<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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 (S)240.14a-11(c) or (S)240.14a-12
OEC COMPRESSION CORPORATION
--------------------------
(Name of Registrant as specified in its Charter)
Payment of Filing Fee (check the appropriate box):
/X/ No Fee Required.
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 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>
OEC LETTERHEAD
June 14, 2000
Stockholders of OEC Compression Corporation:
All Stockholders of OEC Compression Corporation, an Oklahoma
corporation ("OEC" or the "Company") are cordially invited to attend the annual
meeting of the Stockholders of the Company to be held on July 13, 2000 at 11:30
a.m. at the offices of the Company at 2501 Cedar Springs, Dallas, Texas 75201.
At the meeting the following items will be considered:
1. Election of eight directors of the Company;
2. Ratification of Arthur Andersen, LLP as independent auditors
for the Company; and
3. Such other matters as may properly come before the
Stockholders.
The Company has nominated a slate of highly competent qualified
nominees. We urge you to complete the Company white proxy card.
Whether or not you expect to be present at the meeting, please
complete, sign, and return the enclosed white proxy card as soon as possible. To
vote for management and the current Board of Directors, you must submit a white
proxy card. Make sure your vote counts. Please send in the white proxy card. For
your convenience, a return envelope is enclosed that requires no postage if
mailed in the United States. If you attend the meeting in person, your proxy
will be returned to you upon request.
YOU MAY HAVE RECEIVED A PROXY SOLICITATION FROM DENNIS ESTIS, MIKE
BUTLER, ROBERT GREGORY AND DON SMITH (THE "ESTIS GROUP"). THE ESTIS GROUP'S
NOMINEES HAVE NOT BEEN ENDORSED BY YOUR BOARD. THE COMPANY URGES YOU NOT TO SIGN
ANY PROXY CARDS SENT TO YOU BY THE ESTIS GROUP. If you have already done so, you
may revoke your previously signed proxy by delivering a written notice of
revocation or a later dated proxy card.
Very truly yours,
Ray C. Davis
Co-Chairman and Co-Chief Executive Officer
Whether or not you expect to attend the meeting, please sign and date
the enclosed white proxy card and return it in the enclosed envelope. Thank you.
OEC Compression Corporation
2501 Cedar Springs, Suite 600
Dallas, Texas 75201
<PAGE>
OEC COMPRESSION CORPORATION
2501 CEDAR SPRINGS ROAD, SUITE 600
DALLAS, TEXAS 75201
--------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON July 13, 2000
--------------------------
TO THE STOCKHOLDERS OF OEC COMPRESSION CORPORATION (formerly known as Equity
Compression Services Corporation):
The Annual Meeting of Stockholders of OEC Compression Corporation,
formerly known as Equity Compression Services Corporation, an Oklahoma
corporation (the "Company"), will be held at the offices of the Company at 2501
Cedar Springs Road, Suite 600, Dallas, Texas 75201, on Tuesday, July 13, 2000,
at 11:30 a.m. CDT time, for the following purposes:
(1) To elect eight (8) directors of the Company;
(2) To ratify the selection of Arthur Andersen LLP, as independent
auditors for the Company for its fiscal year 2000; and
(3) To transact other business as may properly come before the meeting
or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on June 12, 2000
as the record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting or any adjournment(s) or postponement(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
Dallas, Texas
June 14, 2000
YOUR VOTE IS IMPORTANT
EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO DATE, SIGN AND
PROMPTLY RETURN YOUR ENCLOSED WHITE 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>
OEC COMPRESSION CORPORATION
2501 CEDAR SPRINGS ROAD, SUITE 600
DALLAS, TEXAS 75201
--------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
June 14, 2000
--------------------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Management and Board of Directors of OEC Compression
Corporation (formerly known as Equity Compression Services Corporation) (the
"Company") to be used at the Annual Meeting of Stockholders to be held Thursday,
July 13, 2000, at 11:30 a.m., CDT time, at the offices of the company at 2501
Cedar Springs Road, Suite 600, Dallas, Texas 75201, and all adjournment(s) or
postponement(s) thereof, for the purposes set forth in the attached Notice of
Annual Meeting. The Company's executive offices are located at 2501 Cedar
Springs Road, Suite 600, Dallas, Texas 75201. The approximate date upon which
this Proxy Statement and the form of proxy are being mailed to stockholders is
June 14, 2000.
