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
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
Rule 14a-11(c) or Rule 14a-12
Panaco, Inc.
(Name of Registrant as Specified in Its Articles of Incorporation)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(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 identity the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
- --------------------------------------------------------------------------------
(3) Filing Party:
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
PANACO INC.
1050 West Blue Ridge Boulevard
PANACO Building
Kansas City, Missouri 64145-1216
H. James Maxwell
President and Chief Executive Officer
Annual Meeting - October 7, 1997
August 26, 1997
Dear Fellow Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
of PANACO, Inc. to be held at 10:00 a.m., October 7, 1997, at Whitfield
Conference Center, Avila College, 11901 Wornall Road, Kansas City, Missouri.
Your Board of Directors and management look forward to greeting personally those
shareholders able to attend.
At this meeting, as set forth in the accompanying Notice of Annual
Meeting and Proxy Statement, shareholders are being asked to elect three
directors to serve for a three year term and to ratify the selection of Arthur
Andersen LLP as independent accountants for the year 1997.
It is very important that your shares are represented and voted at the
meeting, so we request your cooperation in promptly signing, dating and mailing
the enclosed WHITE proxy card in the envelope provided for your convenience.
-CAUTION-
Carl C. Icahn, a New York City based corporate raider, has announced
his intention to commence a proxy contest in opposition to your Board of
Directors. Mr. Icahn will seek to replace three of your directors with his
hand-picked nominees who are committed to pursuing the sale or merger of PANACO
with another company which we believe is indirectly controlled by Mr. Icahn.
Your Board of Directors is unanimously opposed to such a transaction as not in
the best interests of PANACO and all its shareholders.
<PAGE>
You are assured that we will continue to act vigorously in the best
interests of PANACO and all its shareholders. We caution you not to sign any
proxy card which this opposition group may have sent or will send to you.
We are committed to keeping you informed of further developments in
this matter. Your continued interest and support are greatly appreciated.
On behalf of your Board of Directors.
Sincerely,
/s/ H. James Maxwell
-----------------------------------
H. James Maxwell
================================================================================
PLEASE SIGN, DATE AND MAIL PROMPTLY
THE ENCLOSED WHITE PROXY CARD
================================================================================
<PAGE>
PANACO INC.
1050 West Blue Ridge Boulevard
PANACO Building
Kansas City, Missouri 64145-1216
NOTICE OF 1997 ANNUAL MEETING AND
PROXY STATEMENT
NOTICE OF ANNUAL MEETING
To The Shareholders:
The annual meeting of shareholders of PANACO, Inc. (the "Company") will
be held at Whitfield Conference Center, Avila College, 11901 Wornall Road,
Kansas City, Missouri on October 7, 1997 at 10:00 a.m. for the following
purposes:
1. To elect three directors for a three-year term ending in 2000;
2. To ratify the appointment of Arthur Andersen LLP as independent
accountants to audit the financial statements of the Company for the year 1997;
and
3. To act upon such other matters as may properly come before the
meeting.
Only shareholders of record at the close of business on August 19,1997
will be entitled to notice of and to vote at the meeting and any adjournment
thereof. Please note that attendance at the annual meeting will be limited to
shareholders (or their authorized representatives) as of August 19,1997, the
record date, and to guests of the Company.
YOUR VOTE IS IMPORTANT
The vote of each shareholder is important, regardless of the number of
shares held. Whether or not you plan to attend the meeting, please sign, date
and mail the accompanying proxy card promptly in the enclosed postage-paid
envelope. PLEASE NOTE THAT YOUR VOTE CANNOT BE COUNTED UNLESS YOU SIGN AND
RETURN THE PROXY CARD OR ATTEND THE MEETING AND VOTE IN PERSON. ACCORDINGLY, YOU
ARE URGED TO RETURN YOUR WHITE PROXY CARD AT YOUR EARLIEST CONVENIENCE.
Thank you for your cooperation and support.
/s/ Todd R. Bart
----------------------------
Todd R. Bart
Secretary
August 26, 1997
<PAGE>
PANACO, Inc.
1050 West Blue Ridge Boulevard
PANACO Building
Kansas City, Missouri 64145-1216
PROXY STATEMENT
This Proxy Statement and the accompanying form of proxy are being
mailed to shareholders on or about August 26, 1997 in connection with the
solicitation of proxies by the Board of Directors of PANACO, Inc. (the
"Company") for use at the annual meeting to be held October 7, 1997.
At the Annual Meeting, shareholders will be asked to: (i) elect three
directors for a three-year term ending in 2000; (ii) consider and ratify the
appointment of Arthur Andersen LLP as independent accountants to audit the
financial statements of the Company for the year 1997; and (iii) act upon such
other matters as may properly come before the meeting. A shareholder of the
Company has notified the Board of Directors that he intends to nominate an
insurgent slate for election to the Board of Directors of the Company at the
Annual Meeting. The Board of Directors unanimously urges shareholders to vote
for the Board's nominees for Directors. See "Other Matters to Come Before the
Meeting--The Company's Response".
Shares can be voted at the meeting only if the shareholder is
represented by proxy or is present in person. A shareholder giving a proxy in
the accompanying form retains the power to revoke it by a later dated
appointment or by giving notice of revocation to the Company in writing or in
open meeting. Any such notices should be directed to Todd R. Bart, Secretary of
the Company, at the address set forth above. Shares represented by properly
executed proxies will be voted in accordance with the instructions contained
therein. In the absence of contrary instructions, such shares will be voted (1)
to elect the director nominees named herein and (2) to ratify the appointment of
Arthur Andersen LLP as independent accountants of the Company for the year 1997.
The holders of a majority of the Common Shares (as defined below)
entitled to vote must be present in person or by proxy at the annual meeting to
constitute a quorum for the purposes of transacting business at the meeting.
Directors are elected by a plurality of the votes present or represented by
proxy at the meeting and entitled to vote on the election of directors.
Broker non-votes and abstentions will not be counted for purposes of
determining whether any proposal has been approved and will be included in
computing the number of shares present for purposes of determining the presence
of a quorum for the shareholder meeting. Because directors are elected by a
plurality of votes, abstentions and broker non-votes will not have an impact on
the election of directors.
Ratification of the appointment of Arthur Andersen LLP requires the
affirmative vote of a majority of the outstanding Common Shares present in
person or by proxy at the meeting and broker non-votes and abstentions will have
the effect of a vote against ratification.
YOUR VOTE IS IMPORTANT. Please sign, date and promptly mail your proxy
card so that a quorum may be represented at the meeting.
On the record date, August 19, 1997, the outstanding voting securities
of the Company consisted of 23,711,017 Common Shares ("Common Shares"), all of
one class. Each Common Share has one vote on each matter presented for action at
the meeting.
