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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:
/x/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
__________________________
(Name of Registrant as Specified In Its Charter)
EQUITY COMPRESSION SERVICES CORPORATION
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required.
/ / 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:
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(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:
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(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:
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(2) Form, Schedule or Registration Statement No.:
-------------------------
(3) Filing Party:
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(4) Date Filed:
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EQUITY COMPRESSION SERVICES CORPORATION
TWENTY EAST FIFTH STREET, SUITE 1500
TULSA, OKLAHOMA 74103
__________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 21, 1997
__________________________
TO THE STOCKHOLDERS OF EQUITY COMPRESSION SERVICES CORPORATION:
The Annual Meeting of Stockholders of Equity Compression Services
Corporation, an Oklahoma corporation (the "Company"), will be held in The
Terrace Room, The Melrose Hotel, 3015 Oak Lawn Avenue, Dallas, Texas 75219,
on Wednesday, May 21, 1997, at 11:00 a.m., local time, for the following
purposes:
(1) To consider and act upon a proposal to approve an amendment to the
Company's Bylaws to eliminate the classification of the Board of
Directors and provide for the annual election of the Company's
directors;
(2) To elect directors of the Company;
(3) To ratify the selection of Coopers & Lybrand, Tulsa, Oklahoma, as
independent auditors for the Company for its fiscal year 1997; and
(4) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 11, 1997 as
the record date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting or any adjournment(s) thereof. Only stockholders
of record at the close of business on the record date are entitled to notice of
and to vote at the Annual Meeting.
The Company's Proxy Statement and Annual Report are submitted herewith.
By Order of the Board of Directors
JACK D. BRANNON
SECRETARY
Tulsa, Oklahoma
April __, 1997
- -------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO DATE, SIGN
AND PROMPTLY RETURN YOUR ENCLOSED PROXY CARD SO THAT YOUR SHARES MAY BE VOTED
IN ACCORDANCE WITH YOUR WISH AND IN ORDER THAT THE PRESENCE OF A QUORUM MAY
BE ASSURED. THE GIVING OF SUCH PROXY DOES NOT AFFECT YOUR RIGHT TO REVOKE IT
LATER OR VOTE YOUR SHARES IN PERSON IN THE EVENT YOU SHOULD ATTEND THE
MEETING.
- -------------------------------------------------------------------------------
<PAGE>
EQUITY COMPRESSION SERVICES CORPORATION
TWENTY EAST FIFTH STREET, SUITE 1500
TULSA, OKLAHOMA 74103
__________________________
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 1997
__________________________
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the management and Board of Directors of Equity Compression
Services Corporation (the "Company") to be used at the Annual Meeting of
Stockholders to be held Wednesday, May 21, 1997, at 11:00 a.m., local time,
in The Terrace Room, The Melrose Hotel, 3015 Oak Lawn Avenue, Dallas, Texas
75219 and all adjournment(s) thereof, for the purposes set forth in the
attached Notice of Annual Meeting. The Company's executive offices are
located at Twenty East Fifth Street, Suite 1500, Tulsa, Oklahoma 74103. The
approximate date upon which this Proxy Statement and the form of proxy are
being mailed to stockholders is April 28, 1997.
EXPENSES OF SOLICITATION
The expense in connection with the solicitation of proxies, including the
cost of preparing, handling, printing and mailing the Notice of Annual
Meeting, Proxy Statement and accompanying proxy, have been or will be borne
by the Company. The Company may reimburse banks, brokerage houses and other
custodians, nominees and fiduciaries for reasonable expenses incurred in
forwarding proxy materials to beneficial owners of the Company's Common
Stock. Directors, officers and other employees of the Company may solicit
proxies personally, by telephone or telegram, from some stockholders if
proxies are not received promptly.
QUORUM AND VOTE REQUIRED
The presence, in person or by proxy, of a majority of the outstanding
shares of Common Stock of the Company is necessary to constitute a quorum at
the Annual Meeting. The affirmative vote of the holders of a majority of the
shares of Common Stock represented in person or by proxy at the Annual
Meeting is required to approve the amendment to the Company's Bylaws and
ratify the selection of the independent auditors. Directors shall be elected
by a plurality of the votes of the shares of Common Stock present in person
or represented by proxy at the meeting. Abstentions from voting, which may
be specified on all proposals except the election of directors, will be
treated as shares that are present for purposes of determining a quorum and
will be included for purposes of determining whether the requisite number of
affirmative votes are received on any matters submitted to the stockholders
for a vote. Accordingly, an abstention will have the same effect as a vote
against any such matters. If a broker indicates on the proxy that it does
not have discretionary authority as to certain shares to vote on a particular
matter, those shares will not be considered as present with respect to that
matter and will have no effect on the outcome of such vote, however, they
will be treated as shares that are present for purposes of determining the
presence of a quorum.
REVOCABILITY OF PROXIES
The form of proxy enclosed is for use at the Annual Meeting if a
stockholder is unable to attend or does not desire to vote in person. At any
time before the shares represented by the proxy are voted at the Annual
Meeting, the stockholder may revoke the proxy by delivering to the Secretary
of the Company a written revocation of the proxy, by delivering a later dated
proxy or by voting in person while in attendance at the Annual Meeting.
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MANNER OF VOTING PROXIES
The accompanying proxy card is designed to permit each stockholder of
record at the close of business on April 11, 1997 to vote on the approval of
the amendment to the Company's Bylaws, the election of directors and the
ratification of the selection of the Company's independent auditors for 1997.
With respect to the election of directors, the proxy card provides space for
stockholders to vote in favor of all nominees or withhold their votes for any
specific or all nominees for the Board of Directors.
All shares represented by valid proxies received prior to the meeting,
and not revoked, will be voted in accordance with the instructions on the
proxy. If the proxy is signed and returned to the Company, but no
instructions are given, it is intended that the proxy will be voted FOR
approval of the amendment of the Company's Bylaws, the Board of Directors'
nominees and the ratification of the selection of the independent auditors
for the Company. As to any other business that may properly come before the
meeting, including all matters incident to the conduct of the meeting, it is
intended that the proxy will be voted in respect thereof in accordance with
the judgment of the person voting the proxies.