A group calling themselves the Shareholder Preservation Committee
formed by the former COO of the Company, Dennis Estis (the "Estis Group"), has
filed a proxy statement with the Security and Exchange Commission to solicit
proxies for 11 nominees for election to the Company's Board of Directors in
opposition to the Board of Directors' nominees.
The Board of Directors is soliciting votes for the Company's slate of
nominees for election to the Board of Directors. A white proxy card is enclosed
for your use. THE BOARD OF DIRECTORS URGES YOU TO COMPLETE, SIGN, DATE AND
RETURN THE WHITE PROXY CARD IN THE ACCOMPANYING ENVELOPE, which is postage-paid
if mailed in the United States.
If you have any questions or need further assistance in voting your
shares, please call:
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
TELEPHONE:
(212) 929-5500 (Call Collect)
(800) 322-2885 (Call Toll-Free)
FACSIMILE:
(212) 929-0061
THE BOARD OF DIRECTORS URGES YOU NOT TO SIGN ANY PROXY CARD SENT TO YOU
BY THE ESTIS GROUP. IF YOU HAVE ALREADY DONE SO, YOU MAY REVOKE YOUR PREVIOUSLY
SIGNED PROXY BY DELIVERING A WRITTEN NOTICE OF REVOCATION OR A LATER DATED PROXY
CARD IN THE ENCLOSED ENVELOPE.
Remember, it will not help your Board of Directors to return the Estis
Group proxy card voting to "abstain." Do not return any card sent to you by the
Estis Group. The only way to support your Board of Directors' nominees is to
vote "FOR" those nominees on the white proxy card.
IF YOUR SHARES ARE HELD IN THE NAME OF THE BANK, BROKER, OR OTHER
NOMINEE, ONLY YOUR BANK OR BROKER OR OTHER NOMINEE CAN VOTE YOUR SHARES AND ONLY
UPON YOUR SPECIFIC INSTRUCTIONS. PLEASE CONTACT THE PERSON RESPONSIBLE FOR YOUR
ACCOUNT AND INSTRUCT HIM OR HER TO VOTE THE WHITE PROXY CARD AS SOON AS
POSSIBLE.
REASONS TO SUPPORT THE COMPANY'S NOMINEES
<PAGE>
A committee formed by the former Chief Operating Officer of the
Company, Dennis Estis, is soliciting proxies for a slate of directors in
opposition to the Company's nominees. For the reasons set forth below, the
Company strongly feels that the Company's nominees should be elected and the
slate proposed by Estis be rejected.
POSSIBLE ACCELERATION OF DEBT. Both the Company's senior debt with the
Bank of Scotland (the "Senior Lender") and the Company's subordinated debt with
Prudential Insurance Company of America (the "Subordinated Leader") contain
change of control provisions. If the Estis Group nominees are elected to the
Board of Directors, a "change of control" of the Company will occur under the
Company's senior and subordinated debt, giving the Senior Lender and the
Subordinated Lender the right to accelerate all of the Company's debt. It is the
Company's understanding that Mr. Estis has been unable to obtain any waivers of
the change of control provision from the Senior Lender or the Subordinated
Lender.
The Company does not believe that it would be able to replace its
senior and subordinated debt and, if such debt is called due to a change of
control, the Company's only alternative may be to file for protection under the
federal bankruptcy law. The Estis Group has provided no evidence that it has
firm commitments to replace the debt if called or that it could obtain any
alternate financing.
A VOTE FOR THE ESTIS NOMINEES MAY EXPOSE THE COMPANY TO A POSSIBLE
ACCELERATION OF THE COMPANY'S DEBT AND BANKRUPTCY.
ESTIS GROUP ACTIONS AS IMPEDIMENT TO SALE PROCESS. In February of this
year the Company engaged a major investment banking firm to pursue strategic
alternatives for the maximization of shareholder value including the possible
sale of the Company. The investment banking firm began conducting an auction of
the Company before Estis publically commenced a proxy contest. After learning of
the potential proxy contest, the investment banking firm informed the Board and
the Estis Group that a proxy fight could be fatal to the process of trying to
sell the Company. Despite such advice, the Estis Group has proceeded with the
attempt to solicit proxies.
The Company believes that the Estis Group's actions have seriously
impaired the prospects for selling the Company in the near future. If the Estis
Group is serious about the selling of the Company, it has taken actions that are
detrimental to such process.
