SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
TRITON ENERGY CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Triton Energy Corporation
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and 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:
------------------------------------------------------------------------
Triton Energy Corporation PRELIMINARY
6688 North Central Expressway, Suite 1400 COPY
Dallas, Texas 75206
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be Held May 11, 1995
To the Shareholders of
TRITON ENERGY CORPORATION
Notice is hereby given that the annual meeting of shareholders of Triton
Energy Corporation (the "Company"), a Texas corporation, will be held at ___:00
a.m., Dallas time, on Thursday, May 11, 1995, at the Royal Oaks Country Club,
7915 Greenville Avenue, Dallas, Texas 75231 for the following purposes:
(1) To elect five directors to serve until the third annual meeting of
shareholders to occur after the May 11, 1995 meeting, or until their
respective successors shall have been duly elected and qualified;
(2) To effect a change in the state of incorporation of the Company from
Texas to Delaware by approving an Agreement and Plan of Merger providing
for the Company to merge into a wholly owned Delaware subsidiary; and
(3) To consider and act upon such other matters as may properly come before
the meeting.
Only holders of record of Common Stock at the close of business on
__________, 1995, are entitled to receive notice of and to vote at the meeting,
or any adjournment or adjournments thereof. The meeting may be adjourned from
time to time without notice other than announcement at the meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER OF
SHARES YOU MAY HOLD. WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE MEETING IN
PERSON, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT
PROMPTLY TO THE COMPANY IN THE ENCLOSED RETURN ENVELOPE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES. IF YOU RECEIVE MORE THAN ONE PROXY CARD BECAUSE
YOUR SHARES ARE REGISTERED IN DIFFERENT NAMES OR AT DIFFERENT ADDRESSES, EACH
SUCH PROXY CARD SHOULD BE SIGNED AND RETURNED TO ENSURE THAT ALL OF YOUR SHARES
WILL BE VOTED. THE PROXY CARD SHOULD BE SIGNED BY ALL REGISTERED HOLDERS
EXACTLY AS THE STOCK IS REGISTERED.
This notice, the Annual Report to Shareholders, the Proxy Statement and the
proxy card that are enclosed herewith are sent to you by order of the Board of
Directors of the Company.
By Order of the Board of Directors
Robert B. Holland, III
Secretary
Dallas, Texas
April __, 1995
PRELIMINARY
COPY
TRITON ENERGY CORPORATION
6688 North Central Expressway, Suite 1400
Dallas, Texas 75206
(214) 691-5200
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
To be Held May 11, 1995
SOLICITATION AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished to the holders of Common Stock, par value
$1.00 per share (the "Common Stock"), of Triton Energy Corporation (the
"Company"), a Texas corporation, in connection with the solicitation, by order
of the Board of Directors on behalf of the management of the Company, of
proxies to be voted at the annual meeting of shareholders of the Company to be
held on May 11, 1995 (the "Annual Meeting"), and at any and all adjournments
thereof, at the time and place and for the purposes set forth in the
accompanying Notice of Annual Meeting. The approximate date on which this
Proxy Statement, the Notice of Annual Meeting and the accompanying proxy card
were first sent or given to shareholders was April __, 1995.
The purpose of the Annual Meeting is to consider and act upon (i) the
election of five directors to serve until the third annual meeting of
shareholders to occur after the Annual Meeting, or until their successors have
been duly elected and qualified; (ii) a proposal to effect a change in the
state of incorporation of the Company from Texas to Delaware by approving an
Agreement and Plan of Merger (the "Merger Agreement") providing for the merger
of the Company with and into a wholly owned Delaware subsidiary; and (iii) such
other matters as may properly come before the Annual Meeting or any adjournment
thereof.
Proxies in the accompanying form that are properly executed, returned to the
Company and not revoked will be voted at the Annual Meeting. Any shareholder
has the unconditional right to revoke his proxy at any time before it is voted.
Proxies may be revoked by duly executing a later dated proxy relating to the
shares being voted or by attending the Annual Meeting and voting by ballot in
person (attending the Annual Meeting without executing a ballot will not
constitute revocation of a proxy). A proxy in the accompanying form which is
properly executed, received by the Company and not revoked will be voted only
as specified in the proxy. Unless the shareholder specifies otherwise, a proxy
in the accompanying form which is properly executed, returned by a shareholder
to the Company and not revoked will be voted (i) FOR the election of the five
individuals who have been nominated by the Board of Directors to serve as
directors of the Company; (ii) FOR approval of the Merger Agreement effecting
the
reincorporation; and (iii) at the discretion of the proxy holders with regard
to any other matters that may properly come before the Annual Meeting.
Management of the Company knows of no matters other than as described in the
accompanying Notice of Annual Meeting which are likely to be brought before the
Annual Meeting. However, if any other matters, not now known, properly come
before such meeting, the persons named in the enclosed proxy will vote the
proxy in accordance with their best judgment on such matters.
VOTING AND PRINCIPAL SHAREHOLDERS
At _______, 1995, the Record Date (herein so called) for the determination
of shareholders entitled to receive notice of and to vote at the Annual
Meeting, there were outstanding ____________________ shares of Common Stock
which were held of record by approximately ___________________ shareholders.
Each share of Common Stock is entitled to one vote on any matter to come before
the Annual Meeting.
The presence, in person or by proxy, of the holders of at least a majority
of the shares of Common Stock entitled to vote as of the Record Date is
necessary to constitute a quorum at the Annual Meeting. Each share represented
at the Annual Meeting in person or by proxy will be counted toward a quorum.
Approval of the proposal to elect the five nominees to serve as directors
requires the affirmative vote of the holders of a plurality of the shares of
Common Stock represented at the Annual Meeting and entitled to vote thereon.
Votes may be cast in favor or withheld. Votes that are withheld will be
excluded entirely from the vote and will have no effect. Approval of the
Merger Agreement requires the affirmative vote of the holders of two-thirds of
the shares of Common Stock outstanding and entitled to vote on the Record Date.
A shareholder may vote for or against the proposal or abstain from voting with
respect to that proposal. Abstentions and broker nonvotes will have the same
effect as a vote against such proposal. The holders of Common Stock have no
appraisal or similar rights with respect to any matter scheduled to be voted on
at the Annual Meeting.
The following table sets forth information as of March ___, 1995, except as
noted below, regarding the beneficial ownership of capital stock of the Company
by each person known to the Company to own 5% or more of the outstanding shares
of the Common Stock, each director of the Company and each nominee for
director, the Company's Chief Executive Officer, each of the Company's four
other most highly compensated executive officers for the year ended
December 31, 1994 and the directors and executive officers of the Company as a
group. The persons named in the table have sole voting and investment power
with respect to all shares of capital stock owned by them, unless otherwise
noted.
2
Amount and
Nature
Name and Address of Beneficial Percent
of Beneficial Owner Ownership (1) of Class
- --------------------------------------- -------------- ---------
Oppenheimer Group, Inc.
Oppenheimer Tower, World
Financial Center
New York, New York 10281 . . . . . . . . . 4,860,611 13.7%
Dietche & Field Advisers, Inc.
437 Madison Avenue
New York, New York 10022 . . . . . . . . . 2,338,473 6.6
Lynch & Mayer, Inc.
520 Madison Avenue
New York, NY 10022 . . . . . . . . . . . . 2,021,250 5.7
Herbert L. Brewer . . . . . . . . . . . . . . 51,523(2) *
Ernest E. Cook . . . . . . . . . . . . . . . 38,299(3) *
Ray H. Eubank . . . . . . . . . . . . . . . . 49,151(3) *
Thomas G. Finck . . . . . . . . . . . . . . . 193,262(4) *
Jesse E. Hendricks . . . . . . . . . . . . . 34,435(3) *
Fitzgerald S. Hudson . . . . . . . . . . . . 165,000(2)(5) *
William I. Lee . . . . . . . . . . . . . . . 285,003(6) *
John P. Lewis . . . . . . . . . . . . . . . . 31,090(3) *
Michael E. McMahon . . . . . . . . . . . . . 5,000(7) *
Wellslake D. Morse, Jr . . . . . . . . . . . 30,683(3) *
Edwin D. Williamson . . . . . . . . . . . . . 1,000 *
J. Otis Winters . . . . . . . . . . . . . . . 7,000(8) *
John P. Tatum . . . . . . . . . . . . . . . . 149,685(9) *
Nick G. De'Ath . . . . . . . . . . . . . . . 58,750(10) *
Robert B. Holland, III . . . . . . . . . . . 86,209(11) *
Peter Rugg . . . . . . . . . . . . . . . . . 91,191(12) *
All directors and executive officers as a
group (17 persons, including those
individuals named above) . . . . . . . . . . 1,376,081(13) 3.8
<FN>
__________________
* less than 1%
(1) Includes shares of Common Stock held by or for the benefit of wives and
minor children of directors and executive officers and entities in which
directors or executive officers hold a controlling interest. Certain directors
and executive officers also own securities
3
issued by corporations in which the Company owns a minority equity interest.
Information with respect to beneficial ownership of shares of Common Stock by
Oppenheimer Group, Inc., Dietche & Field Advisers, Inc. and Lynch & Mayer, Inc.
is based solely upon the latest reports of such entities on Schedules 13G filed
with the Securities and Exchange Commission.
