<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. 1)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
Ponder Industries, Inc.
- - --------------------------------------------------------------------------------
(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)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- - -------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- - -------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- - -------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - -------------------------------------------------------------------------------
(5) Total fee paid:
- - -------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- - -------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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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
April 9, 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 Tuesday, May 12, 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. Following 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 May 12, 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 May 12, 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 March 30,
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 principle 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
April 9, 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 May 12, 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 March 30, 1998 (the "Record Date"), there were outstanding
and entitled to vote 44,405,828 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 April 9, 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
the ratification of the appointment of Arthur Andersen LLP as independent public
accountants and for any other matters which may come before the Annual Meeting.
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.
<PAGE> 5
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 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 January 21, 1998. 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)(2) ....... 17,330,000 36.55%
20 Pine Brook Road
Bedford, New York 10506
Chen Capital Partners, L.P.(3) .......... 2,559,500 5.77%
237 Park Avenue
Ninth Floor
New York, New York 10017
Steven A. Webster(1)(2) ................. 17,330,000 36.55%
William R. Ziegler (1)(2) ............... 17,080,000 36.02%
Eugene L. Butler(4) ..................... 641,500 1.43%
Frank J. Wall(5) ........................ 77,054 *
Rittie W. Milliman, Sr.(6) .............. 16,500 *
Joe R. Nemec(6) ......................... 156,043 *
John Roane(6) ........................... 55,767 *
John M. Le Seelleur(7)(8) ............... 88,833 *
All directors and executive officers as a
group (11 persons)(2)(7)(9) ............. 18,542,468 38.43%
</TABLE>
====================
(#) Based on 44,378,477 shares of Common Stock issued and outstanding as of
January 21, 1998.
(*) Represents less than one percent
(footnotes on following page)
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<PAGE> 6
(1) White Owl Capital Partners ("White Owl") is a general partnership of
Mr. Webster and Mr. Ziegler. Mr. Ziegler and Mr. Webster are also
general partners of Somerset Capital Partners ("SCP").
(2) Includes (a) 10,000,000 shares of Common Stock held by White Owl
Investors L.L.C., of which White Owl is the managing member, (b)
3,040,000 shares of Common Stock held by White Owl, (c) 1,000,000
shares of Common Stock held by SCP and (d) 3,040,000 shares of Common
Stock issuable upon exercise of certain warrants held by White Owl.
(3) 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.
(4) Represents 11,000 shares of Common Stock issuable upon exercise of
options granted pursuant to the 1994 Directors' Stock Option Plan and
600,000 shares of Common Stock issuable upon exercise of options
granted to Mr. Butler on September 30, 1997.
(5) Includes 22,000 shares of Common Stock issuable upon exercise of
options granted pursuant to the Company's 1994 Directors' Stock Option
Plan, 10,000 shares of Common Stock issuable upon exercise of options
granted to Mr. Wall on October 22, 1996, 40,000 shares of Common Stock
issuable upon exercise of options granted to Mr. Wall on September 30,
1997, and 2,696 shares of Common Stock held in Mr. Wall's 401(k) Plan
account as of the Record Date.
(6) Includes 16,500 shares of Common Stock issuable upon exercise of
options granted pursuant to the Company's 1994 Directors' Stock Option
Plan.
(7) Does not include 1,200,000 shares of the Company's Common Stock held by
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.
(8) Includes 5,500 shares of Common Stock issuable upon exercise of options
held by Mr. Le Seelleur granted pursuant to the Company's 1994
Directors' Stock Option Plan.
(9) Includes 836,000 shares of Common Stock issuable upon the exercise of
options held by officers and directors, 3,040,000 shares of Common
Stock issuable upon the exercise of warrants held by White Owl and
5,467 shares of Common Stock held in officers' 401(k) Plan accounts as
of the Record Date.
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,
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<PAGE> 8
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 payment of direct salaries and incentive compensation to
officers of the Company and administers the Company's stock option plans.
COMPENSATION OF DIRECTORS
For the meeting of the Board of Directors held October 22, 1996, each
director who attended received $200 compensation. During the remainder of fiscal
1997, non-employee 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 18 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 21, 1998, there were 44,378,477 shares of Common Stock
issued and outstanding. All of the remaining authorized but unissued shares have
been reserved for issuance under Company option and other benefit plans for
employees and directors or pursuant to warrants to purchase Common Stock granted
by the Company. 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.
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<PAGE> 9
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
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 18 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
6
<PAGE> 10
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.
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.
7
<PAGE> 11
THE BOARD UNANIMOUSLY RECOMMENDS THE STOCKHOLDERS
VOTE FOR THE ADOPTION OF THIS PROPOSAL.