POOR OPERATING RESULTS DURING ESTIS' TENURE AS CHIEF OPERATING OFFICER.
Mr. Estis served as Chief Operating Officer of the Company from the Company's
August, 1997 acquisition of Ouachita Energy until his departure in December,
1998. During his tenure as Chief Operating Officer, Mr. Estis had direct control
over the Company's field, shop and marketing operations as well as physical due
diligence of all Company acquisitions. During his period of service, there was
no improvement in cashflow, operating income or net income, yet the Company's
debt load increased over $23 million. The $23 million increase reflects over 90%
of the debt increase placed on the Company since the Ouachita acquisition. One
of the disagreements and reasons for Estis' departure from the Company was his
refusal to implement cost controls and other procedures in the field, shop and
marketing and his failure to enforce procedures mandated by the Board and CEO.
IMPROVED OPERATING RESULTS OF THE COMPANY UNDER CURRENT MANAGEMENT.
Since current management of Ray Davis and Kelcy Warren assumed the position of
Co-Chief Executive Officers of the Company in September 1999, operating income,
cash flow and net earnings have significantly increased despite no material
revenue increase. The Company believes that the current debt load of the
Company, substantially increased during Estis' tenure as Chief Operating
Officer, limits its ability to materially increase revenue levels at the present
time. The positive operating results for the first fiscal quarter ending March
31, 2000, measured in terms of cashflow, operating income and net earnings,
represent record performance levels for the Company for the last three years.
Mr. Davis and Mr. Warren are serving as Co-Chief Executive Officers without
compensation.
COMMITMENT OF COMPANY NOMINEES TO MAXIMIZING SHAREHOLDER VALUE. The
Board of Directors believes that the election of the individuals nominated by
the Estis Group would not be in the best interests of the Company and its
Stockholders. Seven of the eight Company nominees are current Directors and are
intimately familiar with the Company and the industry in which it operates. The
2
<PAGE>
Company's nominees are fully committed to maximizing value for all of the
Company's Stockholders. The Board of Directors believes that a change in the
Board of Directors at this time would be highly disruptive to the strategy the
Company is actively pursuing and could raise significant concerns with current
and future business partners. Moreover, uncertainties arising from such a change
could result in the loss of key personnel who are important to the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF
THE EIGHT NOMINEES OF THE BOARD OF DIRECTORS DESCRIBED HEREIN AND NOT VOTE IN
FAVOR OF ANY NOMINEES OF THE ESTIS GROUP.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
At the close of business on June 12, 2000, there were 36,986,711 issued
and outstanding shares of the Common Stock (exclusive of 184,500 shares held in
treasury) of the Company. Each holder of Common Stock is entitled to one vote
per share on all matters. Only stockholders of record at the close of business
on June 12, 2000, will be entitled to notice of and to vote at the Annual
Meeting.
The following table sets forth certain information, as of
June 12, 2000, 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, (iii) any Company nominee, (iv)all executive officers of the Company
and (v) 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.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF PERCENT
BENEFICIAL OWNER NUMBER OF SHARES OF CLASS
---------------------------------- ---------------- --------
<S> <C> <C>
HACL, Ltd., .................................. 11,623,631(1) 31.42%
a Texas Limited Partnership
2838 Woodside Street,
Dallas, TX 75206
direct
Energy Investors ............................. 4,136,364 11.18%
a Texas Joint Venture
2838 Woodside Street,
Dallas, TX 75206
direct
Gregory & Cook, Inc. ......................... 3,037,251 8.21%
7575 San Felipe, Suite 350,
Houston, TX 77063
direct
Charles M. Butler, III ....................... 144,166(2) *
direct
James D. Finley .............................. 148,788(3) *
direct and indirect
Neal A. Hawthorn ............................. 3,333(4) *
direct
Clifford S. Lewis ............................ 94,911(5) *
direct and indirect
3
<PAGE>
Jack D. Brannon .............................. 263,000(6) *
direct and indirect
Don E. Smith ................................. 716,559(7) 1.95%
direct and indirect
Richard D. Brannon ........................... 1,101,136(8) 2.98%
direct and indirect
Ray C. Davis ................................. 4,491,742(9) 12.14%
direct and indirect
Matthew S. Ramsey ............................ 228,182(10) *
direct and indirect
Jon P. Stephenson ............................ 370,379(11) 1.00%
direct and indirect
Kelcy L. Warren .............................. 4,491,742(12) 12.14%
direct and indirect
Dennis W. Estis .............................. 5,370,487(13) 14.52%
direct
William J. (Bill) Murray ..................... 183,523(14) *
indirect
All Directors and Executive Officers
as a Group (12 Persons) ...................... 15,980,867(15) 45.49%
</TABLE>
---------------------------
- Less than 1%
(1) Does not include the 4,136,364 shares of Common Stock held by Energy
Investors, a Texas joint venture. 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 29,166 shares which may be acquired upon the exercise of presently
exercisable options.