<PAGE>
BOARD OF DIRECTORS
General Information
The Board of Directors has the responsibility for establishing broad
corporate policies and for the overall performance and governance of the
Company, although it is not involved in day-to-day operating details. Directors
are kept informed of the Company's business by various reports and documents, as
well as by operating and financial reports presented at Board and committee
meetings by the Chairman and other officers.
Meetings of the Board of Directors are regularly held each quarter and
following the annual meeting of the shareholders. Additional meetings, including
meetings by telephone conference call, of the Board may be called whenever
needed. The Board of Directors of the Company held seven meetings in 1996, four
of which were meetings by telephone conference call. Each director attended all
in person meetings of the Board, except Donald W. Chesser who failed to attend
two meetings. With respect to the telephone conference calls, Donald W. Chesser
was not connected two times and James B. Kreamer was not connected on one
conference call.
Committees of the Board
The committees established by the Board of Directors to assist it in
the discharge of its responsibilities are described below. The biographical
information on each director, including those nominated for election, in this
Proxy Statement, identifies the committee memberships currently held by each
nominee and each incumbent director.
The Executive Committee has three members, all of whom are also
officers of the Company. The Committee meets on call whenever needed and has
prescribed authority to act on most matters during the intervals between Board
meetings. The Committee met at least weekly in 1996. The Executive Committee
also serves as the Personnel Committee.
The Audit Committee has three members, none of whom is an employee of
the Company. The Committee meets with management to consider the adequacy of the
internal controls of the Company and the objectivity of its financial reporting;
the Committee also meets with the independent accountants concerning these
matters. The Committee recommends to the Board the appointment of the
independent accountants, subject to ratification by the shareholders at the
annual meeting. The independent accountants periodically meet alone with the
Committee and have unrestricted access to the Committee. The Committee met once
in 1996.
The Compensation Committee has three members, none of whom is an
employee of the Company. It makes recommendations to the Board with respect to
the compensation of management of the Company and the PANACO, Inc. Long Term
Incentive Plan (the "Long Term Incentive Plan"). The Committee met two times in
1996.
Compensation of Directors
In order to align the interests of the Company's shareholders and its
directors, directors do not receive cash compensation. Non-employee directors
are compensated for their services with shares of the Company's common stock,
receiving $1,000 in Common Shares for attending Board of Directors meetings,
$500 in Common Shares for attending committee meetings and $200 in Common Shares
for participating in telephone meetings. Officers of the Company who serve as
directors do not receive additional compensation for serving on the Board of
Directors or a committee thereof. Directors are reimbursed for travel expenses
incurred in attending Board of Directors or committee meetings.
- 2 -
<PAGE>
Each newly elected non-employee director of the Company will, on the
day after the first meeting of the Board of Directors at which that director is
in attendance, automatically be granted a restricted stock award of the number
of shares of Company Common Stock that have a value of $10,000, which will be
calculated based on the average trading price of the Common Stock during the 60
days immediately preceding the date of grant. These restricted stock awards will
vest over two years, with one-third vesting six months following the date of
grant, another one-third vesting on the first anniversary of the date of grant,
and the last one-third vesting on the second anniversary of the date of grant so
long as the non-employee director remains a director of the Company through
those vesting dates. Each non-employee director will be entitled to vote each
share subject to these restricted stock awards from the date of grant until the
shares are forfeited, if ever.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to beneficial
ownership of the Company's Common Stock by (a) each officer and director of the
Company, (b) all officers and directors of the Company as a group, and (c) for
each person who beneficially owns 5% or more of the Common Stock as of August
19, 1997. Except as set forth in footnote 3 below, each shareholder has sole
voting and sole investment power over all shares.
<TABLE>
<CAPTION>
Name and Positions of Beneficial Owners Shares Owned Beneficially (1)
Number Percent
------ -------
<S> <C> <C>
H. James Maxwell: Chief Executive Officer,
President, Chairman of the Board & Director................. 897,586 3.79
Larry M. Wright; Executive Vice President &
Director.................................................... 1,059,614 4.47
Bob F. Mallory; Chief Operating Officer,
Executive Vice President & Director......................... 285,496 1.20
Leonard C. Tallerine Jr.; Vice President; Director............. 1,548,784 6.53
Mark C. Licata; Vice President-General Counsel; Director....... 1,606,146 6.77
Robert G. Wonish; Vice President............................... 66,410 .28
Edward E. Bush, Jr.; Vice President............................ 20,000 .08
William J. Doyle; Vice President............................... 16,288 .07
Todd R. Bart; Chief Financial Officer, Secretary, Treasurer.... 33,997 .14
A. Theodore Stautberg, Jr.; Director........................... 6,881 .03
Donald W. Chesser; Director.................................... 1,669 .01
James B. Kreamer; Director..................................... 51,685 .22
N. Lynne Sieverling; Director.................................. 13,881 .06
Michael Springs; Director...................................... 3,726 .02
Mark C. Barrett; Director...................................... 3,258 .01
All directors and officers as a group (15 persons)............. 5,615,421 23.68
Carl C. Icahn.................................................. 3,030,000(2) 12.78
% Icahn Associates Corp.
767 Fifth Avenue, 47th Floor
New York, NY 10153
Richard A. Kayne............................................... 2,200,793(3) 9.28
% Kayne Anderson Investment Management, Inc.
1800 Avenue of the Stars, #200
Los Angeles, CA 90067
Croft-Loewminster, Inc......................................... 1,193,300 5.03
- 3-
<PAGE>
<FN>
- ------------------------
(1) Includes 1,150,000 currently exercisable options to purchase shares, at
$4.45 per share, held by the following: Mr. Maxwell-600,000; Mr.
Wright-400,000; Mr. Mallory-50,000; Mr. Wonish-40,000; Mr. Bush-20,000; Mr.
Doyle-10,000 and Mr. Bart-30,000. These options are exercisable any time
before June 19, 2000. However, the holder may not dispose of the shares
acquired upon exercise for a period of three years and must remain an
employee of Panaco during that three year period. Otherwise, the shares may
be reacquired by Panaco at the person's cost, thereby denying them the
benefit of the option. In addition, warrants for 160,000 shares,
exercisable at $2.38 any time prior to December 31, 1997, are held by Mr.
Wright.
(2) Mr. Icahn is the sole stockholder of Riverdale Investors Corp. Inc., the
general partner of High River Limited Partnership, the record holder of
these shares.