STOCKHOLDER PROPOSALS FOR 1998 MEETING
Under the rules of the Securities and Exchange Commission, in order to be
considered for inclusion in the Company's proxy statement relating to the
1998 Annual Meeting of Stockholders, a stockholder proposal must be received
by the Company at its principal offices, Twenty East Fifth Street, Suite
1500, Tulsa, Oklahoma 74103, addressed to the Secretary of the Company, on
or before December 29, 1997.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS THEREOF
At the close of business on April 11, 1997, there were 21,040,168 issued
and outstanding shares of the Common Stock (exclusive of 9,067 shares held in
treasury), par value $.01 per share (the "Common Stock"), of the Company.
Each holder of Common Stock is entitled to one vote per share on all matters.
There is no other class of securities of the Company entitled to vote at the
meeting. Only stockholders of record at the close of business on April 11,
1997, will be entitled to vote at the Annual Meeting.
The following table sets forth certain information, as of April 11, 1997,
regarding the beneficial ownership of the Company's Common Stock by (i) all
persons who were known by the Company to be beneficial owners of more than
five percent of the outstanding shares of Common Stock, (ii) each director
and nominee for director, (iii) each of the executive officers named in the
Summary Compensation Table below and (iv) all the directors and executive
officers of the Company as a group. Unless otherwise noted, the Company
believes that the beneficial owners named below have sole voting and
investment power with respect to such shares.
NAME AND ADDRESS OF PERCENT
BENEFICIAL OWNER NUMBER OF SHARES OF CLASS
------------------- ---------------- --------
HACL, Ltd., ................................ 11,463,636(1) 40.03%
a Texas Limited Partnership direct
2838 Woodside Street, Dallas, TX 75206
Energy Investors........................... 4,136,364 19.66%
a Texas Joint Venture direct
2838 Woodside Street, Dallas, TX 75206
Hawkins Oil & Gas, Inc. ................... 1,296,582(2) 6.16%
400 S. Boston, Suite 800, Tulsa, OK 74103 direct and indirect
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Gregory & Cook, Inc. ...................... 3,037,251 14.44%
7575 San Felipe, Suite 350, Houston, TX 77063 direct
Richard D. Brannon......................... 3,088,286(9) 13.38%
direct and indirect
Charles M. Butler, III..................... 152,500(3) *
direct
Ray C. Davis............................... 1,711,641(10) 7.72%
direct and indirect
James D. Finley............................ 148,788(4) *
direct and indirect
Neal A. Hawthorn........................... 3,333(5) *
direct
Clifford S. Lewis.......................... 86,920(6) *
direct and indirect
Thomas F. Ostrye........................... 219,210(7) 1.03%
direct and indirect
Matthew S. Ramsey.......................... 539,465(11) 2.54%
direct and indirect
Don E. Smith............................... 979,111(8) 4.64%
direct and indirect
Jon P. Stephenson.......................... 1,028,318(12) 4.73%
direct and indirect
Kelcy L. Warren............................ 1,711,641(13) 7.72%
direct and indirect
All Directors and Executive Officers
as a Group (13 Persons)................... 10,014,990(14) 37.06%
- -------------------
* Less than 1%
(1) Includes 7,600,000 shares which may be acquired upon the exercise of
warrants which may become exercisable within 60 days. Does not include the
4,136,364 shares of Energy Investors. HACL, Ltd. is the managing joint
venturer of Energy Investors, but is obligated to vote the shares as
directed by the other joint venturers (proportionately according to their
interests) and HACL, Ltd. is not entitled to participate in the
distribution or profits attributable to the shares until the other joint
venturers receive a specified annual return on their investment in the
shares.
(2) Includes 40,319 shares attributable to Hawkins Oil & Gas, Inc.'s general
partner interest in HX 1986, 19,522 shares attributable to its general
partner interest in Hawkins Exploration and 47,393 shares attributable to
the Hawkins Oil & Gas, Inc. Profit Sharing Plan.
(3) Includes 27,500 shares which may be acquired upon the exercise of presently
exercisable options.
(4) Includes 3,333 shares which may be acquired upon the exercise of presently
exercisable options and 145,455 share attributable to Mr. Finley's interest
in Energy Investors.
(5) Includes 3,333 shares which may be acquired upon the exercise of presently
exercisable options.
(6) Includes 55,000 shares which may be acquired upon the exercise of presently
exercisable options, and 31,920 shares held by the 401(k) Plan and
allocated to the account of Mr. Lewis.
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(7) Includes 200,000 shares which may be acquired upon the exercise of
presently exercisable options, and 19,210 shares held by the 401(k) Plan
and allocated to the account of Mr. Ostrye.
(8) Includes 60,000 shares which may be acquired upon the exercise of presently
exercisable options, and 19,718 shares held by the 401(k) Plan and
allocated to the account of Mr. Smith
(9) Includes 3,333 shares which may be acquired upon the exercise of presently
exercisable options, 1,036,364 shares attributable to Mr. Brannon's
interest in HACL, Ltd. and 2,038,589 shares which may be acquired upon the
exercise of warrants which may become exercisable within 60 days and which
are attributable to Mr. Brannon's interest in HACL, Ltd.
(10) Includes 3,333 shares which may be acquired upon the exercise of presently
exercisable options, 575,758 shares attributable to Mr. Davis' interest in
HACL, Ltd. and 1,132,550 shares which may be acquired upon the exercise of
warrants which may become exercisable within 60 days and which are
attributable to Mr. Davis' interest in HACL, Ltd.
(11) Includes 181,818 shares attributable to Mr. Ramsey's interest in HACL, Ltd.
and 357,647 shares which may be acquired upon the exercise of warrants
which may become exercisable within 60 days and which are attributable to
Mr. Ramsey's interest in HACL, Ltd.
(12) Includes 3,333 shares which may be acquired upon the exercise of presently
exercisable options, 345,455 shares attributable to Mr. Stephenson's
interest in HACL, Ltd. and 679,530 shares which may be acquired upon the
exercise of warrants which may become exercisable within 60 days and which
are attributable to Mr. Stephenson's interest in HACL, Ltd.
(13) Includes 3,333 shares which may be acquired upon the exercise of presently
exercisable options, 575,758 shares attributable to Mr. Warren's interest
in HACL, Ltd. and 1,132,550 shares which may be acquired upon the exercise
of warrants which may become exercisable within 60 days and which are
attributable to Mr. Warren's interest in HACL, Ltd.
(14) Includes 405,833 shares which may be acquired upon the exercise of
presently exercisable options, 131,360 shares held by the 401(k) Plan and
allocated to the accounts of such individuals, 2,715,153 shares
attributable to such persons' interests in HACL, Ltd., 5,340,866 shares
which may be acquired upon the exercise of warrants which may become
exercisable within 60 days and which are attributable to such persons'
interests in HACL, Ltd. and 145,455 shares which are attributable to Mr.
