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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
MARCUM NATURAL GAS SERVICES, INC.
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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(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:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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MARCUM NATURAL GAS SERVICES, INC.
1675 BROADWAY
SUITE 2150
DENVER, COLORADO 80202
===============================================================
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 7, 1999
===============================================================
To the Stockholders of
Marcum Natural Gas Services, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of Marcum Natural Gas Services, Inc. (the "Company") will be
held at the Hilton Melbourne Beach Oceanfront, 3003 North Highway A1A,
Indialantic, Florida, on Monday, June 7, 1999 at 9:00 a.m., local time, for the
following purposes:
1. To elect three directors to serve for a term of three years and
until their successors are duly elected and qualified;
2. To adopt and approve an amendment to the Company's Restated
Certificate of Incorporation, as amended, to change the name of the
Company to Metretek Technologies, Inc.;
3. To ratify the appointment by the Board of Directors of Deloitte &
Touche LLP as the Company's independent auditors for the fiscal year
ending December 31, 1999; and
4. To transact such other business as may properly come before the
Annual Meeting or any adjournments or postponements thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record as of the close of business on April 26, 1999
are entitled to notice of and to vote at the Annual Meeting and at any
adjournments or postponements thereof.
By Order of the Board of Directors,
Gary J. Zuiderveen
Secretary
Denver, Colorado
April 30, 1999
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YOUR VOTE IS IMPORTANT
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. HOWEVER,
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE REQUESTED TO SIGN AND DATE THE
ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED, SELF-ADDRESSED
STAMPED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF
YOU ATTEND THE ANNUAL MEETING AND SO DESIRE, YOU MAY REVOKE YOUR PROXY AND VOTE
YOUR SHARES IN PERSON.
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MARCUM NATURAL GAS SERVICES, INC.
1675 BROADWAY
SUITE 2150
DENVER, COLORADO 80202
===============================================================
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 7, 1999
===============================================================
GENERAL SOLICITATION AND VOTING INFORMATION
PROXY SOLICITATION
This Proxy Statement is furnished to the holders of Common Stock, par
value $.01 per share (the "Common Stock"), of Marcum Natural Gas Services, Inc.,
a Delaware corporation (the "Company"), in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the Annual Meeting
of Stockholders of the Company to be held at the Hilton Melbourne Beach
Oceanfront, 3003 North Highway A1A, Indialantic, Florida, on Monday, June 7,
1999, at 9:00 a.m., local time, and at any adjournments or postponements thereof
(the "Annual Meeting"), for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders.
This Proxy Statement, together with the Notice of Annual Meeting of
Stockholders and the accompanying proxy card, are being first mailed to
stockholders on or about April 30, 1999. The solicitation of proxies will
initially be made by mail and may thereafter be made in person or by mail,
telephone, telecopy, telegram, facsimile or other means of communication by the
directors, officers and regular employees of the Company for no additional or
special compensation. In addition, brokerage houses, banks, nominees, trustees,
custodians and other fiduciaries will be requested by the Company to forward
proxy solicitation materials for shares of Common Stock held of record by them
to the beneficial owners of such shares, and such fiduciaries will, upon
request, be reimbursed by the Company for their reasonable out-of-pocket
expenses incurred in connection therewith. The cost of the solicitation of
proxies for use at the Annual Meeting will be borne by the Company.
VOTING RIGHTS AND PROCEDURES
Only stockholders of record as of the close of business on April 26, 1999
(the "Record Date") are entitled to notice of and to vote at the Annual Meeting.
As of the close of business on the Record Date, 3,473,343 shares of Common Stock
of the Company were issued and outstanding. Each share of Common Stock
outstanding on the Record Date entitles the holder thereof to one vote on each
matter to be voted upon at the Annual Meeting. The presence at the Annual
Meeting, in person or by proxy, of the holders of a majority of the shares of
Common Stock outstanding as of the Record Date is necessary to constitute a
quorum for the transaction of business at the Annual Meeting.
Directors will be elected by a plurality of the votes cast by the holders
of shares of Common Stock present, in person or by proxy, and entitled to vote
at the Annual Meeting. 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 and approve an amendment to the Company's Restated Certificate
of Incorporation, as amended (the "Restated Certificate"), to change the name of
the Company to Metretek Technologies, Inc. (the "Name Change Proposal"). The
affirmative vote of the holders of a majority of the shares of Common Stock
present, in person or by proxy, and entitled to vote at the Annual Meeting is
required to ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year ending December 31, 1999 (the "Auditors
Proposal").
Abstentions and "broker non-votes" (shares held of record by brokers or
nominees which are not voted on a particular matter because the broker or
nominee has not received voting instructions from the beneficial owner of such
shares and does not have discretionary voting power with respect to that matter)
will be treated as present for purposes of determining the presence of a quorum
for the transaction of business at the Annual Meeting. Abstentions on a matter
will be treated as present on such matter and, accordingly, (i) will have no
effect on the outcome of the election of directors, and (ii) will have the same
effect as votes against the Name Change Proposal and the Auditors Proposal.
Broker non-votes on a matter will not be treated as present on such matter and,
accordingly, (i) will have no effect on the outcome of the election of directors
or the Auditors Proposal, and (ii) will have the same effect as votes against
the Name Change Proposal.
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If a proxy card is properly signed and returned to the Company at or prior
to the Annual Meeting, unless subsequently properly revoked, the shares
represented by that proxy card will be voted at the Annual Meeting in accordance
with the instructions specified thereon. If a proxy card is properly signed and
returned to the Company at or prior to the Annual Meeting without voting
instructions, it will be voted (i) FOR the election as directors of the persons
named herein as nominees, (ii) FOR the Name Change Proposal, and (iii) FOR the
Auditors Proposal. If any other matters are properly presented at the Annual
Meeting or any adjournments or postponements thereof, the persons appointed as
proxies in the proxy card will have the discretionary authority to vote or act
thereon in accordance with their best judgment. See "Other Matters".
Any stockholder may revoke a proxy at any time before it is exercised,
either by delivering to the Secretary of the Company a written notice of
revocation or a properly signed proxy bearing a later date, or by attending the
Annual Meeting and voting in person. Attendance at the Annual Meeting will not
in and of itself constitute the revocation of a proxy.
ALL SHARE AMOUNTS IN THIS PROXY STATEMENT HAVE BEEN ADJUSTED TO REFLECT
THE ONE-FOR-FOUR REVERSE SPLIT OF THE COMMON STOCK EFFECTED ON JULY 6, 1998.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of April 26, 1999 (except as
otherwise noted in the footnotes) by (i) each person known to the Company to be
the beneficial owner of more than 5% of the outstanding shares of Common Stock,
(ii) each director of the Company, (iii) each of the Named Executive Officers
(as defined in "Executive Compensation" below), and (iv) all directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED (1)
-----------------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT OF CLASS (2)
- ------------------------ ------- --------------------
<S> <C> <C>
American Meter Software Corporation (3)................. 730,216 19.4
105 Erskine Lane
Scott Depot, West Virginia 25560
Kenneth B. Funsten (4).................................. 463,012 13.0
121 Outrigger Mall
Marina del Ray, California 90292
Famco Value Income Partners, L.P. (5)................... 290,250 8.2
121 Outrigger Mall
Marina del Ray, California 90292
Albert F. Thomasson (6)................................. 130,028 3.7
W. Phillip Marcum (7)................................... 120,603 3.5
Robert Lloyd (8)........................................ 57,794 1.7
Anthony D. Pell (9)..................................... 35,262 1.0
Ronald W. McKee (10).................................... 25,691 0.7
A. Bradley Gabbard (11)................................. 22,936 0.7
Basil M. Briggs (12).................................... 17,325 0.5
Harry I. Skilton (13)................................... 9,982 0.3
All directors and executive officers
as a group (8 persons) (14)........................ 419,621 11.5
</TABLE>
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(1) For purposes of this table, the Number and Percent of Class of Shares
Beneficially Owned is determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
information is not necessarily indicative of beneficial ownership for any
other purpose. Under such rule, beneficial ownership includes any shares
as to which the beneficial owner has voting power or investment power and
any shares that the beneficial owner has the right acquire within 60 days
of April 26, 1999 through the exercise of any stock option, warrant or
other right to acquire shares of Common Stock. In addition, such shares
are deemed to be outstanding in calculating the Percent of Class of such
beneficial owner, but are not deemed to be outstanding as to any other
beneficial owner. Unless otherwise indicated in the footnotes, each
beneficial owner has sole voting and investment power (or shares such
powers with his spouse) with respect to the shares shown as beneficially
owned, subject to community property laws where applicable.