(3) The reported shares are owned by seven investment accounts (including four
investment limited partnerships, two insurance companies and an offshore
corporation), managed, with discretion to purchase or sell securities, by
KAIM Non-Traditional, L.P., a registered investment adviser. The four
investment limited partnerships beneficially own 1,849,279 shares,
including 1,466,667 shares that are issuable upon the conversion of 1996
Tranche A Subordinated Notes. KAIM Non-Traditional, L.P. is the sole or
managing general partner of three of the limited partnerships and a
co-general partner of the fourth. Richard A. Kayne is the controlling
shareholder of the corporate owner of Kayne, Anderson Investment
Management, Inc., the sole general partner of KAIM Non-Traditional, L.P.
Mr. Kayne is also the managing general partner of one of the limited
partnerships and a limited partner of each of the limited partnerships.
KAIM Non-Traditional, L.P. is an investment manager of the offshore
corporation. Mr. Kayne is a director of one of the insurance companies. All
shares have shared voting and investment power.
KAIM Non-Traditional, L.P. disclaims beneficial ownership of the shares
reported, except for those shares attributable to it by virtue of its
general partner interests in the limited partnerships. Mr. Kayne disclaims
beneficial ownership of the shares reported, except those shares held by
him or attributable to him by virtue of his limited and general partner
interests in the limited partnerships and by virtue of his indirect
interest in the interest of KAIM Non-Traditional, L.P. in the limited
partnerships.
</FN>
</TABLE>
ELECTION OF DIRECTORS
(Item 1 on Proxy Card)
The Board of Directors of the Company presently consists of eleven
members, six of whom are independent, non-employees of the Company. The
Company's Certificate of Incorporation requires that the directors be divided
into three classes. At each annual meeting of shareholders, directors
constituting a class are elected to hold office until the third annual meeting
of shareholders following their election. The term of the Class II Directors
expires in 1997. The Board of Directors has nominated Larry M. Wright, N. Lynne
Sieverling and Mark C. Barrett for re-election as directors in Class II to serve
until the 2000 annual meeting of shareholders. The four directors in Class III
continue to serve until the 1998 annual meeting of shareholders and the four
directors in Class I continue to serve until the 1999 annual meeting of
shareholders. The directors of each class will serve until their respective
successors are elected and qualified. A shareholder of the Company has notified
the Board of Directors that it intends to nominate an insurgent slate for
election to the Board of Directors at the Annual Meeting. See "Other Matters to
Come Before the Meeting-Insurgent Slate".
- 4 -
<PAGE>
It is intended that shares represented by the accompanying form of
proxy will be voted for the election of the nominees, unless contrary
instructions are indicated as provided on the proxy card. (If you do not wish
your shares to be voted for a particular nominee, you may so indicate on the
proxy card.) The Common Shares vote as a single class for the election of
directors. If one or more of the nominees should at the time of the meeting be
unavailable or unable to serve as a candidate, the shares represented by the
proxies will be voted to elect the remaining nominees and any substitute nominee
or nominees designated by the Board of Directors. The Board of Directors knows
of no reason why any of the nominees will be unavailable or unable to serve.
For each director of the Company, including those nominated for
election, following is a brief description of each nominee or director's
principal occupation and business experience during the last five years,
directorships of publicly held companies presently held by any nominee or
director, age, and certain other information. When indicating the tenure with
the Company of each director, the "Company" means the present corporation
(post-August 1992) and Pan Petroleum MLP ("PAN") (pre-September 1992).
Election of Class II Directors for a Three-Year Term
Larry M. Wright, age 53, received his B.S. Degree in Engineering from
the University of Oklahoma in 1966. From 1966 to 1976 he was employed by Union
Oil Company of California. From 1976 to 1980 he was with Texas International
Petroleum Corporation, ultimately as division operations manager. From 1980 to
1981 he served as Vice President-Exploration and Production of what is now
Transamerica Natural Gas Company. From 1981 to 1982 he was Senior Vice President
of Operations for Texas International, and from 1983 to 1985 he was Executive
Vice President of Funk Fuels Corp., a subsidiary of Funk Exploration. From 1985
to 1993 Mr. Wright was an independent consultant. From 1993 to date he has
served as Executive Vice President of the Company and as a Director. He is a
member of the Executive Committee.
N. Lynne Sieverling, age 59, received his B.S. Degree in Accounting
from the University of Kansas in 1959 and has practiced as a Certified Public
Accountant since graduation, serving 17 years as a partner with the accounting
firm of Coopers & Lybrand. Mr. Sieverling has been actively involved in the oil
and gas industry since 1984 both as an investor and as an operator of oil and
gas leases in Kansas, Oklahoma and North Dakota. He has been a Director with the
Company since 1992 and serves on the Audit and Compensation Committees.
Mark C. Barrett, age 47, received his B.S. degree in Business
Administration/Accounting in 1972 and is licensed to practice as a Certified
Public Accountant in both Kansas and Missouri. He was a partner in the firm
Drees Dunn Lubow and Company from 1974 until 1981. He founded Barrett &
Associates in 1981 and is the president and majority shareholder in that
professional association. His CPA firm served as the Company's independent
public accountants from 1985 to 1995. He has been a Director of the Company
since 1996 and serves on the Audit and Compensation Committees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE CLASS
II NOMINEES.
Class I Directors
James B. Kreamer, age 57, received his B.S. Degree in Business from the
University of Kansas in 1963 and has been active in investment banking since
that time. Since 1982 he has managed his personal investments. He has been a
Director of the Company since 1993.
- 5 -
<PAGE>
A. Theodore Stautberg, Jr., age 50, is a graduate of the University of
Texas and the University of Texas School of Law. Mr. Stautberg has been the
President and a director of Triumph Resources Corporation and its parent
company, Triumph Oil and Gas Corporation of New York since 1981. Triumph engages
in the oil and gas business, assists others in financing energy transactions,
and serves as general partner of Triumph Production L.P. Mr. Stautberg is also
the president of Triumph Securities Corporation and BT Energy Corporation. Prior
to forming Triumph in 1981, Mr. Stautberg was a Vice President of Butcher &
Singer, Inc., an investment banking firm, from 1977 to 1981. From 1971 to 1977,
Mr. Stautberg was an attorney with the Securities and Exchange Commission. He
has been a Director of the Company since 1993 and serves on the Compensation
Committee.
Michael Springs, age 47, graduated from the Medical Field Service
School, Brooke Hospital, San Antonio, Texas in 1971 and the University of
Missouri, Kansas City, in 1969 with a degree in Business. He is the President
and founder of Ortho-Care Inc. of Kansas City, Missouri and Ortho-Care Southeast
of Charlotte, North Carolina. Ortho-Care Inc. is a manufacturer of orthopedic
fracture management and sports medicine products, and hold a number of patents
in the field. Mr. Springs is also controlling partner in Ortho-Implants, a
distributor of total joint replacement prostheses. He has been a Director since
1996, and serves on the Audit Committee.
