SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Amendment No. )
under the Securities Exchange Act of 1934
OEC Compression Corporation
(Name of Issuer)
Common Stock, par value $1.00 per share
(Title of Class of Securities)
670827 10 4
(CUSIP Number)
Shareholder Preservation Committee
c/o Dennis W. Estis
3592 Waverly Circle
Destin, FL 32541
(850) 650-5874
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 27, 2000
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box [ ].
-------------------------
<PAGE>
CUSIP NO. 420258 10 5
OEC COMPRESSION CORPORATION
1. Names of reporting persons: Dennis W. Estis
IRS Identification Nos. of above persons (entities only):_________________
2. Check the appropriate box if a Member of a Group (see instructions):
(a) [X]
(b) [ ]
3. SEC use only:
__________________________________________________________________________
4. Source of funds (see instructions): OO
5. Check if disclosure of legal proceedings is required pursuant to Items
2(d) or 2(e): [ ]
6. Citizenship or Place of Organization: U.S.
Number of shares beneficially owned by each reporting person with:
7. Sole Voting Power 5,363,821
8. Shared Voting Power 0
9. Sole Dispositive Power 5,363,821
10. Shared Dispositive Power 0
11. Aggregate amount beneficially owned by each
reporting person: 5,363,821
12. Check box if the aggregate amount in Row 11 excludes certain shares
(see instructions): [ ]
13. Percent of class represented by amount in Row 11: 18.5%
14. Type of reporting person (see instructions): IN
1-A
<PAGE>
CUSIP NO. 420258 10 5
OEC COMPRESSION CORPORATION
1. Names of reporting persons: Robert P. Gregory, Jr.
IRS Identification Nos. of above persons (entities only):_________________
2. Check the appropriate box if a Member of a Group (see instructions):
(a) [X]
(b) [ ]
3. SEC use only:
__________________________________________________________________________
4. Source of funds (see instructions): OO
5. Check if disclosure of legal proceedings is required pursuant to Items
2(d) or 2(e): [ ]
6. Citizenship or Place of Organization: U.S.
Number of shares beneficially owned by each reporting person with:
7. Sole Voting Power 0
8. Shared Voting Power 3,037,251
9. Sole Dispositive Power 3,037,251
10. Shared Dispositive Power 0
11. Aggregate amount beneficially owned by each
reporting person: 3,037,251
12. Check box if the aggregate amount in Row 11 excludes certain shares
(see instructions): [ ]
13. Percent of class represented by amount in Row 11: 10.5%
14. Type of reporting person (see instructions): IN
<PAGE>
CUSIP NO. 420258 10 5
OEC COMPRESSION CORPORATION
1. Names of reporting persons: Don E. Smith
IRS Identification Nos. of above persons (entities only):_________________
2. Check the appropriate box if a Member of a Group (see instructions):
(a) [X]
(b) [ ]
3. SEC use only:
__________________________________________________________________________
4. Source of funds (see instructions): OO
5. Check if disclosure of legal proceedings is required pursuant to Items
2(d) or 2(e): [ ]
6. Citizenship or Place of Organization: U.S.
Number of shares beneficially owned by each reporting person with:
7. Sole Voting Power 716,559
8. Shared Voting Power 0
9. Sole Dispositive Power 716,559
10. Shared Dispositive Power 0
11. Aggregate amount beneficially owned by each
reporting person: 716,559
12. Check box if the aggregate amount in Row 11 excludes certain shares
(see instructions): [ ]
13. Percent of class represented by amount in Row 11: 2.5%
14. Type of reporting person (see instructions): IN
1-C
<PAGE>
CUSIP NO. 420258 10 5
OEC COMPRESSION CORPORATION
1. Names of reporting persons: Charles M. Butler III
IRS Identification Nos. of above persons (entities only):_________________
2. Check the appropriate box if a Member of a Group (see instructions):
(a) [X]
(b) [ ]
3. SEC use only:
__________________________________________________________________________
4. Source of funds (see instructions): OO
5. Check if disclosure of legal proceedings is required pursuant to Items
2(d) or 2(e): [ ]
6. Citizenship or Place of Organization: U.S.
Number of shares beneficially owned by each reporting person with:
7. Sole Voting Power 144,166
8. Shared Voting Power 0
9. Sole Dispositive Power 144,166
10. Shared Dispositive Power 0
11. Aggregate amount beneficially owned by each
reporting person: 144,166
12. Check box if the aggregate amount in Row 11 excludes certain shares
(see instructions): [ ]
13. Percent of class represented by amount in Row 11: 0.5%
14. Type of reporting person (see instructions): IN
1-D
<PAGE>
Item 1. Security and Issuer.
The security to which this statement relates is the common stock, par value
$1.00 per share (the "Common Stock"), of OEC Compression Corporation, an
Oklahoma corporation (the "Company"). The principal offices of the Company are
located at 2501 Cedar Springs Road, Suite 600, Dallas, Texas 75201.
Item 2. Identity and Background.
This statement is being filed by the Shareholder Preservation Committee
comprised of Dennis W. Estis ("Estis"), Robert P. Gregory, Jr. ("Gregory"), Don
E. Smith ("Smith"), and Charles M. Butler III ("Butler") (collectively referred
to as the "Filing Group"). The members of the Filing Group are filing this
statement as they may be deemed to be a "group" within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Except as expressly otherwise set forth in this statement, each member of
the Filing Group disclaims beneficial ownership of the shares of Common Stock
beneficially owned by any other member of the Filing Group or any other person.
Most particularly, this statement is being filed as a result of the granting of
various irrevocable proxies to Estis and the entry into various other
arrangements, all as set forth in a Shareholders' Agreement described in Item 6
and attached as an exhibit.
The name, residence and business address, present principal occupation or
employment, the name, principal place of business and address of any corporation
or other organization in which such employment is carried on, and the
citizenship of each member of the Filing Group is set forth below:
Dennis W. Estis is a citizen of the U.S. His residence address is 3592 Waverly
Circle, Destin FL 32541. His business address is 106 Comanche Trail, West
Monroe, LA 71201. He is President of Bayland Industries, LLC, a construction
barge company, and is a director of OEC Compression Corporation (2501 Cedar
Springs Road, Suite 600, Dallas TX 75201).
