<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) 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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
PONDER INDUSTRIES, INC.
5005 Riverway Drive, Suite 550
Houston, Texas 77056
Telephone: (713) 965-0653
January 29, 1998
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend
the 1998 Annual Meeting of the Stockholders of Ponder Industries, Inc. The
Annual Meeting will be held Friday, March 6, 1998, at 10:00 a.m. C.S.T. at the
Holiday Inn Crowne Plaza Hotel, 2222 West Loop South, Houston, Texas 77027.
The formal Notice of Annual Meeting is set forth in the enclosed material.
The matters expected to be acted upon at the meeting are described in
the attached Proxy Statement. During the meeting, stockholders will have the
opportunity to ask questions and comment on Ponder Industries, Inc.'s
operations.
It is important that your views be represented whether or not you are
able to be present at the Annual Meeting. Please sign and return the enclosed
proxy card promptly.
We appreciate your investment in Ponder Industries, Inc. and urge you
to return your proxy card as soon as possible.
Sincerely,
Eugene L. Butler
President, Chief Executive Officer and
Chairman of the Board
<PAGE> 3
PONDER INDUSTRIES, INC.
5005 Riverway Drive, Suite 550
Houston, Texas 77056
Notice Of Annual Meeting Of Stockholders
To Be Held March 6, 1998
To the Stockholders of Ponder Industries, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Ponder Industries, Inc., a Delaware corporation (the "Company"), will be held
at the Holiday Inn Crowne Plaza Hotel, 2222 West Loop South, Houston, Texas
77027, on March 6, 1998, at 10:00 a.m. C.S.T., for the following purposes:
(1) to elect eight directors to serve until the next
annual meeting and until their respective successors shall be duly
elected and qualified;
(2) to consider and act upon a proposal to amend the
Certificate of Incorporation of the Company that would increase the
number of authorized shares of the Company's Common Stock from
50,000,000 shares to 150,000,000 shares;
(3) to consider and act upon a proposal to amend the
Certificate of Incorporation of the Company to authorize 10,000,000
shares of Preferred Stock;
(4) to consider and act upon a proposal to amend the
Certificate of Incorporation of the Company to provide for the
limitation of liability of the directors of the Company to the fullest
extent permitted by the Delaware General Corporation Law;
(5) to ratify the appointment of Arthur Andersen LLP as
independent public accountants for the Company for the fiscal year
ending August 31, 1998; and
(6) to transact such other business as may properly come
before the Annual Meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on January 21,
1998, as the record date for the determination of stockholders entitled to
receive notice of and to vote at the Annual Meeting. A list of all
stockholders entitled to vote at the meeting will be maintained at the
principal offices of the Company, 5005 Riverway Drive, Suite 550, Houston,
Texas, and will be available during ordinary business hours for a period of ten
days prior to the meeting. The list will be open to the examination by any
stockholder for any purpose germane to the meeting. The list will also be
produced at the meeting and will be open for the whole time thereof.
So that we may be sure your shares will be voted at the Annual
Meeting, please date, sign and return the enclosed proxy promptly. For your
convenience, a postpaid return envelope is enclosed for your use in returning
your proxy. If you attend the meeting, you may revoke your proxy and vote in
person.
By Order of the Board of Directors,
Eugene L. Butler
President and Chief Executive Officer
Houston, Texas
January 29, 1998
---------------------------
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
EVEN IF YOU PLAN TO BE PRESENT, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED
PROXY AT YOUR EARLIEST CONVENIENCE IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE MEETING, YOU MAY
VOTE EITHER IN PERSON OR BY YOUR PROXY.
<PAGE> 4
PONDER INDUSTRIES, INC.
5005 Riverway Drive, Suite 550
Houston, Texas 77056
------------------------------
PROXY STATEMENT
------------------------------
SOLICITATION OF PROXY, REVOCABILITY AND VOTING
The enclosed proxy is solicited on behalf of the Board of Directors
(the "Board") of Ponder Industries, Inc., a Delaware corporation (the
"Company"), for use at the 1998 Annual Meeting of Stockholders (the "Annual
Meeting") of the Company to be held on March 6, 1998, and at any adjournment or
postponement thereof.
The securities of the Company entitled to vote at the Annual Meeting
consist of shares of common stock, $0.01 par value ("Common Stock"). At the
close of business on January 21, 1998 (the "Record Date"), there were
outstanding and entitled to vote __________ shares of Common Stock. The
holders of record of Common Stock on the Record Date will be entitled to one
vote per share. The Company's Certificate of Incorporation does not permit
cumulative voting in the election of directors.
The Annual Report to Stockholders for the year ended August 31, 1997,
has been or is being furnished with this Proxy Statement, which is being mailed
on or about January 29, 1998, to the holders of record of Common Stock on the
Record Date. The Annual Report to Stockholders does not constitute a part of
the proxy materials.
VOTING AND PROXY PROCEDURES
Properly executed proxies received in time for the Annual Meeting will
be voted. Stockholders are urged to specify their choices on the proxy, but if
no choice is specified, eligible shares will be voted for Proposal No. 2,
Proposal No. 3, Proposal No. 4, Proposal No. 5, and the election of the eight
nominees for director named herein. At the date of this Proxy Statement,
management of the Company knows of no other matters which are likely to be
brought before the Annual Meeting. However, if any other matters should
properly come before the Annual Meeting, the persons named in the enclosed
proxy will have discretionary authority to vote such proxy in accordance with
their best judgment on such matters.
If the enclosed form of proxy is executed and returned, it may
nevertheless be revoked by a later-dated proxy or by written notice filed with
the Secretary at the Company's executive offices at any time before the
enclosed proxy is exercised. Stockholders attending the Annual Meeting may
revoke their proxies and vote in person. The Company's executive offices are
located at 5005 Riverway Drive, Suite 550, Houston, Texas 77056.
The holders of a majority of the total shares of Common Stock issued
and outstanding at the close of business on the Record Date, whether present in
person or represented by proxy, will constitute a quorum for the transaction of
business at the Annual Meeting. The affirmative vote of a plurality of the
total shares of Common Stock present in person or represented by proxy and
entitled to vote at the Annual Meeting is required for the election of
directors, the affirmative vote of a majority of the total shares of Common
Stock outstanding and entitled to vote at the Annual Meeting is required for
the approval of each of Proposal No. 2, Proposal No. 3 and Proposal No. 4,
and the affirmative vote of a majority of the total shares of Common Stock
present in person or represented by proxy and entitled to vote at the Annual
Meeting is required for approval of each of the other proposals described in
this Proxy Statement.