Finley's interest in Energy Investors.
MATTERS TO BE BROUGHT BEFORE THE MEETING
PROPOSAL ONE
AMENDMENT TO THE COMPANY'S BYLAWS
On February 25, 1997, the Board of Directors of the Company unanimously
adopted a resolution recommending that the stockholders approve an amendment to
the Company's Bylaws to eliminate the classification of the Board into three
classes and to provide for the annual election of all directors (hereinafter
this proposal is sometimes referred to herein as "Proposal One"). The text of
the proposed amendment to the Bylaws is set forth in Appendix A to this Proxy
Statement.
The Company's Bylaws currently provide that the Board of Directors be
divided into three classes, with each class being as equal in size as possible
and with the term of each class ending in successive years. Accordingly, each
single class of directors is elected to a three-year term. The Board of
Directors believes that the elimination of the classified Board is in the best
interest of the Company's stockholders for the following reasons. First,
because the Company's directors would be subject to annual election, each
director may have an increased sense
4
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of accountability to the Company's stockholders. Second, the presence of a
classified Board could have the effect of deterring an outside suitor from
submitting a proposal seeking a possible business combination or takeover
because it could possibly take up to two annual Board elections for any such
suitor to obtain control of the Board. Accordingly, the elimination of the
classified Board could have the effect of eliminating an impediment to the
consideration of possible opportunities to maximize the value of the
stockholders' investments in the Company.
Under Oklahoma law and the Bylaws, directors of a classified Board may not
be removed by the shareholders except for cause. The effect of the proposed
amendment will be to permit any director of the Company to be removed, with or
without cause, at any time by the vote of the holders of a majority of the
outstanding shares of Common Stock.
If the proposed amendment to the Bylaws is approved, all of the current
directors except Thomas F. Ostrye will be the director nominees voted on by the
stockholders. If the proposed amendment is not approved, the persons listed
under "Nominees in the Event of Classified Board" will be the nominees and all
of the other current directors will continue to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT TO THE COMPANY'S
BYLAWS TO ELIMINATE THE CLASSIFIED BOARD OF DIRECTORS.
PROPOSAL TWO
ELECTION OF DIRECTORS
If Proposal One is approved by the Company's stockholders, directors will
be elected at each annual meeting of stockholders and will hold office until the
next annual election. All of the persons listed under "Nominees for Directors"
below, each of whom is currently a director of the Company, have been nominated
by the Board of Directors for reelection as directors.
In the event Proposal One is not approved by the Company's stockholders,
the Board of Directors will remain divided into three classes--Class I, Class II
and Class III--with each class being as equal in size as possible and with the
term of each class ending in successive years. Information with respect to the
Board's nominees in the event that the classified Board continues as set forth
below under "Nominees in the Event of Classified Board."
The Board of Directors urges you to vote FOR the Board of Directors'
nominees. Proxies solicited hereby will be so voted unless stockholders specify
otherwise in their proxies. Although the Board of Directors does not
contemplate that any of its nominees will be unavailable for election, in the
event of a vacancy in the slate of nominees it is presently intended that the
proxy will be voted for the election of a nominee who will be selected by the
Board of Directors.
NOMINEES FOR DIRECTORS
The following table sets forth information with respect to each nominee for
election to the Company's Board of Directors.
Position the Company and Principal Occupation
Nominee & Age or Employment for the Last Five Years
- ------------- ---------------------------------------------
Richard D. Brannon Chairman of the Board; Member of Audit and Human
Age 38 Resources Committees of the Board of
Directors; President of Brannon Oil & Gas, Inc.
Charles M. Butler, III Director; Member of the Audit and Human
Age 53 Resources Committees of the Board of
Directors; Attorney.
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Ray C. Davis Director; Member of Audit and Human Resources
Age 53 Committees of the Board of Directors; Principal
of Energy Transfer Company.
James D. Finley Director; Managing Partner and Director of
Age 40 Duer Wagner & Co.
Neal A. Hawthorn Director; Vice President and Director of R.
Age 64 Lacy, Inc.
Clifford S. Lewis Director; Member of the Audit and Human
Age 42 Resource Committees of the Board of
Directors; Vice President and Chief Financial
Officer of Hawkins Oil & Gas, Inc.
Matthew S. Ramsey Director; Member of Human Resources Committee
Age 42 of the Board of Directors; President and
Chief Executive Officer of Equity Compression
Services Corporation.
Don E. Smith Director; former President of Equity
Age 47 Compressors, Inc.; Cattle Rancher.
Jon P. Stephenson Director; Member of Human Resources Committee
Age 51 of the Board of Directors; President of
Sandollar Oil & Gas, Inc.
Kelcy L. Warren Director; Member of Human Resources Committee
Age 41 of the Board of Directors; Principal of
Energy Transfer Company.
Mr. Brannon became Chairman of the Board in December 1996 and is President
of Brannon Oil & Gas, Inc., an independent energy investment company. Mr.
Brannon is also an active investor in oil and gas production, natural gas
pipelines, real estate and equity investments. Mr. Brannon served as
director of Cornerstone Natural Gas, Inc., a natural gas pipeline and processing
company, until its sale to El Paso Natural Gas Company in 1996. Mr. Brannon
also previously served as an Advisory Board member to First Interstate Bank,
Fort Worth. Mr. Brannon began his career in 1981 with TXO Production Corp. as a
completion and reservoir engineer. Mr. Brannon has a B.S. degree in Petroleum
Engineering from the University of Texas and is a Certified Professional
Engineer. Mr. Brannon is the brother of Jack D. Brannon, Senior Vice President
and Chief Financial Officer of the Company.
Mr. Butler has served the Company as a Director since the Company's
inception in 1989. He is presently self employed as a financial and regulatory
consultant in Houston, Texas, and previously was a Senior Vice President of
Kidder, Peabody & Co., Inc. Prior to that, he was Chairman of the Federal
Energy Regulatory Commission (1981-1983); Administrative Assistant to Senator
John Tower (1979-1981); Corporate Counsel to American Natural Service Company
(1976-1979); and he has served in several capacities as an attorney. He holds a
B.A. Degree in Economics from the University of Houston and a J.D. from the
University of Texas, where he earned Order of the Coif Honors.
Mr. Davis became a Director in December 1996. He is a founding principal
of Energy Transfer Company, an energy investment firm, which was formed in 1996.