Robert P. Gregory, Jr. is a citizen of the U.S. His business address is 7575 San
Felipe, Ste. 350 Houston, TX 77063. His residence address is 5777 Indian Circle,
Houston, Texas 77057. He is Chairman and CEO of Gregory & Cook, Inc.
Don E. Smith is a citizen of the U.S. His business and residence address is 134
Smith Lane, Columbia, MS 39429. He is a cattle rancher, the President and
principal owner of Smith Machine Works, Inc., a Vice President and principal
owner of Laird Construction, Inc., and a director of OEC Compression Corporation
(2501 Cedar Springs Road, Suite 600, Dallas TX 75201).
Charles M. Butler III is a citizen of the U.S. His residence address is 12673
Rip Van Winkle, Houston, Texas 77024. His business address is 2121 Sage Road,
Houston, Texas 77057. He is presently self employed as a financial and
regulatory consultant and is a director of OEC Compression Corporation (2501
Cedar Springs Road, Suite 600, Dallas TX 75201).
2
<PAGE>
Each member of the Filing Group affirms that during the last five years, such
person (i) has NOT been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors), or (ii) has NOT been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation of such
laws.
Information with respect to each member of the Filing Group is given solely by
such member and no member of the Filing Group has responsibility for the
accuracy or completeness of the information supplied by another member.
Item 3. Source and Amount of Funds or Other Consideration.
Estis has previously filed a Schedule 13D regarding his acquisition of 5,252,177
shares of Common Stock in exchange for his stock holdings in a company that was
merged with the Company effective August 6, 1997. Estis actually acquired
5,252,178 shares in this merger. In January 1998, the Company issued an
additional 286,976 shares of Common Stock to Estis in settlement of a liability
to Estis which was assumed by the Company in the merger. In February 1999, Estis
purchased an aircraft from the Company in exchange for delivering a yard truck
and 175,333 shares to the Company, resulting in a current ownership of 5,363,821
Shares. Estis has not made any other sales or purchases.
Gregory acquired approximately 2,887,251 shares of Common Stock in exchange for
all stock holdings in a company that was merged with the Company and he
purchased an additional approximately 150,000 shares from another shareholder of
the Company using personal funds, both of which events occurred over three years
ago. Gregory has not made any other sales or purchases. All of Gregory's shares
are owned of record by Gregory & Cook, Inc., a Delaware corporation he controls.
Smith acquired his shares of Common Stock in exchange for all stock holdings in
a company that became a wholly-owned subsidiary of the Company in 1993 and he
exercised an option to acquire an additional 60,000 shares from the Company in
1996, using personal funds. He also holds an option to acquire 10,000 shares at
$2.31 per share that was granted in May 1997 and an option to acquire 6,666
shares at $2.188 per share that was granted in June 1998. Smith has sold an
aggregate of 222,000 shares in the open market from May 1997 through June 1998.
He has not made any other purchases.
Butler acquired his shares of Common Stock with personal funds at various times
prior to 1995. He also holds options to acquire 29,166 shares from the Company
at various prices ranging from $.5625 to $2.31 per share that were granted in
1996, 1997, and 1998. Butler sold an aggregate of 10,000 shares in the open
market in 1997. He has not made any other purchases.
All of the shares of Common Stock presently owned by members of the Filing Group
are subject to a Shareholders' Agreement described in Item 6 and attached hereto
as an exhibit. The source
3
<PAGE>
for capital contributions from each of the members of the Filing Group was
working capital or personal funds.
Item 4. Purpose of Transaction.
Since August 1997, Estis has been a director of the Company. He acquired most of
his shares of the Company's Common Stock in connection with the Company's August
1997 acquisition of Ouachita Energy Corp., which he founded in 1976. Since
August 1997 Estis has held his shares for investment only. As a result of a
serious deterioration in the liquidity and price of the Company's Common Stock
during 1998, Estis decided to review his investment objectives and inquired
whether other significant shareholders were becoming concerned about their
investment in the Company. On November 9, 1998 the members of the Filing Group
(except Mr. Butler) agreed that Estis should approach the management of the
Company with a view to discussing with management specific steps assisting the
Company to increase shareholder value. They also agreed to enter into a
shareholders' agreement, granting irrevocable proxies to Estis, among other
things. Effective December 16, 1998, the Company, Estis and the parties to the
original Shareholders' Agreement settled their disputes and Estis was terminated
as chief operating officer of the Company. In connection with the settlement,
Estis's original 13D filing was amended and the settlement agreement and
original shareholders' agreement were described and filed with the Commission.
That shareholders' agreement terminated by its terms on December 31, 1999.
Following action by the Board of Directors of the Company to schedule an annual
meeting of shareholders for June 13, 2000, on April 19, 2000, Estis approached
the other members of the Filing Group, noting the continued decline in the price
of the Company's common stock and the limited financial capability of the
Company. As a result, the parties to the original shareholders' agreement and
Mr. Butler joined in a new Shareholders' Agreement dated April 27, 2000, and
formed a group seeking to obtain proxies to vote in favor of an entirely new
slate of directors for the Company. The Shareholders' Agreement is described in
Item 6 and attached as an exhibit. The Filing Group also entered a letter
agreement among themselves agreeing to contribute to the costs of nominating and
electing the persons nominated pro rata in accordance with their respective
stock ownership in the Company. That agreement is also described in Item 6 and
attached as an exhibit.
On April 27, 2000 the Filing Group delivered a letter to Jack D. Brannon,
Secretary of the Company, and Ray C. Davis, the Chairman of the Board and Co-CEO
of the Company and member of the Executive and Audit Committees of the Board.
This letter set forth the Filing Group's nominees for the election of directors
at the annual meeting of shareholders of the Company to be held June 13, 2000,
along with information concerning each nominee as required by the Company's
Bylaws. That letter and information on the nominees is attached as an exhibit.