Abstentions are counted toward the calculation of a quorum but are not
treated as either a vote for or against a proposal. An abstention has the same
effect as a vote against the proposal. Any unvoted position in a brokerage
account will be considered as not voted and will not be counted toward
fulfillment of quorum requirements.
The cost of solicitation of proxies will be paid by the Company. In
addition to solicitation by mail, proxies may be solicited by the directors,
officers and employees of the Company, without additional compensation, by
personal interview, telephone, telegram or otherwise. Arrangements will also
be made
<PAGE> 5
with brokerage firms and other custodians, nominees and fiduciaries who hold
the voting securities of record for the forwarding of solicitation materials to
the beneficial owners thereof. The Company will reimburse such brokers,
custodians, nominees and fiduciaries for reasonable out-of-pocket expenses
incurred by them in connection therewith. The Company has hired Corporate
Investor Communications, Inc. to assist in obtaining proxies.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning any person who
was the beneficial owner of five percent or more of the Company's outstanding
Common Stock as of December 15, 1997. The table also shows information
concerning beneficial ownership by all directors and nominees, by each of the
executive officers named in the Summary Compensation Table and by all directors
and executive officers as a group. For purposes of this Proxy Statement,
beneficial ownership is defined in accordance with the rules of the Securities
and Exchange Commission (the "Commission"), to mean generally the power to vote
or dispose of shares, regardless of any economic interest therein. Unless
otherwise indicated, each person has the sole dispositive and voting power (or
shares such powers with his or her spouse) with respect to the shares set forth
in the following table.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNERSHIP OF CLASS#
-------------------- ---------
<S> <C> <C>
White Owl Capital Partners(1) . . . . . . . . . . . . . . . 13,280,000 31.65%
20 Pine Brook Road
Bedford, New York 10506
Chen Capital Partners, L.P.(2) . . . . . . . . . . . . . . 2,559,500 8.92%
237 Park Avenue
Ninth Floor
New York, New York 10017
Steven A. Webster(1)(3) . . . . . . . . . . . . . . . . . . 14,450,000 33.70%
William R. Ziegler(1)(4). . . . . . . . . . . . . . . . . . 14,200,000 33.11%
Eugene L. Butler(5) . . . . . . . . . . . . . . . . . . . . 641,500 2.19%
Frank J. Wall(6) . . . . . . . . . . . . . . . . . . . . . 76,574 *
Rittie W. Milliman, Sr.(7) . . . . . . . . . . . . . . . . 16,500 *
Joe R. Nemec(8) . . . . . . . . . . . . . . . . . . . . . . 156,043 *
John Roane(8) . . . . . . . . . . . . . . . . . . . . . . . 55,767 *
John M. Le Seelleur(9)(10) . . . . . . . . . . . . . . . . 88,833 *
All directors and executive officers as a group (11
persons)(1)(9)(11) . . . . . . . . . . . . . . . . . . . . 16,661,508 37.26%
</TABLE>
- - ------------------
# Based on 28,681,620 shares of Common Stock outstanding as of December 15,
1997.
* Represents less than one percent
(1) White Owl Capital Partners ("White Owl") is a general partnership of
Mr. Webster and Mr. Ziegler. Includes 7,200,000 shares of Common
Stock held by White Owl Investors, LLC, of which White Owl is the
managing member, 3,040,000 shares of Common Stock issuable upon
conversion of certain convertible promissory notes held by White Owl
and 3,040,000 shares of Common Stock issuable upon exercise of
warrants held by White Owl.
2
<PAGE> 6
(2) Represents shares held by Chen Capital Partners, L.P., Chen Capital
Overseas Ltd., and Common Sense Partners. Herbert Chen is a general
partner of Chen Capital Partners, L.P. and the President of Chen
Capital Management, LLC. Chen Capital Management, LLC is the
investment manager of Chen Capital Overseas, Ltd. and Common Sense
Partners. Henry Scholder exercises investment discretion with respect
to Chen Capital Partners, L.P., Chen Capital Overseas, Ltd. and Common
Sense Partners.
(3) Mr. Webster is a general partner of White Owl. Includes 480,000
shares of Common Stock issuable upon conversion of certain convertible
promissory notes held by Mr. Webster and 480,000 shares of Common
Stock issuable upon exercise of warrants held by Mr. Webster.
(4) Mr. Ziegler is a general partner of White Owl. Includes 480,000
shares of Common Stock issuable upon conversion of certain convertible
promissory notes held by Mr. Ziegler and 480,000 shares of Common
Stock issuable upon exercise of warrants held by Mr. Ziegler.
(5) Includes 611,000 shares of Common Stock issuable upon exercise of
options held by Mr. Butler.
(6) Includes 72,000 shares of Common Stock issuable upon exercise of
options held by Mr. Wall and 2,216 shares of Common Stock held in Mr.
Wall's 401(k) Plan.
(7) Includes 16,500 shares issuable upon exercise of options granted
pursuant to the Company's 1994 Directors Stock Option Plan.
(8) Includes 22,000 shares of Common Stock issuable upon exercise of
options granted pursuant to the Company's 1994 Director's Stock Option
Plan.
(9) Does not include 1,104,000 shares of the Company's Common Stock issued
to Panther Oil Tools, Ltd., a Jersey, Channel Islands corporation
("Panther"). Mr. Le Seelleur is the owner of 70% of the outstanding
capital stock of Panther, and may be deemed to be the beneficial owner
of such Shares.
(10) Includes 16,500 shares of Common Stock issuable upon exercise of
options granted pursuant to the Company's 1994 Directors' Stock Option
Plan.
(11) Includes 836,000 shares of Common Stock issuable upon the exercise of
options, 4,000,000 shares of Common Stock issuable upon the conversion
of convertible promissory notes and 4,000,000 shares of Common Stock
issuable upon the exercise of warrants.
3
<PAGE> 7
MATTERS TO COME BEFORE THE ANNUAL MEETING
PROPOSAL NO. 1: ELECTION OF DIRECTORS.
At the Annual Meeting of Stockholders, eight directors are to be
elected, each to hold office until the next annual meeting of stockholders and
until his successor is elected and qualified.
It is the intention of the persons named in the accompanying proxy
that proxies will be voted for the election of the eight nominees named in the
following table unless otherwise indicated thereon. Each of the nominees is
now a Director of the Company and is standing for reelection. The Board has no
reason to believe that any of the nominees will be unable to serve if elected
to office and, to the knowledge of the Board, the nominees intend to serve the
entire term for which election is sought. Should any nominee for the office of
director named herein become unable or unwilling to accept nomination or
election, the persons named in the proxy will vote for such other person as the
Board may recommend.