(2) Includes 15,000 shares issuable upon exercise of stock options that are
exercisable or exercisable within 60 days.
(3) Includes 30,000 shares issuable upon exercise of stock options that are
exercisable or exercisable within 60 days.
(4) Includes 128,100 shares issuable upon exercise of stock options that are
exercisable or exercisable within 60 days and 60,000 shares issuable upon
conversion of the Company's Convertible Subordinated Debentures (the
"Debentures") issued under the Company's Convertible Subordinated
Debenture Plan and that are convertible within 60 days.
(5) Includes 80,000 shares held by partnerships in which Mr. Hudson owns a 1%
interest and for which Mr. Hudson serves as general partner.
(6) Includes 5,000 shares issuable upon exercise of stock options that are
exercisable or exercisable within 60 days and 16 shares of Common Stock
issuable upon the conversion of shares of the Company's 5% Convertible
Preferred Stock.
(7) Consists of 5,000 shares issuable upon exercise of stock options that are
exercisable or exercisable within 60 days.
(8) Includes 5,000 shares issuable upon exercise of stock options that are
exercisable or exercisable within 60 days.
(9) Includes 98,042 shares issuable upon exercise of stock options that are
exercisable or exercisable within 60 days and 50,000 shares issuable upon
conversion of Debentures that are convertible within 60 days.
(10) Consists of 28,750 shares issuable upon exercise of stock options that
are exercisable or exercisable within 60 days and 30,000 shares issuable
upon conversion of Debentures that are convertible within 60 days.
(11) Includes 40,600 shares issuable upon exercise of stock options that are
exercisable or exercisable within 60 days and 40,000 shares issuable upon
conversion of Debentures that are convertible within 60 days.
4
(12) Includes 50,000 shares issuable upon exercise of stock options that are
exercisable or exercisable within 60 days and 40,000 shares issuable upon
conversion of Debentures that are convertible within 60 days.
(13) In addition to the shares issuable upon exercise of stock options and
conversion of 5% Convertible Preferred Stock and Debentures as described
in the foregoing footnotes, includes 12,500 shares issuable upon exercise
of stock options that are exercisable or exercisable within 60 days and
30,000 shares issuable upon conversion of Debentures that are convertible
within 60 days.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
In accordance with the Bylaws of the Company, directors of the Company are
divided into three classes, such classes being as nearly equal in number as
possible. The term of office of each class is three years. At the Annual
Meeting it is proposed that the nominees listed below be elected as members of
the Board of Directors with terms expiring in 1998. Each such director shall
be elected to serve in such capacity until the third annual meeting of
shareholders to occur after the Annual Meeting or until his respective
successor is duly elected and qualified.
INFORMATION CONCERNING DIRECTORS
Information concerning the five nominees proposed by the Board of Directors
for election as directors with terms expiring in 1998 along with information
concerning the present directors, whose terms of office will continue after the
Annual Meeting, is set forth below.
In the event that any of the below-named nominees for director becomes
unable or unwilling to accept nomination or election, the person or persons
voting the proxy will vote for the election in his stead of such person as the
management may recommend. Unless otherwise instructed on the proxy, the proxy
holders will vote the proxies received by them FOR the election of the nominees
shown below:
PRINCIPAL OCCUPATION AND DIRECTOR
NAME AGE OFFICES WITH THE COMPANY SINCE
---- --- ------------------------ --------
NOMINEES
TERM EXPIRING 1998
Thomas G. Finck . . . . . 48 President and Chief Executive Officer(1) 1992
Fitzgerald S. Hudson . . . 70 Investments 1992
William I. Lee . . . . . . 68 Chairman of the Board(1) 1966
________________ . . . . . __ _____________________________ --
________________ . . . . . __ _____________________________ --
5
DIRECTORS CONTINUING IN OFFICE
PRESENT TERM EXPIRES 1996
Herbert L. Brewer . . . . 69 Investments 1989
Jesse E. Hendricks . . . . 81 Professional Consulting Engineer 1965
Michael E. McMahon . . . . 47 Managing Director, Lehman Brothers 1993
J. Otis Winters . . . . . 62 Chairman, Pate, Winters & Stone, Inc. 1993
PRESENT TERM EXPIRES 1997
Ernest E. Cook . . . . . . 69 Independent Oil and Gas Consultant and
Independent Oil Operator 1978
Ray H. Eubank . . . . . . 67 Professional Consulting Engineer and
Independent Oil Operator 1969
John P. Lewis . . . . . . 58 Managing Partner of J. Lewis Partners,
L.P. 1987
Wellslake D. Morse, Jr. . 67 Investments 1978
Edwin D. Williamson . . . 55 Partner, Sullivan & Cromwell 1994
<FN>
- --------------
(1) Mr. Lee has advised the Board that he will step down as Chairman of the
Board effective immediately following the Annual Meeting and the Board has
approved the succession of Mr. Finck to the additional title of Chairman of
the Board following such action.
Except as indicated below, all of the directors and nominees for director
of the Company have served in various capacities with the Company or in the
capacities specified above for a period of at least five years.
In August 1992, Mr. Finck became a director, President and Chief Operating
Officer of the Company, and effective January 1, 1993, Mr. Finck became Chief
Executive Officer. From July 1, 1991, to August 13, 1992, Mr. Finck served as
President and Chief Executive Officer of American Energy Group, an independent
oil and natural gas exploration and production company. From May 1984 until
June 1991, Mr. Finck served as President and Chief Executive Officer of Ensign
Oil & Gas Inc., a private domestic oil and gas exploration company. Mr. Finck
also served as Vice President-Chief Petroleum Engineer of Morgan Guaranty Trust
Company of New York from 1974 to 1980.
Mr. Hudson's principal occupation since 1991 has been his position as
general partner of Hudson Group Partners, a family investment partnership, and
from 1990 to 1991 Mr. Hudson was Chairman of the construction division of
Willis Corroon, an insurance brokerage firm. Mr. Hudson was the Chairman and
Chief Executive Officer of Collier Cobb and Associates, an insurance brokerage
firm, for more than five years prior to its sale in 1990.
Mr. Lee was Chairman of the Board of Directors and Chief Executive Officer
of the Company for more than five years prior to January 1993 when Mr. Finck
succeeded him as Chief Executive Officer. Mr. Lee has continued to serve as
Chairman of the Board.
6
Mr. Brewer served as Chairman of the Board and Chief Executive Officer of
Triton Europe plc, as well as Senior Vice President of the Company, until his
retirement on December 31, 1991.
Mr. McMahon became a Managing Director of Lehman Brothers in October 1994.
Prior to joining Lehman Brothers, Mr. McMahon was a partner in Aeneas Group,
Inc., a subsidiary of Harvard Management Company, Inc., since January 1993.
Harvard Management Company, Inc. is a private investment company responsible
for managing the endowment fund of Harvard University. Mr. McMahon was
primarily responsible for the fund's energy and commodities investments. From
1989 through 1992 Mr. McMahon was a Managing Director of Salomon Brothers,
Inc., responsible for investment banking activities with energy and chemical
companies worldwide. Mr. McMahon served as a Managing Director of Lehman
Brothers from 1983 to 1989, with responsibility for coordinating that firm's
investment banking activities with energy and mining companies worldwide.
Mr. Winters has been Chairman of Pate, Winters & Stone, Inc., a corporate
consulting firm, since 1990.
Mr. Williamson has been a partner in the law firm of Sullivan & Cromwell
since 1970, except from September 1990 to January 1993 when he served as the
legal adviser of the United States State Department. Sullivan & Cromwell
represents the parties, including the Company, to the Cusiana field association
contracts in connection with the formation of a joint stock company to
construct, own and operate pipeline and related facilities to transport
production from the Cusiana field.
Mr. Finck is the Chairman of the Board of Crusader Limited, the Company's
49.9% owned affiliate, and a director of New Zealand Petroleum Company Limited,
a New Zealand corporation 33.7% owned by the Company; Mr. McMahon is a director
of Tejas Power Corporation, Marine Drilling Companies and Cairn Energy USA,
Inc.; Mr. Winters is a director of American Medical Technologies, Inc., Liberty
Bancorp, Inc., Trident NGL, Inc. and United Medicorp, Inc.; and Mr. Cook is a
director of Input/Output, Inc. and Marine & Mercantile Securities plc. As far
as is known to the management of the Company, no other director or nominee for
director of the Company is a director of any company (other than the Company)
that has a class of securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or that is
subject to the requirements of Section 15(d) of such Act, or any company
registered as an investment company under the Investment Company Act of 1940,
as amended.
As far as is known to the Company, no family relationships exist (i)
between the directors and the nominees for director of the Company, or (ii)
between the directors or nominees for director and the officers of the Company.
7
MEETINGS OF DIRECTORS AND COMMITTEES
During the year ended December 31, 1994, the Board of Directors held seven
meetings. Each current director attended no less than 75% of these meetings and
of the meetings of the committees of the Board of Directors on which he served.
The Board of Directors has an Executive Committee, which has the authority,
subject to restrictions imposed by Texas law and the Company's Bylaws, to act
for the Board of Directors. Messrs. Finck (Chairman), Hendricks, Hudson, Lee
and Lewis currently are members of the Executive Committee. The Executive
Committee held eight meetings during the year ended December 31, 1994.