Mr. Davis founded Capstone Partners in 1988, a buy out firm formed to acquire
under performing companies. He served as Chairman and CEO of several companies
acquired by Capstone Partners, including Healthco International Inc., a $500
million a year dental supply company, HPSC, an equipment leasing company quoted
on the Nasdaq system and Cornerstone Natural Gas, Inc., a natural gas pipeline
and processing company listed on the American Stock Exchange. Mr. Davis served
as Director and General Partner of Hydro Environmental Services, Inc. from 1989
to 1992, and as Chief Executive Officer of
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Healthco International, Inc. from June 1991 to August 1992. He was also
Chairman of the Board of HPSC, Inc. from 1991 to 1992. On June 9, 1993,
Healthco International, Inc. filed for protection under Chapter 11 in the
U.S. Bankruptcy Court in the Western District of Massachusetts, Western
Division, Case No. 93-41604-JFQ. In connection with Mr. Davis' and a group
of investors' initial acquisition of an interest in Cornerstone Natural Gas,
Inc. and as part of a pre-packaged plan, Cornerstone's predecessor and
certain of its subsidiaries filed voluntary petitions under Chapter 11 of the
Bankruptcy Code with the U.S. Bankruptcy Court for the Eastern District of
Texas, Sherman Division. On November 2, 1993, Cornerstone emerged from such
pre-packaged plan and Mr. Davis and the investor group acquired their
interest in Cornerstone. From 1983 to 1988, he shared the operating duties
of Colt Industries, a Fortune 200 diversified manufacturer. Mr. Davis was
last responsible for two groups of companies with operations in 15 countries
and sales in excess of $1 billion. Mr. Davis held several executive
positions in Colt Industries and, prior to that, held several management
positions at Mobil Chemical, a division of Mobil Oil.
Mr. Finley became a Director in April of 1997. He is an independent
oil and gas producer and is Managing Partner and Director of Duer Wagner
& Co., an independent oil and gas operator with operations in Alabama,
Louisiana, Mississippi, Oklahoma, Texas and Wyoming. Mr. Finley was Chief
Financial Officer of Duer Wagner & Co. from 1982 until 1996 when he became
Managing Partner. Mr. Finley is an active investor in oil and gas production,
natural gas pipelines and real estate investments. Mr. Finley has a broad
range of experience in the management of oil and gas operations and the
acquisition and financing of oil and gas properties. Mr. Finley began his
career at Arthur Andersen & Co. as a member of the Dallas/Fort Worth oil and
gas industry team. Mr. Finley received a Bachelor of Business Administration
from the University of Texas at Austin in 1979.
Mr. Hawthorn became a Director in April of 1997. He is a Vice President
and Director of R. Lacy, Inc., an independent oil and gas company in Longview,
Texas. Prior to joining R. Lacy, Inc. in 1978, he was a partner of the law firm
of Kenley, Boyland, Hawthorn, Starr and Coghlan in Longview, Texas. Mr.
Hawthorn is a member of the Texas Mid-Continent Oil and Gas Association. Mr.
Hawthorn holds a B.B.A. Degree from the University of Texas at Austin and a J.D.
from the University of Texas Law School.
Mr. Lewis has served the Company as a Director since its inception in 1989.
He also served as the Company's Vice President, Secretary and Treasurer from the
Company's inception through April 5, 1996. Mr. Lewis has served as Vice
President and Chief Financial Officer of Hawkins Oil & Gas, Inc. from 1988 to
present. Previously, he was employed by Hawkins Oil & Gas as Controller (1986
to 1988), as Manager of Financial Accounting (1984 to 1986), Senior Financial
Accountant (1981 to 1984) and by Arthur Young & Company (now Ernst & Young) as
Senior Accountant. He holds a B.S. Degree in Accounting and an M.B.A. Degree
from Kansas State University.
Mr. Ramsey became Chief Executive Officer and a Director in December 1996
and became President in February 1997. Mr. Ramsey served as Vice President of
Nuevo Energy Company, an independent energy company, from 1990 to 1996. From
1990 to 1996, he was employed by Torch Energy Advisors Incorporated, a company
providing management and operations services to energy companies including Nuevo
Energy Company, last serving as a director and Executive Vice President. Mr.
Ramsey joined Torch Energy as Vice President of Land and was named Senior Vice
President of Land in 1992. Prior to joining Torch Energy, Mr. Ramsey was self-
employed for eleven years. Mr. Ramsey holds a B.B.A. in Marketing from the
University of Texas at Austin and a J.D. from South Texas College of Law. Mr.
Ramsey is a graduate of Harvard Business School's Advanced Management Program.
He is licensed to practice law in the State of Texas.
Mr. Smith has served as Director since June 1993. He founded and was
President of Mid-South Compressors, Inc. and its successor in Columbia,
Mississippi from 1985 to 1996. Mid-South Compressors, Inc. became a wholly
owned subsidiary of the Company in 1993 and was merged into Equity Compressors,
Inc. another wholly owned subsidiary of the Company in 1995. From 1981 to 1985,
he was the Branch Manager of Compressor Systems, Inc. Previously, he was the
founder and President of Oilfield Maintenance Service, Inc. from 1974 to 1981,
and Division Compressor Mechanic of Shell Oil Company from 1967 to 1974.
Mr. Stephenson became a Director in December of 1996. He is President and
owner of Sandollar Oil & Gas, Inc., an independent exploration and production
company located in Longview, Texas. Prior to forming
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Sandollar in 1981, Mr. Stephenson was employed from 1971 to 1980 by Ensearch
Exploration, Inc. in Dallas, Texas, in various engineering capacities, with
his last assignment being Vice President of Production. He began his career
in 1968 as an engineer with Shell Oil Company in New Orleans, Louisiana. Mr.
Stephenson received his B.S. degree in Petroleum Engineering from Louisiana
Tech University in 1968. He is a Certified Professional Engineer in the
State of Texas.
Mr. Warren became a Director in December of 1996. He is a founding
principal of Energy Transfer Company, an energy investment firm, which was
formed in 1996. Prior to forming Energy Transfer Company, he was employed by
Endevco, Inc., a natural gas pipeline and processing company and predecessor of
Cornerstone Natural Gas, Inc., from 1981 to 1992. At Endevco, Mr. Warren served
in many capacities, including President, Chief Operating Officer and Director.