PROPOSAL NO. 4: PROPOSAL TO AMEND 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 Sixth 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 Sixth to the Company's
Certificate of Incorporation is set forth in Appendix A, on page 18 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
General 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.
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 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
8
<PAGE> 12
on the Company's financial statements. Prior to its engagement, 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, 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
or 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.
9
<PAGE> 13
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 1990
and 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
Steven 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, White Owl Capital
Partners and others dated October 15, 1997, and the Securities Purchase and
Exchange Agreement between the Company, White Owl Investors L.L.C. and others
dated October 15, 1997, Messrs. Ziegler and Webster were elected to serve as
directors. Except for Messrs. Le Seelleur, Ziegler and Webster, there are no
arrangements or understandings pursuant to which any of the nominees 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 was a fishing
tool supervisor for the Company from 1981 until his retirement in 1996. Mr.
Roane 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.
10
<PAGE> 14
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 of R&B Falcon Corporation, 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 Chief Executive Officer of R&B Falcon
Corporation, a marine oil and gas drilling contractor, since January 1, 1998,
and prior to that was the Chairman of the Board and Chief Executive Officer of
Falcon Drilling Company, Inc., which is now a wholly-owned subsidiary of R&B
Falcon Corporation, 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.
11
<PAGE> 15
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information for fiscal 1997, 1996 and
1995 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
$100,000.
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
Annual Compensation Other ------------
Name and ------------------- Annual Stock All Other
Principal Position Year Salary Bonus Compensation Options(#) Compensation($)
------------------ ---- ------ ----- ------------ ---------- ---------------
<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) $ 5,200(4)
Executive Officer and
President
Larry D. Armstrong(5) 1995 $ 15,185 -- $1,600(1) -- $186,604(5)
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) $ 43,333(6)
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(7) $ 10,495(8)
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 on June 26,
1995, and was made Chairman of the Board, President and Chief Executive
Officer in April 1996. At the time of his election as President, Mr.
Armstrong and the Company agreed to enter into a four year employment
agreement to be effective September 1, 1995. Such agreement provided for
an annual salary of $100,000 and the issuance of 459,333 shares of
Common Stock, which had 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
$0.94. Mr. Armstrong resigned as Chairman of the Board, President and
Chief Executive Officer of the Company in April 1997.
(6) Represents $10,000 in relocation pay and $33,333 in severance pay.
(7) Includes 5,500 options issued pursuant to the Company's 1994 Directors'
Stock Option Plan.
(8) Includes the Company's contribution to Mr. Wall's 401(k) Plan account in
the amount of $2,162 and $8,333 in relocation pay.
12
<PAGE> 16
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information concerning grants of stock options
by the Company to the named executive officers in fiscal 1997. The Company has
not granted any stock appreciation rights.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
- - ---------------------------------------------------------------------------------------------- VALUE AT ASSUMED
PERCENTAGE OF ANNUAL RATES OF STOCK
TOTAL OPTIONS PRICE APPRECIATION FOR
GRANTED TO THE OPTION TERM
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION --------------------------
NAME GRANTED (#) FISCAL YEAR ($/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(3) 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.
(3) Mr. Armstrong resigned from his positions with the Company in April
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>
SHARES NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED OPTIONS/SARS IN-THE-MONEY
ON EXERCISE VALUE AT FISCAL YEAR-END (#) AT FISCAL YEAR-END(1)
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(2) -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
SmallCap Market).
(2) Mr. Armstrong resigned from his positions with the Company in April
1997.
13
<PAGE> 17
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, 1997, its officers, directors and
holders of more than ten percent of the 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 $140,000 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. Mr. Armstrong resigned from
his positions with the Company in April 1997.
COMPENSATION COMMITTEE
Rittie W. Milliman, Sr.
John Roane
14
<PAGE> 18
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 Oil and Gas Field Service
companies. 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]
<TABLE>
<CAPTION>
Total Returns Index For: 08/31/92 8/31/93 08/31/94 08/31/95 08/31/96 08/31/97 12/31/97
- - ------------------------ -------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Ponder Industries, Inc. 100.00 70.69 67.24 18.97 62.07 30.17 49.14
Peer Group 100.00 116.23 100.16 108.93 157.12 327.33 286.75
Nasdaq Stock Market (US 100.00 131.92 137.32 184.93 208.54 290.95 289.03
Companies)
</TABLE>
Notes:
A. No trading activity was recorded for the Company from 01/23/93
to 01/26/93.