Soon after the filing of this statement, the Filing Group anticipates filing a
Schedule 14A with respect to their efforts to nominate directors for election at
the annual meeting and to solicit proxies sufficient to obtain election of such
nominees to the Company's Board of Directors.
4
<PAGE>
Item 5. Interest in Securities of the Issuer.
(a) At the date of this filing, according to the Company's most recent federal
securities filing, the Annual Report on Form 10-K of the Company for the
year ended December 31, 1999, there were issued and outstanding 28,986,711
shares of Common Stock of the Company as of March 30, 2000. The number of
shares of Common Stock beneficially owned by the members of the Filing Group
together is 9,261,797 (including Mr. Butler's options), or 31.9% of the
Company's outstanding stock.
Pursuant to a Shareholders' Agreement, each of the Filing Group members has,
among other things, granted to Estis an irrevocable proxy with respect to the
voting of shares of their Common Stock with regard to the election and
removal of directors at the next meeting. The Shareholders' Agreement is
described in Item 6 and attached as an exhibit.
Each of the members of the Filing Group disclaims beneficial ownership of the
shares of the Company's Common Stock reported hereunder as beneficially owned
by another member of the Filing Group.
(b)
<TABLE>
<CAPTION>
SHARED SOLE SHARED
SOLE VOTING VOTING DISPOSITIVE DISPOSITIVE
NAME POWER POWER POWER POWER
---- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Dennis W. Estis ............ 5,363,821 0 5,363,821 0
Robert P. Gregory, Jr ...... 0 3,037,251 3,037,251 0
Don E. Smith ............... 716,559 0 716,559 0
Charles M. Butler III ...... 144,166 0 144,166 0
</TABLE>
All of Estis' shares are owned of record by The Mallard Partnership, LP, a
limited partnership controlled by him. All of Gregory's shares are owned of
record by Gregory & Cook, Inc., a Delaware corporation he controls.
Pursuant to a Shareholders' Agreement, each of the Filing Group members
have, among other things, granted to Estis an irrevocable proxy with respect
to the voting and exercise of voting powers related to shares of their
Common Stock. The Shareholders' Agreement is described in Item 6 and
attached as an exhibit.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
5
<PAGE>
Each member of the Filing Group has entered into the Shareholders' Agreement
effective April 27, 2000. This agreement covers all of the shares of Common
Stock that are the subject of this Schedule 13D, as well as any additional
shares the members may acquire in the future (the "Shares"). The agreement
grants Estis an irrevocable proxy to vote the Shares for the election and
removal of directors at the next annual or special meeting of shareholders. Each
member of the group also agreed not to (i) subject their Shares to any voting
trust or agreement, (ii) participate in any proxy solicitation other than as
approved by Estis, (iii) join any other "group" other than the Filing Group,
(iv) act to influence the management of the Company other than as approved by
Estis or (v) assist any other person to take any of such actions. Each member
granted Estis a limited power of attorney to execute documents in connection
with exercising the powers granted by the Shareholders' Agreement, including
making the joint filing of this Schedule 13D. The Shareholders' Agreement
terminates either upon written agreement of at least two-thirds of the parties
thereto, after the next election of directors, or on April 20, 2001. Shares sold
in a bona fide sale are no longer subject to the Shareholders' Agreement.
Each member of the initial Filing Group has entered into an Agreement to Share
Expenses effective April 27, 2000. This agreement provides that each party will
pay its pro rata portion (based on its percentage of all the parties' stock
ownership in the Company) of legal, printing, solicitation and other costs
reasonably incurred in connection with the nomination of directors for election
to the Board of Directors of the Company and the solicitation of proxies in
favor of such nominees. Estis will receive all invoices for expenses, have the
invoices reviewed and approved by Robert Gregory, and then invoice and collect
the appropriate amounts from the other parties to the agreement.
Item 7. Material to Be Filed as Exhibits.
1. Shareholders' Agreement dated April 27, 2000, among Dennis W. Estis,
Gregory & Cook, Inc., Don E. Smith and Charles M. Butler III (includes
agreement concerning joint filing).
2. Agreement to Share Expenses dated April 27, 2000, among Dennis W. Estis,
Gregory & Cook, Inc., Don E. Smith and Charles M. Butler III relating to
the sharing of costs.
3. Letter to Ray C. Davis and Jack D. Brannon, Secretary, dated April 27,
2000 (with copies to each member of the Board of Directors of the Company)
and an appendix concerning information on director nominees.
6
<PAGE>
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
April 28, 2000
- -----------------------------
Date
/s/ DENNIS W. ESTIS
- -----------------------------------
Signature
Dennis W. Estis for himself and on
behalf of each reporting person
- -----------------------------------
Name/Title
7
EXHIBIT 1
CONFIDENTIAL
SHAREHOLDERS' AGREEMENT
THIS SHAREHOLDERS' AGREEMENT (this "Agreement"), dated as of April 27,
2000, is entered into by Dennis Estis ("Estis") and the parties listed on the
signature pages hereof, each of whom may be referred to severally as a
"Shareholder" and jointly as the "Shareholders."
W I T N E S S E T H:
WHEREAS, the Shareholders collectively own in excess of 30% of the Equity
Securities (herein defined) of OEC Compression Corporation, an Oklahoma
corporation (the "Company");
WHEREAS, the parties hereto desire to promote their mutual interests and
benefits by granting certain voting rights with respect to the Equity Securities
(herein defined) of the Company now owned or hereafter acquired (legally and
beneficially) by such Shareholder or by any other Shareholder Affiliate (the
"Shareholder Shares");
WHEREAS, the Other Shareholders desire to grant to Estis the power to vote
any and all of their Equity Securities of the Company that they now own or
hereafter acquire (the "Other Shareholder Shares") in connection with the
election of directors (including the power to cast votes for the election of
Estis to the board of directors of the Company); and
WHEREAS, each of the Shareholders understands that Estis and each Other
Shareholder is relying upon the entry into and performance of his or its
agreements set forth below, agrees that they may so rely, and further agrees
that Estis and such Other Shareholders would not enter into this Agreement in
the absence of the entry into and performance of such agreements by each
Shareholder:
NOW, THEREFORE, for and in consideration of the agreements below and the
consideration recited above, and in reliance upon the matters described in the
recitals above (which are incorporated in the agreements below), the parties
hereto, intending to be legally bound, agree as follows:
ARTICLE I.