He and a group of investors acquired controlling interest of Cornerstone Natural
Gas, Inc. in 1993 as part of a pre-packaged plan, whereby Endevco and certain of
its subsidiaries filed voluntary petitions under Chapter 11 of the Bankruptcy
Code with the U.S. Bankruptcy Court for the Eastern District of Texas, Sherman
Division. On November 2, 1993, Cornerstone Natural Gas, Inc. emerged from such
pre-packaged plan and Mr. Warren and the investor group acquired their interest
in Cornerstone. Mr. Warren served as President, Chief Operating Officer and a
director of Cornerstone unit its sale to El Paso Natural Gas Company in 1996.
Prior to joining Endevco, Mr. Warren was employed by Lone Star Gas Company.
NOMINEES IN THE EVENT OF CLASSIFIED BOARD
If Proposal One is not approved, the term of the Class II directors,
consisting of Don E. Smith, Richard D. Brannon and Matthew S. Ramsey will expire
at the Annual Meeting. In addition, as the result of the consummation of the
Stock Purchase Agreement between the Company and HACL, Ltd., Kelcy L. Warren and
Jon P. Stephenson were appointed to the Board of Directors to fill newly created
positions. Since that time, James D. Finley and Neal A. Hawthorn were also
appointed to fill newly created positions. Messrs. Warren, Stephenson, Finley
and Hawthorn are all subject to designation into one of the three classes and
election at the Annual Meeting.
The Board of Directors has nominated Richard D. Brannon, Matthew S. Ramsey
and Don E. Smith for election as Class II directors to serve for a three-year
term; Jon P. Stephenson, Kelcy L. Warren and Neal A. Hawthorn for election as
Class III directors to serve for a one-year term and James D. Finley for
election as a Class I director to serve a two-year term. If Proposal One is not
approved, Charles M. Butler, III and Ray C. Davis will continue to serve as a
Class I directors and Clifford S. Lewis and Thomas F. Ostrye will continue to
serve as Class III directors. The terms of Class III and Class I directors will
expire at the annual meeting of stockholders to be held in 1998 and 1999,
respectively.
ADDITIONAL DIRECTOR
Thomas F. Ostrye, age 44, is currently serving as a Class III director and
his term would otherwise expire in 1998. He has not been nominated to stand for
election at the Meeting. Consequently, if Proposal One is approved, Mr.
Ostrye's term as a director will terminate at the Meeting. If Proposal One is
not approved, he will continue to serve as a Class III director until the Annual
Meeting of Stockholders to be held in 1998.
Mr. Ostrye has been a Director since the formation of the Company in 1989.
Until his resignation as an officer in February 1997, he served as President of
the Company from 1989, Chairman of the Board, from November 1995 and Treasurer
from April 1996. Prior to the formation of the Company, he was employed by
Hawkins Oil & Gas, Inc. as Project/Administrative Manager (1987 to 1989),
Project Manager (1985 to 1987) and as Exploration Manager (1984 to 1985).
Previously, he served: Enstar Petroleum Company, Oklahoma City, Oklahoma as
Exploration Manager (1982 to 1984); C & K Petroleum, Inc., Oklahoma City,
Oklahoma and Midland, Texas as District Geologist (1979 to 1982); and Marathon
Oil Company, Midland, Texas as Exploration Geologist (1975 to 1979). He holds
a B.S. Degree in Geology from State University College, Fredonia, New York and
an M.A. Degree in Geology from State University of New York, Buffalo, New York.
8
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
The Company has standing Audit and Human Resources Committees of the Board
of Directors. Presently, the members of the Audit Committee are Richard D.
Brannon, Charles M. Butler, III, Ray C. Davis, Clifford S. Lewis and Matthew S.
Ramsey and the members of the Human Resources Committee are Richard D. Brannon,
Charles M. Butler, III, Clifford S. Lewis, Jon P. Stephenson and Kelcy L.
Warren. The primary functions of the Audit Committee are to monitor the
Company's internal accounting controls, review quarterly and annual financial
information and review the services and fees of the independent auditors. The
Audit Committee met one time during the fiscal year ended December 31, 1996.
The primary functions of the Human Resources Committee are to review and approve
management's recommendations concerning compensation of executive officers and
certain other employees and to administer the Company Employee Stock Option
Plan. The Human Resources Committee has the authority, in its discretion, to
select the eligible officers and employees to whom options shall be granted and
the number of shares of the Company's Common Stock to be subject to such
options. The Human Resources Committee also serves to evaluate top management
and their successors within the Company. The Human Resources Committee met
three times during the fiscal year ended December 31, 1996.
The Board of Directors met seven times during fiscal 1996. All directors
were present for at least 75% of the aggregate of the meetings of the Board of
Directors and of the committees of the Board on which each director served.
DIRECTOR COMPENSATION
Directors of the Company who are not also employees of the Company are paid
an annual retainer fee of $6,000, payable quarterly, plus an additional payment
of $500 for each directors' and committee meeting attended in person or held by
means of conference telephone calls.
In conjunction with the shareholder approval of the Company's Director
Stock Plan at the 1996 annual meeting held on May 29, 1996, Charles M. Butler,
III and Donald C. Nejedly were granted options covering 17,500 shares each and
Clifford S. Lewis was granted an option for 50,000 shares, all as replacement
options for options granted to them under the Company's 1989 and 1994 director
stock plans. These options have an exercise price of $.5625 per share, a term
of forty years and are exercisable in full. Additionally, by reason of his
election as a Class I director at that meeting, Mr. Butler was granted an option
covering 10,000 shares at an exercise price of $.5625 per share which became
exercisable in its entirety by Board action taken in October of 1996. Upon
their appointment to the Board in December of 1997, Ray C. Davis, Kelcy L.
Warren, Jon P. Stephenson and Richard D. Brannon received automatic grants of
options covering 10,000 shares each at an exercise price of $1.375 per share.
Their options have forty-year terms and became exercisable immediately with
respect to one-third of the shares covered and they become exercisable with
respect to an additional one-third on each of the anniversary dates of their
appointment to the Board.
The Company entered into an agreement with Richard D. Brannon whereby he
was paid $10,000 per month for the first three months of 1997 for his efforts in
developing business opportunities for the Company's compressor leasing business.
PROPOSAL THREE
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has unanimously selected Coopers & Lybrand as the
independent auditors for the Company for its 1997 fiscal year. Although the
Board is not required to submit its selection of auditors for stockholder
approval, the Board has elected to seek ratification by the stockholders at the
Annual Meeting. A representative of Coopers & Lybrand, who will attend the
Annual Meeting, will have the opportunity to make a statement if he or she
desires to do so and will be available to answer appropriate questions.