(3) 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.
(4) Includes 3,333 shares which may be acquired upon the exercise of presently
exercisable options.
(5) Includes 63,332 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. Excludes 650,000 shares owned by Hawkins Oil & Gas.
(6) Includes 23,000 shares which may be acquired upon the exercise of presently
exercisable options.
4
<PAGE>
(7) 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. Also includes 12,000 shares that Mr. Smith owns as a
custodian for his children, pursuant to Uniform Gift to Minors Act.
(8) Includes 3,333 shares which may be acquired upon the exercise of presently
exercisable options, 1,101,136 shares attributable to Mr. Brannon's interest in
HACL, Ltd.
(9) Includes 3,333 shares which may be acquired upon the exercise of presently
exercisable options, 4,491,742 shares attributable to Mr. Davis' interest in
HACL, Ltd.
(10) Includes 35,000 shares which may be acquired upon the exercise of presently
exercisable options, 193,182 shares attributable to Mr. Ramsey's interest in
HACL, Ltd.
(11) Includes 3,333 shares which may be acquired upon the exercise of presently
exercisable options, 367,045 shares attributable to Mr. Stephenson's interest in
HACL, Ltd.
(12) Includes 3,333 shares which may be acquired upon the exercise of presently
exercisable options, 4,491,742 shares attributable to Mr. Warren's interest in
HACL, Ltd.
(13) Excludes 1,380,675 shares which are held by the ex-wife of the Mr. Estis.
Mr. Estis disclaims beneficial ownership of such shares. Includes, 6,666 shares
which may be acquired by currently exercisable options.
(14) Includes 183,523 shares attributable to Mr. Murray's interest in a partner
of HACL, Ltd.
(15) Includes 217,165 shares which may be acquired upon the exercise of
presently exercisable options, 51,638 shares held by the 401(k) Plan and
allocated to the accounts of such individuals, 2,884,847 shares attributable to
such persons' interests in HACL, Ltd., and 145,455 shares which are attributable
to Mr. Finley's interest in Energy Investors.
CERTAIN RELATIONSHIPS
On June 12, 2000, HACL, Ltd. and Jack D. Brannon exercised the
warrant previously issued to HACL, Ltd. in connection with its initial
investment in the Company. An aggregate of $7,280,000 was paid to the Company
for 8,000,000 shares of OEC common stock.
In September of 1999, Mr. Davis and Mr. Warren proposed merging the
Company with several entities owned by Mr. Davis and Mr. Warren. A Special
Committee was formed to review such transaction. The Special Committee
eventually decided not to pursue such transaction.
In September of 1999, the Company entered into a consulting
agreement with Mr. Ramsey under which Mr. Ramsey gave up his rights under a
change of control agreement and agreed to be paid $15,694 per month for 18
months. Mr. Ramsey has agreed to provide consulting and legal services to the
Company and has agreed not to compete against the Company during the consulting
term.
On December 16, 1998, the Company, Dennis Estis, the two other
stockholders who granted a proxy to Mr. Estis and certain other parties entered
into a Settlement Agreement. Among other
5
<PAGE>
things, the Settlement Agreement (i) prohibited Mr. Estis from participating in
any proxy solicitation relating to certain actions, (ii) required termination of
the proxies granted to him by the two other stockholders, (iii) dismissed a
lawsuit filed by Mr. Estis, (iv) released certain claims between the parties,
(v) provided for a "standstill" agreement until June 30, 1999 (subject to
possible extension and reinstatement as described below) prohibiting Mr. Estis
from participating in enumerated actions relating to control of the Company and
(vi) required the Company to reimburse Mr. Estis for certain of his
out-of-pocket expenses. The Settlement Agreement's prohibition on proxy
solicitations and standstill provisions have expired.