B. The peer group is made up of securities of the following
companies: 3-D Geophysical Inc., American Oilfield Divers,
Ameristar Internat, Cal Dive Internat Inc., Cheniere Energy
Inc., Computalog Ltd., Dailey Internat Inc., Dawson
Geophysical Co., Dawson Production SVCS, Eagle Geophysical
Inc., Energy Search Inc., ERC Industries Inc., Fountain Oil
Inc., FX Energy Inc., Global Industries Ltd., ICO Inc., Lufkin
Industries Inc., Marine Drilling Cos Inc., National Energy
Group, Norton Drilling Srvc Inc., Patterson Energy Inc.,
Ponder Industries, Inc., Pool Energy Services Co., Royale
Energy Inc., Sheridan Energy Inc., Southern Mineral Corp.,
Superior Energy Svcs Inc., Tesco Corp., TMBR/Sharp Drilling
Inc., Trico Marine Services, Universal Seismic Assocs.,
Venture Seismic Ltd., Venus Exploration Inc., and Zydeco
Energy Inc.
15
<PAGE> 19
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 the
named executive officers.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Ziegler and Mr. Webster are general partners of White Owl Capital
Partners, a general partnership ("White Owl") and Somerset Capital Partners
("SCP"). White Owl is the managing member of White Owl Investors L.L.C. ("WOI").
The Company entered into a Securities Purchase Agreement (the "Securities
Purchase Agreement") with White Owl and certain other individuals on October 15,
1997, pursuant to which the Company, for the aggregate consideration of
$2,500,000, made convertible promissory notes in the amount of $2,500,000, which
were convertible in the aggregate into 4,000,000 shares of Common Stock, (the
"Convertible Notes"), and granted warrants to purchase an additional 4,000,000
shares of Common Stock. Pursuant to the terms of the agreement, White Owl
received a convertible promissory note from the Company in the amount of
$1,900,000 (the "White Owl Note"), which was convertible into 3,040,000 shares
of Common Stock, and a warrant for the purchase of 3,040,000 shares of Common
Stock. On January 12, 1998, the Company entered into a Securities Purchase and
Exchange Agreement (the "Exchange Agreement") with WOI, SCP and certain other
individuals, pursuant to which the Company sold 11,000,000 shares of Common
Stock to WOI and SCP for an aggregate purchase price of $11,000,000, and the
Convertible Notes, including the White Owl Note, were converted into an
aggregate of 4,000,000 shares of Common Stock. Pursuant to the terms of the
Securities Purchase Agreement and the Exchange Agreement, the Company agreed to
elect three nominees selected by White Owl as directors of the Company, and to
nominate such nominees for reelection at the Annual Meeting. White Owl partially
exercised this right by nominating Mr. Ziegler and Mr. Webster as directors and
the Company elected them as directors of the Company effective January 12, 1998.
White Owl has not exercised its rights as to nominating a third director.
In September 1995, the Company acquired Armstrong Tool, Inc. from Larry
D. Armstrong and his spouse. Mr. Armstrong 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. The Company entered
into an agreement with Mr. Armstrong in May 1997 which adjusted the payment
schedule of the promissory note. In August 1997, Mr. Armstrong agreed to cancel
the balance of the promissory note, approximately $219,000, in exchange for
approximately 280,000 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.
16
<PAGE> 20
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: April 9, 1998
17
<PAGE> 21
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.
SIXTH. No director of the Corporation shall be liable to the
Corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a director; provided that this Article SIXTH shall not
eliminate or limit the liability of a director of the Corporation; (i) for any
breach of the director's duty of loyalty to the Corporation 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
Corporation Law of the State of Delaware, or (iv) for any transaction from which
the director derived an improper personal benefit.
If the General Corporation Law of the State of Delaware hereafter is
amended to authorize the further elimination or limitation of the liability of
directors of the Corporation, then the liability of a director of the
Corporation shall be limited to the fullest extent permitted by the General
Corporation 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 Corporation provided by the provisions of this
Article SIXTH.
Any repeal or modification of this Article SIXTH shall be prospective
only and shall not adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification.
18
<PAGE> 22
PONDER INDUSTRIES, INC.
PROXY -- ANNUAL MEETING OF STOCKHOLDERS -- May 12,1998
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
P Annual Meeting of Stockholders of the Company to be held on Tuesday, May 12,
R 1998, at 10:00 a.m., Central Standard Time, at the Holiday Inn Crowne Plaza
O Hotel, 2222 West Loop South, Houston, Texas, and at any adjournment thereof,
X the number of votes which the undersigned would be entitled to cast if
Y 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 to 150,000,000
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 23
(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
April 9, 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.
--------------------------
