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 ss. 240.14a-11(c) or ss. 240.14a-12
CALLON PETROLEUM COMPANY
(Name of Registrant as Specified in its Charter)
_____________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
<PAGE>
CALLON PETROLEUM COMPANY
200 NORTH CANAL STREET
NATCHEZ, MISSISSIPPI 39120
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, APRIL 29, 1999
TO THE SHAREHOLDERS OF
CALLON PETROLEUM COMPANY (THE "COMPANY"):
Notice is hereby given that the Annual Meeting of Shareholders (the
"Annual Meeting") of the Company will be held in Natchez, Mississippi on
Thursday, April 29, 1999, at 9:00 a.m., in the Le Grand Pre Ballroom of the
Radisson Natchez Eola Hotel, 110 North Pearl Street, Natchez, Mississippi 39120,
for the following purposes:
1. To elect three Class II directors to hold office until the 2002
Annual Meeting of Shareholders.
2. To ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants for the fiscal year ending December
31, 1999.
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment or adjournments thereof.
Shareholders of record at the close of business on March 3, 1999 will be
entitled to notice of and to vote at the Annual Meeting, or any adjournment or
adjournments thereof.
Shareholders are cordially invited to attend the Annual Meeting in person.
Those individuals who will not attend and who wish their shares voted are
requested to sign, date and mail promptly the enclosed proxy for which a
postage-prepaid return envelope is provided.
By Order of the Board of Directors
H. Michael Tatum
SECRETARY
Natchez, Mississippi
March 29, 1999
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. IF YOU CANNOT
ATTEND, PLEASE SIGN AND DATE THE ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY
IN THE RETURN ENVELOPE ENCLOSED FOR YOUR USE. NO POSTAGE IS REQUIRED IF THE
ENVELOPE IS MAILED IN THE UNITED STATES.
<PAGE>
PROXY STATEMENT
------------------------
CALLON PETROLEUM COMPANY
200 NORTH CANAL STREET
NATCHEZ, MISSISSIPPI 39120
(601) 442-1601
------------------------
ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, APRIL 29, 1999
------------------------
SOLICITATION AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Callon Petroleum Company, a
Delaware corporation (the "Company"), from holders of the common stock, $.01
par value per share ("Common Stock"), of the Company for use at the Annual
Meeting of Shareholders of the Company to be held on Thursday, April 29, 1999,
at 9:00 a.m., in the Le Grand Pre Ballroom of the Radisson Natchez Eola Hotel,
110 North Pearl Street, Natchez, Mississippi 39120, and at any adjournment or
adjournments thereof (such meeting or adjournment thereof is referred to herein
as the "Annual Meeting"), for the purpose of considering and voting upon the
matters set forth in the accompanying Notice of Annual Meeting of Shareholders
("Notice").
A proxy in the form accompanying this Proxy Statement (each a "Proxy"),
when properly executed and returned, will be voted in accordance with the
directions specified on the Proxy, and otherwise in accordance with the judgment
of the persons designated therein as proxies. Any Proxy which does not withhold
authority to vote or on which no other instructions are given will be voted for
the election of the nominees named herein to the Board of Directors and in favor
of the other proposals set forth in the Notice. Any Proxy may be revoked at any
time before it is exercised by delivering, to the Secretary of the Company,
written notice of revocation or by duly executing a Proxy bearing a later date,
or by voting in person at the Annual Meeting.
This Proxy Statement and the accompanying Notice and form of Proxy are
being mailed to shareholders on or about March 29, 1999. The Annual Report for
the Company's fiscal year ended December 31, 1998 is also being mailed to
shareholders contemporaneously with this Proxy Statement, although the Annual
Report does not form a part of the material for the solicitation of Proxies.
Proxies will be solicited primarily by mail, but employees of the Company
may also solicit Proxies in person or by telephone. Arrangements may be made
with brokerage firms or other custodians, nominees, and fiduciaries to send
Proxy materials to the beneficial owners of the Common Stock of the Company. All
costs incurred in the solicitation of Proxies will be borne by the Company.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
Unless otherwise indicated, proxies in the form enclosed that are properly
executed, duly returned and not revoked will be voted in favor of:
(1) the election of the three Class II director nominees to the Board
of Directors named herein; and
(2) the ratification of the appointment of Arthur Andersen LLP as the
Company's independent public accountants for the fiscal year
ending December 31, 1999.
The Board of Directors is not presently aware of other proposals that may
be brought before the Annual Meeting. In the event other proposals are brought
before the Annual Meeting, the persons named in the enclosed Proxy will vote in
accordance with what they consider to be in the best interests of the Company
and its shareholders.
<PAGE>
VOTING REQUIREMENTS
The Board of Directors has fixed the close of business on March 3, 1999 as
the record date (the "Record Date") for the determination of shareholders
entitled to notice of, and to vote at, the Annual Meeting. A complete list of
all shareholders entitled to vote at the Annual Meeting will be open for
examination by any shareholder during normal business hours for a period of ten
days prior to the Annual Meeting at the offices of the Company, 200 North Canal
Street, Natchez, Mississippi 39120. Such list will also be available at the
Annual Meeting and may be inspected by any shareholder who is present. At the
Record Date, the Company's outstanding voting securities consisted of 8,543,722
shares of Common Stock. Holders of Common Stock will be entitled to one vote per
share of Common Stock held of record on the Record Date for each proposal to be
presented at the Annual Meeting.
QUORUM AND OTHER MATTERS
The holders of a majority of the total shares of Common Stock issued and
outstanding on the Record Date, whether present in person or represented by
proxy, will constitute a quorum for the transaction of business at the Annual
Meeting. Broker non-votes and abstentions count towards the establishment of a
quorum. The election of directors requires the favorable vote of the holders of
a plurality of shares of Common Stock present and voting, in person or by proxy,
at the Annual Meeting. Abstentions and broker non-votes have no effect on
determinations of plurality except to the extent that they affect the total
votes received by any particular candidate. A majority of the votes represented
by the shareholders present at the Annual Meeting, in person or by proxy, is
necessary for ratification of the Company's independent public accountants.
Abstaining shares will be considered present at the Annual Meeting for this
matter so that the effect of abstentions will be the equivalent of a "no"vote.
With respect to broker non-votes, the shares will not be considered present at
the Annual Meeting for this matter so that broker non-votes will have the
practical effect of reducing the number of affirmative votes required to achieve
a majority vote by reducing the total number of shares from which the majority
is calculated.
2
<PAGE>
BENEFICIAL OWNERSHIP OF SECURITIES
MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth, as of March 3, 1999, certain information
with respect to the ownership of shares of Common Stock and the Company's $2.125
Convertible Exchangeable Preferred Stock ("Preferred Stock") as to (i) all
persons known by the Company to be the beneficial owners of 5% or more of the
outstanding Common Stock, (ii) each director, (iii) each nominee for director,
(iv) each of the executive officers named in the Summary Compensation Table, and
(v) all executive officers and directors of the Company as a group. Information
set forth in the table with respect to beneficial ownership of Common Stock and
Preferred Stock has been obtained from filings made by the named beneficial
owners with the Securities and Exchange Commission ("Commission") as of the
Record Date or, in the case of executive officers and directors of the Company,
has been provided to the Company by such individuals. Holders of Preferred Stock
are not entitled to vote at the Annual Meeting.
<TABLE>
<CAPTION>
COMMON STOCK PREFERRED STOCK
------------------------ ---------------------
AMOUNT AND AMOUNT AND
NAME AND NATURE OF PERCENT NATURE OF PERCENT
ADDRESS OF BENEFICIAL OF BENEFICIAL OF
BENEFICIAL OWNERS(A) OWNERSHIP CLASS OWNERSHIP CLASS
- ------------------------------------- ---------- ------- ---------- -------
<S> <C> <C> <C> <C>
DIRECTORS:
John S. Callon.................. 303,926 (b) 3.52% 0 --
Fred L. Callon.................. 784,756 (c) 9.02% 0 --
200 North Canal Street
P. O. Box 1287
Natchez, Mississippi 39120
Dennis W. Christian............. 161,185 (d) 1.86% 0 --
Robert A. Stanger............... 35,856 (e) * 0 --
John C. Wallace................. 1,999,779 (f) 23.31% 0 --
65 Vincent Square
London, SW1P 2RX, England
B. F. Weatherly................. 142,664 (g) 1.66% 0 --
Richard O. Wilson............... 62,877 (h) * 1,000 *
DIRECTOR NOMINEE:
Leif Dons....................... 0 -- 0 --
NAMED EXECUTIVE OFFICERS:
John S. Weatherly............... 149,660 (i) 1.73% 0 --
Thomas E. Schwager.............. 47,652 (j) * 0 --
Kathy G. Tilley................. 102,980 (k) 1.19% 0 --
DIRECTORS AND EXECUTIVE OFFICERS:
AS A GROUP (14 PERSONS)............ 3,801,672 (l) 40.54% 1,000 *
CERTAIN BENEFICIAL OWNERS:
Fred. Olsen Energy ASA.......... 1,839,386 (m) 21.53% 0 --
Fred. Olsensgate 2
0152 Oslo, Norway
The Guardian Life Insurance
Company of America............ 748,060 (n) 8.27% 220,000 21.03%
201 Park Avenue South
New York, New York 10003
State Street Research &
Management Company............ 827,400 (o) 9.68% -- --
One Financial Center,
Thirtieth Floor
Boston, Massachusetts
02111-2690
Brinson Partners, Inc........... 554,000 (p) 6.48% -- --
209 South LaSalle
Chicago, Illinois 60604-1295
UBS AG.......................... 554,000 (p) 6.48% -- --
Bahnhofstrasse 45
8021, Zurich, Switzerland
Dimensional Fund Advisors
Inc........................... 505,800 (q) 5.92% -- --
1299 Ocean Avenue, Eleventh
Floor
Santa Monica, California 90401
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
3
<PAGE>
- ------------
* less than 1%
(a) Unless otherwise indicated, each of the above persons may be deemed to have
sole voting and dispositive power with respect to such shares.