In December of 1997, the Company sold its Columbia,
Mississippi, facility to Don Smith, a director of the Company. Such sale was in
connection with the Company's closing of its Oklahoma City and Columbia,
Mississippi facilities. The Company received approximately $316,000 in cash and
realized a $11,000 loss due to the sale of such facility.
On August 6, 1997, the Company consummated the acquisition of
all of the stock ownership of Ouachita Energy Corporation and the acquisition of
substantially all of the assets of two affiliated companies (LLC, partnership)
(collectively referred to herein as the "Ouachita Companies") for 7.6 million
shares of Common Stock and the payment in cash or assumption of debt of $24
million. Dennis Estis was the principal stockholder of the Ouachita Companies
and Andy Payne served as chief financial officer of the Ouachita Companies.
Following the closing of such transaction, Mr. Estis and Payne were elected to
the Board of Directors of the Company. In January of 1997, the Company exchange
286,976 shares of Common Stock for the cancellation of approximately $699,000 of
indebtedness owed by the Company to Mr. Estis and an affiliated company.
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. In 1997, all of the Warrants vested and became
exercisable.
Pursuant to the Stock Purchase Agreement, HACL was granted the right to
designate up to eight directors of the Company 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.
Hawkins Oil & Gas, Inc. ("Hawkins Oil & Gas") owns 4.45% 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
6
<PAGE>
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.
ELECTION OF DIRECTORS
The Board of Directors presently consists of 11 directors all of whose
terms expire at the Annual Meeting. The Board has determined to reduce the size
of the Board from 11 to 8 directors effective at the conclusion of the Annual
Meeting. Accordingly, 8 persons will be elected to the Board of Directors at the
Annual Meeting. All of the persons listed under "Company Nominees for
Directors," other than W.J. (Bill) Murray, Jr. are currently directors of the
Company and have been nominated by the Board of Directors for reelection as
directors. W.J. (Bill) Murray, Jr. is the only person who in addition to the
Company's directors has been nominated by the Board of Directors for election as
a director.
The Board of Directors urges you to vote FOR the Board of Directors'
nominees. 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.
COMPANY NOMINEES FOR DIRECTORS
The following table sets forth information with respect to each person who has
been nominated by the Board of Directors to stand for election as a director.
<TABLE>
<CAPTION>
Position in the Company and Principal Occupation
Director & Age or Employment for the Last Five Years
--------------------- -------------------------------------------------------------------------
<S> <C>
Ray C. Davis Co-Chairman of the Board, Co-Chief Executive Officer, Director; Member of
Age 56 Executive Audit and Human Resources Committees of the Board of
Directors; Principal of Energy Transfer Company.
Kelcy L. Warren Director; Co-Chairman of the Board; Co-Chief Executive Officer; Member of
Age 43 Executive and Human Resources Committees of the Board of Directors;
Principal of Energy Transfer Company.
Richard D. Brannon Member of Executive and Human Resources Committees
Age 41 of the Board of Directors; President of Brannon Oil & Gas, Inc.
James D. Finley Director; Member of Audit Committee; President of Finley Resources.
Age 42
Neal A. Hawthorn Director; Chairman of Audit Committee; Vice President and Director of
Age 66 R. Lacy, Inc.
Matthew S. Ramsey Director; Member of Executive, Audit and Human Resources; Committees of the
Age 45 Board of Directors; Consultant to the Company.
7
<PAGE>
Jon P. Stephenson Director; Member of Executive and Human Resources Committees of the Board f
Age 54 of Directors; President of Sandollar Oil & Gas, Inc.
William Murray Private Investor
Age 85
</TABLE>
Mr. Davis became a Director in December 1996. Mr. Davis became Chairman
of the Board and Co-Chief Executive Officer in September of 1999. 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 Healthco International, Inc. from June 1991 to August 1992. He was also
Chairman of the Board of HPSC, Inc. from 1991 to 1992. 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. Warren became a Director in December of 1996. Mr. Warren became
Co-Chief Executive Officer in September of 1999. 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. 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.
Mr. Brannon became a Director in 1996. Mr. Brannon is President of
Brannon Oil & Gas, Inc., an independent energy investment company. Mr. Brannon
was Chairman of the Board of the Company until September of 1999. 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. Finley became a Director in April of 1997. He is an independent oil
and gas producer and is the owner of Finley Resources, an independent oil and
gas company. Prior to the sale of such company, Mr. Finley was 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 its 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.