Leonard C. Tallerine, Jr., age 46, graduated from Rice University's
Advanced Management Institute and holds undergraduate and graduate degrees in
accounting from the University of Houston. Mr. Tallerine practiced as a CPA with
Price Waterhouse and KPMG from 1972 through 1980, specializing in oil and gas
tax issues. From 1981 through 1986, he served as co-managing and general partner
of Paso Grande Investment, Ltd., an oil and gas real estate holding company and
served as Chairman of the Texas Guarantee National Bank from 1983 to 1986. In
1987, he founded the Union Companies and in 1991 became Chairman and C.E.O. of
Goldking Companies, Inc. ("Goldking"). In July, 1997 Mr. Tallerine was appointed
a Vice President and a Director, pursuant to contractual arrangements with the
Company following the Company's acquisition of Goldking. See "Recent Event--
Acquisition of Goldking".
Class III Directors
H. James Maxwell, age 52, received a B.A. degree in Economics from the
University of Missouri-Kansas City and received his Law Degree from that same
university in 1972. Mr. Maxwell practiced securities law from 1972 to 1984, and
was a frequent author and speaker on oil and gas tax and securities law. He
served as a General Partner of Castle Royalty Limited Partnership from 1984 to
1988, Managing General Partner of PAN from 1987 to 1992, both of which were
predecessors of the Company, and President, CEO and Chairman of the Company
since 1992. He is a member of the Executive Committee.
Bob F. Mallory, age 65, received his PhD in Geology from the University
of Missouri in 1968 and a B.A. in Geology from the University of Wichita in
1961. He began consulting in the oil industry in 1980. He served as a General
Partner of Castle Royalty Limited Partnership from 1984 to 1988, as a General
Partner of PAN from 1987 to 1992, both of which were predecessors of the
Company, and Executive Vice President and Chief Operating Officer of the Company
since 1992. He has been a Director since 1992 and serves as a member of the
Executive Committee.
Donald W. Chesser, age 57, received his BBA in Accounting from Texas
Tech University in 1963 and has served with several CPA firms since that time,
including eight years with Elmer Fox and Company. From 1977 to 1981 he was with
IMCO Enterprises, Inc. Since 1982, he has been a shareholder and president of
Chesser Company, P.A., a CPA firm. He is also President of Financial Advisors,
Inc., a registered investment advisor. Mr. Chesser has been a Director since
1992.
- 6 -
<PAGE>
Mark C. Licata, age 45, received a Bachelor of Business Administration
and Accounting (1972) and a law degree (1976) from the University of Texas. He
was employed in the private practice of law from 1976 through 1985 and then
served as President and Chief Operating Officer of Vista Host, Inc. and later as
President and Chief Operating Officer of the publicly held McFaddin Ventures,
Inc. In 1988, Mr. Licata returned to the practice of law in Houston with Looper,
Reed, Mark & McGraw, where he remained until he joined Goldking as President in
1996. In July, 1997 Mr. Licata was appointed Vice President-General Counsel and
a Director, pursuant to contractual arrangements with the Company following the
Company's acquisition of Goldking. See "Recent Event-Acquisition of Goldking".
- 7 -
<PAGE>
Certain Relationships and Related Transactions
A. Theodore Stautberg, Jr., is an officer, director and beneficial
shareholder of Triumph Securities Corporation ("Triumph Securities"), which
provided certain services in connection with the 1997 Common Stock offering. In
connection with the services so provided, Triumph Securities received $268,906,
representing .8% of the 6.8% underwriters discount.
Mark C. Barrett's CPA firm, Barrett and Associates, served as the
Company's independent accountants for the years 1985 through 1996. During 1996
his CPA firm was paid $53,400 for auditing services related to the audit of the
fiscal year 1995. Mr. Barrett's firm has provided advice on tax matters in 1997.
Messrs. Maxwell and Mallory are the partners of 1050 Blue Ridge
Building Partnership, which owns a 5,200 square foot office building at 1050
West Blue Ridge Boulevard, Kansas City, Missouri, which it leases to the Company
on a triple net basis for $4,000 per month for a term of ten years, expiring in
2003. The lease was approved by the Board of Directors, which determined that
the rate was as good or better than that which could be obtained from a
non-affiliated party
Michael Springs and Mark C. Barrett, were each issued restricted stock
awards of 2,447 Common Shares upon their election to the Board of Directors in
1996.
In connection with the Company's acquisition of Goldking, Mark C.
Licata and Leonard C. Tallerine, Jr. were paid a total of $27,539,439 in
consideration, consisting of $7,500,000 in cash, $6,000,000 in promissory notes
and $14,039,439 in the form of 3,154,930 shares of the Company's Common Stock,
valued for purposes of the transaction at $4.45 per share. Messrs. Licata and
Tallerine were the sole beneficial owners of Goldking. See "Recent Event
Acquisition of Goldking".
On October 8, 1996 the Company borrowed $17,000,000 from lenders
advised by Kayne, Anderson Investment Management, Inc. ("Kayne Anderson"), a
beneficial owner of greater than 5% of the Common Shares. The Company paid
certain expenses, including legal fees, of those lenders in 1996 and 1997.
During the first quarter of 1996, lenders advised by Kayne Anderson exercised
warrants issued to them in connection with the Subordinated Notes issued to them
in 1993, receiving 816,526 Common Shares.
H. James Maxwell and Bob F. Mallory are personal guarantors of the
Company's obligation to plug the wells and remove the platforms on the West
Delta Properties acquired from Conoco, Arco (now Vastar), Texaco and Oxy in
1991.
- 8 -
<PAGE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
(Item 2 on Proxy Card)
Subject to shareholder ratification, the Board of Directors, upon
recommendation of the Audit Committee, has appointed the firm of Arthur Andersen
LLP as independent accountants to audit the financial statements of the Company
for the year 1997. If the shareholders do not ratify this appointment, other
independent accountants will be appointed by the Board upon recommendation of
the Audit Committee. One or more members of the firm of Arthur Andersen LLP will
attend the annual meeting, will have an opportunity to make a statement and will
be available to answer questions as appropriate.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR SUCH RATIFICATION.
Change in Independent Accountant
In large part because of the Company's rapid growth, in 1996, the
Company made the decision to change to a national accounting firm. On September
3, 1996, Barrett & Associates resigned as independent accountants for the
Company. The independent accountants' reports on the financial statements of the
Company for the two fiscal years and ended December 31, 1994 and December 31,
1995 did not contain an adverse opinion or a disclaimer of opinion and the
reports were not qualified or modified as to uncertainty, audit scope or
accounting principles.