BOARD OF DIRECTOR NOMINEES
<TABLE>
<CAPTION>
Year First
Name Age Became Director
- - ---- --- ---------------
<S> <C> <C>
Eugene L. Butler . . . . . . . . . . . . . . . . 56 1996
Rittie W. Milliman, Sr. . . . . . . . . . . . . . 44 1994
Frank J. Wall . . . . . . . . . . . . . . . . . . 42 1990
John M. Le Seelleur . . . . . . . . . . . . . . 47 1996
John Roane . . . . . . . . . . . . . . . . . . . 68 1985
Joe R. Nemec . . . . . . . . . . . . . . . . . . 54 1986
Steven A. Webster . . . . . . . . . . . . . . . . 46 1998
William R. Ziegler . . . . . . . . . . . . . . . 55 1998
</TABLE>
The business of the Company is managed by or under the direction of
the Board and its committees. The Board establishes corporate policies,
approves major business decisions and monitors the performance of the Company's
management. The day-to-day management functions and operating activities of
the Company are performed by the Company's full-time officers and executive
employees.
COMMITTEES OF THE BOARD OF DIRECTORS
During fiscal 1997, the Audit Committee of the Board was composed of
two independent directors, Joe R. Nemec and John Le Seelleur. The Audit
Committee recommends the selection of and confers with the Company's
independent accountants regarding the scope and adequacy of annual audits,
reviews reports from the independent accountants and meets with the independent
accountants and with the Company's financial personnel to review the adequacy
of the Company's accounting principles, financial controls and policies. The
entire Board currently performs the nominating committee functions. When
performing nominating committee functions, the Board's duties include
developing a policy on the size and composition of the Board and criteria
relating to candidate selection, and identifying candidates for Board
membership. From September 1996 to October 1996, the entire Board performed
the functions of the Compensation Committee. From October 1996 to April 1997,
the Compensation Committee was composed of three independent directors, John
Roane, Rittie W. Milliman, Sr. and Bill Van Meter. Since April 1997 the
Compensation Committee has been composed of two independent directors, John
Roane and Rittie W. Milliman, Sr. Generally, the Compensation Committee
reviews the Company's compensation philosophy and programs, exercises authority
with respect to the
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<PAGE> 8
payment of direct salaries and incentive compensation to officers of the
Company and administers the Company's stock option plans.
COMPENSATION OF DIRECTORS
During fiscal 1997, directors received $500 compensation per meeting
attended. In addition, directors are entitled to receive options to acquire
5,500 shares of the Company's Common Stock as of each annual stockholders'
meeting date pursuant to the Company's 1994 Directors' Stock Option Plan. The
Company's 1994 Directors' Stock Option Plan will expire as of the Annual
Meeting. The Company also reimburses its directors for expenses incurred in
attending each Board meeting.
ATTENDANCE AT MEETINGS
In fiscal 1997, the Board met seven (7) times and took action on two
(2) occasions by unanimous written consent, the Audit Committee met one (1)
time, and the Compensation Committee met one (1) time. All directors attended
75 percent or more of the aggregate number of meetings of the Board and of the
respective committees of which they are members.
The eight nominees receiving the highest number of affirmative votes
of the shares present in person or represented by proxy and entitled to vote
shall be elected as directors. All shares to be voted by proxy will be voted,
or not voted, as specified on each proxy.
THE BOARD UNANIMOUSLY RECOMMENDS THE STOCKHOLDERS
VOTE FOR THE ELECTION OF THE NOMINEES PROPOSED.
PROPOSAL NO. 2: PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF THE COMPANY'S COMMON STOCK FROM
50,000,000 SHARES TO 150,000,000 SHARES.
On November 24, 1997, the Board unanimously adopted a resolution
declaring it advisable to amend the Company's Certificate of Incorporation to
increase the number of shares of Common Stock that the Company has the
authority to issue to 150,000,000 shares (the "Common Stock Amendment"). The
Board of Directors further directed that the Common Stock Amendment be
submitted for consideration by stockholders at the Company's Annual Meeting.
In the event the Common Stock Amendment is approved by stockholders, the
Company will thereafter amend the Certificate of Incorporation (sometimes
referred to hereinafter as the "Certificate") with the Delaware State Secretary
of State with a filing reflecting such Common Stock Amendment, which will
become effective at the close of business on the date the Certificate is
accepted for filing by the Secretary of State. The text of Article Fourth of
the Certificate, as proposed to be amended, is set forth in Appendix A, on page
16 of this Proxy Statement.
In the event stockholders approve the Common Stock Amendment, the
Company will be authorized to amend Article Fourth of the Company's Certificate
to increase the number of shares of Common Stock which the Company is
authorized to issue from 50,000,000 to 150,000,000.
As of January 15, 1998, there were __________ shares of Common Stock
issued and outstanding. Of the ___________ authorized but unissued shares, a
total of __________ shares were reserved for issuance under Company option and
other benefit plans for employees and directors, pursuant to warrants granted by
the Company to purchase shares of Common Stock or pursuant to certain notes made
by the Company and convertible into shares of Common Stock. The remaining
_______ shares are unreserved. Holders of Common Stock do not have preemptive
rights to subscribe to additional securities that may be issued by the Company,
which means that current stockholders do not have a prior right to purchase any
new issue of Common Stock of the Company in order to maintain their
proportionate ownership interest.
The Board also believes that it is in the Company's best interests to
increase the number of authorized but unissued shares of Common Stock in order
to have additional shares available for issuance to meet the Company's future
business needs as they arise. The Company's management has no present
5
<PAGE> 9
arrangements, agreements, understandings or plans for the issuance or use of
the additional shares proposed to be authorized by the Amendment. The Board
believes the availability of such additional shares will provide the Company
with the flexibility to issue Common Stock for a variety of other proper
corporate purposes as the Board may deem advisable without further action by
the Company's stockholders, except as may be required by law, regulation or the
rules of any national securities exchange or quotation system on which the
shares of the Company's Common Stock are then listed. These purposes could
include, among other things, the sale of stock to obtain additional capital
funds, the purchase of property, the acquisition or merger into the Company of
other companies, the use of additional shares for various equity compensation
and other employee benefit plans, the declaration of stock dividends or
distributions, and other bona fide corporate purposes. Were these situations
to arise, the issuance of additional shares of Common Stock could have a
dilutive effect on earnings per share, and, for a person who does not purchase
additional shares to maintain his or her pro rata interest, on a stockholder's
percentage voting power in the Company.
Although an increase in the authorized shares of Common Stock could,
under certain circumstances, also be construed as having an anti-takeover
effect (for example, by diluting the stock ownership of a person seeking to
effect a change in the composition of the Board of Directors or contemplating a
tender offer or other transaction for the combination of the Company with
another company), the current proposal to amend the Certificate to increase the
number of authorized shares of Common Stock is not in response to any effort to
accumulate the Company's stock or to obtain control of the Company by means of
a merger, tender offer, solicitation in opposition to management or otherwise.