The Board of Directors has an Audit Committee, whose functions include the
selection of the independent auditors, along with the review in conjunction
with the independent auditors of the plans and scope of the audit engagement.
The committee also reviews with the independent auditors the results of their
examination, approves the fee charged by the independent auditors and reviews
the Company's internal controls. Messrs. Lewis (Chairman), Cook, Eubank and
Hendricks currently are members of the Audit Committee. The Audit Committee
held four meetings during the year ended December 31, 1994.
The Board of Directors has a Compensation Committee, which reviews and
recommends the compensation to be paid to employees and reviews, interprets and
helps administer the 401(k) plan and the various existing stock option,
restricted stock and convertible debenture plans. Messrs. Winters (Chairman),
Brewer, Hudson, McMahon and Morse currently are members of the Compensation
Committee. The Compensation Committee held six meetings during the year ended
December 31, 1994.
In January 1995, the Board created a Nominating Committee, which is, as
was the Executive Committee prior to January 1995, authorized by the Board of
Directors to recommend nominees for election to the Board of Directors and
nominees to fill additional directorships that may be created and to fill
vacancies which may exist on the Board of Directors. The Nominating Committee
will consider nominees recommended by shareholders. Recommendations by
shareholders should be submitted to the Secretary of the Company and should
identify the nominee by name and provide detailed background information.
Messrs. Hudson (Chairman), McMahon, Williamson and Winters currently are
members, and Mr. Finck is an ex-officio member, of the Nominating Committee.
8
PROPOSAL NO. 2
REINCORPORATION IN DELAWARE
BACKGROUND
Triton Energy Corporation (the "Company" or "Triton Texas") was
incorporated under the laws of the State of Texas in 1962. The Company believes
that it would be in the best interests of the Company's shareholders for the
Company to become incorporated under the laws of the State of Delaware.
At the Annual Meeting, shareholders will be asked to approve a change in
the state of incorporation of the Company by adopting and approving the Merger
Agreement in the form of Appendix A to this Proxy Statement. After the
shareholders have approved the proposed Merger Agreement, Triton Texas will be
merged (the "Reincorporation") into a wholly owned Delaware subsidiary ("Triton
Delaware"), which has been organized for that purpose. The Board of Directors
is recommending that shareholders approve the proposed Merger Agreement and
Reincorporation of the Company from Texas to Delaware. The Merger Agreement
provides that the Reincorporation may be abandoned at any time at the discretion
of the Board of Directors of the Company. The Certificate of Incorporation and
Bylaws of Triton Delaware are substantially identical to the Articles of
Incorporation and Bylaws of Triton Texas. Particularly, the provisions of the
Certificate of Incorporation of Triton Delaware relating to the authorized
number and classes of stock and the characteristics thereof and the management
of the affairs of the Company are substantially identical to the corresponding
provisions currently contained in the Articles of Incorporation of Triton Texas.
REASONS FOR CHANGE IN THE STATE OF INCORPORATION
As part of the Company's strategy to focus on its international oil and
gas exploration business, the implementation of which to date has resulted in a
substantial majority of the Company's assets being located outside the United
States, management is continually evaluating the Company's corporate structure.
The Company proposes to reincorporate as a Delaware corporation for several
reasons. First, the General Corporation Law of the State of Delaware (the
"DGCL") is generally recognized as one of the most comprehensive and progressive
of the state corporation statutes. Accordingly, because, in the opinion of the
Board and management of the Company, the DGCL addresses matters of corporate
concern more thoroughly than does the Texas Business Corporation Act (the
"TBCA") and is more reflective of current trends and developments in the
business community than is the TBCA, by reincorporating as a Delaware
corporation, the Company will be better suited to take advantage of business
opportunities as they arise and to provide for changing business needs. Second,
there exists a more substantial body of case law construing the DGCL concerning
corporate matters, such as the governance of a corporation's internal affairs
and its relationships and contacts with others, than is found construing the
TBCA. This substantial body of case law contributes to greater predictability
9
under the DGCL and reduces uncertainties and risks commonly associated with
resolving corporate matters. See "Certain Differences Between the Corporation
Statutes of Texas and Delaware." In making its recommendation, the Board of
Directors considered a number of jurisdictions in which to reincorporate,
including a number of offshore jurisdictions. Although the Company may give
further consideration to an offshore migration, the Company has not yet
concluded, and may not conclude, that an offshore migration would be advisable.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSAL
TO APPROVE THE MERGER AGREEMENT.
CONVERSION OF SHARES
At the effective date of the Reincorporation (the "Effective Date"), (i)
each outstanding share of the Company's Common Stock, par value $1.00 per share,
will be converted on a one-for-one basis into a share of common stock, par value
$1.00 per share, of Triton Delaware and (ii) each outstanding share of the
Company's 5% Convertible Preferred Stock, no par value, will be converted on a
one-for-one basis into a share of 5% Convertible Preferred Stock, no par value,
of Triton Delaware. Such conversion of shares will not result in any change in
the present ownership of shares of stock of the Company. Triton Texas stock
certificates outstanding will automatically be deemed to represent the same
number of Triton Delaware shares as represented by the Triton Texas certificates
prior to the Reincorporation. Shareholders of Triton Texas will not be required
to exchange their Triton Texas stock certificates for Triton Delaware stock
certificates. Following the Reincorporation, previously outstanding Triton
Texas stock certificates may be delivered in effecting sales, through a broker
or otherwise, of shares of Triton Delaware. The Triton Delaware Common Stock is
expected to be listed on the NYSE, as a successor to the Triton Texas stock.
The 5% Convertible Preferred Stock of Triton Delaware will have substantially
identical terms as the 5% Convertible Preferred Stock of Triton Texas, and there
will be no change in the relative rights of the holders of the Company's 5%
Convertible Preferred Stock as a result of the Reincorporation.
NO CHANGE IN BUSINESS PLAN, MANAGEMENT, ASSETS, LIABILITIES, NET WORTH OR
CAPITALIZATION
The proposed Reincorporation will not result in any change in the
business, management, assets, liabilities, net worth or capitalization of the
Company. Upon completion of the Reincorporation, the name of the Company will
continue to be Triton Energy Corporation and all of the previously outstanding
shares of Common Stock and 5% Convertible Preferred Stock of Triton Texas will
be automatically converted into the same number of shares of Common Stock and 5%
Convertible Preferred Stock of Triton Delaware. Promptly after the
effectiveness of the Reincorporation, the Company will issue an appropriate
press release, announcing the completion of the Reincorporation. It will not be
necessary for shareholders to exchange their Triton Texas stock certificates for
Triton Delaware stock certificates. The Reincorporation may, however, be
abandoned, either before or after shareholder approval, if circumstances arise
which, in the opinion of the Board of Directors, make it inadvisable to proceed.
10
AUTHORIZED SHARES OF COMMON AND PREFERRED STOCK
Upon consummation of the Reincorporation, the authorized capital stock of
Triton Delaware will consist of 200,000,000 shares of common stock, par value
$1.00 per share, and 5,000,000 shares of preferred stock, without par value. No
additional shares of Triton Delaware preferred stock will be issued in
connection with the Reincorporation. Under the Certificate of Incorporation of
Triton Delaware, as is currently the case under the Articles of Incorporation of
the Company, preferred stock will be issuable in series by action of the Board
of Directors, which may fix the voting powers, designations, preferences and
relative rights, qualifications, limitations or restrictions thereof. The
Company's Articles of Incorporation authorize the same number of shares of
Common Stock and preferred stock.
COMPANY EMPLOYEE BENEFIT PLANS
The Company's employee benefit plans will not be changed in any material
respect by the Reincorporation. Each option and Debenture exercisable for or
convertible into the Company's Common Stock outstanding immediately prior to the
Reincorporation will be automatically adjusted so that such options and
Debentures will become exercisable for or convertible into the same number of
shares of Triton Delaware Common Stock upon the same terms and conditions as in
effect immediately prior to the Effective Date.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the principal federal income tax
consequences of the Reincorporation to holders of Common Stock under present
law. The summary does not address potential legislative changes that may affect
it nor does it address any state, local or foreign tax consequences of the
Reincorporation. The summary is for general information only. SHAREHOLDERS
SHOULD CONSULT THEIR PERSONAL TAX ADVISERS WITH SPECIFIC REFERENCE TO THEIR OWN
TAX SITUATION AND POTENTIAL CHANGES IN THE APPLICABLE LAW AS TO ALL FEDERAL,
STATE, LOCAL AND OTHER TAX MATTERS IN CONNECTION WITH THE REINCORPORATION. The
Company has not secured, nor does it intend to secure, any ruling from the
Internal Revenue Service on the nontaxable nature of the Reincorporation.
No gain or loss should be recognized by the Company or shareholders of the
Company whose Common Stock is automatically converted into Common Stock of
Triton Delaware by reason of the consummation of the Reincorporation. The tax
basis of Triton Delaware Common Stock received by a shareholder of Triton Texas
through the Reincorporation should be the same as the tax basis of Triton Texas
Common Stock converted into Triton Delaware Common Stock. A shareholder who
holds Triton Texas Common Stock as a capital asset should include in the
shareholder's holding period for the Triton Delaware Common Stock received in
the Reincorporation the holding period for the Triton Texas Common Stock
converted into such Triton Delaware Common Stock.