(b) Of the 303,926 shares beneficially owned by John S. Callon, 93,926 are
owned directly by him (of which 15,000 shares represent restricted stock
which vested on February 18, 1999); 105,000 shares are held in a family
limited partnership; and 90,000 shares are subject to options under the
Company's 1994 Stock Incentive Plan ("1994 Plan") exercisable within 60
days. Under the terms of a Stockholders' Agreement ("Stockholders'
Agreement"), among certain members of the Callon family ("Callon
Family") and NOCO Enterprises, L.P. ("NOCO"), dated September 16, 1994
and subsequently amended to include Fred. Olsen Energy ASA ("F.O.
Energy"), John S. Callon and the other members of the Callon Family have
the right of first refusal to acquire shares of Common Stock proposed to be
sold by NOCO or F.O. Energy under certain circumstances and all parties to
the Stockholders' Agreement have agreed to support two directors nominated
by the Callon Family and two directors nominated by NOCO and F.O. Energy.
Shares indicated as owned by John S. Callon do not include shares of Common
Stock owned by NOCO and F.O. Energy and shares of Common Stock owned by
certain other members of the Callon Family, including 58,500 shares owned
by John S. Callon's wife over which he disclaims beneficial ownership. NOCO
and F.O. Energy, as of March 3, 1999, owned 107,297 and 1,839,386 shares of
Common Stock, respectively. John S. Callon disclaims beneficial ownership
of the NOCO and F.O. Energy shares.
(c) Of the 784,756 shares beneficially owned by Fred L. Callon, 232,462 shares
are owned directly by him (of which 25,751 shares represent performance
shares awarded under the 1996 Plan which vested on February 18, 1999);
268,012 shares are held by him as custodian for certain minor Callon Family
members; 78,430 shares are held by him as trustee of certain Callon Family
trusts; 80,000 shares are subject to options under the 1994 Plan
exercisable within 60 days; 75,000 shares are subject to options under the
Company's 1996 Stock Incentive Plan ("1996 Plan") exercisable within 60
days; and 50,852 shares are held by Fred L. Callon as Trustee of shares
held by the Callon Petroleum Company Employee Savings and Protection Plan.
Under the terms of the Stockholders' Agreement (see note (b)), Fred L.
Callon and the other members of the Callon Family have the right of first
refusal to acquire shares of Common Stock proposed to be sold by NOCO or
F.O. Energy under certain circumstances and all parties to the
Stockholders' Agreement have agreed to support two directors nominated by
the Callon Family and two directors nominated by NOCO and F.O. Energy.
Shares indicated as owned by Fred L. Callon do not include shares of Common
Stock owned by NOCO and F.O. Energy and shares of Common Stock owned by
certain other members of the Callon Family, including 25,037 shares owned
by Fred L. Callon's wife over which he disclaims beneficial ownership. NOCO
and F.O. Energy, as of March 3, 1999, owned 107,297 and 1,839,386 shares of
Common stock, respectively. Fred L. Callon disclaims beneficial ownership
of these shares.
(d) Of the 161,185 shares beneficially owned by Dennis W. Christian, 31,685 are
owned directly by him (of which 23,570 shares represent performance shares
awarded under the 1996 Plan which vested February 18, 1999); 60,000 shares
are subject to options under the 1994 Plan exercisable within 60 days; and
69,500 shares are subject to options under the 1996 Plan exercisable within
60 days.
(e) Of the 35,856 shares beneficially owned by Robert A. Stanger, 856 are owned
directly by him; 20,000 shares are subject to options under the 1994 Plan
exercisable within 60 days; and 15,000 shares are subject to options under
the 1996 Plan exercisable within 60 days.
(f) Of the 1,999,779 shares beneficially owned by John C. Wallace, 3,125 shares
are owned directly by him; 20,000 shares are subject to options under the
1994 Plan exercisable within 60 days; 15,000 shares are subject to options
under the 1996 Plan exercisable within 60 days; 107,297 shares are owned by
NOCO; 14,971 shares are owned by Fred. Olsen, Ltd.; and 1,839,386 shares
are owned by F.O. Energy. See note (m) below.
(g) Of the 142,664 shares beneficially owned by B. F. Weatherly, 367 shares are
owned directly by him; 20,000 shares are subject to options under the 1994
Plan exercisable within 60 days; 15,000 shares are subject to options under
the 1996 Plan exercisable within 60 days; and 107,297 shares are owned by
NOCO. See note (m) below.
(h) Of the 62,877 shares beneficially owned by Richard O. Wilson, 20,000 shares
are subject to options under the 1994 Plan exercisable within 60 days;
15,000 shares are subject to options under the 1996 Plan exercisable within
60 days; 25,604 shares are held in a family limited partnership; and 2,273
shares are issuable upon conversion of 1,000 shares of Preferred Stock held
in the family partnership.
(i) Of the 149,660 shares beneficially owned by John S. Weatherly, 27,943 are
owned directly by him (of which 21,500 shares represent performance shares
awarded under the 1996 Plan which vested on February 18, 1999); 217 shares
are held as custodian for his minor children; 60,000 shares are subject to
options under the 1994 Plan exercisable within 60 days; and 61,500 shares
are subject to options under the 1996 Plan exercisable within 60 days.
(j) Of the 47,652 shares beneficially owned by Thomas E. Schwager, 14,452 are
owned directly by him and represent performance shares awarded under the
1996 Plan which vested on February 18, 1999; 20,000 shares are subject to
options under the 1994 Plan exercisable within 60 days; and 13,200 shares
are subject to options under the 1996 Plan exercisable within 60 days.
(k) Of the 102,980 shares beneficially owned by Kathy G. Tilley, 24,980 are
owned directly by her (of which 19,184 shares represent performance shares
awarded under the 1996 Plan which vested on February 18, 1999); 30,000
shares are subject to options under the 1994 Plan exercisable within 60
days; and 48,000 shares are subject to options under the 1996 Plan
exercisable within 60 days.
(l) Includes 456,000 shares subject to options under the 1994 Plan exercisable
within 60 days; 378,500 shares subject to options under the 1996 Plan
exercisable within 60 days; and 148,203 shares awarded as performance
shares or restricted stock which vested in February, 1999.
(m) As disclosed on a Schedule 13D dated August 20, 1997 and as otherwise
disclosed by F.O. Energy to the Company, F.O. Energy has the sole power to
vote and the sole power to dispose of 1,839,386 shares of Common Stock of
the Company. Ganger Rolf ASA, a public joint stock company organized and
existing under the laws of the Kingdom of Norway and the owner of 28.81% of
the outstanding capital stock of F.O. Energy ("Ganger Rolf") and Bonheur
ASA, a public joint stock company organized and existing under the laws of
the Kingdom of Norway and the owner of 28.81% of the outstanding capital
stock of F.O. Energy ("Bonheur"), together have the power to direct the vote
and disposition of the shares of Common Stock of the Company owned by F.O.
Energy. AS Quatro, a joint stock company organized and existing under the
laws of the Kingdom of Norway and the owner of 1.66% of the outstanding
capital stock of Ganger Rolf and 42.10% of the outstanding capital stock of
Bonheur ("Quatro") and AS Cinco, a joint stock company organized and
existing under the laws of the Kingdom of Norway and the owner of 11.99% of
the outstanding capital stock of Ganger Rolf ("Cinco"), each disclaims
beneficial ownership of the shares of Common Stock of the Company owned by
F.O. Energy. John C. Wallace, a director of the Company, is a director of
F.O. Energy and a director of Ganger Rolf, Bonheur, Quatro and Cinco and as
a result, may by deemed to share the power to vote and dispose of, and
therefore be a beneficial owner of the shares of Common Stock owned by F.O.