In addition, the proposal is not part of any plan by management to recommend a
series of similar amendments to the Board of Directors and the stockholders.
Under the Delaware General Corporation Law, the affirmative vote of
the holders of a majority of the shares of Common Stock outstanding and
entitled to vote at the Annual Meeting is required to adopt this Proposal No.
2. With respect to the proposal to amend the Company's Certificate of
Incorporation to increase the number of authorized shares of the Company's
Common Stock from 50,000,000 to 150,000,000 shares, all such shares will be
voted FOR or AGAINST, or not voted, as specified on each proxy. If no choice
is indicated, a proxy will be voted FOR the proposal to amend the Company's
Certificate of Incorporation to increase the number of authorized shares of the
Company's Common Stock from 50,000,000 to 150,000,000 shares.
THE BOARD UNANIMOUSLY RECOMMENDS THE STOCKHOLDERS
VOTE FOR THE ADOPTION OF THIS PROPOSAL.
PROPOSAL NO. 3: PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO
AUTHORIZE 10,000,000 SHARES OF PREFERRED STOCK.
The Company's Certificate of Incorporation does not currently
authorize the issuance by the Company of any shares of preferred stock. On
November 24, 1997, the Board unanimously adopted a resolution declaring it
advisable to amend the Certificate to create and authorize 10,000,000 shares of
preferred stock, $.01 par value ("Preferred Stock"), of the Company (the
"Preferred Stock Amendment"). The Board of Directors further directed that the
Preferred Stock Amendment be submitted for consideration by stockholders at the
Company's Annual Meeting. In the event the Preferred Stock Amendment is
approved by stockholders, the Company will thereafter amend the Certificate of
Incorporation (the "Certificate") with the Delaware State Secretary of State
with a filing reflecting such Preferred Stock Amendment, which will become
effective at the close of business on the date the Certificate is accepted for
filing by the Secretary of State. The text of the proposed Article Fourth is
set forth in Appendix A, on page 16 of this Proxy Statement.
The proposed creation and authorization of Preferred Stock has been
recommended by the Board to assure that an adequate supply of authorized and
unissued shares of Preferred Stock is available for general corporate needs.
The availability of shares of Preferred Stock for issue, without the delay and
expense of obtaining the approval of stockholders at a special meeting, will
afford the Company greater flexibility in taking corporate action.
6
<PAGE> 10
If approved by the stockholders, the Preferred Stock will be available
for issue from time to time for such purposes and consideration as the Board
may authorize, without the necessity of further action or authorization by the
Company's stockholders, except as provided under the Delaware General
Corporation Law or the rules of any national securities exchange or quotation
system on which the shares of the Company are at the time listed or quoted, in
one or more series or classes. Such purposes might include, without
limitation, issuance as part or all of the consideration required to be paid by
the Company in the acquisition of other businesses or properties, or issuance
in public or private sales as a means of obtaining additional capital for use
in the Company's business and operations. The Board may fix by resolution the
designations, relative rights, preferences and limitations of each such series
or class. Each series or class of Preferred Stock could, as determined by the
Board at the time of issuance, rank, with respect to dividends, sinking fund
provisions and conversion, voting, redemption and liquidation rights, senior to
the Common Stock. There are no transactions presently under review or
contemplated by the Board which would require the issuance of Preferred Stock
by the Company.
It is not possible to state the precise effects of the authorization
of shares of Preferred Stock upon the rights of the holders of the Company's
Common Stock until the Board determines the respective preferences, limitations
and relative rights of the holders of each class or series of the Preferred
Stock. However, such effects might include: (a) reduction of the amount
otherwise available for payment of dividends on the Common Stock; (b)
restrictions on dividends on the Common Stock; (c) dilution of the voting power
of the Common Stock to the extent that the Preferred Stock had voting rights;
(d) conversion of the Preferred Stock into Common Stock at such prices as the
Board determines, which could include issuance at below the fair market value
or original issue price of Common Stock; and (e) the holders of Common Stock
not being entitled to share in the Company's assets upon liquidation until
satisfaction of any liquidation preference granted to holders of the Preferred
Stock.
Although the Board would authorize the issuance of Preferred Stock
based on its judgment as to the best interests of the Company and its
stockholders, the issuance of authorized Preferred Stock could have the effect
of diluting the voting power per share and could have the effect of diluting
the book value per share of the outstanding Common Stock. In addition, the
issuance of shares of Preferred Stock could, in certain instances, render more
difficult or discourage a merger, tender offer or proxy contest and thus
potentially have an "anti-takeover" effect, especially if Preferred Stock were
issued in response to a potential takeover. In addition, additional issuances
of authorized Preferred Stock can be implemented, and have been implemented by
some companies in recent years, with voting or conversion privileges intended
to make acquisition of the Company more difficult or more costly. Such an
issuance could deter the types of transactions that may be proposed or could
discourage or limit the stockholders' participation in certain types of
transactions that might be proposed (such as a tender offer), whether or not
such transactions were favored by the majority of the stockholders, and could
enhance the ability of officers and directors to retain their positions.
Under the Delaware General Corporation Law, the affirmative vote of
holders of a majority of the shares of Common Stock outstanding and entitled to
vote at the Annual Meeting is required to adopt the proposed amendment to the
Company's Certificate of Incorporation to authorize 10,000,000 shares of
Preferred Stock of the Company. If the amendment is not approved by the
stockholders, the Company will have no Preferred Stock authorized. With
respect to the proposal to amend the Company's Certificate of Incorporation to
authorize 10,000,000 shares of Preferred Stock, all such shares will be voted
FOR or AGAINST, or not voted, as specified on each proxy. If no choice is
indicated, a proxy will be voted FOR the proposal to amend the Company's
Certificate of Incorporation to authorize 10,000,000 shares of Preferred Stock.
THE BOARD UNANIMOUSLY RECOMMENDS THE STOCKHOLDERS
VOTE FOR THE ADOPTION OF THIS PROPOSAL.
7
<PAGE> 11
PROPOSAL NO. 4: PROPOSAL TO AMEND TO THE COMPANY'S CERTIFICATE OF INCORPORATION
TO ALLOW FOR LIMITATION OF LIABILITY OF THE COMPANY'S DIRECTORS.
On November 24, 1997, the Board adopted a resolution declaring it
advisable to amend the Certificate to add an Article Seventh which would, if
approved by the stockholders, limit the personal liability of its directors to
the Company or its stockholders for monetary damages for breach of their
fiduciary duty to the fullest extent permitted by the Delaware General
Corporation Law.