11
SECURITIES ACT CONSEQUENCES
After the Reincorporation, Triton Delaware will be a publicly held
company, its Common Stock is expected to be quoted on the New York Stock
Exchange (the "NYSE") and the Company will file with the Securities and Exchange
Commission and provide to its shareholders the same type of information that
Triton Texas has previously filed and provided. The shares of Triton Delaware
to be issued in exchange for shares of Triton Texas are not being registered
under the Securities Act of 1933, as amended (the "Securities Act"), in reliance
upon an exemption with respect to a merger which has as its sole purpose a
change in the domicile of the corporation. Shareholders whose stock in Triton
Texas is freely tradable before the Reincorporation will own freely tradable
shares of Triton Delaware. Shareholders holding restricted securities of Triton
Delaware will be subject to the same restrictions on transfer as those to which
their present shares of stock in Triton Texas are subject. For purposes of
computing compliance with the holding period of Rule 144 under the Securities
Act, shareholders will be deemed to have acquired their shares in Triton
Delaware on the date they acquired their shares in Triton Texas. In summary,
Triton Delaware and its shareholders will be in the same respective position
under the federal securities laws after the Reincorporation as were Triton Texas
and its shareholders prior to the Reincorporation.
VOTE REQUIRED FOR APPROVAL
Approval of the Merger Agreement and reincorporation in Delaware will
require the affirmative vote of the holders of at least two-thirds of the
Company's Common Stock outstanding and entitled to vote on the Record Date. As
of ____________, 1995, the officers and directors of the Company, together with
their affiliates, owned approximately 573,073 shares of the outstanding Common
Stock (approximately 1.6% of the outstanding shares) and have each advised the
Company that they presently intend to vote all such shares owned by them FOR
this proposal.
NO RIGHT OF SHAREHOLDERS TO DISSENT
Under Article 5.11 of the Texas Business Corporation Act, the holders of
Common Stock of the Company do not have the right to dissent from the
Reincorporation because such shares are listed on the NYSE. Holders of the
Company's 5% Convertible Preferred Stock do not have the right to dissent from
the Reincorporation because they have no right to vote with respect to the
Reincorporation.
CERTAIN DIFFERENCES BETWEEN THE CORPORATION STATUTES OF TEXAS AND DELAWARE
After the Reincorporation, the shareholders of the Company, a Texas
corporation, will become shareholders of Triton Delaware, a Delaware
corporation. Consequently, because of differences between the TBCA and the
DGCL, rights of shareholders will be changed in certain respects. Certain
changes are summarized below:
12
REQUIRED VOTE FOR CERTAIN TRANSACTIONS -- SHAREHOLDER APPROVAL OF
BUSINESS COMBINATIONS. Under the TBCA, a merger or consolidation, a sale,
lease, exchange or other disposition of all or substantially all of the property
of the corporation (a "Disposition") not in the usual and regular course of the
corporation's business, or a dissolution of the corporation, must be approved by
at least two-thirds of the shares entitled to vote thereon, unless the charter
requires the vote of a different number of shares. If the holders of any class
of shares are entitled to vote as a class thereon, such a transaction must be
approved by two-thirds of the outstanding shares of such class and at least
two-thirds of the outstanding shares otherwise entitled to vote thereon.
Under the DGCL, such transactions are required to be approved by the
holders of a majority of the shares entitled to vote thereon unless the charter
provides otherwise. In addition, under the DGCL, class voting rights exist with
respect to amendments to the charter that adversely affect the terms of the
shares of a class. See "Amendment of Charter" below. Such class voting rights
do not exist as to other extraordinary matters, unless the charter provides
otherwise; the Certificate of Incorporation of Triton Delaware does not provide
otherwise. In addition, the Certificate of Incorporation of Triton Delaware
provides that Delaware's statute providing for a super majority vote in
connection with certain "business combinations" will not apply following the
Reincorporation. See "Delaware Anti-takeover Statute" below.
ABSENCE OF REQUIRED VOTE FOR CERTAIN MERGERS. Under the TBCA, no vote
of the shareholders of a corporation surviving a merger is required to approve
the merger if (i) such corporation is the sole surviving corporation in the
merger, (ii) the articles of incorporation of such corporation will not differ
from its articles of incorporation before the merger, (iii) each shareholder of
such corporation whose shares were outstanding immediately before the effective
date of the merger will hold the same number of shares, with identical
preferences, limitations and relative rights, immediately after the effective
date of the merger, (iv) the voting power of the number of voting shares
outstanding immediately after the merger, plus the voting power of the number of
voting shares of such corporation to be issued in the merger, if any, does not
exceed 20% of the voting power of the total number of voting shares outstanding
immediately before the merger and (v) the number of participating shares of such
corporation to be issued in the merger, if any, does not exceed 20% of the
number of such shares outstanding immediately before the merger.
Under the DGCL, no vote of the shareholders of a corporation surviving a
merger is required to approve a merger if (i) the agreement of merger does not
amend the charter of such corporation, (ii) each share of stock of such
corporation outstanding immediately before the merger is to be an identical
outstanding or treasury share of the surviving corporation thereafter and (iii)
the number of shares of common stock of such corporation to be issued in the
merger, if any, does not exceed 20% of the number of shares outstanding
immediately before the merger.
APPRAISAL RIGHTS. Under the TBCA, in general, a shareholder has (i) the
right to dissent from any plan of merger or consolidation or Disposition to
which such corporation is a party that
13
where a shareholder vote is required and (ii) the right to demand payment of the
fair value of his shares ("appraisal rights") upon compliance with the statutory
procedures. However, under the TBCA, a shareholder of a corporation does not
have the right to dissent or to assert appraisal rights if (i) the shares held
by the shareholder are part of a class or series of shares which are listed on a
national securities exchange, or held of record by not less than 2,000 holders,
on the record date fixed to determine the shareholders entitled to vote on the
plan of merger or consolidation or Disposition and (ii) the shareholder is not
required by the terms of the plan of merger or consolidation or Disposition to
accept for his shares any consideration other than (a) shares of the corporation
that, immediately after the effective date of the merger or, will be part of a
class the shares of which are (x) listed or authorized for listing upon official
notice of issuance, on a national securities exchange, or (y) held of record by
not less than 2,000 holders or (b) cash in lieu of fractional shares otherwise
entitled to be received.
Similarly, under the DGCL, a shareholder of a corporation does not have
appraisal rights in connection with a merger or consolidation or in the case of
a Disposition if (i) the shares of such corporation are listed on a national
securities exchange or held of record by more than 2,000 shareholders or (ii)
such corporation will be the surviving corporation of the merger and no vote of
the shareholders of the surviving corporation is required to approve such
merger, provided, however, that a shareholder is entitled to appraisal rights in
the case of a merger or consolidation, if such shareholder is required by the
terms of an agreement of merger or consolidation to accept in exchange for his
shares anything other than (a) shares of stock of the corporation surviving or
resulting from such merger or consolidation, (b) shares of any other corporation
that at the effective date of the merger or consolidation will be either listed
on a national securities exchange or held of record by more than 2,000
shareholders, (c) cash in lieu of fractional shares of the corporation described
in the foregoing clauses (a) and (b), or (d) any combination of the foregoing.
The Company's Common Stock is presently listed on the NYSE and the Triton
Delaware Common Stock will be listed or authorized for listing upon official
notice of issuance by the NYSE.
SHAREHOLDER CONSENT TO ACTION WITHOUT MEETING. Under the TBCA, if the
Articles of Incorporation so provide, any action that may be taken at a meeting
of the shareholders, may be taken without a meeting if a written consent thereto
is signed by the holders of that number of shares who would be required to
approve the action which is the subject of the consent as set forth in the
Articles of Incorporation. Triton Texas' Articles of Incorporation does not so
provide and therefore any such action without a meeting would require the
written consent of all shareholders entitled to vote thereon.
Under the DGCL, unless otherwise provided in the charter, any action that
can be taken at such meeting can be taken without a meeting if written consent
thereto is signed by the holders of outstanding stock having the minimum number
of votes necessary to authorize or take such action at a meeting of the
shareholders. Triton Delaware's Certificate of Incorporation does not provide
otherwise.
14
SPECIAL MEETINGS OF SHAREHOLDERS. Under the TBCA, special meetings of
shareholders may be called (i) by the president, the Board of Directors or such
other person or persons as may be authorized in the charter or the bylaws or
(ii) by shareholders who own at least 10% of the outstanding voting shares
unless the charter provides for a lesser or greater number, which may not exceed
50%.
Under the DGCL, a special meeting of shareholders may be called only by
the Board of Directors or by persons authorized in the charter or the bylaws.
The Certificate of Incorporation and Bylaws of Triton Delaware do not provide
for the call of a special meeting of shareholders by anyone other than the
President or the Board of Directors of Triton Delaware.