Energy. The principal business address and principal executive offices of
Ganger Rolf, Bonheur, Quatro and Cinco are located at Fred. Olsensgate 2,
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
4
<PAGE>
0152 Oslo, Norway. In connection with F.O. Energy's acquisition of the
shares of Common Stock of the Company, F.O. Energy has become a party to the
Stockholders' Agreement. See "Stockholders' Agreement". Because of the
Stockholders' Agreement, NOCO and certain of its affiliates, F.O. Energy,
Ganger Rolf, Bonheur, Quatro and Cinco and members of the Callon Family may
be deemed to be a "group" for purposes of beneficial ownership under
Commission regulations. If such a group were deemed to exist, it would
beneficially own over 43.91% of the Common Stock.
(n) Information is based upon a Schedule 13G/A, filed with the Commission on
February 11, 1998, by The Guardian Life Insurance Company of America and
certain of its affiliates. Includes 500,060 shares issuable upon conversion
of 220,000 shares of Preferred Stock.
(o) Information is based upon a Schedule 13G, filed with the Commission on
February 8, 1999 by State Street Research & Management Company ("State
Street"). Pursuant to the Schedule 13G, State Street has sole voting power
with respect to 700,400 shares and sole dispositive power with respect to
all of these shares.
(p) Information is based on a Schedule 13G, filed with the Commission on
February 11, 1999, by UBS AG and Brinson Partners, Inc. Both UBS AG and
Brinson Partners, Inc. represent that they possess shared voting and
dispositive power with respect to these shares in the Schedule 13G.
(q) Information is based upon a Schedule 13G, filed with the Commission on
February 11, 1999, by Dimensional Fund Advisors Inc.
Of 1,841,364 shares owned by the Callon Family, 303,926 are owned by John
S. Callon (see note (b) above) and 784,756 are owned by Fred L. Callon (see note
(c) above). As a result of the Stockholders' Agreement, the Callon Family, and
the Callon Family and NOCO and F.O. Energy, may be deemed to form a "group"
for purposes of beneficial ownership under Commission regulations (see note (m)
above). The Callon Family disclaims beneficial ownership of the Common Stock
owned by NOCO and F.O. Energy. In addition, each Callon Family shareholder
disclaims beneficial ownership of all shares of Common Stock owned by the other
Callon Family shareholders and the existence of a group comprised of the Callon
Family shareholders. If such a group were deemed to exist, it would beneficially
own 20.95% of the Common Stock.
PROPOSAL I
ELECTION OF DIRECTORS
NOMINEES
The Company's Certificate of Incorporation provides for a classified Board
of Directors. The Board of Directors is divided into three classes of nearly
equal size, designated as Class I (currently with three directors), Class II
(currently with two directors) and Class III (currently with two directors).
Initially, directors in each class were elected to hold office for terms of one
year, two years and three years, respectively. Upon the date of each annual
meeting after such initial classification, directors elected to succeed those
directors whose terms expire serve for a term which expires on the date of the
third succeeding annual meeting of shareholders after their election.
The terms of the two Class II directors, Messrs. John S. Callon and B. F.
Weatherly, will expire on the date of the Annual Meeting. In addition, on
February 1, 1999, the Board of Directors, pursuant to Article Six of the
Company's Certificate of Incorporation and Article III of the Company's Bylaws,
approved by unanimous written consent, a resolution increasing the size of the
Board of Directors from seven directors to eight directors by providing for an
additional Class II director, to be effective as of the date of the Annual
Meeting. Messrs. John S. Callon, B. F. Weatherly and Leif Dons (the
"Nominees") have been nominated to serve as Class II directors until the 2002
Annual Meeting and until their respective successors have been duly elected and
qualified.
It is intended that all shares of Common Stock represented by the Proxies
will be voted for the election of the Nominees, except where authority to vote
in the election of directors has been withheld. Should the Nominees become
unable or unwilling to serve as directors at the time of the Annual Meeting, the
person or persons exercising the Proxies will vote for the election of
substitute Nominees designated by the Board of Directors, or the Board of
Directors may choose to reduce the number of members of the Board of Directors
to be elected at the Annual Meeting in order to eliminate the vacancy. The
Nominees have consented to be nominated and have expressed their intention to
serve if elected. The Board of Directors has no reason to believe that the
Nominees will be unable or unwilling to serve if elected. Only the Nominees or
substitute Nominees designated by the Board of Directors will be eligible to
stand for election as directors at the Annual Meeting. See "Shareholders'
Proposals for 2000 Annual Meeting."
5
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
The following table provides information with respect to the Nominees and
all current directors whose terms will continue after the Annual Meeting and
present executive officers of the Company. Each executive officer has been
elected to serve until his or her successor is duly appointed or elected by the
Board of Directors or their earlier removal or resignation from office.
<TABLE>
<CAPTION>
COMPANY
NAME AGE POSITION SINCE PRESENT COMPANY POSITION
- ------------------------------------- --- -------------- ------------------------------------------------------
<S> <C> <C> <C>
CLASS I DIRECTORS:
(TERM EXPIRES IN 2001)
Robert A. Stanger 59 1995 Director
John C. Wallace 60 1994 Director
Richard O. Wilson 69 1995 Director
CLASS II DIRECTORS:
(TERM EXPIRES IN 1999)
John S. Callon 79 1994 Director; Chairman of the Board
B. F. Weatherly 55 1994 Director
Leif Dons 49 -- Director Nominee
CLASS III DIRECTORS:
(TERM EXPIRES IN 2000)
Fred L. Callon 49 1994 Director; President; Chief Executive Officer
Dennis W. Christian 52 1994 Director; Senior Vice President; Chief Operating
Officer
OTHER EXECUTIVE OFFICERS:
James O. Bassi 45 1997 Vice President; Controller
Thomas E. Schwager 48 1997 Vice President
H. Michael Tatum 70 1994 Vice President; Secretary
Kathy G. Tilley 53 1996 Vice President
John S. Weatherly 47 1994 Senior Vice President; Chief Financial Officer;
Treasurer
Stephen F. Woodcock 47 1997 Vice President
</TABLE>
The following is a brief description of the background and principal
occupation of each director (including each Nominee) and executive officer:
James O. Bassi is Vice President and Controller of the Company and Callon
Petroleum Operating Company ("Callon Petroleum Operating"). Prior to being
appointed to that position in November 1997, he was Corporate Controller from
June 1997 and prior thereto he was Manager of the Accounting Department for the
Company and Callon Petroleum Operating. Mr. Bassi has been employed by the
Company and its predecessors for a total of ten years. Prior to his employment
by the Company, he was employed by Arthur Andersen LLP. He received his B.S.
degree in accounting in 1976 from Mississippi State University. He is a member
of the American Institute of Certified Public Accountants and the Mississippi
Society of Certified Public Accountants.
John S. Callon is Chairman of the Board of Directors of the Company and
Callon Petroleum Operating. Effective January 2, 1997, John S. Callon resigned
from his position as Chief Executive Officer of the Company, a position he held
since 1980. Mr. Callon founded the Company's predecessors in 1950, and has held
an executive office with the Company or its predecessors since that time. He has
served as a director of the Mid-Continent Oil and Gas Association and as the
President of the Association's Mississippi-Alabama Division. He has also served
as Vice President for Mississippi of the Independent Petroleum Association of
America. He is a member of the American Petroleum Institute. Mr. Callon is the
uncle of Fred L. Callon.
6
<PAGE>
Fred L. Callon is President and Chief Executive Officer of the Company and
Callon Petroleum Operating. Prior to January 2, 1997, he was President and Chief
Operating Officer of the Company and had held that position with the Company or
its predecessors since 1984. He has been employed by the Company or its
predecessors since 1976. He graduated from Millsaps College in 1972 and received
his M.B.A. degree from the Wharton School of Finance in 1974. Following
graduation and until his employment by Callon Petroleum Operating, he was
employed by Peat, Marwick, Mitchell & Co., certified public accountants. He is a
certified public accountant and is a member of the American Institute of
Certified Public Accountants and the Mississippi Society of Certified Public
Accountants. He is the nephew of John S. Callon.
Dennis W. Christian is Senior Vice President and Chief Operating Officer of
the Company and Callon Petroleum Operating. Prior to January 1997, he was Senior
Vice President of Operations and Acquisitions and had held that or similar
positions with the Company or its predecessors since 1981. Prior to joining
Callon Petroleum Operating, he was resident manager in Stavanger, Norway, for
Texas Eastern Transmission Corporation. Mr. Christian received his B.S. degree
in petroleum engineering in 1969 from Louisiana Polytechnic Institute. His
previous experience includes five years with Chevron U.S.A. Inc.
Leif Dons has since 1997 been Senior Vice President, Business Development
of Fred. Olsen Energy ASA, a publicly held Norwegian company engaged in the
offshore energy service industry. From 1992 until 1997, Mr. Dons was employed by
Kvaerner ASA in various positions, including the fields of international
operations and the commercialization of new technology, and as resident country
manager responsible for Israel and Palestine. From 1983 until 1991, he served as
the managing director of Norwegian Oil Consortium A/S & Co., an oil company with
producing properties in Norway. He negotiated the sale of that company in 1991.
From 1973 until 1983, Mr. Dons held various positions as an analyst, staff
engineer and economist at the Pulp and Paper Research Institute, Norway and Saga
Petroleum ASA. Mr. Dons received a Master of Science degree in engineering from
the Norwegian Institute of Technology in 1973.