The text of the proposed added Article Seventh to the Company's
Certificate of Incorporation is set forth in Appendix A, on page 16 of this
Proxy Statement.
As permitted by the Delaware General Corporation Law and if approved
by the Company's stockholders, the Certificate would include a provision that
eliminates the personal liability of its directors to the Company or its
stockholders for monetary damages for breach of their fiduciary duty to the
maximum extent permitted by the Delaware General Corporation Law. The Delaware
Corporation Law does not permit liability to be eliminated (i) for any breach
of a director's duty of loyalty to the Company or its stockholders, (ii) for
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) for unlawful payments of dividends or unlawful
stock repurchases or redemptions, as provided in Section 174 of the Delaware
General Corporation Law or (iv) for any transaction from which the director
derived an improper personal benefit. In addition, as permitted in Section 145
of the Delaware General Corporation Law, the Certificate would provide that the
Company shall indemnify its directors and executive officers to the fullest
extent permitted by the Delaware General Corporation Law, including those
circumstances in which indemnification would otherwise be discretionary,
subject to certain exceptions. The Certificate of Incorporation would also
provide that the Company may advance expenses to directors and executive
officers incurred in connection with an action or proceeding as to which they
may be entitled to indemnification, subject to certain exceptions.
Under the Delaware General Corporation Law, the affirmative vote of a
majority of the shares of Common Stock outstanding and entitled to vote at the
Annual Meeting is required to approve this Proposal No. 4. With respect to the
proposal to amend the Company's Certificate of Incorporation to provide for
limitation of liability of the Company's directors, all such shares will be
voted FOR or AGAINST, or not voted, as specified on each proxy. If no choice
is indicated, a proxy will be voted FOR the proposal to amend the Company's
Certificate of Incorporation to provide for the limitation of liability of the
Company's directors.
THE BOARD UNANIMOUSLY RECOMMENDS THE STOCKHOLDERS
VOTE FOR THE ADOPTION OF THIS PROPOSAL.
CHANGES IN INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Hairston, Kemp, Sanders & Stich, P.C., certified public
accountants ("Hairston") served as the independent auditors of the Company
until January 8, 1996, at which time the Company replaced the firm now known as
Kemp & Stich, P.C. with William B. Sanders, C.P.A. ("Sanders") as the principle
accountant of the Company (See Form 8-K dated January 8, 1996). On April 10,
1996, Sanders was replaced by Arthur Andersen LLP ("Andersen"). The decision
to change accountants was recommended by the Board.
In connection with the audits of the fiscal year ended August 31,
1995, and the subsequent interim period through April 10, 1996, there were no
disagreements with Hairston or Sanders on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedures,
which disagreements if not resolved to their satisfaction would have caused
them to make reference in connection with their opinion to the subject matter
of the disagreement.
On April 10, 1996, Arthur Andersen LLP was engaged to audit the
financial statements of the Company for its fiscal year ended August 31, 1996.
The Company has authorized Sanders to respond fully to inquiries of Arthur
Andersen LLP. The Company did not contact Arthur Andersen LLP during
8
<PAGE> 12
the Company's two most recent fiscal years, or any subsequent interim period,
regarding (1) any disagreement with Sanders or Hairston or (2) the application
of accounting principles to a specified transaction or the type of audit
opinion that might be rendered on the Company's financial statements. Prior to
its agreement, Arthur Andersen LLP was neither asked for, nor has it expressed
any opinion on any accounting issues concerning the Company.
Other than a qualification of opinion as to the Company's ability to
continue as a going concern due to recurring losses from operations, negative
working capital (primarily as a result of the current classification of its debt
with a lender for its noncompliance with certain of its debt covenants), an
accumulated deficit and its limited access to capital contained in the
independent auditor's report filed by Arthur Andersen LLP in connection with the
Company's consolidated financial statements for the fiscal year ended August 31,
1997, the audit reports of Arthur Andersen LLP for the fiscal years ended August
31, 1997 and 1996, did not contain any adverse opinion of disclaimer of opinion
nor were they qualified or modified as to uncertainty, audit scope or accounting
principles.
PROPOSAL NO. 5: PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT PUBLIC
ACCOUNTANTS.
The Board desires to obtain stockholders' ratification of the Board's
appointment of Arthur Andersen LLP as the Company's independent public
accountants to audit the financial statements of the Company for the year
ending August 31, 1998. Representatives of Arthur Andersen LLP will be present
at the meeting to respond to appropriate questions from stockholders and will
be given the opportunity to make a statement should they desire to do so.
The proposal will be approved if approved by the vote of a majority of
the shares present in person or by proxy at the meeting, provided that the
total shares present at the meeting constitute a quorum. With respect to the
proposal to ratify the approval of Arthur Andersen LLP as the Company's
independent accountants, all such shares will be voted FOR or AGAINST, or not
voted, as specified on each proxy. If no choice is indicated, a proxy will be
voted FOR the proposal to ratify the approval of Arthur Andersen LLP as the
Company's independent accountants.
THE BOARD UNANIMOUSLY RECOMMENDS THE STOCKHOLDERS
VOTE FOR THE ADOPTION OF THIS PROPOSAL.
FURTHER INFORMATION
BOARD OF DIRECTORS
The following table sets forth certain information with respect to the
nominees for director:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION SINCE
---- --- -------- --------
<S> <C> <C> <C>
Eugene L. Butler 56 President, Chief Executive Officer and 1996
Chairman of the Board
Frank J. Wall 42 Senior Vice President of Operations and 1990
Director
John M. Le Seelleur 47 Director 1996
Rittie W. Milliman, Sr. 44 Director 1994
Joe R. Nemec 54 Director 1986
John Roane 68 Director 1985
William R. Ziegler 55 Director 1998
Stephen A. Webster 46 Director 1998
</TABLE>
There are no family relationships among any director listed. In
connection with the Company's acquisition of Panther Oil Tools, Ltd., Mr. Le
Seelleur was elected to serve as a Director of the Company. In connection with
the Securities Purchase Agreement between the Company and White Owl Capital
Partners and the Securities Purchase Agreement between the Company and White
Owl Investors, LLC, Messrs. Ziegler and Webster were elected to serve as
directors. Except for Messrs. Le Seelleur, Ziegler
9
<PAGE> 13
and Webster, there are no arrangements or understandings pursuant to which any
of these persons were elected as directors. Officers are elected annually by
the Board at its first meeting following the annual meeting of stockholders,
each to hold office until the corresponding meeting of the Board in the next
year or until his successor shall have been elected or shall have been
qualified.