(2) The Percent of Class is based upon 3,473,343 shares of Common Stock
outstanding as of April 26, 1999.
(3) Information based upon Schedule 13D filed by American Meter Software
Corporation (under its former name, Eagle Research Corporation) ("American
Meter Software") with the Securities and Exchange Commission ("SEC") on
April 2, 1998. American Meter Software is a wholly-owned subsidiary of
American Meter Company ("American Meter"), and both corporations are
ultimately controlled by Ruhrgas AG ("Ruhrgas"), a German corporation.
Includes 180,766 shares that may be acquired by American Meter Software
upon the conversion of a convertible, subordinated note and 109,890 shares
that may be acquired by American Meter Software upon the exercise of
currently exercisable warrants.
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(4) Information based upon Amendment No. 1 to Schedule 13D filed by Kenneth B.
Funsten with the SEC on January 22, 1999, and Form 3 filed by Mr. Funsten
with the SEC on January 11, 1999. According to the information contained
therein, includes (a) 23,825 shares that may be acquired upon the exercise
of currently exercisable warrants owned by Mr. Funsten; (b) 232,200
shares, and 58,050 shares that may be acquired upon the exercise of
currently exercisable warrants, owned by Famco Value Income Partners, L.P.
("Famco VIP"); and (c) 36,250 shares, and 9,062 shares that may be
acquired upon the exercise of currently exercisable warrants, owned by
Famco Offshore, Ltd. ("Famco Offshore"). Funsten Asset Management Company
and Mr. Funsten, who is the president and portfolio manager of Funsten
Asset Management Company, are the general partners of Famco VIP and Famco
Offshore. Mr. Funsten holds sole voting and investment power over the
securities owned by Famco VIP and Famco Offshore. In this table, the
shares beneficially owned by Mr. Funsten include the shares owned by Famco
VIP (see note (5) below). Does not include 4,100 shares owned by an
employee of Funsten Asset Management Company which cannot be sold or
further added to without permission by Mr. Funsten by virtue of
restrictions that are placed on securities transactions by employees of
Funsten Asset Management Company, because Mr. Funsten has no investment or
voting authority over the shares of such employee and Mr. Funsten
expressly disclaims beneficial ownership of such shares.
(5) Information based upon Amendment No. 1 to Schedule 13D filed by Famco VIP
with the SEC on January 22, 1999. According to the information contained
therein, includes 58,050 shares that may be acquired by Famco VIP upon the
exercise of currently exercisable warrants. Kenneth B. Funsten and Funsten
Asset Management Company are the general partners of Famco VIP. In this
table, the shares owned by Famco VIP are also included in the shares
beneficially owned by Mr. Funsten (see note (4) above). Does not include
4,100 shares owned by an employee of Funsten Asset Management Company
which cannot be sold or further added to without permission by Mr. Funsten
by virtue of restrictions that are placed on securities transactions by
employees of Funsten Asset Management Company, because Famco VIP has no
investment or voting authority over the shares of such employee and Famco
VIP expressly disclaims beneficial ownership of such shares.
(6) Includes 2,338 shares held of record by Mr. Thomasson's wife and 32,858
shares held in family trusts. Also includes 16,857 shares that may be
acquired by Mr. Thomasson upon the exercise of currently exercisable stock
options and 33,195 shares that may be acquired by Mr. Thomasson or his
wife or their family trusts upon the exercise of currently exercisable
warrants.
(7) Includes 7,750 shares owned by Mr. Marcum's wife. Also includes 22,120
shares that may be acquired by Mr. Marcum or his wife upon the exercise of
currently exercisable warrants. Does not include 120,000 shares that may
be acquired by Mr. Marcum upon the exercise of stock options that, due to
the one year exercise blackout period imposed in connection with the 1998
stock option repricing, do not become exercisable until October 6, 1999.
(8) Includes 21,857 shares that may be acquired by Mr. Lloyd upon the exercise
of currently exercisable stock options and 7,187 shares that may be
acquired by Mr. Lloyd upon the exercise of currently exercisable warrants.
(9) Includes 2,600 shares held by Mr. Pell's wife. Also includes 15,000 shares
that may be acquired by Mr. Pell upon the exercise of currently
exercisable stock options and 4,052 shares that may be acquired by Mr.
Pell or his wife upon the exercise of currently exercisable warrants.
(10) Includes 12,500 shares that may be acquired by Mr. McKee upon the exercise
of currently exercisable stock options and 2,638 shares that may be
acquired by Mr. McKee upon the exercise of currently exercisable warrants.
Does not include 12,500 shares that may be acquired by Mr. McKee upon the
exercise of stock options that, due to the one year exercise blackout
period imposed in connection with the 1998 stock option repricing, do not
become exercisable until October 6, 1999.
(11) Includes 1,750 shares owned by Mr. Gabbard's minor children. Also includes
4,587 shares that may be acquired by Mr. Gabbard or his minor children
upon the exercise of currently exercisable warrants. Does not include
44,500 shares that may be acquired by Mr. Gabbard upon the exercise of
stock options that, due to the one year exercise blackout period imposed
in connection with the 1998 stock option repricing, do not become
exercisable until October 6, 1999.
(12) Includes 375 shares owned by Mr. Briggs' wife. Also includes 16,857 shares
that may be acquired by Mr. Briggs upon the exercise of currently
exercisable stock options and 93 shares that may be acquired by Mr.
Briggs' wife upon the exercise of currently exercisable warrants.
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(13) Includes 6,857 shares that may be acquired by Mr. Skilton upon the
exercise of currently exercisable stock options and 625 shares that may be
acquired by Mr. Skilton upon the exercise of currently exercisable
warrants. Although Mr. Skilton is the President, Chief Executive Officer
and a director of American Meter and the Vice President and a director of
American Meter Software, no shares owned of record by American Meter
Software have been attributed to Mr. Skilton's beneficial ownership.
(14) See notes (6) through (13).
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of eight members
divided into three classes, designated Class I, Class II and Class III, with
members of each class serving staggered three year terms. In May 1998, Harry I.
Skilton, the President, Chief Executive Officer and a director of American
Meter, was appointed to the Board of Directors in connection with the Company's
acquisition of the assets of a subsidiary of American Meter.
Three Class II directors are to be elected at the Annual Meeting, each to
serve for a term of three years and until his successor is duly elected and
qualified. The Board of Directors has nominated the persons listed below as
"Nominees" to be re-elected as Class II directors. All of the nominees are
currently serving as directors of the Company. All other members of the Board of
Directors will continue in office until the expiration of their respective terms
in 2000 or 2001, as indicated below, and until their respective successors are
duly elected and qualified.