9
<PAGE>
CERTAIN RELATIONSHIPS AND INTEREST IN CERTAIN TRANSACTIONS
On December 19, 1996, the Company consummated the sale of 8,000,000 shares
of its Common Stock, and warrants which, upon satisfying certain vesting
requirements, entitle the holder to purchase up to an additional 8,000,000
shares of Common Stock at a price of $.91 per share (the "Warrants"). The sales
of the Common Stock and Warrants were made pursuant to the terms and conditions
of the Stock Purchase Agreement dated October 16, 1996, between the Company and
HACL, Ltd., a Texas limited partnership ("HACL"). All of the Warrants and
3,863,636 of the shares of Common Stock were issued to HACL and 4,136,364 shares
of Common Stock were issued to HACL's designee, Energy Investors ("Energy
Investors"), a Texas joint venture of which HACL is the managing joint venture
partner, for aggregate consideration of $4,400,000 in cash. The general
partner of HACL is Six-Dawaco, Inc., a Texas corporation, whose directors and
executive officers are Ray C. Davis and Kelcy L. Warren. Ray C. Davis, Kelcy L.
Warren, Matthew S. Ramsey, Richard D. Brannon and Jon P. Stephenson are each
limited partners in HACL. James D. Finley is a joint venture partner in Energy
Investors.
Pursuant to the Stock Purchase Agreement, HACL was granted the right to
designate up to eight directors of the Registrant upon consummation of the
transaction. Following such consummation, John B. Hawkins, Donald C. Nejedly
and David J. Parsons resigned as directors of the Company, and HACL's designees,
Ray C. Davis, Kelcy L. Warren, Matthew S. Ramsey, Richard D. Brannon and Jon P.
Stephenson, were elected to serve as directors. Under the terms of the Stock
Purchase Agreement, the Company has agreed to hereafter include among its
nominees for the Board of Directors a sufficient number of persons designated by
HACL such that the percentage of directors proposed to be composed of HACL's
designees is approximately proportionately equal to HACL's percentage ownership
of the Company's total outstanding shares of Common Stock.
Hawkins Oil & Gas, Inc. ("Hawkins Oil & Gas") owns in excess of 6% of the
outstanding stock of the Company, two of the principals of Hawkins Oil & Gas,
Mr. John B. Hawkins and Mr. James F. Hawkins, Jr., served as Directors of the
Company in 1996 and Mr. Clifford S. Lewis, an officer and shareholder of Hawkins
Oil & Gas, continues to be a director of the Company. In March of 1996, the
Company and Hawkins Oil & Gas, Inc. entered into an agreement pursuant to which
the sublease of office space by the Company from Hawkins Oil & Gas was
terminated as of December 31, 1995, operations of certain oil and gas properties
owned jointly by the Company and Hawkins Oil & Gas were transferred to the
Company and the parties agreed (i) upon the method of allocating the
compensation of Mr. Lewis (who, at the time of the execution of the agreement,
was servicing as a Vice President, Treasurer and Secretary of the Company) and
other shared employees, (ii) to the joint access to certain geologic and
production data maintained by the Company (which data the Company agreed to
transfer to Hawkins Oil & Gas at no cost if the Company should sell all or
substantially all of its oil and gas assets or terminate its active involvement
in the business of oil and gas exploration, development and production) and
computer data and facilities maintained by Hawkins Oil & Gas, (iii) to
participate jointly in the administration of their respective self-insured
health plans, and (iv) that the Company would have the right to participate in
an oil and gas concession in Pakistan which Hawkins Oil & Gas is pursuing. By a
subsequent agreement with Hawkins Oil & Gas and Messrs. John B Hawkins and James
F. Hawkins, Jr., the Company agreed to change its name from Hawkins Energy
Corporation prior to January 1, 1997 and to transfer to Mr. James F. Hawkins,
Jr. title to the motor vehicle that he had been using as a company vehicle while
an officer and director of the Company.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Certain information with respect to the following table sets forth all
compensation paid for services rendered in all capacities to the Company and its
subsidiaries during the fiscal years ended December 31, 1996, 1995 and 1994 to
(a) each person serving as the Company's chief executive officer during fiscal
1996 and (b) each of the Company's most highly compensated executive officers
whose aggregate compensation during fiscal 1996 exceeded $100,000.
10
<PAGE>
<TABLE>
Long Term
Compensation
Awards
Annual Compensation Number of
--------------------------- Shares
Name and Principal Fiscal Underlying Other
Position Year Salary(1) Bonus Options Compensation(2)
- ------------------ ------ --------- ------ ------------ ---------------
<S> <C> <C> <C> <C> <C>
Matthew S. Ramsey 1996 $ 6,731 $ 0 0 $ 0
Chief Executive Officer
Thomas F. Ostrye 1996 $125,000 $ 0 200,000 $2,500
President and 1995 $100,000 $ 0 0 $2,000
Chairman of the Board 1994 $100,000 $5,000 65,000 $2,100
Don E. Smith 1996 $100,000 $ 0 60,000 $2,000
President of Equity 1995 $100,000 $ 0 0 $2,000
Compressors, Inc. 1994 $ 98,414 $5,000 40,000 $2,068
</TABLE>
- -------------------
(1) Includes all before-tax contributions to the Employee 401(k) Plan.
(2) Other compensation consists solely of employer contributions to the
Employee 401(k) Plan. Does not include the value of any perquisites
because the aggregate amount of such compensation does not exceed the
lesser of $50,000 or 10% of the total amount of annual salary and bonus for
any named individual.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information with respect to options
granted to the named executive officers of the Company during fiscal 1996. The
Company has never granted any stock appreciation rights.
<TABLE>
Number of Securities Percentage of Total
Underlying Options Options Granted to Exercise Expiration
Name Granted(1) Employees in Fiscal Year Price(2) Date
- ---- -------------------- ------------------------ --------- ------------
<S> <C> <C> <C> <C>
Matthew S. Ramsey 0 0% N/A N/A
Thomas F. Ostrye 200,000 54% $.50 June 3, 2036
Don E. Smith 60,000 16% $.50 June 3, 2036
</TABLE>
- -------------------
(1) Consists solely of options to acquire shares of Common Stock. The options
were granted for a term of 40 years, subject to earlier termination in
certain events related to the termination of employment. The options
become exercisable in five equal annual installments commencing on the
anniversary date of the date of grant.