EUGENE L. BUTLER joined the Company in February 1996, became Executive Vice
President, Chief Financial Officer and Director in April 1996, and was elected
President, Chief Executive Officer and Chairman of the Board in April 1997.
Since 1991, Mr. Butler has also served as Chairman of the Board and Chief
Executive Officer of Intercoastal Terminal, Inc., a company engaged in
operating a petrochemical storage and terminal facility. Mr. Butler has served
as a director of Powell Industries, Inc. since March 1990. From 1974 through
1991, Mr. Butler served in various executive capacities for
Weatherford/Enterra, Inc., a multinational energy corporation, including
director, president, chief executive officer and chief operating officer. Mr.
Butler received his degree in accounting from Texas A&M University in 1963, and
is a Certified Public Accountant.
RITTIE W. MILLIMAN, SR. was elected a Director in August 1994. He is President
of the Milliman Group, Inc., an oilfield services and equipment firm. From
March 1992 to February 1996, Mr. Milliman served as the Company's
Vice-President of Wireline Operations. From 1984 to 1993 he was an independent
consultant and equipment supplier for wireline logging and perforating of
wells.
JOE R. NEMEC has been a Director of the Company since 1986 and is an original
shareholder of the Company. Since September 1995, he has served as director of
Norwest Bank Texas, Alice. From 1987 through 1995 Mr. Nemec served as
Secretary of the Company. Mr. Nemec is a Certified Public Accountant and has
owned his own accounting practice since 1972.
JOHN ROANE has been a Director of the Company since March 1985. He has been a
fishing tool supervisor for the Company since 1981 and is an original
shareholder of the Company. Prior to joining the Company in 1981, Mr. Roane
was a fishing tool supervisor for Wilson Downhole. His experience includes all
aspects of the drilling and production of oil and gas, as a consultant and
drilling superintendent.
FRANK J. WALL has served as a Director of the Company since August 1990 and an
officer since 1982. Mr. Wall has 19 years of experience in the fishing tool
industry and has been with the Company since 1981. Since joining the Company,
Mr. Wall has served in various executive capacities and now serves as Senior
Vice President of Operations.
JOHN M. LE SEELLEUR has been a Director of the Company since October 1996 and
is the owner of Petresearch International, Inc., an oil exploration joint
venture and farm-out advisory firm headquartered in Aberdeen, Scotland. Mr. Le
Seelleur is the former chairman of Panther Oil Tools, Ltd., a wholly-owned
subsidiary of the Company. Mr. Le Seelleur has over 21 years of experience in
oilfield operations and management throughout the North Sea and Middle East.
Mr. Le Seelleur holds a diploma in business studies from Kingston College,
London.
WILLIAM R. ZIEGLER has been a partner of the law firm of Parson & Brown LLP
since June 1994. Prior to that time he was a partner in the law firm of
Whitman Breed Abbott & Morgan and a predecessor firm for over five years. Mr.
Ziegler is a director and Vice Chairman of the Board of Falcon Drilling
Company, Inc., a director and Vice Chairman of the Board of Grey Wolf, Inc., a
director of Flotek Industries, Inc., and a director of Geokinetics, Inc., which
provides 3-D seismic acquisition and geophysical services to the oil and gas
industry.
STEVEN A. WEBSTER has been the Chairman of the Board and Chief Executive
Officer of Falcon Drilling Company, Inc., a marine oil and gas drilling
contractor since 1991. He serves as a director of Crown Resources Corporation,
(a mining company), a director of Grey Wolf, Inc., Trust Manager of Camden
Property Trust, Chairman of the Board of Carrizo Oil & Gas, Inc., an
independent oil and gas exploration company, and a director of Geokinetics,
Inc., which provides 3-D seismic acquisition and geophysical services to the
oil and gas industry.
10
<PAGE> 14
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information with respect to the cash
compensation awarded to, earned by, or paid to the Company's Chief Executive
Officer and the remaining most highly compensated executive officers (the
"named executive officers") of the Company whose total annual salary and bonus
for the fiscal year ended August 31, 1997, was at least $100,000.
<TABLE>
<CAPTION>
LONG-TERM
------------
COMPENSATION
------------
AWARDS
NAME AND ANNUAL COMPENSATION OTHER ------------
-------- ------------------- ANNUAL STOCK ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS(#) COMPENSATION($)
- - ------------------ ------ ------ ----- ------------ ---------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Eugene L. Butler 1995 $ -- -- -- -- --
Chairman of the 1996 $ 30,000 -- $3,600(1) 5,500(2) $ 20,000(3)
Board, Chief 1997 $128,333 $6,000 $6,800(1) 5,500(2) $ 5,320(4)
Executive Officer
and President
Larry D. Armstrong(5) 1995 $ 15,185 -- $1,600(1) -- $186,604(6)
Chairman of the 1996 $111,538 -- $8,406(1) 5,500(2) --
Board, Chief 1997 $ 90,000 $8,000 $3,800(1) 5,500(2) $ 10,000(7)
Executive Officer
and President
Frank J. Wall 1995 $ 51,000 -- $7,100(1) 5,500(2) --
Senior Vice 1996 $ 80,039 -- $7,600(1) 5,500(2) --
President of 1997 $106,667 $6,500 $7,400(1) 55,500(8) $ 10,549(9)
Operations and
Director
</TABLE>
- - --------------
(1) Includes vehicle allowance and director's fees.
(2) Issued pursuant to the Company's 1994 Directors' Stock Option Plan.
(3) Represents fees paid to Mr. Butler before his employment and not as an
employee for consulting services for the Company.
(4) Represents the Company's contribution to Mr. Butler's 401(k) Plan account.
(5) Mr. Armstrong became President and Chief Operating Officer in June 1995 and
was made Chairman of the Board, President and Chief Executive Officer in
April 1996. Effective September 1, 1995, the Company entered into an
employment agreement with Mr. Armstrong which provided for an annual salary
of $100,000. Mr. Armstrong resigned as Chairman of the Board, President
and Chief Executive Officer of the Company in April 1997.
(6) Before his employment and not as an employee and prior to his election as
President, Chief Operating Officer and Director in June 1995, Mr. Armstrong
personally guaranteed a promissory note of the Company in the amount of
$2,500,000 and a revolving line of credit for $500,000 and performed
various services for the Company in the auction sale of excess tools and
equipment. Mr. Armstrong was paid for such services by the issue of 459,333
shares of the restricted Common Stock of the Company with a value at the
date of grant of $186,604. The closing market price of the Company's
Common Stock on June 26, 1995 was $.94.
(7) Represents amounts paid to Mr. Armstrong for relocating.