Thomas E. Schwager is Vice President of Engineering and Operations for the
Company and Callon Petroleum Operating. Prior to being appointed to the position
in November 1997, he has held engineering positions with the Company and its
predecessors since 1981. Prior to joining the Company, Mr. Schwager held various
engineering positions with Exxon Company USA in Louisiana and Texas. He received
his B.S. degree in petroleum engineering from Louisiana State University in
1972. He is a member of the Society of Petroleum Engineers and is a registered
professional engineer in the state of Louisiana.
Robert A. Stanger has been the managing general partner since 1978 of
Robert A. Stanger & Company, Inc., a Shrewsbury, New Jersey-based firm engaged
in publishing financial material and providing investment banking services to
the real estate and oil and gas industries. He is a director of Citizens
Utilities, Stamford, Connecticut, a provider of telecommunications, electric,
natural gas, and water services and Electric Lightwaves, Inc., Seattle,
Washington, a regional fiber optic telephone company. Previously, Mr. Stanger
was Vice President of Merrill Lynch & Co. He received his B.A. degree in
economics from Princeton University in 1961. Mr. Stanger is a member of the
National Association of Securities Dealers and the New York Society of Security
Analysts.
H. Michael Tatum is Vice President and Secretary for the Company and Callon
Petroleum Operating and is responsible for management of administrative matters.
Mr. Tatum has held this position with the Company or its predecessors since
1976, and has been employed by Callon Petroleum Operating since 1969. He
graduated from Southern Methodist University in 1967 and is a member of the
American Society of Corporate Secretaries and the Society for Human Resource
Management.
Kathy G. Tilley is Vice President of Acquisitions and New Ventures for the
Company and Callon Petroleum Operating and has held that position since April
1996. She was employed by Callon Petroleum Operating in December 1989 as manager
of acquisitions and prior thereto, held that or similar positions as a
consultant from 1981. Ms. Tilley received her B.A. degree in economics from
Louisiana State University in 1967.
John C. Wallace is a Chartered Accountant having qualified with Coopers &
Lybrand in Canada in 1963, after which he joined Baring Brothers & Co., Limited
in London, England. For more than the last
7
<PAGE>
eleven years, he has served as Chairman of Fred. Olsen Ltd., a London-based
corporation which he joined in 1968 and which specializes in the business of
shipping and property development. He is a director of Fred. Olsen Energy ASA, a
publicly held Norwegian company engaged in the offshore energy service industry;
Harland & Wolff PLC, Belfast, a shipbuilding yard for the offshore oil and gas
industry; and Ganger Rolf ASA and Bonheur ASA, Oslo, both publicly-traded
shipping companies. He is an executive officer of NOCO Management, Ltd., the
general partner of NOCO and of other companies associated with Fred. Olsen
Interests.
B. F. Weatherly is a principal of Amerimark Capital Group, Houston, Texas,
an investment banking firm, and a general partner of CapSource Fund, L.P.,
Jackson Mississippi, an investment fund. He is an executive officer of NOCO
Management Ltd., the general partner of NOCO. Prior to September 1996, he was
Executive Vice President, Chief Financial Officer and a director of Belmont
Constructors, Inc., a Houston, Texas-based industrial contractor formerly
associated with Fred. Olsen Interests. He holds a Master of Accountancy degree
from the University of Mississippi. He has previously been associated with
Arthur Andersen LLP, and has served as a Senior Vice President of Weatherford
International, Inc. B. F. Weatherly and John S. Weatherly are brothers.
John S. Weatherly is Senior Vice President, Chief Financial Officer and
Treasurer for the Company and Callon Petroleum Operating. Prior to April 1996,
he was Vice President, Chief Financial Officer and Treasurer of the Company and
had held that position since 1983. Prior to joining Callon Petroleum Operating
in August 1980, he was employed by Arthur Andersen LLP as audit manager in the
Jackson, Mississippi office. He received his B.B.A. degree in accounting in 1973
and his M.B.A. degree in 1974 from the University of Mississippi. He is a
certified public accountant and a member of the American Institute of Certified
Public Accountants and the Mississippi Society of Certified Public Accountants.
John S. Weatherly and B. F. Weatherly are brothers.
Richard O. Wilson is an Offshore Consultant. In his 42 years of working in
offshore drilling and construction, he spent two years with Zapata Offshore and
21 years with Brown & Root, Inc. working in various managerial capacities in the
Gulf of Mexico, Venezuela, Trinidad, Brazil, The Netherlands, the United Kingdom
and Mexico. He was a director and senior group vice president of Brown & Root,
Inc. and senior vice president of Halliburton, Inc. For the last 18 years he has
been associated with the Fred. Olsen Interests where he served as Chairman of
OGC International PLC, Dolphin A/S and Dolphin Drilling Ltd., and Belmont
Constructors, Inc. Since the sale of OGC International PLC to Halliburton, Inc.
in 1997, he has been a consultant to Brown & Root, Inc. on oil and gas projects
in Brazil, Bolivia, Mexico and Ecuador. He holds a B.S. degree in civil
engineering from Rice University. Mr. Wilson is a Fellow in the American Society
of Civil Engineers and is a member of the Institute of Petroleum, London,
England.
Stephen F. Woodcock is Vice President of Exploration for the Company and
Callon Petroleum Operating, being appointed to that position in November 1997.
He has been employed by the Company and Callon Petroleum Operating since 1995.
Prior thereto, he was manager of geophysics for CNG Producing Company and
division geophysicist for Amoco Production Company. Mr. Woodcock received a
masters degree in geophysics from Oregon State University in 1975. He is a
member of the Society of Exploration Geophysicists and the American Association
of Petroleum Geologists.
All officers and directors (including the Nominees) of the Company are
United States citizens, except Mr. Wallace, who is a citizen of Canada, and Mr.
Dons, who is a citizen of Norway.
STOCKHOLDERS' AGREEMENT
Pursuant to the Stockholders' Agreement among the Callon Family, NOCO and
F.O. Energy dated September 16, 1994, the Callon Family, on the one hand and
NOCO and F.O. Energy on the other hand, each elect two directors to the
Company's Board of Directors. Specifically, the Stockholders' Agreement provides
that the Callon Family, NOCO and F.O. Energy shall use their best efforts,
including voting the shares of Common Stock which they own, to cause the
Company's Board of Directors to be composed of at least four members, two of
such members to be selected by the Callon Family and two of such members to be
selected by NOCO and F.O. Energy. The current directors of the Company are John
S. Callon, Fred L.
8
<PAGE>
Callon, Dennis W. Christian, Robert A. Stanger, John C. Wallace, B. F.
Weatherly, and Richard O. Wilson. Prior to the Consolidation, the Company's sole
shareholder appointed John S. Callon and Fred L. Callon to the Board of
Directors as representatives of the Callon Family. In 1994, John C. Wallace and
B. F. Weatherly were appointed to the Board of Directors as representatives of
NOCO (F.O. Energy did not become a party to the Stockholders Agreement until
1997) subsequent to the Consolidation.
Mr. Wallace was nominated and re-elected to the Board of Directors as one
of the representatives of NOCO at the 1995 and 1998 Annual Meeting and Mr. B. F.
Weatherly was nominated and elected to the Board of Directors at the 1996 Annual
Meeting as the other representative of NOCO. Mr. John S. Callon was nominated
and re-elected to the Board of Directors at the 1996 Annual Meeting as a
representative of the Callon Family and Mr. Fred L. Callon was nominated and
re-elected to the Board of Directors at the 1997 Annual Meeting as the other
representative of the Callon Family. Mr. John S. Callon currently stands for
re-election as a representative of the Callon Family and Mr. Leif Dons currently
stands for election as a representative of NOCO and F.O. Energy. Because the
Callon Family, NOCO and F.O. Energy own more than 43.91% of the outstanding
shares of Common Stock, the election of Messrs. John S. Callon and Leif Dons as
directors at the Annual Meeting is assured under the terms of the Stockholders'
Agreement.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
with the Commission and any exchange or other system on which such securities
are traded or quoted, initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than ten percent shareholders are required by the
Commission's regulations to furnish the Company and any exchange or other system
on which such securities are traded or quoted with copies of all Section 16(a)
forms they file with the Commission. Since 1994, the Company's Common Stock was
quoted on the National Association of Securities Dealers, Inc.'s National Market
System ("Nasdaq NMS"). On April 22, 1998, the Common Stock began trading on
the New York Stock Exchange.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1998, the
Company's officers, directors and greater than ten percent shareholders had
complied with all Section 16(a) filing requirements.
INFORMATION CONCERNING THE OPERATION OF THE BOARD OF DIRECTORS
The business of the Company is managed under the direction of the Board of
Directors. The Board of Directors meets on a quarterly basis to review
significant developments affecting the Company and to act on matters requiring
Board approval. The Board of Directors may also hold special meetings when an
important matter requires Board action between regularly scheduled meetings.