During the Company's fiscal years ending December 31, 1994 and December
31, 1995, and subsequent interim period ending September 3, 1996, there were no
disagreements with Barrett & Associates on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure
which, if not resolved to the satisfaction of Barrett & Associates, would have
caused Barrett & Associates to make a reference to the subject matter of the
disagreements in connection with their report. During the Company's fiscal years
ending December 31, 1994 and 1995, and the subsequent interim period ending
September 3, 1996, there did not occur any event listed in paragraphs
(a)(1)(v)(A) through (D) of Regulation S-K, Item 304.
Effective September 5, 1996, the Company engaged Arthur Andersen LLP as
independent auditors to audit the Company's financial statements for the fiscal
year ending December 31, 1996. During the Company's fiscal years ending December
31, 1994 and December 31, 1995, and the subsequent interim period ending on
September 5, 1996, neither the Company nor any person acting on behalf of the
Company consulted Arthur Andersen LLP regarding (i) either the application of
accounting principles to a specified transaction, either completed or proposed,
or the type of opinion that might be rendered on the Company's financial
statements or (ii) any matter that was either the subject of a disagreement (as
defined in paragraphs (a)(1)(iv) of Regulation S-K, Item 304 and the related
instructions) or a reportable event (as described in paragraph (a)(1)(v) of
Regulation S-K, Item 304).
- 9 -
<PAGE>
EXECUTIVE COMPENSATION
I. Summary Compensation Table
The following table sets forth the annual compensation paid to the
Company's Chief Executive Officer and each executive officer whose compensation
exceeded $100,000 during 1996.
<TABLE>
<CAPTION>
Long-Term Incentive Plan
--------------------------------------------
Annual Compensation Awards Payouts
---------------------------------- ------------------------ ------------------
Securities
Other Restricted Underlying LTIP All
Salary Bonus Annual Stock Options Payouts Other(1)
Position Year $ $ Comp.($) Award(s)($) # $ Comp.($)
- --------------------- ---- ------- ----- -------- ----------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
H. James Maxwell 1996 166,900 0 0 0 0 0 22,500
President and Chief 1995 153,500 0 0 0 24,615 0 22,500
Executive Officer 1994 120,000 0 0 0 22,857 0 18,000
Larry M. Wright 1996 160,300 0 0 0 0 0 22,500
Executive Vice 1995 147,300 0 0 0 0 0 22,100
President 1994 134,000 0 0 0 0 0 20,000
Robert G. Wonish 1996 100,200 0 0 0 0 0 15,000
Vice President 1995 92,100 0 0 0 0 0 13,800
1994 78,800 0 0 0 0 0 11,800
(1) The "other compensation" represents contributions to the accounts of
the employees under the Company's Employee Stock Ownership Plan.
</TABLE>
II. Grants of Stock Options and Warrants
No options or warrants were granted during 1996.
- 10 -
<PAGE>
III. Aggregate Option and Warrant Exercises
The following table provides information relating to the number and
value of Common Shares subject to options exercised during 1996 or held by the
named executive officers as of December 31, 1996.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
Number of
securities underlying Value of unexercised
Securities unexercised options in-the-money
acquired Value at fiscal year-end ($) options at year-end($)(2)
Name on Exercise (#) Realized ($)(1) Exercisable/Unexercisable Exercisable/Unexercisable
- ------------------------ --------------- --------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
H. James Maxwell 0 0 -0- / -0- -0- / -0-
Larry M. Wright 0 0 250,000 / -0- 658,750 / -0-
Robert G. Wonish 0 0 -0 -/ -0- -0- / -0-
<FN>
(1) Value realized is calculated based upon the difference between the options
exercise price and the market price of the Common Shares on the date of
exercise multiplied by the number of shares to which the exercise price
relates.
(2) Value of unexercised in-the-money options is calculated based on the
difference between the option exercise price and the closing price of the
Common Shares at year-end, multiplied by the number of shares underlying
the options. The closing price on December 31, 1996 of the Common Shares
was $4.875.
</FN>
</TABLE>
IV. Long-Term Incentive Plan Awards Table
No awards were outstanding under the Long-Term Incentive Plan at
December 31, 1996.
V. Compensation Committee Report on Executive Compensation for the Year 1996
Objectives and Approach
The overall goals of the Company's executive compensation program are:
(i) to encourage and provide an incentive to its executive officers to achieve
the Company's strategic business and financial goals, both short-term and
long-term, and thereby enhance shareholder value, (ii) to attract and retain
well-qualified executive officers and (iii) to reward individuals for
outstanding job performance in a fair and equitable manner when measured not
only with respect to the Company's internal performance goals but also the
Company's performance in comparison to its peers. The components of the
Company's executive compensation are salary, incentive bonuses and awards under
its Long Term Incentive Plan and Employee Stock Ownership Plan, each of which
assists in achieving the program's goals.
- 11 -
<PAGE>
Long Term Incentive Plan
The Company's Long-Term Incentive Plan provides for the granting, to
certain officers and key employees of the Company and its participating
subsidiaries, of incentive awards in the form of stock options, stock
appreciation rights ("SARS"), stock, and cash awards. The Long-Term Incentive
Plan is administered by a committee of independent members of the Board of
Directors (the "Plan Committee") with respect to awards to certain executive
officers of the Company but may be administered by the Board of Directors with
respect to any other awards. Except for certain automatic awards, the Plan
Committee has discretion to select the employees to be granted awards, to
determine the type, size, and terms of the awards, to determine when awards will
be granted, and to prescribe the form of the instruments evidencing awards.
Options, which include nonqualified stock options and incentive stock
options, are rights to purchase a specified number of Common Shares at a price
fixed at the time the option is granted. Payment may be made with cash or other
Common Shares owned by the optionee or a combination of both. Options are
exercisable at the time and on the terms that the Plan Committee determines. The
payment of the option price can be made either in cash or by the person
exercising the option turning in to the Company, Common Shares presently owned
by him, which would be valued at the then current market price. SARs are rights
to receive a payment, in cash or Common Shares or both, based on the value of
the Common Shares. A stock award is an award of Common Shares or denominated in
Common Shares. Cash awards are generally based on the extent to which
pre-established performance goals are achieved over a pre-established period but
may also include individual bonuses paid for previous, exemplary performance.
The Plan Committee determines performance objectives and award levels before the
beginning of each plan year.
The Long-Term Incentive Plan allows for the satisfaction of a
participant's tax withholding with respect to an award by the withholding of
Common Shares issuable pursuant to the award or the delivery by the participant
of previously owned Common Shares, in either case valued at the fair market
value, subject to limitations the Plan Committee may adopt.