SHARES COVERED BY AGREEMENT; DEFINITIONS
1.1. Certain Definitions.
(a) As used in this Agreement, the following terms have the meanings
ascribed to them below:
(i) "Affiliate" means, as to any specified Person, a person
that directly, or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with, the
person specified.
<PAGE>
(ii) "Equity Securities" means securities that, as to any
given non-natural Person, have any of the following attributes: (A)
the power to vote in the election of directors or similar governing
body of such Person, (B) the power to participate in the management
or operation of such Person (whether as a general partner, member or
manager), (C) the power to receive dividends or distributions from
such Person or as a result of its activities, and/or (D) the power
to approve or disapprove of any action taken by such Person.
(iii) "Person" means any individual, corporation, trust,
partnership, limited liability company or partnership, association,
group, governmental agency, body, or any other entity or person.
(b) For the purposes of this Agreement, beneficial ownership shall
be determined by reference to Rule 13d-3, as in effect in the date hereof,
promulgated by the Securities Exchange Commission under the Securities and
Exchange Act of 1934, as amended.
1.2. ALL EQUITY SECURITIES BOUND. During the term hereof, any Equity
Securities of the Company acquired by any Shareholder or Shareholder Affiliate
shall be deemed to be additional Shareholder Shares and bound by the terms
hereof.
ARTICLE II.
VOTING POWERS RELATING TO SHAREHOLDER SHARES
2.1. VOTING BY ESTIS. During the term of this Agreement, Estis shall have
the sole and exclusive power to vote and act, and is hereby irrevocably granted
a proxy to vote and exercise all voting powers in any way relating to the
Shareholder Shares in connection with the election or removal of directors, such
power not to include any other power to cast votes in matters not involving the
election or removal of directors on which the Shareholder Shares shall be
entitled to vote at any annual or special meeting of the stockholders of the
Company, pursuant to a written consent of such stockholders, or otherwise.
2.2. NATURE OF POWER GRANTED. The power granted pursuant to SECTION 2.1 is
expressly intended by all of the Shareholders to be sole and exclusive, and each
Shareholder acknowledges that such power is coupled with an interest and is
irrevocable. None of the Other Shareholders shall directly or indirectly attempt
to revoke or curtail the power granted by SECTION 2.1 or to frustrate or
circumvent the exercise of such power by Estis. Without limiting the foregoing,
none of the Other Shareholders shall (without the prior written consent or at
the direction of Estis and except for the powers granted in SECTION 2.1):
(a) attempt to deposit any Equity Securities of the Company in a
voting trust or subject any Equity Securities of the Company to any
arrangement or agreement relating to the voting of such Equity Securities;
(b) solicit proxies or initiate, propose or become a "participant"
in a "solicitation" (as such terms are defined in Regulation 14A under the
Exchange Act),
2
<PAGE>
other than except as may be deemed to do so by virtue of Estis' exercise
of voting powers conferred by Section 2.1 or as may otherwise be
specifically approved by Estis;
(c) join a partnership, limited partnership, syndicate or other
group, or otherwise act in concert with any other Person (except as
specifically contemplated hereby), for the purpose of acquiring, holding,
voting or disposing of voting securities of the Company, or otherwise
become a "person" or a member of a "group" within the meaning of Section
13(d) of the Securities Exchange Act of 1934, as amended other than in the
case that the Shareholders might be deemed members of such a "group" under
the Securities Exchange Act as a result of this Agreement;
(d) otherwise act, alone or in concert with others, to seek to
affect or influence the control of the management of the Board of
Directors of the Company or its business operations or affairs except in
concert with Estis and the Other Shareholders
(e) directly or indirectly, participate in, aid and abet or
otherwise induce any Person to take any of the actions enumerated in (a)
through (d) above or any other actions inconsistent with the provisions of
this Agreement.
2.3. POWER OF ATTORNEY. Each Other Shareholder hereby constitutes Estis as
agent and power of attorney to execute and deliver, in the name, place and stead
of such Other Shareholder, any and all documents and instruments that Estis
deems to be necessary or desirable in order to exercise the power granted by
SECTION 2.1, including proxies and voting agreements. Each Other Shareholder
agrees that such power of attorney is irrevocable and coupled with an interest.
Each Other Shareholder irrevocably makes, constitutes and appoints Estis, with
full power of substitution as provided herein, as the true and lawful agent and
attorney-in-fact of such Other Shareholder, with full power and authority in the
name, place and stead of such Shareholder to execute, swear to, acknowledge,
deliver, file or record in public offices and publish all certificates, filings,
and other instruments (including counterparts thereof) that Estis (or such
substitute) deems necessary or appropriate to file in any state or federal
office in the United States, including the Securities and Exchange Commission
and any agency of the State of Oklahoma, in accordance with the terms of this
Agreement.
ARTICLE III.
REPRESENTATIONS, WARRANTIES AND COVENANTS
Each signatory hereto hereby represents and warrants as to all other
parties hereto that as of the date hereof, each of the following is true and
correct:
(a) The number of Shareholder Shares set forth below the signature
of such Other Shareholder below are owned of record and beneficially by
such Other Shareholder, who owns such shares free and clear of any liens,
claims, options, charges, encumbrances or rights of other Persons; and
(b) During the last five years, none of the parties to this
Agreement (i) has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors), or (ii) has been a party to a
civil proceeding of a judicial or
3
<PAGE>
administrative body of competent jurisdiction and as a result of such
proceeding such person was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any
violation of such laws.
ARTICLE IV.
TERMINATION
4.1. TERMINATION. This Agreement shall terminate upon the earlier to occur
of the following:
(a) the written agreement among at least two-thirds of the parties
hereto;
(b) upon the vote by the shareholders for the election of directors
at an annual or special meeting in which Estis has been given an
opportunity to nominate directors and shareholders have been given an
opportunity to vote in favor of such nominees; or
(c) April 20, 2001.