Each non-employee director receives an annual fee of $10,000 for service on the
Board of Directors. Under the 1994 Plan, each non-employee director received an
annual automatic grant of an option to purchase 5,000 shares of Common Stock for
an exercise price equal to the fair market price on the date of grant and for a
ten-year term. Pursuant to the 1996 Plan, an option to purchase 5,000 shares of
Common Stock is to be granted to each non-employee director on the date he or
she is initially elected or appointed to the Board for an exercise price equal
to the fair market price on the date of grant and for a ten-year term.
Thereafter, for each subsequent year in which the non-employee director is still
serving as director, he or she shall automatically be granted an option to
purchase an additional 5,000 shares on the same terms. On August 23, 1996, the
Compensation Committee authorized a one-time grant to each non-employee director
of an option to purchase 20,000 shares of Common Stock under the 1996 Plan at a
purchase price of $12.00 per share, the fair market value of the Common Stock on
such date. One-fourth of each option vests at each succeeding annual meeting of
directors following each annual shareholders' meeting, beginning with the 1997
Annual Meeting.
9
<PAGE>
During 1998, the Board of Directors of the Company met formally four times
and executed four unanimous consents. All directors attended at least 75% of the
total number of meetings of the Board of Directors.
In order to facilitate the various functions of the Board of Directors, the
Board of Directors has created an Audit Committee and a Compensation Committee.
The Board of Directors does not have a nominating committee. The functions
customarily performed by a nominating committee are performed by the entire
Board of Directors. Committee members are not remunerated in addition to their
annual Board retainer.
AUDIT COMMITTEE. The Audit Committee monitors the Company's internal
accounting controls, reviews quarterly and annual financial information and
reviews the services and fees of the independent auditors. Members are Messrs.
Robert A. Stanger and Richard O. Wilson. Mr. John C. Wallace was a member of the
Audit Committee during 1998 and resigned from that position in February 1999.
The Audit Committee held two meetings during 1998, and all members of the Audit
Committee attended the meetings.
COMPENSATION COMMITTEE. The Compensation Committee establishes and
approves the terms of employment of senior executive officers and reviews and
approves management's recommendations concerning compensation of the other
executive officers and certain other employees. Members are Messrs. B. F.
Weatherly, CHAIRMAN, Robert A. Stanger, John C. Wallace and Richard O. Wilson.
The Compensation Committee held three meetings during 1998, and all members of
the Compensation Committee attended all meetings.
TRANSACTIONS WITH RELATED PERSONS
STOCKHOLDERS' AGREEMENT. In connection with the Consolidation, the
Company, the Callon Family (including John S. Callon and Fred L. Callon) and
NOCO entered into the Stockholders' Agreement, which was subsequently amended to
include F.O. Energy and which (a) provides that the Callon Family shall vote for
two directors to the Company's Board of Directors as directed by NOCO and F.O.
Energy and NOCO and F.O. Energy will vote for two directors to the Company's
Board of Directors as directed by the Callon Family, (b) contains certain
restrictions on transfer of the Common Stock owned by the Callon Family, NOCO
and F.O. Energy, and (c) provides that neither the Callon Family on the one hand
nor NOCO or F.O. Energy, on the other hand, can transfer shares of Common Stock
in connection with, or vote for, consent to or otherwise approve, a transaction
which would result in certain changes of control or fundamental changes without
the prior written consent of the other party. The Callon Family, NOCO and F.O.
Energy own an aggregate of 43.91% of the Company's Common Stock. See
"Stockholders' Agreement."
REGISTRATION RIGHTS. The Callon Family (including John S. Callon and Fred
L. Callon) is party to a Registration Rights Agreement dated September 16, 1994
(the "Registration Rights Agreement"), pursuant to which they are entitled to
require the Company to register Common Stock owned by them with the Commission
for sale to the public in a firm commitment public offering and generally to
include shares owned by them in registration statements filed by the Company.
NOCO and the Company have entered into a similar agreement, which was
subsequently amended to include F.O. Energy.
10
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information with respect to the Chief
Executive Officer of the Company and the four most highly compensated executive
officers of the Company as to whom the total salary and bonus for the years
ended December 31, 1998, 1997 and 1996 exceeded $100,000.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------------------
ANNUAL COMPENSATION
------------------------------ AWARDS
OTHER -------------------------- PAYOUTS ALL
ANNUAL RESTRICTED SECURITIES -------- OTHER
COMPEN- STOCK UNDERLYING LTIP COMPEN-
NAME AND SALARY BONUS SATION AWARD(S) OPTIONS PAYOUTS SATION
PRINCIPAL POSITION(A) YEAR ($) ($)(B) ($)(C) ($) (#) ($) ($)(E)
- ------------------------------------- ---- ------- --------- -------- ----------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fred L. Callon....................... 1998 242,727 0 -- -- 60,000 -- 27,965
President and Chief 1997 205,769 160,000 -- -- -- -- 24,268
Executive Officer 1996 182,761 124,000 -- 720,000(d) 75,000 -- 12,928
Dennis W. Christian.................. 1998 221,473 0 -- -- 55,000 -- 25,050
Senior Vice President 1997 180,048 145,000 -- -- -- -- 21,773
and Chief Operating 1996 160,808 118,000 -- 660,000(d) 70,000 -- 11,362
Officer
John S. Weatherly.................... 1998 195,202 0 -- -- 45,000 -- 23,427
Senior Vice President 1997 169,760 130,000 -- -- -- -- 20,688
Chief Financial 1996 143,469 114,000 -- 600,000(d) 65,000 -- 10,234
Officer and Treasurer
Kathy G. Tilley...................... 1998 164,850 0 -- -- 30,000 -- 17,818
Vice President 1997 138,894 130,000 -- -- -- -- 15,028
1996 119,032 94,000 -- 540,000(d) 55,000 -- 8,475
Thomas E. Schwager................... 1998 141,950 0 -- 495,000(d) -- -- 15,043
Vice President 1997 127,608 60,000 -- -- -- -- 13,800
1996 111,884 45,000 -- -- 22,000 -- 7,910
</TABLE>
- ------------
(a) John S. Callon resigned as Chief Executive Officer of the Company on January
2, 1997. Fred L. Callon was appointed Chief Executive Officer of the Company
and Dennis W. Christian was appointed Chief Operating Officer of the Company
(a position previously held by Fred L. Callon) on January 2, 1997. John S.
Callon did not receive any base, bonus or stock-based compensation during
1997 for his role as Chief Executive Officer. Pursuant to a Consulting
Agreement, Mr. Callon earned $190,000 during 1997 and $195,700 during 1998.
In addition, as inducement for entering into the Consulting Agreement, he
was granted 25,000 restricted shares of Common Stock which vested in full on
February 18, 1999.
(b) The amounts represent that portion of bonuses declared in March 1998 and
1997, respectively, and earned by service during 1997 and 1996,
respectively. Bonuses have not been declared in 1999 for services during
1998. See "Report on Executive Compensation." Generally, earned
compensation is not payable unless the executive remains employed by the
Company through the date bonus compensation is declared, which is generally
in March of the following year. These amounts also include amounts deferred.
(c) None of the named executive officers received perquisites or other personal
benefits, securities or property, the aggregate annual amount of which
exceeded the lesser of $50,000 or 10% of the total of annual salary and
bonus reported for the named executive.
(d) As of August 23, 1996, the following performance shares were awarded under
the 1996 Plan: Fred L. Callon, 60,000 shares; Dennis W. Christian, 55,000
shares; John S. Weatherly, 50,000 shares; Kathy G. Tilley, 45,000 shares. On
August 23, 1996, the closing price of the Common Stock on the Nasdaq NMS was
$12.00 per share. Pursuant to the provisions of the performance share
awards, certain criteria were met and 20% of the awards vested on October
20, 1997. The closing price of the Common Stock on the Nasdaq NMS on October
20, 1997 was $20.19 per share. On January 6, 1998, 30,000 performance shares
were awarded to Thomas E. Schwager and 10% of the shares vested on that
date. The closing price of the Common Stock on the Nasdaq NMS on January 6,
1998 was $16.50 per share. On January 1, 1999, an additional 20% of the
shares vested. The fair market value of the Common Stock on January 1, 1999
was $11.75 per share. On February 18, 1999, the Board of Directors approved,
upon the Compensation Committee's recommendation, the vesting of the balance
of the performance shares granted to the named executive officers. The
closing price of the Common Stock on the New York Stock Exchange on February
18, 1999 was $10.28 per share.
The total number and value of the performance shares held by the named
executive officers as of the end of fiscal 1998 are as follows, with the
values based on the closing price of the Common Stock on the New York Stock
Exchange on December 31, 1998, of $11.625 per share.