Directors are elected by a plurality of the votes cast by the holders of
shares of Common Stock present, in person or by proxy, and entitled to vote at
the Annual Meeting. If properly signed and returned to the Company at or prior
to the Annual Meeting, the accompanying proxy card will be voted for the
election of the nominees listed below, unless contrary instructions are
specified. Although the Board of Directors has no reason to believe that any of
the nominees listed below will decline or be unable to serve as a director,
should that occur, the persons appointed as proxies in the accompanying proxy
card intend to vote, unless the number of nominees or directors is reduced by
the Board of Directors, for such other nominee or nominees as the Board of
Directors may designate.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE ELECTION AS DIRECTORS OF THE PERSONS LISTED BELOW AS "NOMINEES". PROXY CARDS
SIGNED AND TIMELY RETURNED TO THE COMPANY WILL BE SO VOTED, UNLESS CONTRARY
INSTRUCTIONS ARE SPECIFIED THEREON.
NOMINEES
CLASS II - TERM EXPIRES IN 2002
A. BRADLEY GABBARD, 44, a founder of the Company, has served as a director
and executive officer of the Company since its incorporation in April 1991. Mr.
Gabbard has served as the Executive Vice President of the Company since July
1993, and the Chief Financial Officer and Treasurer of the Company since August
1996 and from April 1991 until July 1993. He also served as the Vice President
and the Secretary of the Company from April 1991 through July 1993. Mr. Gabbard
also serves as the Chief Financial Officer of each of the Company's direct
wholly-owned subsidiaries. From October 1990 to February 1991, Mr. Gabbard was
employed by Boettcher & Company, serving as Vice President in its research
department. In 1987, Mr. Gabbard joined Great Horn, Inc., a privately held New
York based investment corporation, as its Vice President in charge of western
oil and gas investment activities. In 1988, Great Horn acquired a controlling
interest in Premier Resources, Ltd. ("Premier"), Denver, Colorado, and appointed
Mr. Gabbard as the Executive Vice President and Chief Operating Officer, where
he served until the sale of Premier in 1990. From 1981 to 1987, Mr. Gabbard was
employed by Search Drilling Company, Wichita, Kansas, a privately held oil and
gas company, initially serving as its Vice President of Finance, and later as an
Executive Vice President. From 1976 to 1981, Mr. Gabbard was employed in the
Oklahoma City office of Ernst and Whinney (now Ernst and Young), principally
serving clients in the oil and gas industry. Mr. Gabbard is a certified public
accountant.
RONALD W. MCKEE, 51, has served as a director of the Company since August
1997 and has served as the President and Chief Operating Officer of Metretek,
Incorporated ("Metretek"), a wholly-owned subsidiary of the Company, since
September 1995. Mr. McKee had previously served as the Vice President of
Marketing of Metretek since he joined Metretek in 1989. From 1970 to 1989, Mr.
McKee held various sales and marketing management positions with Rockwell
International, Pittsburgh, Pennsylvania and became the general sales and
marketing manager for Rockwell International's plug valve business unit in 1987.
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<PAGE> 8
ALBERT F. THOMASSON, 57, has served as a director of the Company since
March 1994. Mr. Thomasson was a director of Metretek from 1981 until it was
acquired by the Company in March 1994. For the past five years, Mr. Thomasson
has been President of AFT Corporation, which provides management consulting
services to selected businesses in the Birmingham, Alabama area; President of
AFTCO Properties, Inc. and Brookhaven Properties, III, Inc., which are engaged
in residential real estate development in the Birmingham area; President of
Thomasson, Coal & Coke, Inc., which is a manufacturer of alloy block for
foundries until it merged into AFT Corporation in 1996; Managing General Partner
of Opto Oil and Gas Company, which owns working interests in oil and gas fields;
and Chairman of the Board of Daily Access Concepts, Inc., Mobile, Alabama, which
provides fully automated recordkeeping and trading services for qualified
retirement plans.
CONTINUING DIRECTORS
CLASS I - TERM EXPIRES IN 2001
W. PHILLIP MARCUM, 55, a founder of the Company, has served as the
President, Chief Executive Officer, Chairman of the Board and a director of the
Company since its incorporation in April 1991. He also serves as the Chairman
and Chief Executive Officer of each of the Company's direct wholly-owned
subsidiaries. Mr. Marcum currently serves on the board of directors of one
public corporation, Key Energy Services, Inc., East Brunswick, New Jersey, an
oil field service provider, and one privately-held corporation, Test America,
Inc., Asheville, North Carolina, a water analysis company.
BASIL M. BRIGGS, 63, has served as a director of the Company since June
1991. He has been a practicing attorney in Detroit, Michigan since 1961,
practicing law with Cox, Hodgman & Giarmarco, P.C., Troy, Michigan since January
1997. Mr. Briggs was of counsel with Miro, Weiner & Kramer, P.C., Bloomfield
Hills, Michigan, from 1987 through 1996. He was the President of Briggs &
Williams, P.C., Attorney at Law, from 1977 through 1986. Mr. Briggs was the
Secretary of Patrick Petroleum Company ("Patrick Petroleum") from 1984, and a
director of Patrick Petroleum from 1970, until Patrick Petroleum was acquired by
Goodrich Petroleum Company ("Goodrich Petroleum"), an oil and gas company, in
April 1995. Since August 1995, Mr. Briggs has been a director of Goodrich
Petroleum.
ROBERT LLOYD, 60, has served as a director of the Company since July 1993.
He currently manages his personal investments. From 1988 to 1989 he was an
Executive Director of Interallianz London Limited, the wholly-owned corporate
finance subsidiary of Interallianz Bank Zurich A.G. Mr. Lloyd formerly held
several positions with Drexel Burnham Lambert Inc. and affiliates, including
Managing Director and Senior Corporate Finance Officer in Europe.
CLASS III - TERM EXPIRES IN 2000
ANTHONY D. PELL, 60, has served as a director of the Company since June
1994. Mr. Pell is a director of Rochdale Investment Management, Inc., New York,
New York. He was the President and a co-owner of Pell, Rudman & Co., Boston,
Massachusetts, an investment advisory firm, from 1981 until 1993, when it was
acquired by United Asset Management Company, since which time he has served as a
consultant. Mr. Pell was a director of Metretek from 1985 until Metretek was
acquired by the Company in March 1994. Mr. Pell was associated with the law firm
of Coudert Brothers from 1966 to 1968 and with the law firm of Cadwalder,
Wickersham and Taft from 1968 to 1972, specializing in estate and tax planning.
In 1972, Mr. Pell joined Boston Company Financial Strategies, Inc. as a Vice
President and was appointed a Senior Vice President in 1975.
HARRY I. SKILTON, 60, has served as a director of the Company since May
1998. Mr. Skilton has been the President, Chief Executive Officer and a director
of American Meter Company, Horsham, Pennsylvania, a worldwide supplier of meters
and electronic instruments to the natural gas industry, since 1994. American
Meter is ultimately controlled by Ruhrgas, a German corporation. Mr. Skilton is
also a director of Elster AG and Chairman of International Gas Measurement Ltd.
(UK), which are affiliates of Ruhrgas. From 1992 through 1994, Mr. Skilton was a
principal of D/R Consultants, which engaged in general industry marketing and
consulting. From 1990 through 1992, Mr. Skilton was the President, Chief
Operating Officer and a director of Lukens Inc., Coatsville, Pennsylvania, a
diversified company engaged in a manufacture of carbon, steel and related
products. From 1986 through 1990, Mr. Skilton was the Executive Vice President
and Group President of the Air Distribution Group of Phillips Industries, Inc.,
Dayton, Ohio, which produces building components, air distribution,
transportation materials handling systems. From 1965 through 1984, Mr. Skilton
served in various executive capacities with Illinois Tool Works, Inc., General
Instrument Corporation and Celanese Corporation.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held six meetings during 1998. During 1998, no
director attended fewer than 75% of the aggregate of the total number of
meetings of the Board of Directors (held during the period that he served as a
director) and the total number of meetings of committees of the Board of
Directors on which he served (during the period that he served).