4.2. DEATH OR DISABILITY OF ESTIS. In the event of the disability or death
of Estis, at least a two-thirds majority of Shareholders shall elect a permanent
or temporary successor to Estis, as the circumstances warrant. In the event
Estis is unable to vote his Shares, they shall be voted by the person or entity
named as executor under his last will and testament. "Disability" shall mean any
event or condition, temporary or permanent, that prevents Estis from exercising
the powers granted to him pursuant to this Agreement.
ARTICLE V.
MISCELLANEOUS
5.1. SEVERABILITY. The parties hereto intend that each and every provision
be given full effect. If, however, any provision of this Agreement or the
application thereof to any person or circumstance is for any reason and to any
extent invalid or unenforceable, the remainder of this Agreement and the
application of such provision to the other persons or circumstances will not be
affected thereby, but rather are to be enforced to the greatest extent permitted
by law, and there shall be deemed substituted for the provision at issue a
valid, legal and enforceable provision as similar as possible to the provision
at issue. In particular, should the proxy and powers granted herein be deemed
not coupled with an interest, the proxy and other powers shall nevertheless
continue but shall be revocable by the grantor of such proxy and powers.
5.2. NOTICES. Unless otherwise provided, any notices, consents, waivers or
other communications required or permitted hereunder shall be deemed to have
been received upon the actual receipt thereof, and shall be sufficiently given
if given in writing and delivered personally, sent by telecopy or other
facsimile or electronic transmission, or sent by certified mail, return receipt
requested, postage prepaid and addressed to the address set forth next to each
party's name on the signature page.
4
<PAGE>
5.3. PARTIES BOUND. This Agreement is for the benefit of and is binding
upon and enforceable by and against the parties hereto and all future
transferees of Shareholder Shares, together with the respective heirs, donees,
pledgees, devisees, personal representatives, legal representatives, successors
and assigns of such parties. Nothing contained in this SECTION 5.4 shall be
construed as preventing any transfer of the Shareholder Shares. Notwithstanding
the foregoing, any Shareholder Shares transferred in a bona fide sale shall not
bound by the terms of this Agreement.
5.4. SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
damage would occur in the event any of the provisions of this Agreement were not
performed in accordance with the terms hereof and, therefore, any party hereto,
and any successor thereof shall be entitled to specific performance of the terms
hereof. If any such action or proceeding is brought to enforce the provisions
hereof, any person against whom such action or proceeding is brought hereby
waives the claim or defense therein that such party or successor has or have an
adequate remedy at law, and such party or successor shall not urge in any such
action or proceeding the claim or defense that such remedy at law exists.
5.5. EXPENSES AND ATTORNEYS' FEES. In the event that any party hereto
shall find it necessary to resort to litigation to enforce its rights hereunder,
the parties hereto agree that the party prevailing in such litigation shall also
be entitled to recover its reasonable expenses actually incurred in connection
therewith, including reasonable attorneys' fees.
5.6. AMENDMENT. The Agreement may be modified or amended by written
instrument executed by at least a two-thirds majority of the signatories hereto.
5.7. GOVERNING LAW. All provisions of this Agreement shall be construed
according to the laws of the State of Oklahoma without regard to its conflict of
laws principles.
5.8. REMEDIES CUMULATIVE. The remedies provided in this Agreement shall be
cumulative and shall preclude the assertion or exercise of any other rights or
remedies available by law, in equity or otherwise.
5.9. FURTHER ASSURANCES. Upon the reasonable request of any party hereto,
the other parties will execute and deliver such other documents, and take such
actions, as may be required to effectuate completely the purposes of this
Agreement.
5.10. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitute but one and the same Agreement.
5.11. EFFECTIVE DATE. This Agreement shall become effective on the date
when there are two signatory Persons to this Agreement. Thereafter additional
Persons may join this Agreement by signing below, dating their signature and
stating the number of Equity Securities owned, and thereupon such additional
Persons shall be party to this Agreement as if they had been original
signatories.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
_________________________________________
Dennis W. Estis
Address: ________________________________
________________________________
________ Shares of Common Stock
Date: ___________________________________
GREGORY & COOK, Inc.
Address: ________________________________
________________________________
________ Shares of Common Stock
By: _____________________________________
Name: ___________________________________
Title: __________________________________
Date: ___________________________________
_________________________________________
Don E. Smith
Address: ________________________________
________________________________
________ Shares of Common Stock
Date: ___________________________________
_________________________________________
Charles M. Butler, III
Address: ________________________________
________________________________
________ Shares of Common Stock
Date: ___________________________________
6
EXHIBIT 2
AGREEMENT TO SHARE EXPENSES
THIS AGREEMENT TO SHARE EXPENSES (this "Agreement"), dated as of April 27,
2000, is entered into by the parties listed on the signature pages hereof, each
of whom may be referred to severally as a "Shareholder" and jointly as the
"Shareholders."
W I T N E S S E T H:
WHEREAS, the Shareholders collectively own in excess of 30% of the Equity
Securities (as defined in that certain Shareholders' Agreement dated April 27,
2000, referred to herein as the "Shareholders' Agreement") of OEC Compression
Corporation, an Oklahoma corporation (the "Company");
WHEREAS, the parties, in order to promote their mutual interests and
benefits have granted to Estis under the Shareholders' Agreement certain voting
rights and powers with respect to the Equity Securities of such Shareholder or
by any other Shareholder Affiliate (the "Shareholder Shares");
WHEREAS, the Shareholders desire to share the expenses related to the
nomination and election of new directors of the Company; and
WHEREAS, each Shareholder understands that Estis and each Other
Shareholder is relying upon the entry into and performance of his or its
agreements set forth below, agrees that they may so rely, and further agrees
that Estis and such Other Shareholders would not enter into this Agreement in
the absence of the entry into and performance of such agreements by each
Shareholder:
NOW, THEREFORE, for and in consideration of the agreements below and the
consideration recited above, and in reliance upon the matters described in the
recitals above (which are incorporated in the agreements below), the parties
hereto, intending to be legally bound, agree as follows:
1. As used in this Agreement, the term "Expenses" means the legal costs
(including those that are and will be owed to Mayor, Day, Caldwell & Keeton,
L.L.P. and other counsel, including Oklahoma counsel), accounting costs,
printing costs, filing fees, and other costs and fees reasonably incurred in
connection with the formation of the Shareholder Preservation Committee, the
nomination of directors, the solicitation of proxies in favor of the
Shareholders' nominees for directors of the Board of Directors of the Company,
and the exercise of the Shareholders' rights to elect new directors to the
Company's Board.