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<PAGE>
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. Ramsey became a Director in December 1996. Mr. Ramsey served as
President and Chief Executive until September of 1999 when he resigned to become
a consultant to the Company. 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. 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 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. William J. (Bill) Murray, Jr. has been nominated as a director of
the Company. Mr. Murray is a retired private investor. Mr. Murray has served as
a director of Cornerstone National Gas, Inc. Mr. Murray is chair of the Energy
Reliability Council. Mr. Murray is a recipient of the Distinguished Graduate
Award, University of Texas Engineering School.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
The Company has standing Executive, Audit and Human
Resources Committees of the Board of Directors. Presently, the members of the
Executive Committee are Richard D. Brannon, Charles M. Butler, III, Ray C.
Davis, Matthew S. Ramsey and Kelcy L. Warren, the members of the Audit
Committee are Charles M. Butler, III, Ray C. Davis, Clifford S. Lewis, Neal
A. Hawthorne and James D. Finley, and the members of the Human Resources
Committee are Richard D. Brannon, Matthew S. Ramsey, Jon P. Stephenson and
Kelcy L. Warren. The function of the Executive Committee is to act for the
Board between Board meetings. The Executive Committee held one meeting during
1999. 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, 1999.
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 one time during the fiscal year ended December 31,
1999.
The Board of Directors met 11 times during fiscal 1999. 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
9
<PAGE>
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. Each of the Directors
other than Don Smith, Cliff Lewis and Charles Butler waived such compensation
for the term ended December 31, 1999.
Mr. Ramsey is a party to a consulting agreement with the
Company under which he is paid $15,694 per month for legal and consulting
services.
Mr. Butler served as Chairman of a Special Committee of the
Board of Directors to review a proposed transaction between the Company and a
group of companies owned by Mr. Davis and Mr. Warren. The Special Committee
eventually decided not to pursue such transaction. The Compensation Committee of
the Board recommended and the entire Board approved paying Mr. Butler $15,000
for his services as Chairman of such Special Committee.
On June 11, 1998, all non-officer Directors were each issued
options to purchase 6,666 shares of Common Stock. The exercise price of all
options granted in 1998 was equal to the fair market value of the Common Stock
on the date of grant. The options were granted for a term of 40 years.
On May 20, 1999, all non-officer Directors were each issued
options to purchase 6,666 shares of Common Stock. The exercise price of all
options granted in 1999 was equal to the fair market value of the Common Stock
on the date of grant. The options were granted for a term of 40 years.
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. Commencing June 1997, Mr. Brannon was retained as a business
development consultant for which he was paid $5,000 per month through June 1999
when Mr. Brannon waived his consulting fee.
EMPLOYMENT AGREEMENT
Dan McCormick, a Senior Vice President of the Company, is
party to Change of Control Agreement pursuant to which such executive officer is
entitled to payments equal to the sum of (i) one years' salary plus (ii) the
greater of such executive's last year bonus or the bonus such executive would
have earned for the current fiscal year under any bonus plan in effect for the
Company at the time of such termination if such executive is terminated without
cause following a change of control. Jack D. Brannon, Senior Vice President and
Chief Financial Officer of the Company, is party to Change of Control Agreement
pursuant to which such executive officer is entitled to payments equal to the
sum of two years' salary if such executive is terminated without cause following
a change of control. Such amount shall be paid to the terminated executive in
either a lump sum or in monthly installments over 12 months at the election of
the terminated employee.
In September of 1999, the Company entered into a consulting
agreement with Mr. Ramsey under which Mr. Ramsey gave up his rights under a
change of control agreement and agreed to be paid $15,694 per month for 18
months. Mr. Ramsey has agreed to provide consulting and legal services to the
Company and has agreed not to compete against the Company during the consulting
term.
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, 1999, 1998 and 1997 to
(a) each person serving as the Company's chief executive officer during fiscal
10
<PAGE>
1999 and (b) each of the Company's most highly compensated executive officers
whose aggregate compensation during fiscal 1999 exceeded $100,000.