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The Board of Directors has a standing Audit Committee and Compensation
Committee, but no standing nominating committee. The functions customarily
attributable to a nominating committee are performed by the Board of Directors.
The Audit Committee currently consists of Messrs. Gabbard, Lloyd, Pell and
Thomasson. The Audit Committee formally met one time during 1998, and also met
informally several other times. The function of the Audit Committee is to
recommend the appointment of the independent auditors, to review the nature and
scope of the services of the independent auditors, to confer with the
independent auditors and to review the results of their audit and the Company's
internal accounting controls, and to provide assistance to the Board of
Directors with respect to the corporate and reporting practices of the Company.
The Compensation Committee currently consists of Messrs. Marcum, Briggs
and Skilton. The Compensation Committee formally met three times during 1998,
and also met informally several other times. The function of the Compensation
Committee is to make recommendations to the Board of Directors regarding
compensation to be paid to the Company's executive officers.
EXECUTIVE OFFICERS AND KEY EMPLOYEES
The executive officers and certain other key employees of the Company and
its subsidiaries are as follows:
W. PHILLIP MARCUM, 55, a founder of the Company, has served as the
President, Chief Executive Officer, Chairman of the Board and a director of the
Company since April 1991. He also serves as the Chairman and Chief Executive
Officer of each of the Company's direct wholly-owned subsidiaries.
A. BRADLEY GABBARD, 44, a founder of the Company, has served as an
executive officer and director of the Company since April 1991. He has served as
the Executive Vice President of the Company since July 1993 and the Chief
Financial Officer and Treasurer of the Company from April 1991 until July 1993
and since 1996. He also served as the Vice President and Secretary of the
Company from April 1991 through July 1993. Mr. Gabbard also serves as the Chief
Financial Officer of the Company's direct wholly-owned subsidiaries.
RONALD W. MCKEE, 51, has served as the President and Chief Operating
Officer of Metretek since September 1995 and a director of the Company since
August 1997. Mr. McKee had previously served as the Vice President of Marketing
of Metretek since joining Metretek in 1989. From 1970 to 1989, Mr. McKee held
various sales and marketing management positions with Rockwell International,
Pittsburgh, Pennsylvania and became the general sales and marketing manager for
Rockwell International's plug valve business unit in 1987.
WOOD A. BREAZEALE, JR., 69, has served as the President, Chief Operating
Officer and a director of Southern Flow Companies, Inc., a wholly-owned
subsidiary of the Company, since May 1993. Mr. Breazeale was formerly the
President and Chief Operating Officer of the Southern Flow Companies, a division
of Homco International, Inc., and a Vice President of Homco International, Inc.
from 1979 until the Company purchased the assets of the Southern Flow Companies
division in April 1993. Mr. Breazeale founded Southern Flow Companies in 1953.
GARY J. ZUIDERVEEN, 40, has served as the Controller of the Company since
May 1994 and the Secretary and Principal Accounting Officer of the Company since
August 1996. From June 1992 until May 1994, Mr. Zuiderveen was the General
Accounting Manager at the University Corporation for Atmospheric Research in
Boulder, Colorado. From 1983 until June 1992, Mr. Zuiderveen was employed in the
Denver, Colorado office of Deloitte & Touche LLP, providing accounting and
auditing services to clients primarily in the manufacturing and financial
services industries and serving in the firm's national office accounting
research department.
7
<PAGE> 10
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table sets forth certain information concerning the total
compensation that the Company paid or accrued for services rendered to the
Company in all capacities during the last three fiscal years by its Chief
Executive Officer and its two other executive officers (the "Named Executive
Officers") whose total salary and bonus exceeded $100,000 in the fiscal year
ended December 31, 1998 ("fiscal 1998"):
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG TERM
COMPENSATION
------------
AWARDS
------
ANNUAL COMPENSATION(1) SECURITIES
---------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#)(2) COMPENSATION($)(3)
- --------------------------- ---- --------- -------- ------------- ------------------
<S> <C> <C> <C> <C> <C>
W. Phillip Marcum.......... 1998 $200,000 $ 0 120,000(4) $ 6,436
President and Chief 1997 175,250 31,395 50,000 6,127
Executive Officer 1996 162,000 21,900 76,200(5) 12,678
A. Bradley Gabbard......... 1998 145,000 0 44,500(4) 6,249
Executive Vice 1997 127,292 24,225 25,000 5,877
President and Chief 1996 121,000 13,200 23,250(5) 8,821
Financial Officer
Ronald W. McKee (6)........ 1998 130,000 0 25,000(4) 4,102
President of Metretek 1997 100,000 19,380 12,250 3,829
</TABLE>
- ---------------------
(1) Excludes perquisites and other personal benefits, if any, which were less
than the lesser of $50,000 or 10% of the total annual salary and bonus
reported for each Named Executive Officer.
(2) The number of securities underlying options has been adjusted to reflect
the one-to-four reverse split of the Common Stock effected on July 6,
1998.
(3) Includes amounts paid or accrued by the Company on behalf of the Named
Executive Officers in 1998 for (i) matching contributions under the
Company's 401(k) plan of $5,000 for Mr. Marcum, $5,000 for Mr. Gabbard,
and $3,360 for Mr. McKee; (ii) premiums for group term life insurance of
$972 for Mr. Marcum, $785 for Mr. Gabbard, and $422 for Mr. McKee; and
(iii) premiums for long-term disability insurance of $464 for Mr. Marcum,
$464 for Mr. Gabbard, and $320 for Mr. McKee.
(4) Includes options originally granted prior to 1998 (120,000 to Mr. Marcum,
44,500 to Mr. Gabbard and 12,500 to Mr. McKee) that were cancelled and
regranted pursuant to a stock option repricing in 1998.
(5) Includes options originally granted prior to 1996 (70,000 to Mr. Marcum
and 19,500 to Mr. Gabbard) that were cancelled and regranted pursuant to a
stock option repricing in 1996.
(6) Mr. McKee became an executive officer of the Company in 1997.
EMPLOYMENT AGREEMENTS, CHANGE IN CONTROL ARRANGEMENTS AND OTHER COMPENSATION
ARRANGEMENTS
The Company has entered into employment agreements with W. Phillip Marcum,
the President, Chief Executive Officer and Chairman of the Board of the Company,
and A. Bradley Gabbard, the Executive Vice President and Chief Financial Officer
of the Company. These employment agreements were amended on December 3, 1998 to
provide for an
8
<PAGE> 11
extension of the employment term until December 3, 2001 for Mr. Marcum and until
June 3, 2000 for Mr. Gabbard, with automatic additional one-year renewal periods
when the term expires, unless either party gives six months prior written notice
of termination. The base salaries under these employment agreements, which are
subject to annual upward adjustments at the discretion of the Board of
Directors, are currently set at $210,000 for Mr. Marcum and $152,250 for Mr.
Gabbard. In addition to the base annual compensation, the employment agreements
provide, among other things, for standard benefits commensurate with the
management levels involved. The employment agreements also provide for the
Company to establish an incentive compensation fund, to be administered by the
Compensation Committee of the Board of Directors, to provide for incentive
compensation to be paid to each officer or employee (including Messrs. Marcum
and Gabbard) deemed by the Compensation Committee to have made a substantial
contribution to the Company in the event of a change of control of the Company
or of the sale of substantially all of the assets of the Company or similar
transactions. The total amount of incentive compensation from the fund available
for distribution will be determined by a formula based on the amount by which
the fair market value per share of the Common Stock exceeds $10.08, multiplied
by a factor ranging from 10-20% depending upon the ratio of the fair market
value to $10.08. In the case of the sale of a significant subsidiary of the
Company or substantially all of the assets of a significant subsidiary, a
similar pro rata distribution is required. As amended, the employment agreements
with Messrs. Marcum and Gabbard provide that if the employment period expires
without being renewed, then the executive is entitled to receive a lump-sum
severance payment equal to 12 months, for Mr. Marcum, and six months, for Mr.