DISTRIBUTIONS AND DIVIDENDS; REDEMPTIONS. Under the TBCA, a
distribution is defined as a transfer of money or other property (except a
corporation's shares or rights to acquire its shares), or an issuance of
indebtedness, by a corporation to its shareholders in the form of: (i) a
dividend on any class or series of the corporation's outstanding shares; (ii) a
purchase or redemption of its shares; or (iii) a payment in liquidation of all
or a portion of its assets. Under the TBCA, a corporation may make a
distribution, subject to restrictions in its charter, if it does not render the
corporation unable to pay its debts as they become due in the usual course of
its business, and if it does not exceed the corporation's surplus. Surplus is
defined in the TBCA as the excess of net assets over stated capital, as such
stated capital may be adjusted by the board. This limitation does not apply to
distributions involving a purchase or redemption of shares to eliminate
fractional shares, collect indebtedness, pay dissenting shareholders or redeem
shares if net assets exceed the proposed distribution.
Under the DGCL, a corporation may pay dividends out of surplus and, if
there is no surplus, out of net profits for the current and/or the preceding
fiscal year, unless the net assets of the corporation are less than the capital
represented by issued and outstanding stock having a preference on asset
distributions. Surplus is defined in the DGCL as the excess of the net assets
over capital, as such capital may be adjusted by the board. A Delaware
corporation may purchase or redeem shares of any class except when its capital
is impaired or would be impaired by such purchase or redemption. A corporation
may, however, purchase or redeem out of capital shares that are entitled upon
any distribution of its assets to a preference over another class or series of
its stock if such shares are to be retired and the capital reduced.
PROXIES. Under the TBCA, proxies are valid for 11 months, and under the
DGCL, proxies are valid for three years, in both cases unless the proxies
provide for a longer period.
VACANCIES ON BOARD OF DIRECTORS. Under the TBCA, a vacancy on the board
may be filled by the vote of a majority of directors then in office, although
less than a quorum, or by election at a meeting of shareholders. A newly
created directorship resulting from an increase in the number of directors may
be filled by election at a meeting of shareholders or may be filled by the board
for a term continuing only until the next election of directors by shareholders,
15
but not more than two such directorships may be so filled during the period
between any two successive annual meetings.
Under the DGCL, a vacancy and newly created directorship may be filled by
a majority of the remaining directors, although less than a quorum, unless
otherwise provided in the charter or bylaws. Neither the Certificate of
Incorporation nor the Bylaws of Triton Delaware otherwise so provides.
REMOVAL OF DIRECTORS. Under the TBCA, the bylaws or charter may provide
that at any meeting of shareholders called expressly for that purpose, any
director or the entire board may be removed, with or without cause, by vote of
the holders of a majority of the shares then entitled to vote at an election of
directors, subject to further restrictions on removal which may be contained in
the bylaws, except in the case of a corporation with a classified board.
Under the DGCL, any director or the entire board may be removed, with or
without cause, by the holders of a majority of the shares entitled to vote at an
election of directors (or in the case of class voting, the holders of a majority
of the shares of that class and entitled to vote) except in the case of a
corporation with a classified board.
If a Texas or Delaware corporation has a classified board, shareholders
may remove a director or directors only for cause unless the charter otherwise
provides. The Board of Directors of each of Triton Texas and Triton Delaware is
classified.
INSPECTION OF BOOKS AND RECORDS. Under the TBCA, a shareholder may, for
a proper purpose, inspect the books and records of a corporation if such
shareholder holds at least 5% of the outstanding shares of stock of the
corporation or has been a holder of shares for at least six months prior to such
demand.
Under the DGCL, any shareholder may inspect the corporation's books and
records for a proper purpose.
AMENDMENT OF CHARTER. Under the TBCA, the charter may be amended if:
(i) the board sets forth the proposed amendment in a resolution and directs that
it be submitted to a vote at a meeting of shareholders and (ii) the holders of
at least two-thirds of the outstanding shares entitled to vote on the amendment
approve it by affirmative vote, unless the charter otherwise requires the vote
of a different number of shares, which if lesser, must be at least a majority.
In addition, if the holders of any class or series of shares are entitled to
vote as a class or series thereon, such an amendment must be approved by the
affirmative vote of the holders of at least two-thirds of the shares within each
class or series of outstanding shares entitled to vote thereon, unless the
charter otherwise requires the vote of a different number of shares, which, if
lesser, must be at least a majority.
16
Under the DGCL, the charter may be amended if (i) the board sets forth
the proposed amendment in a resolution, declares the advisability of the
amendment and directs that it be submitted to a vote at the meeting of
shareholders and (ii) the holders of at least a majority of shares of stock
entitled to vote thereon approve the amendment, unless the charter requires the
vote of a greater number of shares. If the holders of the outstanding shares of
a class are entitled to vote as a class upon a proposed amendment, the holders
of a majority of the outstanding shares of such class must also vote in favor of
the amendment.
AMENDMENT OF BYLAWS. Under the TBCA, the board may amend or repeal a
corporation's bylaws, or adopt new bylaws, unless (i) the charter reserves such
power exclusively to shareholders, or (ii) the shareholders in amending,
repealing or adopting a particular bylaw provision expressly provide that the
board may not amend or repeal that bylaw. In addition, unless the charter or a
bylaw adopted by the shareholders provides otherwise as to all or some portion
of a corporation's bylaws, shareholders may amend the bylaws even though such
bylaws may also be amended by the board. The Company's Articles of
Incorporation do not reserve the power to amend its Bylaws exclusively to the
shareholders. No particular Bylaw provision expressly provides that the Board
may not amend or repeal it.
Under the DGCL, the board may amend bylaws if so authorized in the
charter. The shareholders of a Delaware corporation also have the power to
amend bylaws. The Certificate of Incorporation of Triton Delaware authorizes
the Board to amend its bylaws.
INDEMNIFICATION OF DIRECTORS AND OFFICERS. The TBCA and the DGCL have
different provisions and limitations regarding indemnification by a corporation
of its officers, directors, employees and agents. If the Reincorporation is
approved, the DGCL indemnification provisions will not apply to any act or
omission that occurs before the Effective Date. The following is a summary
comparison of TBCA and DGCL indemnification provisions:
SCOPE. Under the TBCA, a corporation is permitted to provide
indemnification or advancement of expenses by a bylaw provision, agreement,
security arrangement or otherwise. Under the DGCL, indemnification rights
are expressly non-exclusive. A corporation is permitted to provide
indemnification or advancement of expenses by a bylaw provision, agreement
or otherwise.
ADVANCEMENT OF EXPENSES. Under the TBCA, reasonable court costs
and attorneys' fees ("expenses") incurred by a director who was, is, or is
threatened to be made a named defendant or respondent in a proceeding because
the person is or was a director of such corporation (a "proceeding") may be
paid or reimbursed by the corporation in advance of the final disposition of
the proceeding after the corporation receives (A) a written affirmation by
the director of his good faith belief that he has met the standard of conduct
necessary for indemnification under the TBCA and (B) a written undertaking by
or on behalf of the director to repay the amount paid or reimbursed if it
17
is ultimately determined that he has not met those requirements or
indemnification for such expenses is precluded under the TBCA.
The DGCL provides for the advancement of expenses for such
proceedings upon receipt of a similar undertaking, such undertaking, however,
need not be in writing. The DGCL does not require that such director give an
affirmation regarding his conduct in order to receive an advance of expenses.
REIMBURSEMENT OF EXPENSES. Under the TBCA, a reimbursement of
expenses may only be made after the required determination of the
appropriateness thereof has been made pursuant to the procedures set out in
the TBCA. Thus, there cannot be automatic reimbursement of expenses.
Under the DGCL, there is no express provision that allows for the
automatic reimbursement of expenses, but a Delaware corporation, through
bylaw provision or contract, may make such reimbursement automatic.
MANDATORY INDEMNIFICATION. Under the TBCA, indemnification by the
corporation is mandatory only if the director is wholly successful on the
merits or otherwise, in the defense of the proceeding. The DGCL allows for
indemnification with respect to any claim, issue or matter on which the
director is successful on the merits or otherwise, in the defense of the
proceeding.
INSURANCE. The TBCA and the DGCL both allow a corporation to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation against any liability
asserted against such person and incurred by such person in such a capacity
or arising out of his status as such a person whether or not the corporation
would have the power to indemnify him against that liability. Under the
TBCA, a corporation may also establish and maintain arrangements, other than
insurance, to protect these individuals, including a trust fund or surety
arrangement. As noted above, indemnification rights under the DGCL are
expressly non-exclusive.
PERSONS COVERED. The TBCA expressly and separately deals with the
protection available for officers, employees and agent. Such protections are
similar to those provided to directors. The DGCL provides the same
indemnification rights to officers, employees and agents as it provides for
directors.
STANDARD OF CARE. The standard of care required under both the
TBCA and DGCL is substantially the same. In general, directors are charged
with the duty in their decision-making process and oversight responsibilities
to act as would a reasonably prudent person in the conduct of such person's
own affairs.
18
CONTINUITY OF INDEMNIFICATION. The TBCA does not have a provision
that expressly provides indemnification after a directorship has terminated
for acts or omissions which took place prior to such termination. The DGCL
contains a provision that expressly provides that the statutory
indemnification provisions (i) apply to a director after he leaves the
corporation for acts he performed while a director and (ii) apply to the
estate and personal representatives of the director.
SHAREHOLDER REPORT. The TBCA requires a report to the
shareholders upon indemnification or advancement of expenses. The DGCL does
not have a similar reporting requirement.