(8) Includes 5,500 options issued pursuant to the Company's 1994 Directors'
Stock Option Plan.
(9) Includes the Company's contribution to Mr. Wall's 401(k) Plan account in
the amount of $2,216 and $8,333 paid for relocating.
11
<PAGE> 15
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information concerning grants of stock options
by the Company to the named executive officers in fiscal 1997. The Company has
not granted any stock appreciation rights.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- - -----------------------------------------------------------------------------
PERCENTAGE POTENTIAL REALIZABLE
OF VALUE AT ASSUMED
TOTAL ANNUAL RATES OF STOCK
OPTIONS PRICE APPRECIATION
GRANTED TO FOR THE OPTION TERM
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION -----------------------
NAME GRANTED (#) FISCAL YEAR ($/SHARE) DATE 5% 10%
---- ----------- ----------- --------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Eugene L. Butler 5,500(1) 2% $1.0938 3/12/07 $ 3,783 $ 9,588
Frank J. Wall(2) 5,500(1) 2% $1.0938 3/12/07 $ 3,783 $ 9,588
Frank J. Wall(2) 50,000 15% $ 1.75 10/22/06 $55,025 $139,450
Larry D. Armstrong 5,500(1) 2% $1.0938 3/12/07 $ 3,783 $ 9,588
</TABLE>
- - ----------------
(1) Options were granted under the Company's 1994 Directors' Stock Option Plan
and are fully exercisable.
(2) Mr. Wall received an aggregate of 17% of Total Options granted to the
Company's employees in fiscal 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information on option exercises in fiscal 1997
by the named executive officers and the value of such officers' unexercised
options at August 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS/SARS IN-THE-MONEY
ACQUIRED AT FISCAL YEAR-END (#) AT FISCAL YEAR-END(1)
ON EXERCISE VALUE --------------------------- ---------------------------
NAME (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ---- ------------- -------- --------------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Eugene L. Butler -0- -0- 11,000 -0- -0- ---
Frank J. Wall -0- -0- 22,000 50,000 $430 ---
Larry D. Armstrong -0- -0- 5,500 -0- -0- ---
</TABLE>
- - --------------------
(1) The "value" of any option set forth in the table above is determined by
subtracting the amount which must be paid upon exercise of the options
from the market value of the underlying Common Stock as of August 31,
1997 (based on the closing sales price as reported by the NASDAQ Small Cap
Market).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
From September 1996 to October 1996, the entire Board performed the
functions of the Compensation Committee. Mr. Butler and Mr. Wall are executive
officers of the Company. From October 1996 through April 1997, the Compensation
Committee was comprised of Mr. Van Meter, Mr. Roane and Mr. Milliman, none
of whom were employed by the Company. Since April 1997, the Compensation
Committee has been comprised of Mr. Roane and Mr. Milliman.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and
holders of more than ten percent of the Common Stock to file with the
Commission initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. The Company believes
that through the end of its fiscal year ended August 31, 1996, its officers,
directors and holders of more than ten percent of the
12
<PAGE> 16
Common Stock complied with the Section 16(a) filing requirements with the
following exceptions: Gerald A. Slaughter and Shirley Meyer each filed one Form
4 late, and Frank Wall filed three Form 4s late.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or the
Exchange Act that might incorporate future filings, including this Proxy
Statement, in whole or in part, the following reports and the Performance Graph
shall not be incorporated by reference into any such filings.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
During fiscal 1997, the Company had no formal compensation policies
with respect to executive officers. Because there are no formal compensation
policies in place, the compensation of executive officers was determined by the
Compensation Committee based generally on the qualifications and prior
experience of the executive officers. The following paragraphs set forth the
basis of the compensation paid in fiscal 1997 to Eugene L. Butler and Larry D.
Armstrong.
In April 1997, the Board elected Eugene L. Butler as Chairman of the
Board, President and Chief Executive Officer of the Company. At that time, the
Board established Mr. Butler's salary at $130,000 per year for the remainder of
fiscal 1997. The Board set Mr. Butler's compensation package based on the key
role he was to hold within the Company and in view of competitive compensation
packages offered to his peer group in the industry.
For fiscal 1997, the Board set Mr. Armstrong's salary at $120,000 per
year. The Board set Mr. Armstrong's compensation package based on the key role
he was to hold within the Company and in view of competitive compensation
packages offered to his peer group in the industry.
COMPENSATION COMMITTEE
Rittie W. Milliman, Sr.
John Roane
13
<PAGE> 17
PERFORMANCE GRAPH
The following performance graph compares the performance of the Common
Stock to the NASDAQ Stock Market (US Companies) and to a Peer Group of other
public companies. The information was provided by Media General Services, Inc.
The Peer Group Index is comprised of NASDAQ-listed companies having the three
digit standard industry classification codes 7350-7359 (Miscellaneous Equipment
Rental and Leasing). The graph assumes that the value of the investment in the
Common Stock and each Index was 100 at August 30, 1992, and that all dividends
were reinvested.
[GRAPH]
LEGEND
<TABLE>
<CAPTION>
MGS TOTAL RETURNS INDEX FOR: 08/30/92 08/30/93 08/30/94 08/30/95 08/30/96 08/30/97
--------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Ponder Industries, Inc. 100.00 70.69 67.24 18.97 62.07 30.17
NASDAQ Stocks (S/C 7350-7359 US Companies
Miscellaneous Equipment Rental and Leasing 100.00 101.62 114.13 150.72 205.12 274.29
Nasdaq Stock Market (US Companies) 100.00 131.92 137.32 184.93 208.54 290.95
</TABLE>
Notes:
A. The lines represent index levels derived from compounded daily returns
that include all dividends.
B. The indexes are reweighed daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.00 on 08/30/92.
E. No trading activity recorded for Ponder Industries, Inc. from 01/23/93 to
01/26/93.
F. THE PEER GROUP IS MADE UP OF THE FOLLOWING SECURITIES: AARON RENTS INC.,
ALRENCO INC., BESTWAY INC., CRONOS GROUP (THE), ELECTRO RENT CORP., EQUITY
COMPRESSION SRVCS., GLOBE BUSINESS RSCS INC., MATTHEWS STUDIO EQUIP GR,
MCGRATH RENTCORP, PONDER INDUSTRIES, INC., RENT-WAY INC., RENTERS CHOICE
INC., THORN PLC ADR, TRANS LEASING INTERNATIONAL, UNIVERSAL HOSPITAL
SVCS.
EMPLOYMENT AGREEMENTS
The Company and Larry Armstrong entered into a four year employment
agreement on September 1, 1995. Mr. Armstrong resigned as President, Chief
Executive Officer and Chairman of the Board in April 1997. Under the agreement,
Mr. Armstrong was to receive $100,000 per annum, and if the Company achieved
certain financial criteria, stock options granting him the right to purchase up
to $100,000 of Common Stock.