Gabbard, of his then base salary, and continued participation in all insurance
plans of the Company for such additional period. The employment agreements also
contain certain restrictions on each executive's ability to compete, use of
confidential information and use of inventions and other intellectual property.
As amended, the employment agreements with Messrs. Marcum and Gabbard also
include "change in control" provisions designed to provide for continuity of
management in the event of a change in control of the Company. The agreements
provide that if within three years after a change in control of the Company, the
executive is terminated by the Company for any reason other than for "cause", or
if the executive terminates his employment for "good reason" (as such terms are
defined in the employment agreements), then the executive is entitled to receive
a lump-sum severance payment equal to two times, for Mr. Marcum, and one times,
for Mr. Gabbard, the amount of his then base salary, together with certain other
payments and benefits, including continued participation in all insurance plans
of the Company for a period of two years for Mr. Marcum and one year for Mr.
Gabbard. Under these employment agreements, a "change in control" will be deemed
to have occurred only if: (i) any person or group becomes the beneficial owner
of 50% or more of the Company's Common Stock; (ii) a majority of the Company's
present directors are replaced, unless the election of any new director is
approved by a two-thirds vote of the current (or properly approved successor)
directors; (iii) the Company approves a merger, consolidation, reorganization or
combination, other than one in which the voting securities of the Company
outstanding immediately prior thereto continue to represent more than 50% of the
total voting power of the Company or of the surviving corporation following such
a transaction and the directors of the Company continue to represent a majority
of the directors of the Company or of the surviving corporation following such
transaction; or (iv) the Company approves a sale of all or substantially all of
its assets.
During 1998, under the Company's 1998 Employee Stock Purchase Plan, all
full-time employees of the Company, including Messrs. Marcum, Gabbard and McKee,
were entitled to purchase shares of the Company's Common Stock at fifty percent
(50%) of the market value of the Common Stock, based upon the closing sale price
of the Common Stock as reported on the Nasdaq National Market on the purchase
dates. A total of 47,244 shares of Common Stock were purchased by 48 employees,
including 10,966 shares purchased by Mr. Marcum, 5,918 shares purchased by Mr.
Gabbard, and 5,687 shares purchased by Mr. McKee. The 1998 Employee Purchase
Plan was discontinued in July 1998.
STOCK OPTION GRANTS
On October 6, 1998, the Company repriced all stock options held by its
officers, employees and directors. The exercise price of all such options was
reduced to $2.00, the last sale price of the Common Stock as reported on the
Nasdaq National Market on the date of repricing. The remaining terms of the
options reissued to effect the repricing were generally identical to the terms
of the options cancelled, except that (i) a one year exercise blackout period
was imposed with respect to options held by officers and employees, as a result
of which repriced options held by officers and employees will not be exercisable
prior to October 6, 1999, whether or not the cancelled options were previously
vested and exercisable, and thereafter the options will be subject to the
original vesting conditions, and (ii) all repriced options held by Mr. Marcum
and Mr. Gabbard will be deemed vested as of October 6, 1999, irrespective of
prior vesting conditions. Options held by the Board of Directors of the Company
and the Named Executive Officers were included in the repricing.
9
<PAGE> 12
The following table sets forth certain information with respect to stock
options granted during fiscal 1998 to the Named Executive Officers. The Company
did not grant any stock appreciation rights, alone or in tandem with stock
options, in fiscal 1998.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
INDIVIDUAL GRANTS (1)
-----------------------------------------------------------------------------
% OF TOTAL
OPTIONS
NUMBER OF SECURITIES GRANTED TO
UNDERLYING EMPLOYEES IN EXERCISE EXPIRATION
NAME OPTIONS GRANTED (#)(2) FISCAL YEAR (3) PRICE ($)(4) DATE (5)
- ---- ---------------------- --------------- ------------ --------
<S> <C> <C> <C> <C>
W. Phillip Marcum...... 40,000 (6) 12.3% $2.00 August 6, 2002
15,000 (6) 4.6% 2.00 March 5, 2003
15,000 (6) 4.6% 2.00 May 19, 2003
50,000 (6) 15.4% 2.00 July 14, 2007
A. Bradley Gabbard..... 7,500 (6) 2.3% 2.00 August 6, 2002
6,000 (6) 1.8% 2.00 March 5, 2003
6,000 (6) 1.8% 2.00 May 19, 2003
25,000 (6) 7.7% 2.00 July 14, 2007
Ronald W. McKee........ 12,500 (6) 3.8% 2.00 March 20, 2007
12,500 3.8% 2.44 December 4, 2008
</TABLE>
- ---------------------
(1) All information in this table has been adjusted to reflect the
one-for-four reverse split of the Common Stock effected on July 6, 1998.
(2) The options in this table are incentive stock options or nonqualified
stock options granted under the Company's 1991 Stock Option Plan and the
Company's 1998 Stock Incentive Plan. All options have ten year terms from
the date of initial grant and vest and become fully exercisable on October
6, 1999, one year after the date of repricing, except that the options
granted to Mr. McKee after the repricing were fully vested and exercisable
upon grant.
(3) Based upon 325,058 options granted by the Company during 1998 to
employees, including 277,558 options that were cancelled and regranted in
connection with a repricing by the Company during 1998.
(4) The exercise price of the option is the fair market value of the Common
Stock on the date of grant or the date of repricing, as appropriate, based
upon the last sale price of the Common Stock on such date as reported on
the Nasdaq National Market.
(5) These options may terminate before their terms expire due to the
termination of the optionee's employment or the optionee's disability or
death.
(6) These options were originally granted prior to 1998, at an exercise price
equal to the fair market value of the Common Stock on the date of grant,
and were cancelled and reissued in 1998, in connection with a stock option
repricing, at the fair market value of the Common Stock on October 6,
1998, the date of the repricing.
10
<PAGE> 13
STOCK OPTION EXERCISES AND VALUES
The following table sets forth information with respect to stock options
held by the Named Executive Officers on December 31, 1998. The Named Executive
Officers did not exercise any stock options during 1998.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
AT FISCAL YEAR-END (#) FISCAL YEAR-END ($)(1)
------------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE(2) EXERCISABLE UNEXERCISABLE
- ---- ----------- ---------------- ----------- -------------
<S> <C> <C> <C> <C>
W. Phillip Marcum.......... 0 120,000 $0 $15,000
A. Bradley Gabbard......... 0 44,500 0 5,563
Ronald W. McKee............ 12,500 12,500 0(3) 1,563
</TABLE>
- -------------------
(1) For purposes of this table, the value of unexercised in-the-money options
is calculated based upon the difference between $2.125, the closing sale
price of the Common Stock on such date as reported on the Nasdaq National
Market, and the option exercise price.
(2) The unexercisable options included in this table are options that were
granted prior to 1998 and then cancelled and regranted in the 1998 stock
option repricing. Pursuant to a one year exercise blackout period imposed
under the terms of that repricing, the unexercisable options do not become
exercisable until October 6, 1999, on which date they become fully vested.
(3) The exercise price of these options exceeded $2.125, the closing sale
price of the Common Stock on December 31, 1998 as reported on the Nasdaq
National Market.