(2) The exercise price of the options is equal to the fair market value of the
Common Stock on the date of grant.
BOARD REPORT ON REPLACEMENT OPTIONS. During 1996, a portion of the shares
covered by the options granted to Thomas F. Ostrye and Don E. Smith were
included on the condition that the grantees surrender the options granted to
them in 1989 and 1994 under Director Stock Option Plans. Fifty thousand shares
were included in the option granted to Mr. Ostrye on the condition that he
surrender options granted to him in 1989 covering a total of 35,000 shares with
an exercise price of $2.50 per share and in 1994 covering 65,000 shares with an
11
<PAGE>
exercise price of $1.40 per share. Twenty thousand shares were included in
the option granted to Mr. Smith on the condition that he surrender the
options granted to him in 1994 covering 40,000 shares with an exercise price
of $1.40 per share.
Substantially all of the options that were outstanding at the beginning
of 1996 were replaced with options granted under either the Company's
Employee Stock Option Plan or the Company's Director Stock Plan. It was
believed that by the Special Stock Plan Committee of the Board of Directors
that the exercise prices of the outstanding options were too high to provide
the type of incentive to the option holders that was the original intent of
the adoption of the plans and the grants of the options.
Charles M. Butler, III John B. Hawkins
Donald C. Nejedly
MEMBERS OF THE SPECIAL STOCK PLAN COMMITTEE OF THE BOARD OF DIRECTORS AT THE
TIME OF THE GRANT OF THE DESCRIBED OPTIONS.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth certain information with respect to
options exercised by the named executive officers of the Company during
fiscal 1996, and the number and value of unexercised options held by such
executive officers at the end of the fiscal year.
<TABLE>
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options at
Acquired Value Options at Fiscal Year End (#) Fiscal Year End ($)(1)
on Realized ------------------------------ ---------------------------
Name Exercise(#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C>
Richard D. Brannon 0 0 3,333 6,667 208 417
Ray C. Davis 0 0 3,333 6,667 208 417
Clifford S. Lewis 0 0 55,000 0 48,125 0
Thomas F. Ostrye 0 0 200,000 0 187,500 0
Matthew S. Ramsey 0 0 0 0 0 0
Jon P. Stephenson 0 0 3,333 6,667 208 417
Don E. Smith 0 0 60,000 0 56,250 0
Kelcy L. Warren 0 0 3,333 6,667 208 417
</TABLE>
- -------------------
(1) Market value of the underlying shares of Common Stock at the date of
exercise or fiscal year-end, as the case may be, minus the option exercise
price and multiplied by the applicable number of shares. The last sale
price for the Company's Common Stock as quoted on the Nasdaq Small Cap
Market on December 31, 1996, the last trading day of the fiscal year, was
$1.4375.
CHANGE OF CONTROL AGREEMENTS
On March 27, 1996, the Board of Directors approved a "Change of Control"
Agreement (the "Change Agreement") between the Company and Thomas F. Ostrye,
then the Company's Chairman and President. Under the Change Agreement, the
investment by HACL, Ltd. and the implementation of its right to designate five
directors
12
<PAGE>
constituted a "change of control" and Mr. Ostrye voluntarily terminated after
a reduction in his responsibilities. He thereby became entitled to receive a
final payment in an amount equal to his compensation, including bonuses, for
the twelve months immediately preceding his termination, plus the value of
employee benefits received for that twelve month period. Mr. Ostrye received
a payment of $143,000 from the Company pursuant to the Change Agreement.
Under the terms of a Termination Agreement entered into in December of
1996, Don E. Smith resigned as an officer and employee of the Company and its
subsidiaries and became entitled to receive a termination payment of $81,500,
payable in five equal monthly installments beginning December 31, 1996. The
Termination Agreement also extended the term of the Mr. Smith's Non-Compete
Agreement with the Company (which was entered into in connection with the
Company's acquisition of Mid-South Compressors, Inc., in 1993) to December 31,
2001.
The Company has entered into a Change of Control Agreement with Matthew S.
Ramsey, Chief Executive Officer and President of the Company. Under the terms
of this agreement, upon a termination of Mr. Ramsey's employment by reason of a
change of control of the Company, he shall be entitled to a payment equal to
12 months' salary and health, hospitalization and disability insurance coverage
then being provided by the Company for a period of 12 months following such
termination. A change of control is deemed to occur when (a) there has been
a material change in the ownership or control of the Company by reason of an
extraordinary event such as a liquidation, dissolution, reorganization, reverse
stock split or merger; (b) any person or group acquires more than 50% of a
class of the outstanding voting securities of the Company; or (c) less than a
majority of the Board is comprised of persons who are nominees of the
Board of Directors as a result of a contested election.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
ten percent of the Common Stock, to report their initial ownership of the Common
Stock and any subsequent changes in that ownership to the SEC, and to furnish
the Company with a copy of each such report. SEC regulations impose specific
due dates for such reports, and the Company is required to disclose in this
Proxy Statement any failure to file by these dates during and with respect to
fiscal 1996.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no reports
were required, during and with respect to fiscal 1996, all Section 16(a) filing
requirements applicable to its officers, directors and more than ten percent
stockholders were complied with, except that Frank Gagliardi, Vice President,
inadvertently failed to file a Form 3 in connection with his election as an
officer in May of 1996.
OTHER MATTERS
MATTERS WHICH MAY COME BEFORE THE MEETING
The Board of Directors does not intend to bring any other matters before
the meeting, nor does the Board of Directors know of any matters which other
persons intend to bring before the meeting. If, however, other matters not
mentioned in this Proxy Statement properly come before the meeting, the persons
named in the accompanying Proxy Card will vote thereon in accordance with the
recommendation of the Board of Directors.
REMINDER: PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD TO ASSURE THAT ALL
OF YOUR SHARES WILL BE VOTED.