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ---------
<S> <C> <C>
Fred L. Callon....................... 48,000 $ 558,000
Dennis W. Christian.................. 44,000 511,500
John S. Weatherly.................... 40,000 465,000
Kathy G. Tilley...................... 36,000 418,500
Thomas E. Schwager................... 27,000 313,875
</TABLE>
(e) Amounts reflect the Company's contribution in 1998, 1997 and 1996 of
$24,273, $20,576 and $11,446 to Fred L. Callon's 401(k) savings plan and
payment of $3,692, $3,692 and $1,482 term life insurance premiums; $21,147,
$18,000 and $10,060 to Mr. Christian's 401(k) savings plan and payment of
$3,903, $3,773 and $1,302 term life insurance premiums; $19,520, $16,976 and
$9,077 to Mr. Weatherly's 401(k) savings plan and payment of $3,907, $3,712
and $1,157 term life insurance premiums; $16,485, $13,890 and $7,509 to Ms.
Tilley's 401(k) savings plan and payment of $1,333, $1,138 and $966 term
life insurance premiums; and $13,905, $12,761 and $6,998 to Mr. Schwager's
401(k) savings plan and payments of $1,138, $1,039 and $912 term life
insurance premiums.
11
<PAGE>
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Fred L. Callon, Dennis W. Christian and John S. Weatherly have entered into
employment agreements with the Company effective September 1, 1996 and ending
January 1, 2001. The agreements provide that Mr. Callon, Mr. Christian and Mr.
Weatherly will receive an annual base salary of at least $200,000, $175,000 and
$165,000, respectively, and that they will be entitled to participate in any
incentive compensation program established by the Company for its executive
officers. Each agreement terminates upon death or disability or for cause. If
the agreement is terminated because of disability, compensation payments
continue for a period of two years from the date of termination, reduced by the
amount of disability insurance paid. If the agreement is terminated for cause,
the Company is not required to make any additional payments. "Cause" is
defined generally as any of the following, as determined by a majority vote of
the Board of Directors: intentional or continual neglect of duties, conviction
of a felony, or failure or refusal to perform duties in accordance with the
employment agreement.
The employment agreements further provide that the employee may terminate
the agreement for "good reason," which is defined generally as (a) failure to
be re-elected to office, (b) significant change in duties, (c) reduction or
failure to provide typical increases in salary following a change in control of
the Company, (d) relocation to an office outside the Natchez, Mississippi area,
or (e) failure to maintain the level of participation in the compensation and
benefit plans of the Company following a change in control. If the employee
terminates his employment for good reason (other than following a change in
control), or if the Company breaches the agreement, compensation shall continue
for a period of three years. Pursuant to the agreements, a "change in control"
occurs if: (i) any person or group of persons acting in concert (within the
meaning of Section 13(d) of the Exchange Act) shall have become the beneficial
owner of a majority of the outstanding common stock of the Company (other than
pursuant to the Stockholders' Agreement), (ii) the shareholders of the Company
cause a change in a majority of the members of the Board within a twelve-month
period, or (iii) the Company or its shareholders enter into an agreement to
dispose of all or substantially all of the assets or outstanding capital stock
of the Company. If the compensation to be paid upon a change in control would
constitute a "parachute" payment under the Internal Revenue Code, the amount
otherwise payable will be grossed up to an amount such that the employee will
receive the amount he would have received if no portion of such compensation had
been subject to the excise tax imposed by the Internal Revenue Code, and the
Company will be responsible for the amount of the excise tax.
The Company entered into a consulting agreement with John S. Callon,
effective as of January 2, 1997, the day he retired as Chief Executive Officer
of the Company. The agreement was amended on February 18, 1999. Pursuant to the
agreement, John S. Callon provides consulting services to the Company on matters
pertaining to corporate or financial strategy, investor relations and
public/private financing opportunities. The agreement remains in effect from the
effective date until December 31, 2001, subject to renewal for succeeding five
year periods unless earlier terminated. As compensation for his services under
the agreement, John S. Callon is paid a fee ("Consultation Fee") of not less
than $190,000 per year increased annually based upon the change in the Consumer
Price Index, as adjusted for inflation. In addition, he will remain eligible to
participate in the Company's major medical and disability coverage, and will be
entitled to participate in all other employee benefit plans (other than a cash
bonus program) provided to full-time executives of the Company. As an inducement
for entering into the agreement, John S. Callon was granted 25,000 restricted
shares of Common Stock, 20% of which vests on each of the first five
anniversaries of the effective date of the agreement. On February 18, 1999, the
Board of Directors approved the Compensation Committee's recommendation that all
unvested restricted shares be vested as of such date.
Upon termination of the agreement other than for cause, John S. Callon or
his spouse shall be entitled to receive a termination payment equal to the
Consultation Fee, as adjusted for inflation, to be paid annually until the later
of the death of John S. Callon (if applicable) or his spouse. In lieu of the
termination payment, John S. Callon or his spouse may elect to receive, subject
to the approval of the Board of Directors, a lump sum payment of $1.5 million.
In addition, if the agreement terminates due to the Company's breach, John S.
Callon and his spouse shall be entitled to liquidated damages. The Company may
terminate the agreement
12
<PAGE>
for cause. "Cause" is defined generally in the agreement as willful misconduct
or intentional and continual neglect of duties which has materially and
adversely affected the Company.
Pursuant to the 1994 Plan and the 1996 Plan, in the case of a merger or
consolidation where the Company is not the surviving entity, or if the Company
is about to sell or otherwise dispose of substantially all of its assets while
unvested options remain outstanding, the Compensation Committee or other plan
administrator may, in its discretion and without shareholder approval, declare
some or all options exercisable in full before or simultaneously with such
merger, consolidation or sale of assets without regard for prescribed waiting
periods. Alternatively, the Compensation Committee or other plan administrator
may cancel all outstanding options provided option holders are given notice and
a period of 30 days prior to the merger, consolidation or sale to exercise the
options in full.
STOCK BASED PLANS
The Company currently maintains two Common Stock-based incentive plans for
employees: the Callon Petroleum Company 1994 Stock Incentive Plan and the Callon
Petroleum Company 1996 Stock Incentive Plan. The Company in the past has used
and will continue to use stock options and performance share grants to attract
and retain key employees in the belief that employee stock ownership and stock
related compensation devices encourage a community of interest between employees
and shareholders.
1994 PLAN. The 1994 Plan was adopted on June 30, 1994. Pursuant to the
1994 Plan, 600,000 shares of Common Stock were reserved for issuance upon the
exercise of options or for grants of performance shares. The 1994 Plan is
administered by the Compensation Committee of the Board of Directors. Members of
the Compensation Committee currently are Messrs. Stanger, Wallace, B. F.
Weatherly and Wilson. No awards were granted under the 1994 Plan during 1996,
1997 and 1998 other than automatic grants to non-employee directors and the
grant of restricted shares to John S. Callon in connection with his Consulting
Agreement. See "-- Employment Agreements, Termination of Employment and Change
in Control Arrangements."
1996 PLAN. On August 23, 1996, the Board of Directors of the Company
approved and adopted the 1996 Plan and granted awards thereunder to various
employees. The 1996 Plan was approved by the shareholders of the Company at the
1997 Annual Meeting. Pursuant to the 1996 Plan, 900,000 shares of Common Stock
were reserved for issuance upon the exercise of options or for grants of
performance shares. On August 20, 1998, the Board of Directors amended the 1996
Plan, as permitted pursuant to the terms of the 1996 Plan, to increase the
number of shares of Common Stock reserved for issuance by 300,000 shares to
1,200,000 shares. As of March 3, 1999, there were 229,873 shares of Common Stock
available for grant under the 1996 Plan. Individual awards under the 1996 Plan
may take the form of one or more of (i) incentive stock options; (ii)
non-qualified stock options; or (iii) performance shares.
BONUS PLAN. In 1996, the Board of Directors authorized the establishment
of a cash bonus program (the "Bonus Plan") to be administered by the
Compensation Committee in accordance with formulas or procedures determined by
the Compensation Committee on an annual basis. Each year, the Compensation
Committee establishes target level bonuses as a percentage of base salary for
certain officers, managers and staff members. The Committee also establishes
financial and operating goals to be achieved by the Company during the year and
assigns a relative weighting percent to each goal. Cash bonus awards for the
year are then based upon the extent to which such goals were achieved during the
year. See "Report on Executive Compensation."
1997 EMPLOYEE STOCK PURCHASE PLAN. In 1997, the Board of Directors
authorized the implementation of the Callon Petroleum Company 1997 Employee
Stock Purchase Plan (the "1997 Purchase Plan"), which was approved by the
Company's shareholders at the 1997 Annual Meeting. The Plan provides eligible
employees of the Company with the opportunity to acquire a proprietary interest
in the Company through participation in a payroll-deduction based employee stock
purchase plan. An aggregate of 250,000 shares of Common Stock have been reserved
for issuance over the ten-year term of the 1997 Purchase Plan. The purchase
price per share at which Common Stock will be purchased on the participant's
behalf on each
13
<PAGE>
purchase date within an offering period is equal to eighty-five percent of the
fair market value per share of Common Stock.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning the number
and terms of options to purchase Common Stock granted during 1998 to the Chief
Executive Officer and the four most highly compensated executive officers named
in the Summary Compensation Table. The options described below were granted on
August 20, 1998. The closing price of the Common Stock on the New York Stock
Exchange on August 20, 1998 was $9.46875 per share. The grants are exercisable
25% on August 20, 1998 and 25% each January 1 beginning 1999.