COMPENSATION COMMITTEE REPORT ON STOCK OPTION REPRICING
During September and October 1998, members of the Compensation Committee,
along with A. Bradley Gabbard, the Company's Chief Financial Officer, held
discussions with respect to the option exercise prices for the stock options
granted by the Company, including options granted under the Company's 1991 Stock
Option Plan, the Company's Directors' Stock Option Plan and the Company's 1998
Stock Incentive Plan. As a result of those discussions, the Committee
recommended that the Company reprice all outstanding stock options to the
current market price of the Company's Common Stock. The stock option repricing
was authorized and approved by the Board of Directors on October 6, 1998. The
exercise price on all outstanding stock options was reduced to $2.00 per share,
the closing sale price of the Common Stock as reported on the Nasdaq National
Market on such date.
In making its recommendation, the Committee considered the Company's
compensation policy and stock option programs. The Committee believed that as a
result of the decline in the Company's stock price, outstanding options with
high exercise prices in excess of the current stock price were not providing
meaningful compensation or incentives for the Company's officers, employees and
directors. The Committee also believed that the future growth and success of the
Company was dependent upon its ability to successfully attract, retain and
motivate its officers, employees and directors, which serves the best interests
of the Company and its stockholders. The Committee noted the importance of the
Company's stock option programs in accomplishing these goals, especially for
small and technology-based companies like the Company which utilize stock
options as a significant portion of their compensation and incentives. The
Committee believes that the use of stock options also aligns the interests of
the optionees with the interests of the stockholders, which is in the best
interests of the stockholders.
11
<PAGE> 14
The Committee noted that in 1994, all outstanding options (other than
those issued pursuant to the Directors' Stock Option Plan) exercisable at a
price in excess of $16.52 per share were repriced to $16.52 per share. The
Committee also noted that in 1996 all existing stock options held by directors,
officers, employees and consultants were repriced to $6.36 per share, and such
repricing was ratified by the stockholders of the Company. The Committee noted
that since those repricings, the Company's stock price had continued to
substantially decline. The Committee noted that the decline of the price of the
Company's Common Stock over the past few years has caused virtually all of the
Company's outstanding options granted to its officers, employee and directors to
be "underwater," with exercise prices substantially higher than the Company's
recent stock price. It was noted that most options were exercisable at prices
two to four times as high as the recent trading price of the Common Stock.
Accordingly, it was the opinion of the Committee that existing stock options
were not providing meaningful, if any, incentives to the holders of the options,
that the purposes of the Company's stock option program were not being achieved,
that the current stock options were not providing appropriate compensation, and
that reducing the exercise price of the stock options to the current market
price of the Common Stock was essential to further the purposes of the stock
option program and was in the best interests of the Company and its
stockholders.
It was noted that the receipt of options under the Company's stock option
plans is the primary means (other than $1,000 per meeting and expense
reimbursements) by which non-employee directors are compensated for their
services as members of the Board of Directors. The Committee also noted that
repricing stock options provided an additional or alternative method of
supplementing the compensation of, and attracting, retaining and motivating, the
Company's employees, compared to more substantial increases in their cash
compensation, which would reduce the Company's limited capital resources, and
the issuance of new options, which would dilute existing equity. The Committee
also took note of the fact that many public companies had recently repriced
outstanding options for similar reasons.
The Committee also considered the legal and accounting issues and
considerations relating to the repricing of stock options. The Committee
consulted with counsel and analyzed the requirements for disclosure of the
repricing of stock options in the Company's filings with the Securities and
Exchange Commission and the Board's fiduciary duties. The Committee received the
advice of the Company's independent auditors on the accounting and tax issues
attendant to a repricing. The Committee also consulted informally with its
financial advisors and, based on such consultation and advice, concluded that
the repricing of stock options would not have a long-term detrimental effect on
the market for the Common Stock.
Based on the foregoing, the Committee concluded that a reduction in the
exercise price of outstanding options held by officers, employees and directors
was appropriate to provide meaningful incentives to option holders to operate
the Company with the goal of maximizing stockholder value and would provide
appropriate compensation for services. Accordingly, the Committee unanimously
concluded that all outstanding stock options held by the officers, employees and
directors of the Company should be repriced, with the option exercise price
being $2.00, the last sale price of the Company's Common Stock as reported on
the Nasdaq National Market on October 6, 1998, the date the Board of Directors
adopted and approved the repricing. All other terms of the options, including
vesting and termination, remain unchanged, except (i) all repriced options held
by W. Phillip Marcum and A. Bradley Gabbard will be deemed vested as of October
6, 1999, irrespective of vesting conditions of the prior options, and (ii) no
repriced employee options will be exercisable prior to October 6, 1999, one year
after the date of repricing, even if the prior options vested before such date.
COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS
W. Phillip Marcum
Basil M. Briggs
Harry I. Skilton
DIRECTOR COMPENSATION
Directors who are officers or employees of the Company or any of its
subsidiaries do not receive any additional compensation for serving on the Board
of Directors. All directors are reimbursed for out-of-pocket costs of attending
meetings of the Board of Directors and its committees. Directors who are not
officers or employees of the Company or any of its subsidiaries ("Non-Employee
Directors") currently receive a fee of $1,000 for attendance at each meeting of
the Board of Directors. Non-Employee Directors also receive stock options
granted by the Company. Until June 1998, such options were granted under the
Company's Directors' Stock Option Plan (the "Directors' Plan"). Since June 1998,
all such options are granted under the Company's 1998 Stock Incentive Plan (the
"1998 Plan"). Under the formula for these stock option grants, which is the same
in both the Directors' Plan and the 1998 Plan, each person who is first elected
or appointed
12
<PAGE> 15
to serve as a Non-Employee Director is automatically granted an option to
purchase 5,000 shares of Common Stock. On the date of the Annual Meeting of
Stockholders each year, each Non-Employee Director (who has been such for at
least six months) is automatically granted an option to purchase 2,500 shares of
Common Stock. All options vest and become exercisable immediately upon grant.
Additional non-formula options can be granted to Non-Employee Directors under
the 1998 Plan in the discretion of the Board of Directors.
Each Non-Employee Director has the right to irrevocably elect on an annual
basis in advance to receive additional stock options under the 1998 Plan
("Meeting Options") in lieu of cash fees for attending meetings of the Board of
Directors. The Meeting Options are granted on the date of each Annual Meeting of
Stockholders and vest in 25% increments on the date of each of the subsequent
four regular quarterly meetings of the Board of Directors attended by such
Non-Employee Director. The number of shares of Common Stock exercisable upon the
exercise of Meeting Options are such that the value of the stock options granted
is equal to the amount of fees waived.
All options granted to Non-Employee Directors are nonqualified stock
options exercisable at a price equal to the fair market value of the Common
Stock on the date of grant and have ten year terms, subject to earlier
termination in the event of the termination of the optionee's status as a
director or the optionee's death. Options typically remain exercisable for one
year after a Non-Employee Director dies and for that number of years after a
Non-Employee Director leaves the Board of Directors (for any reason other than
death or removal for cause) equal to the number of full or partial years that
the Non-Employee Director served as a director, but not beyond the ten year term
of the option. On October 6, 1998, the exercise price of all options then
outstanding to Non-Employee Directors under the Directors' Plan and under the
1998 Plan were reduced to $2.00 per share, the closing sale price of the Common
Stock as reported on the Nasdaq National Market on such date. As of December 31,
1998, options to purchase 110,000 shares of Common Stock were outstanding to
Non-Employee Directors under the Directors' Plan and options to purchase 17,428
shares of Common Stock were outstanding to Non-Employee Directors under the 1998
Plan, all at an exercise price of $2.00 per share.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On March 7, 1997, options to purchase 12,500 shares of Common Stock were
granted to Stephen E. McGregor, a former director of the Company, and options to
purchase 2,500 shares of Common Stock were granted to Mr. Lloyd, a director of
the Company, under the Directors' Plan at an exercise price that has been
reduced to $2.00 per share pursuant to the 1998 stock option repricing, for
personal services rendered by such non-employee directors in connection with a
Metretek strategic alliance.