LIMITED LIABILITY OF DIRECTORS. Under Article 1302-7.06 ("Article
1302") of the Texas Miscellaneous Corporation Laws Act, a corporation's charter
may eliminate all monetary liability of each director to the corporation or its
shareholders for conduct in the performance of such director's duties other than
conduct specifically excluded from protection. The Company's Articles of
Incorporation does so provide. Article 1302 does not permit any limitation of
the liability of a director for (i) breaching the duty of loyalty to the
corporation or its shareholders, (ii) failing to act in good faith, (iii)
engaging in intentional misconduct or a known violation of law, (iv) obtaining
an improper personal benefit from the corporation or (v) violating applicable
statutes which expressly provide for the liability of a director. It is likely
that any amendment to a charter would have no effect on the availability of
equitable remedies, such as an injunction or rescission, based upon a director's
breach of the duty of care.
Section 102(b)(7) of the DGCL permits the adoption of a charter provision
limiting or eliminating the monetary liability of a director to a corporation or
its shareholders by reason of a director's breach of the fiduciary duty of care
("Section 102"). Section 102 does not permit any limitation of the liability of
a director for (i) breaching the duty of loyalty to the corporation or its
shareholders, (ii) failing to act in good faith, (iii) engaging in intentional
misconduct or a known violation of law, (iv) obtaining an improper personal
benefit from the corporation or (v) paying a dividend or approving a stock
repurchase that was illegal under the DGCL.
The Articles of Incorporation of the Company and the Certificate of
Incorporation of Triton Delaware both eliminate the monetary liability of a
director to the full extent permitted by applicable law.
DELAWARE ANTI-TAKEOVER STATUTE. The TBCA does not contain an
anti-takeover provision. Section 203 of the DGCL makes it more difficult to
effect certain transactions between a Delaware corporation (or its majority
owned subsidiaries) and an "Interested Shareholder." The term "Interested
Shareholder" is defined to include any person owning 15% or more of the
outstanding voting stock of a Delaware corporation and affiliates and associates
of such person. The definition also covers a person who is an affiliate or an
associate of a Delaware corporation and who was the owner of 15% or more of its
outstanding voting stock at any time during the preceding three years, and
affiliates and associates of such person. Under Section 203, for a
19
period of three years following the date that a shareholder becomes an
Interested Shareholder, the following types of transactions ("Business
Combinations") between a Delaware corporation and such Interested Shareholder
are prohibited unless certain conditions, described below, are met: (i) mergers
or consolidations, (ii) sales, leases, exchanges or other disposition of 10% or
more of (a) the aggregate assets of the Delaware corporation or (b) the
aggregate market value of all the outstanding stock of the Delaware corporation,
(iii) issuance or transfer by the Delaware corporation of shares of its stock
that would have the effect of increasing the Interested Shareholder's
proportionate share of stock of the Delaware corporation, (iv) receipt by the
Interested Shareholder of the benefit of loans, advances, guarantees, pledges or
other financial benefits provided by the Delaware corporation and (v) any other
transaction that has the effect of increasing the proportionate share of the
stock of the Delaware corporation owned by the Interested Shareholder.
The three-year ban will not apply: (i) if, prior to the date upon which
the Interested Shareholder becomes such, the Board approves either the proposed
Business Combination or the transaction which would result in the shareholder
becoming an Interested Shareholder; (ii) if, upon the consummation of the
transaction that results in such shareholder becoming an Interested Shareholder,
the shareholder will own at least 85% of the voting stock of the Delaware
corporation which was outstanding on the date such transaction commenced
(excluding those shares owned by its directors who are also officers and certain
employee stock plans in which participants do not have the right to determine
confidentially whether shares will be tendered in a tender or exchange offer);
or (ii) if such Business Combination is approved by the Board and, at a meeting,
by the holders of at least 66 2/3% of the outstanding voting stock not owned by
the Interested Shareholder.
A Delaware corporation can exclude itself from the coverage of Section 203
by (i) a provision in its charter or (ii) an amendment to the Bylaws adopted by
shareholders (which amendment may not be further amended by the Board) or (iii)
an amendment to its charter, provided that (a) such amendment to the charter
must be approved by the affirmative vote of not less than a majority of the
outstanding shares entitled to vote thereon and (b) such amendment will not be
effective until 12 months after its adoption and will not apply to any Business
Combination with a person who became an Interested Shareholder prior to the
adoption of such amendment.
The Certificate of Incorporation of Triton Delaware excludes Triton
Delaware from the coverage of Section 203.
20
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid during the year ended December 31, 1994, and the years ended May 31, 1994
and May 31, 1993, to the Company's Chief Executive Officer and each of the
Company's four other most highly compensated executive officers who were
executive officers at December 31, 1994, based on salary and bonus earned during
the year ended December 31, 1994. The Company changed its fiscal year end from
May 31 to December 31, commencing December 31, 1994.
LONG TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------------- ----------------------- -------
RESTRICTED OPTIONS/ LTIP ALL OTHER
NAME AND FISCAL SALARY OTHER ANNUAL STOCK SARS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) BONUS ($) COMPENSATION(S) AWARD(S)($) (#)(1) (#) ($)
- ------------------------------- ------ ------ --------- --------------- ------------ -------- ------- ------------
Thomas G. Finck . . . . . . . . 1994(2) 566,667 300,000 --- --- 75,000 --- ---
President and Chief 1994 520,833 225,000 --- --- 150,000 --- ---
Executive Officer 1993 405,979 --- --- --- 250,000 --- ---
John P. Tatum . . . . . . . . . 1994(2) 354,167 50,000 --- --- 100,000 --- ---
Executive Vice President, 1994 329,167 --- --- --- 150,000 --- 94,006(3)
Operations 1993 231,145 --- --- --- 80,000 --- ---
Nick G. De'Ath (4) . . . . . . 1994(2) 212,500 150,000 --- --- 50,000 --- ---
Senior Vice President, 1994 190,000 --- --- --- 75,000 --- ---
Exploration 1993 --- --- --- --- 20,000 --- ---
Robert B. Holland, III (5) . . 1994(2) 341,667 153,479 --- --- 50,000 --- ---
Senior Vice President, 1994 314,583 150,000 --- --- 100,000 --- ---
General Counsel and 1993 125,000 --- --- --- 75,000 --- ---
Secretary
Peter Rugg (6) . . . . . . . . 1994(2) 304,167 --- --- --- 50,000 --- ---
Senior Vice President and 1994 279,167 100,000 --- --- 100,000 --- ---
Chief Financial Officer 1993 34,091 --- --- --- 50,000 --- ---
<FN>
- ----------------
(1) Options to acquire shares of Common Stock. Does not include Debentures
purchased by the named executive officers under the Debenture Plan. See
"Debenture Purchase."
(2) Information is for the twelve month period ended December 31, 1994.
Accordingly, there is some duplication of the information presented for the
fiscal year ended May 31, 1994.
21
(3) Represents the market value of 2,482 shares of Common Stock allocated to
Mr. Tatum pursuant to the Company's Employee Stock Ownership Plan, which value
is based on the closing price of the Common Stock as of May 31, 1994 as reported
on the New York Stock Exchange Composite Tape.
(4) Mr. De'Ath's employment by the Company commenced April 5, 1993.
(5) Mr. Holland's employment by the Company commenced January 4, 1993.
(6) Mr. Rugg's employment by the Company commenced April 13, 1993.
OPTION GRANTS DURING 1994
The following table provides information related to options and stock
appreciation rights granted to the named executive officers during the year
ended December 31, 1994.
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES
OF STOCK PRICE
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM (1)
------------------------------------------------------ -----------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION
GRANTED (#)(2) FISCAL YEAR ($/SH)(3) DATE 0% 5%($) 10%($)
-------------- ------------- ----------- ------------- --- --------- ---------
Thomas G. Finck . . . . . . . 75,000 6.0% 33.25 Oct. 18, 2004 --- 1,568,306 3,974,395
John P. Tatum . . . . . . . 100,000 8.0 32.00 May 19, 2004 --- 5,212,463 8,299,976
Nick G. De'Ath . . . . . . . 50,000 4.0 33.25 Oct. 18, 2004 --- 1,045,537 2,649,597
Robert B. Holland, III . . . 50,000 4.0 33.25 Oct. 18, 2004 --- 1,045,537 2,649,597
Peter Rugg . . . . . . . . . 50,000 4.0 33.25 Oct. 18, 2004 --- 1,045,537 2,649,597
<FN>
- ----------------
(1) The potential realizable value portion of the table illustrates value
that might be realized upon exercise of the options immediately prior to the
expiration of their term, assuming the specified compounded rates of
appreciation on the Company's Common Stock from the date of grant to the
expiration date. These numbers do not take into account provisions of certain
options providing for termination of the option following termination of
employment, nontransferability or vesting over periods of up to four years.
22
(2) Options to acquire shares of Common Stock. Options become exercisable
with respect to 25% of the shares covered thereby on each anniversary of the
date of grant. In the event of a Change of Control (as hereafter defined) of the
Company, however, any unexercisable portion of the options will become
immediately exercisable.
(3) The exercise price is equal to the closing price of the Common Stock
as of the date of grant as reported on the New York Stock Exchange Composite
Tape. The exercise price may be paid in shares of Common Stock owned by the
executive officer, in cash, or in any other form of valid consideration or a
combination of any of the foregoing, as determined by the Compensation Committee
in its discretion.