OPTION/SAR GRANTS IN 1998
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE
- ----------------------------------------------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF % ANNUAL RATES OF
SECURITIES OF TOTAL STOCK PRICE
UNDERLYING OPTIONS APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OPTION TERM
GRANTED EMPLOYEES IN PRICE EXPIRATION --------------------
NAME (#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ------------------------------------- ---------- ------------- --------- --------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Fred L. Callon....................... 60,000 29.3% 9.46875 August 20, 2008 357,291 905,445
Dennis W. Christian.................. 55,000 26.8 9.46875 August 20, 2008 327,517 829,991
John S. Weatherly.................... 45,000 22.0 9.46875 August 20, 2008 267,968 679,084
Kathy G. Tilley...................... 30,000 14.6 9.46875 August 20, 2008 178,645 452,772
Thomas E. Schwager................... -- -- -- -- -- --
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table sets forth certain information concerning the number
and value of unexercised options to purchase Common Stock by the Chief Executive
Officer and the four most highly compensated executive officers named in the
Summary Compensation Table at December 31, 1998. No stock options were exercised
by such persons in 1998.
AGGREGATED OPTION EXERCISES IN 1998 AND OPTION
VALUES AT DECEMBER 31, 1998
<TABLE>
<CAPTION>
UNEXERCISED OPTIONS AT DECEMBER 31, 1998
------------------------------------------
NUMBER OF VALUE OF
UNDERLYING IN-THE-MONEY
SECURITIES OPTIONS
------------------ ------------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE(A) UNEXERCISABLE(B)
- ------------------------------------- --------------- ----------- ------------------ ------------------
<S> <C> <C> <C> <C>
Fred L. Callon....................... -- -- 155,000/60,000 194,688/64,688
Dennis W. Christian.................. -- -- 129,500/55,500 156,797/59,297
John S. Weatherly.................... -- -- 121,500/48,500 146,016/48,516
Kathy G. Tilley...................... -- -- 78,000/37,000 81,094/32,344
Thomas E. Schwager................... -- -- 33,200/ 8,800 32,500/ --
</TABLE>
- ------------
(a) Represents awards granted under the 1994 Plan and the 1996 Plan.
(b) On December 31, 1998, the Closing Price of the Common Stock on the New York
Stock Exchange was $11.625.
14
<PAGE>
LONG-TERM INCENTIVE PLAN AWARDS
Other than the 1994 Plan and the 1996 Plan, the Company does not have a
long-term incentive plan for its employees.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee are Messrs. Robert A.
Stanger, John C. Wallace, B. F. Weatherly and Richard O. Wilson, none of whom
are or have been officers or employees of the Company.
STOCKHOLDERS' AGREEMENT. In connection with the Consolidation, the
Company, the Callon Family and NOCO entered into the Stockholders' Agreement
which was subsequently amended to include F.O. Energy and which contains certain
voting requirements and transfer restrictions. Messrs. Wallace and Weatherly are
affiliates of NOCO and Mr. Wallace is a director of F.O. Energy. See
"Transactions with Related Persons."
REGISTRATION RIGHTS. NOCO and F.O. Energy are parties to a Registration
Rights Agreement dated September 16, 1994. Messrs. Wallace and Weatherly are
affiliates of NOCO and Mr. Wallace is a director of F.O. Energy. See
"Transactions with Related Persons."
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is composed of four non-employee directors who
make recommendations to the Board with respect to the annual base and bonus
compensation of the executive officers of the Company. The Compensation
Committee also administers the Company's employee benefit plans.
COMPENSATION POLICY. The Company's compensation policy is comprised of
three elements: (1) base compensation; (2) bonus compensation; and (3)
stock-based compensation. In allocating annual compensation among these three
categories, the Company has historically provided for conservative base salaries
with more aggressive incentive compensation in order to emphasize pay for
performance. With respect to stock-based compensation, the Committee strives to
award grants to encourage greater focus on actions that enhance stockholder
value.
In order to promote the Company's goal of retaining key employees and the
long-term growth of the Company, the Company has entered into several employment
agreements with certain executive officers. These agreements establish an
initial base salary subject to upward adjustment by the Board of Directors or
the Compensation Committee and provide that such officers are entitled to
participate in the Company's incentive compensation programs. See "Executive
Compensation -- Employment Agreements, Termination of Employment and
Change-in-Control Arrangements."
The Committee does not currently intend to award levels of compensation
that would result in a limitation on the deductibility of a portion of such
compensation for federal income tax purposes pursuant to Section 162(m) of the
Internal Revenue Code of 1986, as amended; however, the Committee may authorize
compensation that results in such limitations in the future if it determines
that such compensation is in the best interest of the Company.
BASE COMPENSATION. The analysis used by the Compensation Committee to
establish base compensation has remained relatively constant since the Company
was formed in 1994. The base salary decision has no specific relationship to
Company performance. Instead, as its principal consideration, the Committee
evaluates compensation set for comparable positions by the Company's competitors
and targets the median of base salaries among peer group companies in the
industry of similar size, complexity and activity. The Compensation Committee
analyzes published industry survey data and proxy and annual report information
to determine base salaries paid by such peer group companies. From time to time,
the Company also engages independent compensation consulting firms. With input
from management of the Company, the Committee also may take into account certain
individual and subjective factors such as individual performance and
contribution to the Company's success, seniority, experience level, internal
equities within the Company and general economic and industry conditions. No
specific weight, however, is assigned to
15
<PAGE>
these factors if they are considered. Base salaries of the Company's executive
officers for 1998 were increased, reflecting the Committee's commitment to
maintaining competitive salary levels, subjective valuation of individual
contributions to the Company's performance in 1997 and potential contributions
during 1998 and general inflationary considerations.
BONUS COMPENSATION. Since 1996, bonus compensation has been determined
pursuant to a Bonus Plan administered by the Compensation Committee. The Company
established the Bonus Plan in order to tie compensation to fiscal targets which
affect short and long term share price performance. In accordance with the Bonus
Plan, the Committee follows a formal mechanism for determining annual bonus
compensation based upon pre-set fiscal and operating goals which the Committee
believes are important determinants of share price over time. Each such goal is
assigned a relative weighting percent, which is multiplied at year end by the
percentage by which each such goal was achieved in order to determine the
"Weighted Goal Achieved." The Committee derives the "Total Goal Achieved" by
adding together each Weighted Goal Achieved. In addition, the Committee
establishes target level bonuses as a percentage of base salary for officers and
other employees. For 1998, if the Total Goal Achieved at year end was (i) less
than 80%, no bonuses would be awarded under the Bonus Plan; (ii) between 80% and
120%, bonuses would be awarded at 80% to 120% of the target level; and (iii)
more than 120%, additional bonuses could be awarded at the discretion of the
Committee. For the year ended December 31, 1998, the Total Goal Achieved was
less than 80% of the goals set for 1998. Accordingly, no bonus compensation was
awarded. The Compensation Committee anticipates following a similar formula for
determining cash bonuses for 1999, subject to adjustment for 1999 performance
goals.
STOCK-BASED COMPENSATION. To determine the timing and amount of
stock-based awards, the Compensation Committee analyses the factors set forth
under "Base Compensation" above as well as the employee's ability to influence
the Company's future performance. The Committee considers the number of
outstanding unvested options held by an executive officer as well as the size of
previous option awards to the executive officer. In addition, the Committee
surveys the same peer group companies it studies to determine base compensation.
In 1996, the Committee granted options under the 1996 Plan to executive officers
and other employees of the Company to equalize their position vis-a-vis their
counterparts in the industry. In 1998, the Committee again granted options to
certain executive officers in order to maintain a competitive compensation
package.
The Committee is aware that the price of the Company's stock is affected to
a significant extent by oil and gas prices, over which executives have no
control, and believes that executives can provide services of exceptional value
during periods where such prices are depressed. While under the Bonus Plan it is
unlikely that executives and other employees will receive bonus compensation
during such periods, the Committee is considering awarding additional
stock-based compensation to its executive officers in order to encourage future
performance, particularly as it relates to stock price.
To further ensure that the interests of the Company's stockholders are
reflected in the compensation program, the Company has recently broadened its
package of stock-based compensation. Specifically, in 1997 and 1998, the
Committee authorized the grant of performance shares to executive officers
subject to vesting over time or upon the event of certain conditions related to
performance. On February 18, 1999, the Board of Directors approved the
Compensation Committee's recommendation for the immediate vesting of the balance
of these performance shares to award such employees for past performance as well
as to enhance their commitment to strengthen the market value of the Company's
stock. There are no performance shares currently outstanding; however, the
Committee will continue to monitor the Company's stock-based compensation
program to determine if performance shares should be granted in the future.
The Company established the 1997 Employee Stock Purchase Plan to further
focus executive attention on the Company's stock market performance. This Plan
permits executive officers and other employees of the Company to set aside a
portion of their salaries to purchase Common Stock of the Company.