The Company currently has no employment agreements with any of its
employees.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Ziegler and Mr. Webster are partners sole partners in White Owl
Capital Partners, a general partnership ("White Owl"). The Company entered
into a Securities Purchase Agreement with White Owl, Mr. Ziegler, Mr. Webster
and other parties on October 15, 1997, pursuant to which the Company, for
consideration of $2,500,000, made convertible promissory notes in the amount of
$2,500,000 which are convertible into 4,000,000 shares of Common Stock, and
granted warrants to purchase an additional 4,000,000 shares of Common Stock.
On December __, 1997, the Company entered into a Securities
14
<PAGE> 18
Purchase Agreement with White Owl Investors, LLC, of which White Owl is the
managing member, pursuant to which the Company issued 7,200,000 shares of
Common Stock to White Owl Investors, LLC for an aggregate purchase price of
$9,000,000. Pursuant to said Securities Purchase Agreements, the Company
agreed to elect Messrs. Webster and Ziegler to the Board, and to nominate them
for reelection at the Annual Meeting.
In September 1995, the Company acquired Armstrong Tool, Inc. from
Martha Gail Armstrong, the wife of Larry D. Armstrong, who served as
President, Chief Executive Officer and Chairman of the Board of the Company
from April 1996 to April 1997. The consideration for the assets of Armstrong
Tool, Inc. consisted of the issuance of a promissory note for $400,000 to Mr.
Armstrong and the assumption by the Company of approximately $450,000 of
liabilities. Upon Mr. Armstrong's resignation as President, Chief Executive
Officer and Chairman of the Board, the Mr. Armstrong agreed to cancel said
promissory note in exchange for $275,000 shares of Common Stock, which had a
fair market value at the time of issuance of $0.75 per share.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
From time to time the stockholders of the Company submit proposals
which they believe should be voted upon by the stockholders. The Commission
has adopted regulations which govern the inclusion of such proposals in the
Company's annual proxy materials. All such proposals must be submitted to the
Secretary of the Company no later than October 10, 1998 in order to be
considered for inclusion in the Company's 1998 proxy materials.
MATTERS NOT DETERMINED AT THE TIME OF SOLICITATION
The Board is not aware of any matters to come before the meeting other
than those set forth above. If any other matter should come before the
meeting, then the persons named in the enclosed form of proxy will have
discretionary authority to vote all proxies with respect thereto in accordance
with their judgment.
By Order of the Board of Directors
EUGENE L. BUTLER
Chairman of the Board of Directors
Houston, Texas
Dated: January 29, 1998
15
<PAGE> 19
APPENDIX "A"
FOURTH. The total number of shares of stock which the corporation
shall have authority to issue is 160,000,000 shares, of which 150,000,000
shares shall be common stock, $.01 par value per share, and 10,000,000 shares
shall be preferred stock, $.01 par value per share. The designations, rights,
preferences, privileges and voting powers of the preferred stock, and any
restrictions and qualifications thereof, shall be determined by the Board of
Directors.
SEVENTH. No director of the Company shall be liable to the Company or
any of its stockholders for monetary damages for breach of fiduciary duty as a
director; provided that this Article SEVENTH shall not eliminate or limit the
liability of a director of the Company; (i) for any breach of the director's
duty of loyalty to the Company or its stockholders, (ii) for acts or omissions
not in good faith or that involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the General Company Law of the State of
Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit.
If the General Company Law of the State of Delaware hereafter is
amended to authorize the further elimination or limitation of the liability of
directors of the Company, then the liability of a director of the Company shall
be limited to the fullest extent permitted by the General Company Law of the
State of Delaware, as so amended, and such limitation of liability shall be in
addition to, and not in lieu of, the limitation on the liability of a director
of the Company provided by the provisions of this Article SEVENTH.
Any repeal or modification of this Article SEVENTH shall be
prospective only and shall not adversely affect any right or protection of a
director of the Company existing at the time of such repeal or modification.
16
<PAGE> 20
PROXY
- - --------------------------------------------------------------------------------
PONDER INDUSTRIES, INC.
PROXY -- ANNUAL MEETING OF STOCKHOLDERS -- March 6, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Please mark, sign, date and return in the enclosed envelope.
The undersigned stockholder of Ponder Industries, Inc. (the "Company")
hereby appoints Eugene L. Butler and Gerald A. Slaughter, or each of them,
proxies of the undersigned with full power of substitution to vote at the Annual
Meeting of Stockholders of the Company to be held on Friday, March 6, 1998, at
10:00 a.m., Central Standard Time, at the Holiday Inn Crowne Plaza Hotel, 2222
West Loop South, Houston, Texas, and at any adjournment thereof, the number of
votes which the undersigned would be entitled to cast if personally present:
(1) ELECTION OF DIRECTORS
FOR [ ] WITHHOLD AUTHORITY [ ]
all nominees listed below to vote for all nominees
(except as marked below) listed below
William R. Ziegler Eugene L. Butler
Frank J. Wall John M. Le Seelleur
Steven A. Webster Rittie W. Milliman, Sr.
Joe R. Nemec John Roane
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
DRAW A LINE THROUGH OR STRIKE OUT THAT NOMINEE'S NAME AS
SET FORTH ABOVE.
(2) Proposal to amend the Certificate of Incorporation of the Company to
increase the number of Authorized shares of the Company's Common Stock from
50,000,000 shares to 150,000,000
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 21
(3) Proposal to amend the Certificate of Incorporation of the Company to
authorize 10,000,000 shares of Preferred Stock
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) Proposal to amend the Certificate of Incorporation of the Company to
provide for the limitation of liability of the directors of the Company to
the fullest extent permitted by the Delaware General Corporation Law
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) Proposal to ratify the appointment of Arthur Andersen LLP as the Company's
Independent Public Accountants for the fiscal year ending August 31, 1998
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(6) To consider and act upon any other matter which may properly come before
the meeting or any adjournment thereof;
all as more particularly described in the Proxy Statement dated January 29,
1998, relating to such meeting, receipt of which is hereby acknowledged.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted FOR the nominees listed in Proposal 1, FOR Proposal 2, FOR Proposal 3,
FOR Proposal 4 and FOR Proposal 5.
-----------------------------------------------------
-----------------------------------------------------
Signature of Stockholder(s)
Please sign your name exactly as it appears hereon.
Joint owners must each sign. When signing as attorney,
executor, administrator, trustee or guardian, please
give your full title as it appears hereon.
Dated , 1998.
----------------------