2. Each Shareholder agrees to pay his or its pro rata portion of the
Expenses, computed by calculating the product of the Expenses and a fraction,
the numerator of which shall be the number of shares of Equity Securities held
by that particular Shareholder and the denominator of which shall be the number
of total Shareholder Shares (the Shareholder's "Pro Rata Share").
<PAGE>
3. Dennis Estis will receive and accumulate the invoices for all Expenses
as they are incurred and submit such invoices to Robert Gregory for review and
approval. On a periodic basis in accordance with his discretion (but no more
frequently than monthly) after receipt of approval from Mr. Gregory, Estis will
send an invoice to each Shareholder for that Shareholder's Pro Rata Share of the
Expenses incurred and invoiced to that date, excluding those Expenses that have
appeared in previous invoices sent to Shareholders. Estis shall include in each
invoice an accounting and a substantiation of the Expenses appearing in the
invoice. Upon receipt of an invoice from Estis, each Shareholder shall pay Estis
the amount invoiced within thirty (30) days.
4. In the event that any party hereto shall find it necessary to resort to
litigation to enforce its rights hereunder, the parties hereto agree that the
party prevailing in such litigation shall also be entitled to recover its
reasonable expenses actually incurred in connection therewith, including
reasonable attorneys' fees.
5. The Agreement may be modified or amended by written instrument executed
by at least a two-thirds majority of the signatories hereto.
6. All provisions of this Agreement shall be construed according to the
laws of the State of Oklahoma without regard to its conflict of laws principles.
7. This agreement may be executed in counterparts, each of which shall be
deemed an original for all purposes.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
Dennis W. Estis
Address: ________________________________
________________________________
________ Shares of Common Stock
Date: ___________________________________
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
2
<PAGE>
_________________________________________
Charles M. Butler, III
Address: ________________________________
________________________________
________ Shares of Common Stock
Date: ___________________________________
_________________________________________
Donald Smith
Address: ________________________________
________________________________
________ Shares of Common Stock
Date: ___________________________________
GREGORY & COOK, Inc.
Address: ________________________________
________________________________
________ Shares of Common Stock
By: _____________________________________
Name: ___________________________________
Title: __________________________________
Date: ___________________________________
3
EXHIBIT 3
April 27, 2000
Mr. Ray Davis and Kelcy Warren, Co-Chairmen of the Board and co-CEOs
Mr. Jack Brannon, Secretary
OEC Compression Corporation
2501 Cedar Springs Road, Suite 600
Dallas TX 75201
Gentlemen:
I was both surprised and gratified that the management of OEC initiated a
call for the annual meeting of shareholders on June 13, 2000, in accordance with
our bylaws, Oklahoma law and the rules of the American Stock Exchange.
As you know, I have supported the efforts of Prudential Securities, Inc.
to pursue strategic alternatives for OEC on the terms stipulated in their
original presentation to the Board. I will continue to support that effort and
will vote in favor of any transaction that promises to yield the range of values
originally indicated by PSI.
During 1998 management initiated an amendment to the Bylaws of the Company
that effectively prevents any shareholder from calling a special meeting. The
effect of this amendment is that the only time that shareholders are able to
exercise their franchise to nominate and elect directors is during the annual
meeting. That I intend to do. I hereby nominate the eleven (11) persons named in
Schedule 1 attached hereto as directors of OEC. Each of these persons has agreed
to serve as a director if elected, as evidenced by the enclosed consents. As
required by the Bylaws, information is also furnished on Schedule 1, number 2,
concerning myself, the nominator of the candidates. Schedule 1 also includes
information on each of the candidates as called for in the Bylaws. Any further
information you desire concerning these gentlemen can be obtained from me or
from the individuals directly.
While I intend to work toward getting my nominees elected to the Board,
you should understand that I do not intend to allow that effort to detract from
the current efforts to sell the Company. I simply feel that if a sale does not
occur in the very near future, OEC would be better off with new management,
starting at the Board level. And while working to have my nominees elected to
the Board, I have not and do not presently intend to initiate any litigation
unless the democratic processes embedded in our bylaws, Oklahoma corporate law
and the American Stock Exchange rules are frustrated. I am hopeful that you will
allow these processes to work and will not interfere with the holding of an
annual election of directors on June 13 or with the results of the election.
Sincerely,
Dennis W. Estis
cc: Board of Directors
<PAGE>
SCHEDULE 1 TO LETTER TO BOARD OF DIRECTORS
AND SECRETARY OF OEC COMPRESSION CORPORATION
(REVISED)
1. NAME: C. M. BUTLER, III
A) AGE: 57
B) BUSINESS ADDRESS: 2121 Sage Road
Houston, Texas 77057
C) RESIDENCE ADDRESS: 12673 Rip Van Winkle
Houston, Texas 77024
D) PRINCIPAL OCCUPATION OR EMPLOYMENT:
1988 - present Self-employed attorney, financial and regulatory
consultant
E) SHARES OF COMMON STOCK BENEFICIALLY OWNED: 115,000
Mr. Butler also has been granted options for a total of 29,166
shares
F) OTHER INFORMATION REQUIRED BY REGULATION 14A:
Mr. Butler has been a director of the Company since its inception in
1989. He also serves on the Executive, Audit and Human Resources
Committees of the Board of Directors.
Mr. Butler has served on the Board of Directors of Piedmont Natural
Gas Company, Incorporated since 1990. He serves on the Ad Hoc,
Audit, Benefits and Finance Committees of Piedmont.