OPTION EXERCISES DURING 1994
AND YEAR END OPTION VALUES
The following table provides information related to options and stock
appreciation rights exercised by the named executive officers during the year
ended December 31, 1994 and the number and value of options held at year end.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY OPTIONS/
UNEXERCISED OPTIONS/SARS SARS
AT FY-END (#) AT FY-END ($)(1)
-------------------------- ---------------------------
SHARES
ACQUIRED ON VALUE
EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ----------- ----------- ------------- ----------- -------------
Thomas G. Finck . . . . . --- --- 162,500 312,500 $ 5,425 $ 72,525
John P. Tatum (2) . . . . 8,333 $229,158 72,416 212,127 320,490 409,222
Nick G. De'Ath . . . . . --- --- 23,750 121,250 32,813 135,938
Robert B. Holland, III . --- --- 43,750 181,250 33,550 188,150
Peter Rugg . . . . . . . --- --- 37,500 162,500 43,750 168,750
<FN>
- ----------------
(1) Value at fiscal year end is calculated based on the difference
between the option or SAR exercise price and the closing market price of the
Common Stock at December 30, 1994 multiplied by the number of shares to which
the option relates. On December 30, 1994, the closing price as reported by the
New York Stock Exchange Composite Tape was $34.00.
(2) Does not include the value realized upon the conversion by Mr. Tatum of
Debentures into an aggregate of 6,667 shares of Common Stock at the conversion
price of $8.00 per
23
share and the subsequent resale of such shares for the aggregate consideration
of $241,753.75.
PENSION PLAN TABLE
The following table lists estimated annual benefits payable upon
retirement under the Company's Retirement Income Plan ("Retirement Plan"),
including amounts attributable to the Company's Supplemental Executive
Retirement Plan ("SERP"), to participants with varying average earnings levels
and years of service.
Years of Credited Service
----------------------------------------------------
Remuneration 10 15 20 25 30
- ---------------- -------- -------- -------- -------- --------
$100,000 . . . . $ 37,500 $ 38,200 $ 38,800 $ 39,500 $ 40,100
150,000 . . . . 63,300 64,300 65,300 66,300 67,300
200,000 . . . . 88,300 89,300 90,300 91,300 92,300
250,000 . . . . 113,300 114,300 115,300 116,300 117,300
300,000 . . . . 138,300 139,300 140,300 141,300 142,300
350,000 . . . . 163,300 164,300 165,300 166,300 167,300
400,000 . . . . 188,300 189,300 190,300 191,300 192,300
450,000 . . . . 213,300 214,300 215,300 216,300 217,300
500,000 . . . . 238,300 239,300 240,300 241,300 242,300
550,000 . . . . 263,300 264,300 265,300 266,300 267,300
600,000 . . . . 288,300 289,300 290,300 291,300 292,300
Payments made under the Retirement Plan and SERP are based on years of
service and annual earnings. Salary and wages are included in the calculation of
average earnings, but bonuses, overtime, severance pay, overrides, royalties and
fringe benefits are excluded.
Under the Retirement Plan, the benefit which a participant is entitled to
receive at his normal retirement date (age 65) is equal to .8% of his average
monthly compensation multiplied by his years of service, not to exceed 30 years
plus .65% of his excess average monthly compensation multiplied by his years of
service, not to exceed 30 years. The Retirement Plan also provides an optional
early retirement benefit under which a participant may qualify for a reduced
pension after the attainment of age 55 and the completion of ten years of
service. Such benefit is further reduced if distribution commences prior to the
participant's normal retirement date.
24
The SERP provides supplemental benefits to selected employees who are also
participants in the Retirement Plan. The benefit levels under the SERP on normal
or early retirement are based on the participant's final salary at retirement
reduced by the participant's accrued benefit under the Retirement Plan and
further reduced by the participant's primary Social Security benefits. A maximum
of 50% of the participant's final salary will be payable annually from the SERP.
A participant's right to receive a benefit is forfeited in the event a
participant's employment is terminated for cause. A participant vests in his
retirement benefit over a ten-year period. A participant's vesting is
accelerated upon the occurrence of any of the following events (a "Change of
Control"): (i) the consummation of a merger or consolidation of the Company,
where the Company is not the surviving corporation, or the sale or other
transfer of all or substantially all of the Company's assets, (ii) the
shareholders of the Company approve a plan of liquidation of the Company, (iii)
any person or group becomes, without the prior approval of the Board of
Directors, a beneficial owner (as defined in Rule 13d-3 of the Securities
Exchange Act of 1934, as amended) of securities of the Company representing 25%
or more of the Company's then outstanding securities having the right to vote in
the election of directors, or (iv) during any period of two consecutive years,
individuals who, at the beginning of such period constituted the entire Board,
cease for any reason (other than death) to constitute a majority of the
directors of the Company, unless the nomination for election of each new
director was approved by a vote of at least two-thirds of the directors then
still in office.
The SERP generally provides that a participant may elect to receive
benefits under the SERP in equal monthly installments over a period of 15 years
or for the remainder of the lifetime of the participant and his spouse. The
Company has purchased life insurance to fund the Company's obligations to
participants.
For the year ended December 31, 1994, the remuneration included in the
computation of annual earnings under the Retirement Plan and the SERP for each
of the executive officers named in the Summary Compensation Table was as
follows: Thomas G. Finck, $590,590; John P. Tatum, $375,000; Nick G. De'Ath,
$275,000; Robert B. Holland, III, $350,000; and Peter Rugg, $325,000. The years
of credited service under the Retirement Plan and the SERP for each of those
individuals was as follows: Thomas G. Finck, 1 John P. Tatum, 13; Nick G.
De'Ath, 1; Robert B. Holland, III, 1; and Peter Rugg, 1.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
GENERAL. The Compensation Committee of the Board of Directors of the
Company is composed of non-employee directors. The Compensation Committee, as
part of its review and consideration of executive compensation, takes into
account, among other things, the following goals:
- Provision of incentives and rewards that will attract and retain
highly qualified and productive people;
25
- Motivation of employees to high levels of performance;
- Differentiation of individual pay based on performance;
- Ensuring external competitiveness and internal equity; and
- Alignment of Company, employee and shareholder interests.
The principal components of executive compensation are base pay,
discretionary bonus, and long-term incentives in the form of stock options and
convertible debentures. Executive compensation also includes various benefit
and retirement programs. The Compensation Committee believes that an emphasis
on equity compensation is in the best interests of the Company's shareholders
because it more closely aligns management and shareholder interests and
maximizes the availability of cash for significant capital expenditures such as
those contemplated for development of the Company's Colombian properties.
Since August 1992, the Company has recruited successors to most of its
senior management. In doing so, the Company negotiated separate compensation
packages, the principal components of which were base salaries and stock
options, with its current Chief Executive Officer, its Senior Vice Presidents
(including its Chief Financial Officer, General Counsel and heads of exploration
and operations), and several Vice Presidents. Those individuals' compensation
packages were determined by negotiations based on what the Compensation
Committee and the entire Board of Directors determined to be reasonable and
necessary to attract and properly incentivize highly qualified senior
executives.
CHIEF EXECUTIVE OFFICER'S 1994 COMPENSATION. The Compensation Committee
determines the compensation of Thomas G. Finck, the Company's Chief Executive
Officer and President, and is responsible for making all decisions with regard
to his compensation. During 1992, Mr. Finck joined the Company as President and
Chief Operating Officer. Mr. Finck's initial base compensation of $360,000, the
opportunity for an incentive bonus in the discretion of the Compensation
Committee and a stock option grant of 250,000 shares, was a package that
resulted from negotiations with Mr. Finck, and was designed to induce Mr. Finck
to join the Company and to align a significant portion of his potential
compensation to shareholder interests. The Company also agreed to guarantee up
to $1.3 million in indebtedness that may be incurred by Mr. Finck to finance the
acquisition or construction of his primary residence.
On January 1, 1993, Mr. Finck, as planned upon the retirement of William
I. Lee, became Chief Executive Officer. Mr. Finck's increased base salary of
$480,000 reflected the increase in Mr. Finck's responsibilities.
During 1994, the Compensation Committee, which during 1994 was composed of
Messrs. Hudson, Brewer, McMahon and Morse, considered the progress that had been
achieved by the new senior management team in meeting various corporate
objectives, including progress in
26
negotiating agreements relating to the Malaysia-Thailand Joint Development Area,
raising capital to finance the Company's substantial capital expenditures,
restructuring the Company's assets and operations, disposing of non-core assets,
resolving various contingencies, and enhancing the Company's reputation, and,
based on its assessment of that progress, approved bonuses to various members of
senior management, including Mr. Finck who received a bonus of $225,000, and
increases in their base salaries. Mr. Finck's base salary was increased to
$550,000.
In considering external competitiveness as part of determining Mr. Finck's
compensation, the Committee considered, among other things, executive
compensation of other companies, including those listed under "Stock Performance
Chart" taking into account perceived differences in the circumstances between
the Company and those companies. The Committee has considered the establishment
of objective goals as a basis for its executive compensation recommendations,
but believes that a subjective assessment of management's performance is more
appropriate given the nature of the Company's exploration business, the status
of the Company's major assets (including its Colombian and Malaysia-Thailand
interests), and the influence on the Company's results of operations and stock
price of factors deemed largely beyond management's control (such as
fluctuations in the price of oil and gas).