Awards granted pursuant to the Long-Term Incentive Plan may provide
that, upon a change of control of the Company, (a) each holder of an option will
be granted a corresponding SAR (b) all outstanding SARs and stock options become
immediately and fully vested and exercisable in full, and (c) the restriction
period on any restricted stock award shall be accelerated and the restriction
shall expire.
The Long-Term Incentive Plan provides for the issuance of a maximum
number of Common Shares equal to 20% of the total number of Common Shares
outstanding from time to time. Unexercised SARs, unexercised options, restricted
stock, and performance units under the Long-Term Incentive Plan are subject to
adjustment in the event of a stock dividend, stock split, recapitalization or
combination of the Company, merger or similar transaction and are not
transferable except by will and by the laws of descent and distribution. Except
when a participant's employment terminates as a result of death, disability, or
retirement under an approved retirement plan or following a change in control in
certain circumstances, an award generally may be exercised (or the restriction
thereon may lapse) only if the participant is an officer, employee, or director
of the Company, or subsidiary at the time of exercise or lapse or, in certain
circumstance, if the exercise or lapse occurs within 180 days after employment
is terminated.
Under the Company's Long-Term Incentive Plan all full time employees
share a bonus equal to 5% of the Company's pre-tax net income, in accordance
with GAAP, exclusive of extraordinary and non-recurring items. The bonuses will
be paid to all full time (1,000 + hours) employees at December 31. The bonus
will be paid upon delivery of the independent audit. The Bonus shall be
allocated to the full time employees based upon their salary at December 31.
- 12 -
<PAGE>
Employee Stock Ownership Plan
In 1994, the Company adopted the Panaco, Inc. Employee Stock Ownership
Plan ("ESOP"). Pursuant to the terms of the ESOP, the Company may contribute up
to fifteen percent (15%) of the participant's annual compensation to the ESOP.
ESOP assets are allocated in accordance with a formula based on participant
compensation. In order to participate in the ESOP, a participant must complete
at least one thousand hours of service to the Company within twelve consecutive
months. A participant's interest in the ESOP becomes one hundred percent vested
after three years of service to the Company. Benefits are distributed from the
ESOP at such time as a participant retires, dies or terminates service with the
Company in accordance with the terms and conditions of the ESOP. Benefits may be
distributed in cash or in shares of the Company's common stock. No participant
contributions are allowed to be made to the ESOP.
CEO Compensation
In establishing the annual compensation of Mr. Maxwell, the
Compensation Committee considers the performance of the Company and the Chief
Executive Officer, including his leadership and effectiveness in identifying
opportunities for growth and increased profitability and implementing Panaco's
strategic plan. While overall corporate performance is considered, the CEO's
compensation is determined by a subjective evaluation of his individual
performance.
The Compensation Committee took into account Mr. Maxwell's significant
contribution to the growth of the Company in determining his compensation. Mr.
Maxwell has played an important part in the numerous acquisitions made by the
Company, whereby proved reserves and total assets have increased 3.4 fold since
year-end 1991. Most recently, Mr. Maxwell was principally responsible for
identifying, negotiating and successfully closing the recent Goldking
acquisition. The Compensation Committee and the Board believe this acquisition
over time will significantly enhance shareholder value.
Pursuant to the Long-Term Incentive Plan, on June 18, 1997, Mr. Maxwell
was granted stock options to purchase 600,000 shares at $4.45 per share, above
the then current market price. The Compensation Committee and the Board believe
that it is important for Mr. Maxwell to own and maintain a significant stake in
the Company, thereby aligning his interests with those of Panaco's shareholders.
In the future, the Board intends to continue to tie Mr. Maxwell's compensation
to his ability to enhance and maximize shareholder value, unifying Mr. Maxwell's
and shareholder interests.
COMPENSATION COMMITTEE
A. Theodore Stautberg, Jr.
Mark Barrett
N. Lynne Sieverling
- 13 -
<PAGE>
PERFORMANCE GRAPHS
The following performance graph compares the annual change of the
cumulative total shareholder return, assuming reinvestment of dividends, of an
assumed $100 investment on January 1, 1992 in (1) Common Shares, (2) the NASDAQ
Market Index and (3) a peer group of all crude petroleum and natural gas
exploration and production companies (SIC Code 1311) listed in NASDAQ.
Measurement Period NASDAQ
(Fiscal Year Covered) PANACO, INC. MARKET INDEX PEER GROUP INDEX
--------------------- ------------ ------------ ----------------
December 1991 100 100 100
December 1992 60.87 100.98 100.49
December 1993 91.3 121.13 120.03
December 1994 139.13 127.17 108.48
December 1995 154.35 164.96 126.02
December 1996 169.57 204.98 190.08
OTHER MATTERS TO COME BEFORE THE MEETING
Insurgent Slate
On June 12, 1997, Carl C. Icahn, a beneficial owner of 12.78% of the
Company's Common Shares, proposed that the Company consider: (i) being acquired
by National Energy Group, Inc. ("NEG") through an exchange of stock or other
transaction and (ii) having representatives of Icahn on the Board of Directors.
On July 10, 1997, Mr. Icahn gave written notice of his intention to nominate
candidates for election as Class II directors. Mr. Icahn notified the Company
that his purpose was to nominate a slate that, if elected to the Board of
Directors, would give consideration to having the Company be acquired by NEG.
According to NEG's Proxy Statement dated April 26, 1997, as of April 21, 1997,
Icahn beneficially owned 19.8% of NEG's common stock assuming conversion of the
Series D preferred shares and exercise of warrants for 700,000 shares of common
stock. As set forth in a Schedule 13D dated August 19, 1997, Icahn reported that
as of August 19, 1997 his beneficial ownership of warrants had increased to
1,000,000.
The Company's Response
The Board of Directors has considered the proposal of Mr. Icahn and
believes that it is not in the best interests of the Company and its
shareholders that his nominees be elected. Further, it is the unanimous
consensus of the Board that the Company's prospects for growth and shareholder
value enhancement are such that a sale of the Company is not in the best
interests of the Company and its shareholders.
- 14 -
<PAGE>
The Board of Directors of Panaco is optimistic about its future
prospects. Given the Company's continuing success at acquiring attractive
properties with significant exploitation potential and its existing portfolio of
low-cost producing properties, the Board of Directors believes that the market
does not reflect PANACO'S true value. In light of Panaco's prospects, the Board
believes that the surest path to maximizing shareholder value is through the
continued implementation of the Company's strategic plan. In short, the Board
believes that it is the wrong time to sell the Company, as shareholders would
obtain only limited value for their shares. Consistent with its fiduciary duties
and mindful of the trust placed in it, the Board assures all shareholders of its
commitment to maximizing the value of their investment in Panaco.