Mr. Butler is contemplating entering into a Shareholders Agreement
with Dennis Estis and others.
2. NAME: DENNIS WILLIAM ESTIS
A) AGE: 53
B) BUSINESS ADDRESS: 106 Comanche Trail
West Monroe, Louisiana 71291
C) RESIDENCE ADDRESS: 3592 Waverly Circle
Destin, Florida 32541
<PAGE>
D) PRINCIPAL OCCUPATION OR EMPLOYMENT:
1976 - 8/97 Founder, President, Chief Executive Officer -
Ouachita Energy Corporation, Ouachita Energy
Partners, Ouachita Energy Group
8/97 - 12/98 President, Chief Operating Officer - Ouachita Energy
Corp. (post merger); subsidiary of OEC Compression
Corporation
12/98 - present Self-employed, personal investments and other
private ventures.
01/00 - present President, Secretary - Bayland Industries, L.L.C.
E) SHARES OF COMMON STOCK BENEFICIALLY OWNED: 5,363,821
F) OTHER INFORMATION REQUIRED BY REGULATION 14A:
8/97 - present Director, OEC Compression Corporation
8/97 - 12/98 Executive Committee, OEC Compression Corporation
Mr. Estis has a note payable to OEC resulting from an Arbitration
Agreement settled in early 1998. The note carries an interest rate
of 6.5% and is due upon the sale of Mr. Estis' stock in OEC. The
amount owed (principal and interest) as of 12/31/99 was $251,218.38.
Mr. Estis has an option granted under the Directors' Stock Plan for
an unknown number of shares at fair market value. None of the
options has been exercised. Options will expire 40 years from the
date of the grant.
In 2/99, Mr. Estis purchased through an LLC owned by him, an
airplane from OEC for $290,000 less the cost of a yard truck Mr.
Estis sold to OEC which was valued at $27,000. The transaction was
payable in stock. The net amount of the transaction was $263,000,
divided by $1.50 per share for a total of 175,333 shares.
As a result of a Settlement Agreement dated December 16, 1998, Mr.
Estis was reimbursed $35,000 for out-of-pocket expenses incurred
related to the Shareholder Group activities in late 1998.
Mr. Estis became a director when Ouachita Energy Corp. was merged
with Equity Compression Corporation in August 1997. In December
1998, as a result of a Settlement Agreement, the HACL and Energy
Investor Groups agreed to vote in favor of Mr. Estis as a
director at the 1999 Annual Shareholders Meeting.
Mr. Estis is contemplating entering into a Shareholders Agreement
with other shareholders.
2
<PAGE>
3. NAME: DAVID EDWIN FITE
A) AGE: 50
B) BUSINESS ADDRESS: 400 Travis Street, Suite 903
Shreveport, Louisiana 71101
C) RESIDENCE ADDRESS: 241 Clearwood Lane
Shreveport, Louisiana 71163
D) PRINCIPAL OCCUPATION OR EMPLOYMENT:
1980 - present President, Sole Stockholder - Fite Oil & Gas, Inc.,
a Louisiana corporation
E) SHARES OF COMMON STOCK BENEFICIALLY OWNED: 25,000 (directly)
6,100 (spouse, minor
children or
relatives living in
your home)
All shares purchased and/or sold through broker at Morgan Keegan
using personal funds
F) OTHER INFORMATION REQUIRED BY REGULATION 14A:
Fite Oil & Gas, Inc. obtains contract compression service for its
wells from OEC. Sales personnel for OEC have bought meals for David
E. Fite in the normal course of business. Fite Oil & Gas, Inc.
intends to lease compression services from OEC. Currently, two
compressors are leased on a month-to-month basis for approximately
$7,500 per month.
4. NAME: ROBERT GRAY GREGORY
A) AGE: 37
B) BUSINESS ADDRESS: 7575 San Felipe, Suite 350
Houston, Texas 77063
C) RESIDENCE ADDRESS: 11748 Duart
Houston, Texas 77024
D) PRINCIPAL OCCUPATION OR EMPLOYMENT:
1984 - present Gregory & Cook, Inc. - 1999 President; 1997 - 1999
Vice President; 1995 - 1997 Project Manager
E) SHARES OF COMMON STOCK BENEFICIALLY OWNED: 3,037,251
3
<PAGE>
F) OTHER INFORMATION REQUIRED BY REGULATION 14A:
Mr. Gregory is a director of Unified Office, Inc.
Gregory & Cook, Inc. is the owner of record of the OEC stock.
Mr. Gregory is contemplating entering into a Shareholders
Agreement with Dennis Estis and others.
5. NAME: CLIFFORD SCOTT LEWIS
A) AGE: 45
B) BUSINESS ADDRESS: 400 S. Boston, Suite 1000
Tulsa, Oklahoma 74103
C) RESIDENCE ADDRESS: 5118 E. 98th Street
Tulsa, Oklahoma 74137
D) PRINCIPAL OCCUPATION OR EMPLOYMENT:
12/89 - 4/96 Vice President, Secretary, Treasurer - Hawkins
Energy Corp. (k/n/a OEC Compression
Corporation)
1988 - present Chief Financial Officer, Vice President -
Hawkins Oil & Gas, Inc.
1998 - present Chief Financial Officer, Vice President -
Hawkins International, Inc.
E) SHARES OF COMMON STOCK BENEFICIALLY OWNED: 31,579
Mr. Lewis also has been granted options for a total of 63,332
shares with exercise prices ranging from $0.5625 to $2.3125
per share.
F) OTHER INFORMATION REQUIRED BY REGULATION 14A:
Mr. Lewis was elected a Director of the Company on May 20,
1999. He is also a member of the Audit Committee.
6. NAME: ROBERT HENRY MCDANIEL
A) AGE: 53
B) BUSINESS ADDRESS: P.O. Box 591392
Houston, Texas 77259
4
<PAGE>
C) RESIDENCE ADDRESS: 14134 Lake Scene Trail
Houston, Texas 77059
D) PRINCIPAL OCCUPATION OR EMPLOYMENT:
1/98 - present Business Consultant - McDaniel Enterprises
12/73 - 1/98 Co-Owner, President - Tech-Quip, Inc.