Long Term Compensation Awards
Annual Compensation Number of Shares
<TABLE>
<CAPTION>
Other Securities All Other
Name and Principal Fiscal Annual Underlying Compensation
Position Year Salary(1) Bonus Compensation Options (2)
---- --------- ----- ------------ ------- ---
<S> <C> <C> <C> <C> <C> <C>
Matthew S. Ramsey(3) 1999 $163,745 $ -- $ -- $ -- $ 2,788
Chief Executive Officer 1998 $196,081 -- -- -- 1,333
1997 $175,000 $87,500 $ -- $213,890 $ 1,010
Jack D. Brannon 1999 $148,650 $ -- $ -- $ -- $ --
1998 $127,755 -- -- -- --
1997 $115,000 $57,500 $ -- $ 140,560 $ --
Ray C. Davis (4) 1999 $ -- $ -- $ -- $ -- $ --
Kelcy L. Warren (4) 1999 $ -- $ -- $ -- $ -- $ --
</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.
(3) Mr. Ramsey was the Chief Executive Officer of the Company until Septermber
of 1999.
(4) Mr. Warren and Mr. Davis became Co-Chief Executive Officers of the Company
in September of 1999. Mr. Warren and Mr. Davis have agreed to serve in such
positions for no compensation.
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
1999, and the number and value of unexercised options held by such executive
officers at the end of the fiscal year.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-money Options
At December 31, 1999 At December 31, 1999
-------------------- --------------------
Shares
Acquired On Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
--------- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Matthew Ramsey -- $-- 127,126 -- -- --
Jack Brannon -- $-- 56,224 105,732 -- --
Ray Davis -- $-- 28,332 -- -- --
Kelcy Warren -- $-- 28,332 -- -- --
</TABLE>
11
<PAGE>
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 American Stock Exchange on December 31,
1999, the last trading day of the fiscal year, was $0.5625.
COST AND METHOD OF SOLICITATION
The Company will bear the cost of this solicitation. The Company
currently estimates that it will spend a total of approximately $100,000 for
its solicitation of proxies, including expenditures for attorneys, solicitors
and advertising, printing, transportation and related expenses, but excluding
the salaries and wages of regular employees and officers and the normal expense
of an uncontested proxy solicitation for the election of directors. As of
June 12, 2000, the Company has incurred proxy solicitation expenses of
approximately $215,000. In addition to soliciting proxies by mail, Directors
of the Company may solicit proxies in person or by telephone or telecopy.
The Company will also reimburse brokers, fiduciaries, custodians and
other nominees, as well as persons holding stock for others who have the
right to give voting instructions, for out-of-pocket expenses incurred in
forwarding this proxy statement and related materials to, and obtaining
instructions or authorizations relating to such materials from, beneficial
owners of the Company's capital stock. The Company will pay for the cost of
these solicitations, but these individuals will receive no additional
compensation for these solicitation services. The Company has retained the
proxy solicitation firm of MacKenzie Partners, Inc. at estimated fees of not
more than $25.000 in the aggregate, plus reasonable out-of-pocket expenses,
to participate in the solicitation of proxies and revocations. The Company
also has agreed to indemnify MacKenzie Partners, Inc. against certain
liabilities and expenses. The Company estimates that approximately 35
employees of McKenzie Partners, Inc. will be involved in the solicitation of
proxies on behalf of the Company.
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
WHO MAY SOLICIT PROXIES
The following table sets forth (a) the name, business and address of
the Directors and nominees as a Director of the Company and any officers and
employees of the Company who may also solicit proxies from stockholders of the
Company ("Participants") and (b) the dates, types and amounts of each of
Participant's purchases and sales of the Company's Common Stock within the past
two years. The principal occupation of each of the Directors is set forth
elsewhere in this proxy statement.
<TABLE>
<CAPTION>
Transaction Number of Acquired
Name Date Shares or Sold
---- ---- ------ -------
<S> <C> <C> <C>
Ray C. Davis
2838 Woodside
Dallas, TX 75201
Kelcy L. Warren
2838 Woodside
Dallas, TX 75201
W.J. (Bill) Murray, Jr.
