stock. The Company then
obtained a security interest in those shares of stock, certain personal real
estate and proceeds from certain contractual and stock option agreements. At
December 31, 1998, the $5.5 million owed to the Company by Mr. Benton exceeded
the value of the Company's collateral, due to the decline in the price of the
Company's stock. As a result, the Company recorded an allowance for doubtful
accounts of $2.9 million. The portion of the note secured by the Company's stock
and stock options, $2.1 million, was presented on the Balance Sheet as a
reduction from Stockholders' Equity at December 31, 1998. In August 1999, Mr.
Benton filed a Chapter 11 (reorganization) bankruptcy petition in the U.S.
Bankruptcy Court for the Central District of California, in Santa Barbara,
California. The Company recorded an additional $2.8 million allowance for
doubtful accounts for the remaining principal and accrued interest owed to the
Company at June 30, 1999, and continues to record additional allowances as
interest accrues ($0.2 million for the period July 1, 1999 to December 31,
1999). Measuring the amount of the allowances requires judgements and estimates,
and the amount eventually realized may differ from the estimate.
In February 2000, the Company entered into a Separation Agreement and a
Consulting Agreement with Mr. Benton, pursuant to which the Company retained Mr.
Benton as an independent contractor to perform certain services for the Company.
At the same time, Mr. Benton agreed to propose a plan of reorganization in his
bankruptcy case that provides for the full repayment of the Company's loans to
Mr. Benton, including all principal and accrued and accruing interest at the
rate of 6% per annum. Under the proposed plan, which the Company anticipates
will be submitted to the bankruptcy court in the second quarter of 2000, the
Company will retain its security interest in Mr. Benton's 600,000 shares of the
Company's stock and in his stock options, and in a portion of certain proceeds
of his Consulting Agreement. Repayment of the Company's loans to Mr. Benton will
be achieved through Mr. Benton's liquidation of certain real and personal
property assets; a phased liquidation of Company stock resulting from Mr.
Benton's exercise of his Company stock options; and, if necessary, from the
retained interest in the portion of the Consulting Agreement's proceeds. The
amount eventually realized by the Company and the timing of its receipt of
payments will depend upon the timing and results of the liquidation of Mr.
Benton's assets.
Under the terms of the Consulting Agreement, Mr. Benton will be paid consulting
fees of $485,000 for 2000, reducing to $322,000 in 2001, $240,000 in 2002, and a
declining consulting fee for the remainder of the term which expires December
31, 2006. Mr. Benton will also be entitled to certain additional incentive
bonuses with respect to cash receipts to the Company in connection with the
operations or divestiture of Geoilbent, Ltd. and Arctic Gas. To the extent that
Mr. Benton continues to be a consultant of the Company, his unvested stock
options will continue to vest and for a period of twelve (12) months thereafter.
Mr. Benton's consulting services will relate principally to the Company's
Russian activities.
In June 1996, the Company loaned $600,000 to Mr. Wray, a director and then
President of the Company, for the purchase of a home. The loan bore interest at
6% and was secured by a mortgage on the home. On December 31, 1998, Mr. Wray
made an interest payment of $91,430. On May 11, 1999, Mr. Wray repaid the entire
balance of principal and interest outstanding on his loan. In September 1997,
the Company loaned $500,000 to Mr. Whipkey, the Company's Senior Vice President
and Chief Financial Officer, for the purchase of a home in connection with his
recruitment and relocation. The loan bears interest at 6% and is secured by a
mortgage on the home. On December 30, 1998, Mr. Whipkey made an interest payment
of $10,000. During 1999, Mr. Whipkey made payments of principal and interest of
$126,091, and on February 9, 2000, he made a payment of principal and interest
of $95,605. On April 25, 2000, Mr. Whipkey repaid the entire balance of
principal and interest outstanding on his loan.
The Company has made loans to certain of its directors and employees (including
one former employee), with interest varying from 6% to prime plus 1%. At April
30, 2000, an aggregate of four officers, directors and employees (excluding
those named above) owed an aggregate balance of $70,478.
9
<PAGE> 10
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
BENTON OIL AND GAS COMPANY
(Registrant)
Date: April 30, 2000 By: /s/ Michael B. Wray
---------------------------------------
Michael B. Wray
Acting Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<S> <C>
/s/ Michael B. Wray April 30, 2000
- -----------------------------------------------------
Michael B. Wray,
Director, Acting Chief Executive Officer
/s/ BRuce M. Mcintyre April 30, 2000
- -----------------------------------------------------
Bruce M. McIntyre, Director
/s/ David H. Pratt April 30, 2000
- -----------------------------------------------------
David H. Pratt,
Senior Vice President, Chief Financial Officer,
Treasurer, Principal Financial Officer
/s/ Chris C. Hickok April 30, 2000
- -----------------------------------------------------
Chris C. Hickok,
Vice President - Controller, Principal Accounting
Officer
/s/ A. E. Benton April 30, 2000
- -----------------------------------------------------
A. E. Benton, Director
/s/ Richard W. Fetzner April 30, 2000
- -----------------------------------------------------
Richard W. Fetzner, Director
/s/ Garrett A. Garrettson April 30, 2000
- -----------------------------------------------------
Garrett A. Garrettson, Director
</TABLE>
10