E) SHARES OF COMMON STOCK BENEFICIALLY OWNED: 30,000
All shares purchased and/or sold through brokers at Merrill
Lynch or Waterhouse Securities using personal funds
F) OTHER INFORMATION REQUIRED BY REGULATION 14A:
No business affiliations with OEC Compression or its
subsidiaries
7. NAME: JAMES F. REED, JR.
A) AGE: 55
B) BUSINESS ADDRESS: 5419 Pine Arbor
Houston, Texas 77066
C) RESIDENCE ADDRESS: 5419 Pine Arbor
Houston, Texas 77066
D) PRINCIPAL OCCUPATION OR EMPLOYMENT:
1986 - present President, Sole Proprietor - The Reed Group
5/99 - present Consultant, Finance and Accounting - Champion
Window, Inc.
2/97 - present CFO, Director - Container-Care International,
Inc.
1986 - present Retained as Consultant, Strategic Planning -
CRC-Evans Pipeline International, Inc.
1990 - present Co-founder, Director - International Testing
Services, Inc.
2/98 - present Consultant, Finance Strategic Planning,
Acquisition Evaluation - United Industrial
Services, Inc.
1971 - 1985 Vice President, Corporate Development -
Crutcher Resources Corporation
E) SHARES OF COMMON STOCK BENEFICIALLY OWNED: None
5
<PAGE>
F) OTHER INFORMATION REQUIRED BY REGULATION 14A:
Mr. Reed is a director of International Testing Services,
Inc., but has never been an executive officer of that company.
ITS filed for Chapter 11 bankruptcy status in November 1998.
ITS traded on the over-the-counter market under the symbol
ITST but there is currently no trading in its securities.
Mr. Reed was engaged by Ouachita Energy Corporation to provide
valuation analysis for OEC, Ouachita Energy Partners and
Ouachita Compression Group late in 1996 and into early 1997. A
report was presented in February 1997, and Mr. Reed's
compensation totalled approximately $4,500. He was also
retained to perform certain due diligence for Equity
Compression Services from April - July, 1997. Total fees were
approximately $5,500.
8. NAME: JAMES A. ROWELL, JR.
A) AGE: 74
B) BUSINESS ADDRESS: 509 Market Street, Suite 300
Shreveport, Louisiana 71101
C) RESIDENCE ADDRESS: 11015 Louisiana 1 Highway South
Shreveport, Louisiana 71115
D) PRINCIPAL OCCUPATION OR EMPLOYMENT:
prior to 10/97 Acting President - PAR Minerals Corporation
10/97 to present Principal, Partner - PAR Minerals Corporation
E) SHARES OF COMMON STOCK BENEFICIALLY OWNED: 5,000
F) OTHER INFORMATION REQUIRED BY REGULATION 14A:
Rowell Family Limited Partnership is the owner of record of
the OEC stock.
Mr. Rowell has a monthly compressor rental on multiple units
for the calendar year 1999, with rents totalling $304,632.04.
9. NAME: DON E. SMITH
A) AGE: 52
B) BUSINESS ADDRESS: 134 Smith Lane
Columbia, Mississippi 39429
C) RESIDENCE ADDRESS: 134 Smith Lane
Columbia, Mississippi 39429
6
<PAGE>
D) PRINCIPAL OCCUPATION OR EMPLOYMENT:
Present President, Principal Owner - Smith Machine
Works, Inc.
Present Vice President, Principal Owner - Laird
Construction, Inc.
1996 - present Rancher
E) SHARES OF COMMON STOCK BENEFICIALLY OWNED: 699,893
Mr. Smith also has been granted an option to acquire 10,000
shares at $2.31 per share and an option to acquire 6,666
shares at $2.188 per share.
F) OTHER INFORMATION REQUIRED BY REGULATION 14A:
Mr. Smith has been a director of the Company since June 1993.
Smith Machine Works, Inc. provided compression repair services
to the Company during calendar year 1999. Smith Machine
received a total of $509,931 for such repairs.
Mr. Smith is contemplating entering into a Shareholders
Agreement with Dennis Estis and others.
10. NAME: ROBERT WONISH
A) AGE: 46
B) BUSINESS ADDRESS: 1100 Louisiana, Suite 5100
Houston, Texas 77002
C) RESIDENCE ADDRESS: 17315 Klee Circle
Spring, Texas 77379
D) PRINCIPAL OCCUPATION OR EMPLOYMENT:
1/92 - 1997 Engineer - PANACO, Inc.
1997 - present Senior Vice President - PANACO, Inc.
5/99 - present Chief Operating Officer - PANACO, Inc.
E) SHARES OF COMMON STOCK BENEFICIALLY OWNED: None
F) OTHER INFORMATION REQUIRED BY REGULATION 14A:
7
<PAGE>
PANACO, Inc. has rented three compressors from the Company under two
separate contracts, the earliest of which became effective
approximately March of 1998.
Mr. Wonish has enjoyed entertainment provided by the Company in the
form of a ski trip and two golf outings.
11. NAME: D. DALE WOOD
A) AGE: 61
B) BUSINESS ADDRESS: 180 Joe Wimberley Boulevard
Wimberley, Texas 78676
C) RESIDENCE ADDRESS: 68 Champions Court Place
Houston, Texas 77069
D) PRINCIPAL OCCUPATION OR EMPLOYMENT:
1991 - 1995 Chairman, President and CEO - Enterra; Enterra
merged into Weatherford International in 1995.
1995 - present Consultant - Weatherford Enterra International
1995 - present Owner - The Dale Wood Company
E) SHARES OF COMMON STOCK BENEFICIALLY OWNED: None
F) OTHER INFORMATION REQUIRED BY REGULATION 14A:
Mr. Wood has served as the Chairman of the Board of CRC-Evans
Pipeline International, Inc. since June 1997. He was also
elected Chairman of the Board of Container Care International
in February 1997. He has served on the Board of Drilltec, Inc.
since August 1998.
8