#7 Woodstone Building
Austin, TX 78703
Richard Brannon
2240 A. Forest Park Blvd.
Fort Worth, TX 76110
12
<PAGE>
James Finley
1308 Lake St., Ste. 200
Fort Worth, TX 76102
Neal Hawthorn January 21, 1999 5,000 Purchased
222 East Tyler St.
Longview, TX 75601
Jon Stephenson July 7, 1998 2,000 Purchased
P.O. Box 1019
Hallsville, TX 75650
Matthew S. Ramsey
2501 Cedar Springs, Ste. 600
Dallas, TX 75201
Jack D. Brannon
2501 Cedar Springs, Ste. 600
Dallas, TX 75201
</TABLE>
Except as otherwise indicated, shares of Common Stock of the Company
owned of record by each Participant are also owned beneficially by such
Participant. The number of shares of Common Stock of the Company owned by each
Director or nominee is set forth in the table under "Principal Owners of Common
Stock."
Except as described in this Proxy Statement, none of the Participants
nor any of their respective affiliates or associates (together, the "Participant
Affiliates") (i) directly or indirectly beneficially owns any securities of the
Company or of any subsidiary of the Company or (ii) has had any relationship
with the Company in any capacity other than as a shareholder, employee, officer
or director. Futhermore, except as described in the Proxy Statement, no
Participant or Participant Affiliate is either a party to any transaction or
series of transactions since January 1, 1999, or has knowledge of any currently
proposed transaction or series of transactions, (i) to which the Company or any
of its subsidiaries was or is to be a party, (ii) in which the amount involved
exceeds $60,000, and (iii) in which any Participant or Participant Affiliate has
or will have, a direct or indirect material interest.
Except as described in this Proxy Statement, no Participant or
Participant Affiliate has entered into any agreement or understanding with any
person respecting any (i) future employment by the Company or its affiliates or
(ii) any transactions to which the Company or any of its affiliates will or may
be a party. Except as described in this Proxy Statement, there are no contracts,
arrangements or understandings by any Participant or Participant Affiliates
within the past year with any person with respect to any capital stock of the
Company.
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 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.
13
<PAGE>
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.
MANNER OF VOTING PROXIES
The accompanying proxy card is designed to permit each stockholder of
record at the close of business on June 12, 2000, to vote on the election of
directors and the ratification of the selection of the Company's independent
auditors for 2000. 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 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 2001 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
2001 Annual Meeting of Stockholders, a stockholder proposal must be received by
the Company at its principal offices, 2501 Cedar Springs, Suite 600, Dallas,
Texas 75201 addressed to the Secretary of the Company, on or before February
3, 2001.
REMINDER: PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD TO ASSURE THAT
ALL OF YOUR SHARES WILL BE VOTED.
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 1999.
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 1999, all Section 16(a)
filing requirements applicable to its officers, directors and more than ten
percent stockholders were complied with.
PROPOSAL TWO
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has unanimously selected Arthur Andersen LLP, as
the independent auditors for the Company for its 2000 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 Arthur Andersen, 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.
14
<PAGE>
The Board of Directors recommends that Stockholders vote in favor of
ratification of the selection of independent auditors.
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 person
named in the accompanying Proxy Card will vote thereon in accordance with the
recommendation of the Board of Directors.
15
<PAGE>
[FORM OF PROXY - FRONT SIDE]
OEC COMPRESSION CORPORATION
BOARD OF DIRECTORS PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD AT
11:30 A.M. LOCAL TIME ON JULY 13, 2000, AT THE OFFICES OF THE COMPANY AT 2501
CEDAR SPRINGS, SUITE 600, DALLAS, TEXAS 75201
The undersigned stockholder(s) of OEC Compression 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 or
postponement thereof as follows:
PROPOSAL ONE: TO ELECT DIRECTORS OF THE COMPANY:
James D. Finley, Neal A. Hawthorn, Richard D. Brannon, Ray C. Davis,
Matthew S. Ramsey, Jon P. Stephenson, Kelcy L. Warren and W.J. (Bill)
Murray, Jr.
/ / FOR listed nominees.............. / / WITHHOLD AUTHORITY
(except do not vote for............... to vote for
the nominee(s) whose name(s)
I have written below).
---------------------------------------------
PROPOSAL TWO: TO RATIFY THE SELECTION OF ARTHUR ANDERSEN LLP, DALLAS, TEXAS,
AS INDEPENDENT AUDITOR FOR THE COMPANY FOR ITS FISCAL YEAR
2000; 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)
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.
All other proxies previously given by the undersigned to vote shares of
Common Stock of the Corporation are hereby expressly revoked.
DATED this ______ day of _________, 2000.
............................ ___
............................ Signature(s) of Stockholder(s)
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.