At the time this Proxy Statement was released for printing on August
26, 1997, the Company knew of no other matters which might be presented for
action at the meeting. If any other matters properly come before the meeting, it
is intended that the Common Shares represented by proxies will be voted with
respect thereto in accordance with the judgment of the persons voting them.
RECENT EVENT
Acquisition of Goldking
In early July 1997, the Company and the shareholders of Goldking
Companies, Inc. ("Goldking"), a Houston based oil and gas company, agreed to the
basic terms of an acquisition of Goldking. Goldking is engaged primarily in the
exploration, acquisition, development and production of oil and gas along the
Gulf Coast and in the state waters of Texas and Louisiana. Goldking has
interests in over 128 wells and builds and operates pipelines through a
subsidiary, Hill Transportation, Inc. Goldking has proved reserves of over 50
billion cubic feet of natural gas equivalents, a portfolio of exploration
prospects and development projects, and a staff of oil and gas professionals
experienced in Gulf Coast operations. The sole beneficial owners of Goldking
were Leonard C. Tallerine and Jr. Mark C. Licata.
On July 16, 1997, effective July 1, 1997, the Company, Messrs.
Tallerine and Licata and The Union Companies, Inc. ("Union") (a holding company
whose primary asset was Goldking stock), entered into a formal Merger Agreement
which provided for the merger of Union into Goldking Acquisition Corp., a newly
formed subsidiary of the Company. Pursuant to a Restated Merger Agreement
executed on July 30, 1997 (the "Goldking Merger Agreement"), a total of
$27,539,439 in consideration was paid to Messrs. Tallerine and Licata,
consisting of $7,500,000 in cash, $6,000,000 in promissory notes and $14,039,439
in the form of 3,154,930 shares of the Company's Common Stock, valued for
purposes of the transaction at $4.45 per share. Final Merger Certificates were
filed on July 31, 1997.
Messrs. Tallerine and Licata were appointed to new positions on the
Company's Board of Directors and were employed by the Company as Vice President
and General Counsel, respectively. Under the Goldking Merger Agreement, their
employment, at annual salaries of $200,000 for Mr. Tallerine and $150,000 for
Mr. Licata, will continue until the promissory notes issued to them as a portion
of the merger consideration are paid in full. Messrs. Tallerine and Licata have
also been granted certain demand and other registration rights with respect to
the Company's Common Stock received in the merger.
- 15 -
<PAGE>
ADDITIONAL INFORMATION
The costs of soliciting proxies will be borne by the Company. In
addition to this solicitation by mail, directors, officers and regular employees
of the Company may solicit proxies in person or by telephone, telegraph and
other electronic means, with no additional compensation to be paid to such
individuals for their efforts. See Schedule I. Brokers, nominees, fiduciaries
and other custodians will be requested to forward soliciting material to the
beneficial owners of shares and will be reimbursed for their expenses.
In addition, the Company has retained D.F. King & Co., Inc. ("King") to
assist in the solicitation of proxies for a fee estimated not to exceed $25,000,
plus reimbursement of expenses. The Company has also agreed to indemnify King
against certain liabilities and expenses, including liabilities under the
federal securities laws. King anticipates that it will employ approximately 30
persons in connection with the solicitation. The Company has spent $25,000 to
date in connection with the solicitation of security holders and estimates that
it will spend a total of $65,000.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be considered for inclusion in next
year's proxy statement should be sent to Investor Relations, PANACO, Inc., 1050
West Blue Ridge Boulevard, PANACO Building, Kansas City, Missouri 64145-1216,
and must be received by May 2, 1998. Any such proposal must comply with Rule
14a-8 promulgated by the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended.
FINANCIAL STATEMENTS AVAILABLE
Financial statements for the Company were included in the Company's
Annual Report on Form 10-K ("Form 10-K") as filed with the Securities and
Exchange Commission for the year 1996, and previously mailed to shareholders. A
copy of the Form 10-K is being provided to all shareholders as of the record
date together with the Company's proxy materials. Additional copies of the Form
10-K will be furnished without charge, on request directed to Investor
Relations, PANACO, Inc., 1050 West Blue Ridge Boulevard, PANACO Building, Kansas
City, Missouri 64145-1216.
By order of the Board of Directors
/s/ Todd R. Bart
----------------------------------
Todd R. Bart
Secretary
August 26,1997
- 16 -
<PAGE>
IMPORTANT
It is important that your shares be represented and voted at the
meeting. Shareholders are urged to promptly sign, date and mail the enclosed
WHITE proxy in the postage-paid envelope provided. PLEASE ACT TODAY.
If you have any questions or need assistance, please call D.F. King &
Co., Inc., which is assisting us, at the number listed below:
D.F. King & Co., Inc.
77 Water Street, 20th Floor
New York, New York 10005
Call toll free 800-697-6974
- 17 -
<PAGE>
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF PANACO, SHARES
HELD BY THEM AND CERTAIN TRANSACTIONS BETWEEN
ANY OF THEM AND PANACO
A. The following table sets forth (i) the name of the directors and executive
officers of Panaco (whose principal occupations are set forth in the Proxy
Statement) who may assist in soliciting proxies from Panaco shareholders, and
the name and address of any corporation or other organization in which their
employment is carried on and (ii) certain transactions between the directors
and executive officers and Panaco. Unless otherwise indicated below or in the
Proxy Statement, the principal business address of each such person is 1050 West
Blue Ridge Boulevard, PANACO Building, Kansas City, Missouri 64145-1216, and
such person is an employee of PANACO. Directors are indicated with a single
asterisk.
<TABLE>
<CAPTION>
Shares of Common
Name of Stock Beneficially Shares of Common Stock
Owner Owned (1) Owned ofRecord
------- --------- --------------
<S> <C> <C>
H. James Maxwell* 897,586 283,386
Larry M. Wright* 1,059,614 485,000
Bob F. Mallory* 285,496 228,030
Leonard C. Tallerine, Jr.* 1,548,784 1,548,784
Goldking Oil and Gas Corp.
1 Houston Center, Suite 1800
1221 McKinney
Houston, Texas 77010
Mark C. Licata* 1,606,146 1,606,146
Goldking Oil and Gas Corp.
1 Houston Center, Suite 1800
1221 McKinney
Houston, Texas 77010
Robert G. Wonish 66,410 17,000
Panaco, Inc.
1100 Louisiana
Suite 5100
Houston, Texas, 77002-5110
Edward E. Bush, Jr. 20,000 -----
Panaco, Inc.