By combining awards of stock options which vest over time with performance
shares subject to vesting over time or vesting based upon performance, as well
as providing the opportunity for executive officers and other employees to
purchase stock of the Company through the 1997 Employee Stock Purchase Plan,
16
<PAGE>
the Company believes that its executive officers are competitively compensated
and motivated to attain outstanding share price performance.
COMPENSATION OF CHIEF EXECUTIVE OFFICER. Pursuant to the employment
agreement between Fred L. Callon and the Company, Mr. Callon's annual base
salary is set at a floor of $200,000, subject to increase by the Board of
Directors or the Compensation Committee. Mr. Callon's base salary was increased
by the Committee to $242,727 for 1998 as compared to $205,769 for 1997 in order
to keep Mr. Callon's salary level competitive with the chief executive officer
position at peer group companies. With respect to the personal performance
criterion, the Committee found Mr. Callon's performance in 1998 to be exemplary.
In particular, he addressed and resolved difficult issues which were necessary
for the Company's long-term future.
Under the Bonus Plan formula set by the Compensation Committee, Fred L.
Callon did not earn a bonus in 1998. The Committee granted to Mr. Callon in 1998
an option to purchase 60,000 shares of Common Stock under the Company's 1996
Stock Incentive Plan. The Committee believes that the grant of this option,
which vests over time, is necessary to further the Company's goal of retaining
quality executives such as Mr. Callon and as a performance incentive. In total,
Mr. Callon holds options to purchase an aggregate of 215,000 shares of Common
Stock.
B. F. Weatherly, Chairman
Robert A. Stanger
John C. Wallace
Richard O. Wilson
17
<PAGE>
PERFORMANCE GRAPH
The following graph compares the yearly percentage change for the five
years ended December 31, 1998, in the cumulative total shareholder return on the
Company's Common Stock against the cumulative total return (i) for the Nasdaq
Market Value Index (the "Nasdaq Index") and (ii) the Media General Financial
Services Industry and Market Index of SIC Group 121 (the "Industry Group
Index") consisting of oil and gas companies.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
<TABLE>
<CAPTION>
12/31/93 12/31/94 12/30/95 12/29/96 12/31/97 12/31/98
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Callon Petroleum Company $100 $142 $130 $247 $212 $151
NASDAQ Market Value Index $100 $105 $136 $169 $207 $292
Industry Group Index $100 $108 $118 $152 $141 $92
</TABLE>
- ------------
(1) The comparison of total return on an investment for each of the periods
assumes that $100 was invested on December 31, 1993, in each of the Company,
the Nasdaq Index and the Industry Group Index, and that all dividends were
reinvested.
(2) The Company's Common Stock did not begin trading on the Nasdaq NMS until
September 19, 1994. The Company was formed in March 1994 to participate in a
consolidation consummated on September 16, 1994 and succeeded to the assets,
liabilities, operations and management of Callon Consolidated Partners,
L.P., ("CCP"), formerly a publicly-held limited partnership, and certain
affiliated companies. As a result of the consolidation, one share of the
Company's Common Stock was issued for each three units of limited
partnership interest in CCP whose depository units were traded on the Nasdaq
NMS from February 1989 through September 1994. The equivalent closing price
per share of the Company's Common Stock before September 16, 1994 was
determined by multiplying the Nasdaq NMS quoted price per CCP unit by three.
As of April 22, 1998, the Company's Common Stock began trading on the New
York Stock Exchange.
18
<PAGE>
PROPOSAL II
RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Arthur Andersen LLP, independent
public accountants, for the examination of the accounts and audit of the
financial statements of the Company for the year ending December 31, 1999. At
the Annual Meeting, the Board of Directors will present a proposal to the
shareholders to approve and ratify the engagement of Arthur Andersen LLP. A
representative of Arthur Andersen LLP will be present at the Annual Meeting and
will have the opportunity to make a statement, if he desires, and to respond to
appropriate questions.
Management recommends that the shareholders approve and ratify the
appointment of Arthur Andersen LLP as independent public accountants of the
Company for the fiscal year ending December 31, 1999. Unless otherwise
indicated, all properly executed Proxies received by management will be voted
for such ratification at the Annual Meeting. An adverse vote will be considered
as a direction to the Audit Committee of the Board of Directors to select other
auditors in the following year.
SHAREHOLDERS' PROPOSALS FOR 2000 ANNUAL MEETING
Shareholders who desire to present proposals at the 2000 Annual Meeting of
Shareholders and to have proposals included in the Company's proxy materials
must submit their proposals to the Company at its principal executive offices
not later than November 30, 1999. If the date of the 2000 Annual Meeting of
Shareholders is changed by more than 30 days from the date of the 1999 Annual
Meeting of Shareholders, the deadline for submitting proposals is a reasonable
time before the Company begins to print and mail its proxy materials for its
2000 Annual Meeting of Shareholders.
The persons named in the Company's form of proxy for the 2000 Annual
Meeting will have discretionary authority to vote any proxies they hold at such
meeting on any matter for which the Company does not receive notice by February
13, 2000, unless the Company changes the date of its 2000 Annual Meeting of
Shareholders by more than 30 days from the date of the 1999 Annual Meeting of
Shareholders, in which case such persons will be able to exercise discretionary
authority if notice of the matter has not been received in a reasonable time
before the Company mails its proxy materials for the 2000 Annual Meeting of
Shareholders.
If the date of the 2000 Annual Meeting of Shareholders is advanced or
delayed by more than 30 calendar days from the date of the 1999 Annual Meeting
of Shareholders, the Company shall, in a timely manner, inform shareholders of
such change by including a notice under Item 5 in its earliest possible
quarterly report on Form 10-Q. The notice will include the new deadline for
submitting proposals to be included in the Company's proxy statement and the new
date for determining whether the Company may exercise discretionary voting
authority because it has not received timely notice of a matter.
In order to avoid controversy as to the date on which any such proposal is
received by the Company, it is suggested that shareholders submit their
proposals by certified mail, return receipt requested.
FINANCIAL STATEMENTS
Financial statements of the Company for its most recent fiscal year are
contained in the 1998 Annual Report and the Company's Report on Form 10-K.
COPIES OF THE COMPANY'S ANNUAL REPORT AND THE COMPANY'S REPORT ON FORM 10-K ARE
AVAILABLE TO SHAREHOLDERS UPON WRITTEN REQUEST TO THE INVESTOR RELATIONS
DEPARTMENT, CALLON PETROLEUM COMPANY, 200 NORTH CANAL STREET, NATCHEZ,
MISSISSIPPI 39120.
19
<PAGE>
OTHER BUSINESS
The Board of Directors does not know of any matter to be acted upon at the
Annual Meeting other than those described above. If other business comes before
the Annual Meeting, the persons named on the Proxy will vote the Proxy in
accordance with what they consider to be in the best interests of the Company
and its shareholders.
By order of the Board of Directors
Fred L. Callon
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Natchez, Mississippi
March 29, 1999
20
<PAGE>
CALLON PETROLEUM COMPANY
200 NORTH CANAL STREET, NATCHEZ, MISSISSIPPI 39120
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY FOR THE ANNUAL MEETING ON APRIL 29, 1999
The undersigned hereby constitutes and appoints John S. Callon and Fred L.
Callon and each of them, his true and lawful agents and proxies with full power
of substitution in each, to represent and to vote, as designated on the reverse,
all of the shares of common stock of Callon Petroleum Company, held of record by
the undersigned on March 3, 1999, at the Annual Meeting of Shareholders to be
held in the LeGrand Pre Ballroom of the Radisson Natchez Eola Hotel, 110 North
Pearl Street, Natchez, Mississippi 39120 on April 29, 1999, and at any
adjournments thereof, on all matters coming before said meeting.
IF NO DIRECTION AS TO THE MANNER OF VOTING THIS PROXY IS MADE, THIS PROXY
WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS AND "FOR" ITEM 2 AS INDICATED ON
THE REVERSE SIDE HEREOF.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
(SEE REVERSE SIDE) BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE
YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
(TO BE SIGNED ON REVERSE SIDE)
[X] Please mark your
votes as in this
example.
WITHHOLD
authority for all
FOR Nominees
1. ELECTION OF [ ] [ ]
DIRECTORS.
To withhold authority to vote for any specific nominee(s), mark the "FOR" box
and write the name of each such nominee on the line provided below.
___________________________________________________________________
NOMINEES: John S. Callon
S.F. Weatherly
Leif Dons
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE DIRECTORS AND
FOR PROPOSAL 2.
FOR AGAINST ABSTAIN
2. To rally the appointment of Arthur
Andersen LLP as independent public [ ] [ ] [ ]
accountants.
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF
DIRECTORS AND "FOR" PROPOSAL 2.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY IN THE STAMPED,
PRE-ADDRESSED ENVELOPE ENCLOSED.
SIGNATURE _________________________________ DATE _______________
SIGNATURE _________________________________ DATE _______________
Note: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or as guardian,
please indicate your full title as such.