In December 1997, Marcum Gas Transmission, Inc., a wholly-owned subsidiary
of the Company, sold one-third of its preferred and performance share interests
and one-third of its interest in future management and administrative fees in
two business trusts to Odessa Exploration Incorporated ("Odessa"), a subsidiary
of Key Energy Services, Inc. Odessa paid MGT $700,000 for its interest, a
mutually agreed reduction from an initial purchase price amount of $1,000,000.
W. Phillip Marcum, the Chairman of the Board, President and Chief Executive
Officer and a director of the Company, is also a director of Key Energy
Services, Inc.
On May 4, 1998, in connection with the Company's acquisition, through
Metretek, of certain assets of American Meter Software, a wholly-owned
subsidiary of American Meter, Metretek entered into a license agreement with
American Meter and American Meter Software, providing for the license by
American Meter and American Meter Software to Metretek of certain operating
software, and the development, manufacture and sale by Metretek to American
Meter and American Meter Software of certain electronic components and related
equipment pertaining to electronic temperature and pressure correction to be
embedded within certain new rotary and turbine meters of American Meter. The
license agreement also grants to American Meter and its affiliates the right to
sell Metretek products in the United States and Canada at certain agreed-upon
prices. Subsequent to the acquisition, Metretek and American Meter entered into
an international sales agreement, pursuant to which American Meter and its
affiliates have the non-exclusive right to sell Metretek products
internationally. Harry I. Skilton, the President, Chief Executive Officer and a
director of American Meter, became a member of the Board of Directors of the
Company in connection with this acquisition. During fiscal 1998, the Company
recorded revenues of approximately $522,000 with respect to sales to American
Meter under the license agreement and the international sales agreement. The
terms of the license agreement and the international sales agreement were the
result of arms-length negotiations between the parties.
Each material transaction between the Company and any related party is
approved by a majority of the members of the Board of Directors of the Company
who are disinterested in the transaction.
13
<PAGE> 16
PROPOSAL NO. 2
AMENDMENT TO THE RESTATED CERTIFICATE TO
CHANGE THE NAME OF THE COMPANY
In March 1999, the Board of Directors unanimously adopted a resolution
authorizing, and unanimously recommended that the stockholders of the Company
approve, an amendment to the Company's Restated Certificate to change the name
of the Company to "Metretek Technologies, Inc."
If the Name Change Proposal is approved by the stockholders, Article FIRST
of the Company's Restated Certificate will be amended to read in its entirety as
follows:
"FIRST: The name of the corporation is Metretek Technologies, Inc."
REASONS FOR NAME CHANGE
The Board of Directors believes that it is in the best interests of the
Company and its stockholders to change its corporate name to more accurately
reflect the Company's current business, which is providing data management
technologies and services in the energy measurement field, and to align its
corporate name with the Company's most publicly recognized subsidiary, Metretek.
Important and positive changes have occurred at the Company over the past
several years. The Company discontinued its compressed natural gas business in
1997 and its natural gas assets management business in 1998. While the Company's
current name served it well in the past, it does not reflect the Company's
present business or future goals. The Board of Directors believes that its
current name causes the Company to be inaccurately perceived as to the type of
business in which it is engaged. After careful consideration, the Board of
Directors believes that Metretek Technologies, Inc. better reflects the
business, strategy and focus of the Company and will provide a more accurate
perception of the same to the public.
EFFECT OF NAME CHANGE
If approved by the stockholders at the Annual Meeting, the change of the
Company's name will become effective upon the filing of a Certificate of
Amendment to the Restated Certificate with the Secretary of State of the State
of Delaware.
The change of the Company's name will not affect in any way the validity
or transferability of the Company's outstanding securities, or the certificates
therefor, or the Company's capitalization or corporate structure. STOCKHOLDERS
WILL NOT BE REQUIRED TO SURRENDER OR EXCHANGE THEIR CERTIFICATES REPRESENTING
COMMON STOCK OR COMMON STOCK PURCHASE WARRANTS FOR NEW CERTIFICATES BEARING THE
NEW CORPORATE NAME.
In addition, if the stockholders approve the name change, the Company
intends to change the symbol for the Company's Common Stock on the Nasdaq
National Market from "MGAS" to "MTEK", and to change the symbol for the
Company's Common Stock Purchase Warrants on the Nasdaq SmallCap Market from
"MGASW" to "MTEKW", effective as soon as practicable following the effectiveness
of the filing of the Certificate of Amendment with the Secretary of State of the
State of Delaware.
Although the Board of Directors intends to file the Certificate of
Amendment as soon as practicable following the date of the Annual Meeting, if,
in the judgment of the Board of Directors, any circumstances exist that would
make consummation of the name change inadvisable, then, in accordance with
Delaware law and notwithstanding approval of the proposed amendment by the
stockholders, the Board of Directors may abandon the name change, either before
or after approval and authorization of the proposed amendment by the
stockholders, at any time prior to the effectiveness of the filing of the
Certificate of Amendment.
NO APPRAISAL RIGHTS
Under Delaware law, stockholders are not entitled to appraisal rights with
respect to the Name Change Proposal.
14
<PAGE> 17
VOTE REQUIRED
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 and approve the amendment to the Company's Restated Certificate to change
the name of the Company to Metretek Technologies, Inc.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE ADOPTION AND APPROVAL OF THE AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE
TO CHANGE THE NAME OF THE COMPANY TO METRETEK TECHNOLOGIES, INC. PROXY CARDS
SIGNED AND TIMELY RETURNED TO THE COMPANY WILL BE SO VOTED, UNLESS CONTRARY
INSTRUCTIONS ARE SPECIFIED THEREON.
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has unanimously appointed Deloitte &
Touche LLP to serve as the Company's independent auditors for the fiscal year
ending December 31, 1999. Deloitte & Touche LLP has served as the Company's
independent auditors since 1991, the Company's first fiscal year. Services
provided to the Company by Deloitte & Touche LLP during fiscal 1998 included the
audit of the Company's consolidated financial statements, services related to
filings of reports with the Securities and Exchange Commission, preparation of
tax returns and consultation in connection with various accounting and tax
matters. A representative of Deloitte & Touche LLP is expected to be present at
the Annual Meeting, will have the opportunity to make a statement if he desires
to do so, and is expected to be available to respond to appropriate questions.
The affirmative vote of the holders of a majority of the shares of Common
Stock present, in person or by proxy, and entitled to vote at the Annual Meeting
is required to ratify the appointment by the Board of Directors of Deloitte &
Touche LLP as the Company's independent auditors for the fiscal year ending
December 31, 1999.
If the stockholders fail to ratify the appointment of Deloitte & Touche
LLP, then the Board of Directors will reconsider its appointment. Even if the
appointment is ratified, the Board of Directors may, in its discretion, appoint
different independent auditors for 1999 at any time during the year if the Board
of Directors determines that such a change would be in the best interests of the
Company and its stockholders.
The Board of Directors unanimously recommends that stockholders vote FOR
the ratification of the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year ending December 31, 1999. Proxy cards
signed and timely returned to the Company will be so voted, unless contrary
instructions are specified thereon.