1100 Louisiana
Suite 5100
Houston, Texas, 77002-5110
I-1
<PAGE>
Shares of Common
Name of Stock Beneficially Shares of Common Stock
Owner Owned (1) Owned ofRecord
------- --------- --------------
William J. Doyle 16,288 -----
Panaco, Inc.
1100 Louisiana
Suite 5100
Houston, Texas, 77002-5110
Todd R. Bart 33,997 2,500
A. Theodore Stautberg, Jr.* 6,881 6,137
Triumph Resources
1270 Avenue of the Americas
New York, NY 10020
Donald W. Chesser* 1,669 1,039
Chesser & Company, PA
365 North Rock Road - Suite A
Wichita, KS 67206
James B. Kreamer* 51,685 51,055
3621 Cabin Creek Road
London, KY 40741
N. Lynne Sieverling* 13,881 8,137
800 W. 47th Street - Suite 318
Kansas City, MO 64112
Michael Springs* 3,726 3,096
Ortho Care, Inc.
11 West 128th Street
Kansas City, MO 64144
Mark C. Barrett* 3,258 2,447
Barrett & Associates, Inc.
10990 Quivira - Suite 250
Overland Park, KS 66210
<FN>
(1) In connection with transactions in the Company's Common Shares, H. James
Maxwell, Bob F. Mallory and Larry M. Wright incurred indebtedness in the
amounts of $50,000, $66,800 and $180,000 respectively, obtained or borrowed
pursuant to a margin account or bank loan in the regular course of
business.
</FN>
</TABLE>
I-2
<PAGE>
B. The following table sets forth information concerning all purchases and
sales of securities of the Company by directors and executive officers since
August 1, 1995.
Date of Record
Shares Purchased (Sold)
-------------------------
Name Date Number
- ---- ------- ---------
Directors
- ---------
H. James Maxwell 12/95 104,615
12/95 (40,000)
3/97 (30,000)
Bob F. Mallory 12/95 61,790
12/95 (61,790)
Larry M. Wright 7/97 90,000
Leonard C. Tallerine, Jr.
Mark C. Licata
Mark C. Barrett
Michael Springs
A. Theodore Stautberg, Jr. 11/95 1,039(1)
N. Lynne Sieverling 11/95 1,039(1)
Donald W. Chesser 11/95 25,000
11/95 (25,000)
11/95 1,039(1)
2/96 (7,764)
James B. Kreamer 11/95 1,039(1)
12/95 25,000
I-3
<PAGE>
Date of Record
Shares Purchased (Sold)
-------------------------
Name Date Number
- ---- ------- ---------
Officers
- --------
Robert G. Wonish 1/96 (50,000)
3/97 5,000
Edward E. Bush, Jr. N/A
Todd R. Bart N/A
William J. Doyle N/A
(1) Shares issued as part of Director compensation.
None of the directors or executive officers of the Company named in
this Schedule I is or was within the past year a party to any contract,
arrangement or understanding with any person with respect to any securities of
the Company, including but not limited to, joint ventures, loan or option
arrangements, puts or calls, guarantees against loss or guarantees of profit,
division of losses or profits, or the giving or withholding of proxies.
Except as set forth in the Proxy Statement, none of the directors or
executive officers of the Company named in this Schedule I has any arrangement
or understanding with any other person with respect to any future employment by
the Company or its affiliates or with respect to any future transactions to
which then Company or any of its affiliates will be a party. See "Recent
Event-Acquisition of Goldking".
I-4
<PAGE>
IMPORTANT
Your vote is important, regardless of the number of shares you own.
Please vote as recommended by your Board of Directors by taking these few easy
steps.
1. If your shares are registered in your own name(s), please sign,
date and mail the enclosed WHITE Proxy Card in the postage-paid
envelope provided.
2. If your shares are held in the name of a brokerage firm, bank
nominee or other institution, only it can sign a WHITE Proxy Card
with respect to your shares and only after receiving your specific
instructions. Accordingly, please sign, date and mail the enclosed
WHITE Proxy Card (or voting instruction form) you received for the
brokerage firm, bank nominee or other institution in whose name
your shares are held in the postage-paid envelope provided. Please
do so for each account you maintain. To ensure that your shares are
voted, you should also contact the person responsible for your
account and give instructions for a WHITE Proxy Card to be issued
representing your shares.
3. After signing the enclosed WHITE Proxy Card (or voting instruction
form), do not sign or return any card (or form) sent to you by
Icahn not even as a vote of protest. Remember, only your latest
dated card will count.
If you have any questions about voting your shares or require
assistance, please call:
D. F. King & Co., Inc.
77 Water Street, 20th Floor
New York, NY 10005
(212) 269-5550 (Collect)
or
CALL TOLL-FREE
(800) 697-6974
<PAGE>
PROXY
PANACO, INC.
Kansas City, Missouri
This Proxy is solicited on behalf of the Board of Directors of PANACO,
Inc. for the Annual Meeting on October 7, 1997.
The undersigned hereby appoints H. James Maxwell and Todd R. Bart, or
any of them, proxies for the undersigned, each with full power of substitution
to attend the Annual Meeting of Shareholders of PANACO, Inc. to be held on
October 7, 1997 at 10:00 a.m., Central Time, and at any adjournments thereof,
and to vote as specified in this Proxy all the shares of stock of the Company
which the undersigned would be entitled to vote if personally present. The
undersigned hereby revokes any previous proxies with respect to the matters
covered by this Proxy.
PANACO'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
PROPOSAL 1 AND "FOR" PROPOSAL 2.
1. ELECTION OF DIRECTORS
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary below) listed below
[ ] [ ]
Larry M. Wright N. Lynne Sieverling Mark C. Barrett
(INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"FOR" above and write the name(s) of that nominee(s) with respect to whom you
wish to withhold authority to vote here.)
- --------------------------------------------------------------------------------
TO BE SIGNED AND DATED ON THE REVERSE SIDE.
2. Appointment of Independent Accountants
RESOLVED, that the firm of Arthur Andersen LLP be ratified as
independent accountants to audit the financial statements of the Company for the
year 1997.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
<PAGE>
3. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting. This Proxy when properly
executed will be voted in the manner directed herein. If no direction is made,
this Proxy will be voted FOR Proposal 1 and FOR Proposal 2.
Please sign exactly as your name
appears on this card. Joint Owners
should each sign personally.
Corporation proxies should be
signed in corporate name by an
authorized officer. Executors,
administrators, trustees or
guardians should give their title
when signing.
Date ________________________, 1997
Signature__________________________
__________________________
PLEASE SIGN, DATE AND PROMPTLY MAIL YOUR PROXY
IN THE ENCLOSED ENVELOPE PROVIDED
<PAGE>