13
<PAGE>
APPENDIX A
PROPOSAL ONE
Amendment to the Bylaws:
EXISTING PROVISIONS
SECTION 3.1 NUMBER, QUALIFICATIONS, ELECTION AND TERM OF OFFICE. The number
of directors which shall constitute the whole Board shall be not less than
one (1) nor more than fifteen (15). Within the limits above specified, the
number of directors shall be determined by resolution of the Board of
Directors or by the shareholders at the annual or a special meeting of the
shareholders; provided that in the event the directors or shareholders fail
to adopt such a resolution, the number of directors previously fixed shall
apply until further action by the directors or shareholders. [The directors
shall be divided into three classes: Class I, Class II and Class III. Such
classes shall be as nearly equal in number as possible. The term of office of
the initial Class I directors shall expire at the annual meeting of the
shareholders in 1990, the term of office of the initial Class II directors
shall expire at the annual meeting of the shareholders in 1991 and the term
of office of the initial Class III directors shall expire at the annual
meeting of the shareholders in 1992. At each annual meeting of shareholders,
directors chosen to succeed those whose terms then expire shall be elected
for a full term of office expiring at the third succeeding annual meeting of
stockholders after their election, except as provided in Section 3.2 of this
Article.] Directors need not be shareholders.
PROPOSED AMENDMENT
Section 3.1 of the Bylaws will be amended by deleting the bracketed portion
of the existing provisions and replacing it with the following sentence:
Each director shall serve until the next annual meeting of
shareholders and until his successor shall have been elected and shall
qualify, except in the event of his death, resignation or removal.
EXISTING PROVISION
SECTION 3.2 VACANCIES. Except as provided in Section 3.14 of this
Article III, vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum. There shall be no
classification of those directors elected to fill newly created directorships
until the next annual meeting of shareholders. Any director elected to fill
a vacancy shall hold office until the next election pertaining to the class
to which such director is designated and until such director's successor is
duly elected and shall qualify unless such director resigns or is removed.
If there are no directors in office, then an
PROPOSED AMENDMENT
Section 3.2 of the Bylaws will be amended by replacing the existing
provisions with the following:
Section 3.2 Vacancies. Vacancies and newly-created directorships resulting
from any increase in the authorized number of directors may be filled by a
majority vote of the directors in an office, though less than a quorum, or by a
sole remaining director. Each director so chosen shall hold office until the
next annual meeting of shareholders and until his successor shall have been duly
elected and shall qualify, unless he dies, resigns or is removed prior to such
time. If there are no directors in office, then an election of directors may be
held in a manner provided by statute.
14
<PAGE>
election of directors may be held in the manner provided by statute.
EXISTING PROVISION
SECTION 3.14 VOTE REQUIRED FOR REMOVAL OF DIRECTOR; REPLACEMENT. Any
director may be removed for cause only by a majority vote of the shareholders
entitled to vote for the election of such director at any annual or special
meeting of the shareholders. Upon such removal of a director, the
shareholders (and not the remaining directors) shall elect a director to
replace such removed director at the same shareholders' meeting at which such
removal took place or at a subsequent shareholders' meeting.
PROPOSED AMENDMENT
Section 3.14 of the Bylaws will be amended by deleting the first sentence
of the existing section and replacing it with the following sentence:
Except as otherwise provided in the Certificate of Incorporation or the
General Corporation Act of the State of Oklahoma, any director may be removed
from office, with or without cause, at any time by the holders of a majority of
the shares entitled to vote at any election of directors, at any annual or
special meeting of the shareholders.
15
<PAGE>
[FORM OF PROXY - FRONT SIDE]
EQUITY COMPRESSION SERVICES CORPORATION
BOARD OF DIRECTORS PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD AT
11:00 A.M. LOCAL TIME ON MAY 21, 1997, AT THE TERRACE ROOM, THE MELROSE
HOTEL, 3015 OAK LAWN AVENUE, DALLAS, TEXAS 75219.
The undersigned stockholder(s) of Hawkins Energy Corporation (the
"Corporation") do(es) hereby nominate, constitute and appoint JACK D.
BRANNON, as proxy of the undersigned, with full powers of substitution and
resubstitution, to represent and vote the shares of capital stock of the
Corporation held of record by the undersigned on the record date for the
above-described annual meeting, at such meeting and at any adjournment
thereof as follows:
PROPOSAL ONE: TO APPROVE AN AMENDMENT TO THE COMPANY'S BYLAWS TO ELIMINATE
THE CLASSIFICATION OF THE BOARD OF DIRECTORS AND PROVIDE FOR
THE ANNUAL ELECTION OF THE COMPANY'S DIRECTORS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PROPOSAL TWO: TO ELECT DIRECTORS OF THE COMPANY.
[NOMINEES ARE LISTED ON REVERSE SIDE]
[ ] FOR listed nominees [ ] WITHHOLD AUTHORITY
(except do not vote for to vote for
the nominee(s) whose name(s) listed nominees.
I have written below).
PROPOSAL THREE: TO RATIFY THE SELECTION OF COOPERS & LYBRAND, TULSA, OKLAHOMA,
AS INDEPENDENT AUDITOR FOR THE COMPANY FOR ITS FISCAL YEAR
1997; AND
[ ] FOR [ ] AGAINST [ ] ABSTAIN
TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR
ANY ADJOURNMENT THEREOF.
<PAGE>
[FORM OF PROXY - REVERSE SIDE]
(continued from other side)
<TABLE>
Director Nominees:
<S> <C>
If Proposal One is Approved, the Nominees are:
Richard D. Brannon Ray C. Davis Neal A. Hawthorn Matthew S. Ramsey Jon P. Stephenson
Charles M. Butler, III James D. Finley Clifford S. Lewis Don E. Smith Kelcy L. Warren
If Proposal One is Not Approved, the Nominees and their designated classes are:
Richard D. Brannon Class II Jon P. Stephenson Class III James D. Finley Class I
Matthew S. Ramsey Class II Kelcy L. Warren Class III
Don E. Smith Class II Neal A. Hawthorn Class III
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE
VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE ABOVE. IF A CHOICE IS NOT
INDICATED WITH RESPECT TO ANY OF THE ABOVE PROPOSALS, THIS PROXY WILL BE
VOTED "FOR" SAID PROPOSAL. IF ANY OTHER MATTERS SHOULD BE BROUGHT BEFORE THE
MEETING, THE PROXY WILL VOTE ON SUCH MATTERS IN ACCORDANCE WITH HIS BEST
JUDGMENT. THIS PROXY IS REVOCABLE AT ANY TIME BEFORE IT IS EXERCISED.
DATED this day of , 1997.
----- -------------- -------------------------------------------------------
-------------------------------------------------------
Signature(s) of Stockholder(s)
</TABLE>
Joint owners must EACH sign. Please sign EXACTLY as your name(s) appear(s)
on this card. When signing as attorney, trustee, executor, administrator,
guardian or corporate officer, please give your FULL title.
PLEASE SIGN, DATE AND MAIL TODAY.