ANNUAL REPORT
THE COMPANY'S 1998 ANNUAL REPORT, WHICH CONTAINS THE COMPANY'S ANNUAL
REPORT ON FORM 10-KSB WITH RESPECT TO FISCAL 1998 AND INCLUDES THE COMPANY'S
AUDITED FINANCIAL STATEMENTS FOR FISCAL 1998, ACCOMPANIES THIS PROXY STATEMENT
BUT IS NOT A PART OF THIS PROXY STATEMENT OR THE COMPANY'S PROXY SOLICITATION
MATERIALS. THE COMPANY WILL PROVIDE, WITHOUT CHARGE, ADDITIONAL COPIES (WITHOUT
EXHIBITS) OF ITS ANNUAL REPORT ON FORM 10-KSB FOR FISCAL 1998 TO ANY STOCKHOLDER
UPON RECEIPT OF A WRITTEN REQUEST, ADDRESSED TO MARCUM NATURAL GAS SERVICES,
INC., 1675 BROADWAY, SUITE 2150, DENVER, COLORADO 80202, ATTENTION: SECRETARY.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act ("Section 16(a)") requires the Company's
directors and executive officers, and beneficial owners of more than 10% of the
outstanding Common Stock, to file initial reports of ownership on Form 3 and
reports of changes in ownership on Form 4 or Form 5 with the SEC, and to furnish
the Company with copies of all such reports that they file. Based solely upon
its review of the copies of such forms received by the Company, the Company
believes that, during 1998, all reports required by Section 16(a) to be filed by
such persons were timely filed, except for the late filing of Mr. Skilton's
initial report of ownership on Form 3.
15
<PAGE> 18
STOCKHOLDER PROPOSALS
Stockholders of the Company may submit proper proposals for consideration
at the 2000 Annual Meeting of Stockholders by submitting their proposals in
writing to the Company in a timely manner and otherwise in compliance with
federal and state laws and regulations and the Company's By-Laws. In order to be
considered for inclusion in the Company's proxy materials for the 2000 Annual
Meeting of Stockholders, stockholder proposals must be received by the Secretary
of the Company on or before January 2, 2000, and must otherwise comply with the
requirements of Rule 14a-8 of the Exchange Act ("Rule 14a-8"). The timely
submission of a stockholder proposal does not guarantee that it will be included
in the Company's proxy materials for the 2000 Annual Meeting.
In addition, the Company's By-Laws establish an advanced notice procedure
that stockholders must follow in order to nominate directors or to bring other
business before an annual meeting of stockholders without complying with Rule
14a-8. These advance notice procedures require that, among other things, notice
of a director nomination or other business must be submitted in writing to the
Secretary of the Company not less than 45 days nor more than 150 days prior to
the anniversary of the date on which the Company first mailed its proxy
materials for the prior annual meeting, unless the date of the annual meeting is
changed by more than 30 days from the anniversary of the date of the prior
annual meeting. For director nominations or other business to be properly
brought before the 2000 Annual Meeting, a stockholder must deliver written
notice to the Secretary of the Company no sooner than December 2, 1999 and no
later than March 16, 2000; provided, however, that if the date of the 2000
Annual Meeting is changed by more than 30 days from the date of the 1999 Annual
Meeting, notice must be received not later than the later of 75 days before the
date of the 2000 Annual Meeting or 10 days following the date on which public
announcement of the date of the 2000 Annual Meeting is first made.
The notice must contain the information specified in the By-Laws
concerning the matters to be brought before such meeting and concerning the
stockholder proposing such matters, including the name, address, number of
shares beneficially owned and any material interest of the stockholder making
the proposal. Notice of a director nomination must include information on
various matters regarding the nominee, including the nominee's name, age,
business and residence address, principal occupation and security holdings and
any arrangements between the stockholder and the nominee. Notice of other
business must include a description of the proposed business, the reasons
therefor and other specified matters. A copy of the relevant provisions of the
Company's By-Laws may be obtained by a stockholder without charge upon written
request to the Secretary of the Company. All notices of proposals by
stockholders, whether or not to be included in the Company's proxy materials,
must be sent to Marcum Natural Gas Services, Inc., 1675 Broadway, Suite 2150,
Denver, Colorado 80202, attention: Secretary.
Any stockholder proposal must also comply with all other applicable
provisions of the Company's Restated Certificate and By-Laws, the Exchange Act,
including the rules and regulations thereunder, and Delaware law. No stockholder
proposal will be considered unless it is in compliance with the foregoing
requirements. If a stockholder does not comply with the requirements of Rule
14a-4 of the Exchange Act, then the persons appointed as proxies in the proxy
card solicited by the Board of Directors of the Company for the 2000 Annual
Meeting may exercise discretionary voting authority to vote in accordance with
their best judgment on any proposal submitted by such stockholder outside of
Rule 14a-8.
OTHER MATTERS
After the deadline for inclusion of stockholder proposals in this Proxy
Statement established by Rule 14a-8, Famco Value Income Partners, L.P. submitted
a proposal requesting the Board of Directors of the Company to refrain from
adopting any future stockholder rights plan without prior stockholder approval
and to redeem or terminate the Company's existing Rights Plan. If that or any
similar proposal is properly brought before the Annual Meeting, the persons
appointed as proxies in the accompanying proxy card intend to exercise their
discretionary authority to vote against such proposal.
As of the date of this Proxy Statement, the Board of Directors knows of no
other matters to be presented at the Annual Meeting. However, if any other
matters are properly presented at the Annual Meeting, the persons appointed as
proxies in the accompanying proxy card will have the discretionary authority to
vote the shares represented by the proxy card in accordance with their best
judgment.
By Order of the Board of Directors
Gary J. Zuiderveen
Secretary
April 30, 1999
Denver, Colorado
16
<PAGE> 19
PROXY MARCUM NATURAL GAS SERVICES, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 7, 1999
The undersigned stockholder of Marcum Natural Gas Services, Inc., a Delaware
corporation (the "Company"), hereby appoints W. Phillip Marcum and A. Bradley
Gabbard, or either of them, with full power and substitution (the "proxies"), as
proxy or proxies of the undersigned, to represent the undersigned, and to
exercise all the powers that the undersigned would have if personally present to
act and to vote all of the shares of the Company that the undersigned is
entitled to vote, at the Annual Meeting of Stockholders of the Company (the
"Annual Meeting") called to be held on Monday, June 7, 1999, at 9:00 a.m. at the
Hilton Melbourne Beach Oceanfront, 3003 North Highway A1A, Indialantic, Florida,
and at any adjournments or postponements thereof, as follows:
1. To elect three (3) directors of the Company to serve for a term of three
years and until their successors are duly elected and qualified.
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for
(except as marked to the all nominees listed below.
contrary below).
A. Bradley Gabbard Ronald W. McKee Albert F. Thomasson
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW:)
------------------------------------------------------------------------
2. To adopt and approve an amendment to the Company's Restated Certificate of
Incorporation, as amended, to change the name of the Company to Metretek
Technologies, Inc.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To ratify the appointment by the Board of Directors of Deloitte & Touche
LLP as the Company's independent auditors for the fiscal year ending
December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the proxies are authorized to take action and to vote
upon such other business as may properly come before the Annual Meeting or
any adjournments or postponements thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH ITEM
The shares represented by this proxy card when properly executed will be voted
as specified. IF NO SPECIFICATION IS MADE, THE SHARES WILL BE VOTED FOR ITEMS 1,
2 AND 3 AND IN ACCORDANCE WITH THE DISCRETION OF THE PROXIES UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS OR
POSTPONEMENTS THEREOF. All proxies previously given are hereby revoked. Receipt
of the accompanying Proxy Statement is hereby acknowledged.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
SELF-ADDRESSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
Date:
----------------------------------
---------------------------------------
Signature
---------------------------------------
Additional Signature (if shares are
held jointly)
INSTRUCTIONS: Please sign exactly as your name appears on the label above and
return this proxy card promptly in the accompanying envelope. When shares are
held by joint tenants, both should sign. When shares are held in the name of a
corporation, partnership, limited liability company or other entity, please sign
the full entity name by an authorized officer, partner, manager, member or other
authorized person. When signing as attorney, executor, administrator, trustee,
guardian or in any other representative capacity, please give your full title as
such.
[ ] Please check this box if you are planning to attend the
Annual Meeting of Stockholders.