COMPENSATION COMMITTEE MEMBERS. This report is submitted by the members
of the Compensation Committee of the Board of Directors who served as such
during 1994:
Fitzgerald S. Hudson, Chairman
Herbert L. Brewer
Michael E. McMahon
Wellslake D. Morse, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Herbert L. Brewer served as Chairman of the Board and Chief Executive
Officer of Triton Europe and as a Senior Vice President of the Company until his
retirement on December 31, 1991.
STOCK PERFORMANCE CHART
The following chart compares the yearly percentage change in the
cumulative total shareholder return on the Company's Common Stock during the
five years ended December 31, 1994 with the cumulative total return on the S&P
500 Index and a peer group selected by the Company consisting of businesses
engaged in international oil and gas exploration and development. The comparison
assumes $100 was invested on December 31, 1989 in the Company's Common Stock and
in each of the foregoing indices and assumes reinvestment of dividends.
27
The returns of each issuer in the selected peer group have been weighted
according to the respective issuer's stock market capitalization as of the
beginning of each period.
28
CUMULATIVE TOTAL RETURN
Based on reinvestment of $100 beginning December 31, 1989
Dec. '89 Dec. '90 Dec. '91 Dec. '92 Dec. '93 Dec. '94
-------- -------- -------- -------- -------- --------
Triton Energy Corp . . . . . . $100 $40 $216 $219 $195 $220
S&P 500-R- . . . . . . . . . . $100 $97 $126 $136 $150 $152
Custom Composite Index . . . . $100 $97 $ 77 $ 67 $ 69 $ 68
The 11-Stock Custom Composite Index includes Apache Corp., Enterprise Oil PLC,
Lasmo PLC, Louisiana Land & Exploration, Maxus Energy Corp., Murphy Oil Corp.
Oryx Energy Company, Pogo Producing Company, Ranger Oil Ltd., Santa Fe Energy
Resources Inc., and Union Texas Petroleum Holdings Inc.[ql]
29
EMPLOYMENT AGREEMENTS
All executive officers of the Company have executed Employment Agreements
with the Company. Among other provisions, these agreements provide that, in
consideration for remaining in the employ of the Company, each such officer is
entitled, subject to certain conditions, to receive certain benefits in the
event of a Change of Control of the Company. If an officer of the Company is
terminated for a reason other than (a) his death, disability or retirement, (b)
for cause, or (c) his voluntary termination other than for good reason, such
officer would be entitled to receive from the Company a lump sum severance
payment equal to the sum of the following amounts: (i) the officer's full base
salary through his date of termination at the rate then in effect, (ii) an
amount equal to two times the officer's annual base salary, (iii) certain
relocation and indemnity payments, along with all legal fees and expenses
incurred by the officer as a result of the termination, and (iv) in the event
the officer is subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code"), as a result of the Change of
Control, an amount equal to the product of (x) 25% multiplied by (y) the amount
of any "excess parachute payment" received by the officer as described in the
provisions of Section 280G(b) of the Code. In the event that an officer receives
a "parachute payment" as the result of a Change of Control, such payment would
be deemed to be an "excess parachute payment" if it equals or exceeds 300% of
the officer's "base amount," generally the average annual compensation received
by the officer over the five most recent tax years. The "excess parachute
payment" is computed as that portion of the "parachute payment" which exceeds
the "base amount." In addition, unless the officer is terminated for cause, the
Company must maintain in full force and effect for the continued benefit of the
officer for a two-year period after the date of termination, all benefit plans
and programs or arrangements (or similar plans and programs or arrangements) in
which the officer was entitled to participate immediately prior to the date of
termination.
DIRECTORS' COMPENSATION
CASH REMUNERATION. During the year ended December 31, 1994 each
director who was not also an officer or employee of the Company was entitled to
receive $20,000 annually, plus $1,000 (or, beginning April 1994, $2,000 in the
case of the committee chairman) for each board or committee meeting attended.
Members of the Board of Directors are also reimbursed for travel expenses to
meetings of the Board of Directors and its committees.
RETIREMENT PLAN FOR DIRECTORS. The Company has adopted a retirement plan
for Directors to provide certain benefits to outside directors of the Company.
In order to be entitled to receive any benefits under the retirement plan for
Directors, a director must have served as an "outside director" for an aggregate
of not less than five complete years or, if a director has served less than an
aggregate of five complete years as an "outside director," (i) have had his
service on the board as an "outside director" terminated due to death or
disability or (ii) have a Change of Control of the Company occur while he was a
director. An "outside director" is defined in the retirement plan as a director
who is not a full or part-time employee of the
30
Company or who, other than as a director, does not act, directly or indirectly,
for the Company under any consulting contract or agreement for the provision of
services which provides for compensation in excess of $60,000 during any fiscal
year.
Benefits under the Retirement Plan for Directors are payable quarterly and
commence at the beginning of the Company's fiscal quarter next following the
later of the date on which a director (i) attains age 65 or (ii) retires from
the Board of Directors; provided that if a director retires from the board due
to his death or disability, the payments to such director or his estate will
commence at the beginning of the Company's fiscal quarter next following the
date of such director's death or retirement, as the case may be. The payment of
benefits continue for a period equal to the lesser of (i) the number of years
and parts thereof, rounded upwards to the nearest six months, during which such
director served as an outside director or (ii) ten years. The Company may elect
in its discretion to pay a retired director, with the consent of such director
or his estate, a lump sum.
Under the Retirement Plan for Directors, the total benefits payable to a
director for each year that he receives benefits thereunder are equal to the
greater of (i) the annual stipend payable to such director effective for the
fiscal year of the Company in which he retires or (ii) the annual stipend
payable to such director for the Company's fiscal year prior to the fiscal year
in which he retires.
STOCK OPTION GRANTS. Pursuant to the Company's Amended and Restated
1992 Stock Option Plan, on November 15 of each year, outside directors
automatically receive grants of nonqualified stock options to purchase 15,000
shares of Common Stock. The options become exercisable at the rate of 33 1/3%
per year on each anniversary of the date of grant and terminate on the tenth
anniversary of the date of grant. The exercise price of the options is equal to
fair market value of the Common Stock on the date of grant. Each of Messrs.
Brewer, Cook, Eubank, Hendricks, Hudson, Lee, Lewis, McMahon, Morse, Williamson
and Winters on November 15, 1994 received options to purchase 15,000 shares of
Common Stock at an exercise price of $36.25.
STOCK APPRECIATION RIGHTS PLAN. Effective November 12, 1987, the Company
adopted the Triton Energy Corporation 1988 Stock Appreciation Rights Plan (the
"SAR Plan"). Under the SAR Plan, Stock Appreciation Rights ("SARs") equivalent
in the aggregate of up to 200,000 shares of Common Stock, subject to adjustment
as provided below, may be granted from time to time to non-employee directors of
the Company. Presently, there are eleven directors eligible to participate in
the SAR Plan.
The SAR Plan is administered by the Board of Directors; however, the Board
of Directors may in its discretion at any time delegate such administrative
authority to a committee of the Board of Directors comprised of disinterested
directors.
31
An SAR, upon exercise, will allow the holder thereof to receive in cash
the difference between the SAR's Price and the fair market value of the shares
of Common Stock covered by the SAR on the date of exercise. The "SAR's Price" is
established by the Board of Directors at the time the SARs are granted, at a
price not less than the fair market value (but in no event less than the par
value) of the shares of Common Stock covered by such SARs on the date of grant.
Subject to the conditions described below, SARs granted under the SAR Plan
generally become exercisable after one year following the date of grant with
respect to 50% of the shares of Common Stock covered thereby. The remaining 50%
increment becomes exercisable two years from the date of grant.
The period during which an SAR may be exercised is specified in the Stock
Appreciation Rights Agreement (the "SAR Agreement") with respect to each SAR
granted. In any event, such period shall terminate at the earliest of (i) the
expiration of 10 years from the date on which such SARs were granted, (ii) the
expiration of three months from the date on which the holder terminates his or
her membership on the Board of Directors except by reason of death or
disability, or (iii) the expiration of 12 months after the holder's membership
on the Board of Directors is terminated by reason of such holder's death or
disability.
The exercise price is subject to appropriate adjustment upon (i) the
issuance of stock dividends and (ii) any recapitalization resulting in a stock
split-up, combination, or exchange of shares of Common Stock. The SAR Plan
reserves the right of the Board of Directors to accelerate the time at which any
SAR shall become exercisable. The form of SAR Agreement also provides that in
the event of a Change of Control all SARs shall automatically be accelerated and
exercisable in full. All SARs are non-transferable except by will or the laws of
descent and distribution.
The SAR Plan will terminate on November 12, 1997. The Board of Directors
may amend, suspend or discontinue the SAR Plan. However, absent the consent of
the holder of an SAR, no such amendment or suspension may substantially impair
such holder's SAR Agreement. During the year ended December 31, 1994, Mr. Eubank
realized $263,750.00 upon exercise of SARs.
OTHER. Since January 1, 1993, when he ceased to serve as Chief
Executive Officer of the Company, Mr. Lee has received a monthly consulting fee
of $15,000.
DEBENTURE PURCHASE
In April 1994, the executive officers of the Company purchased from the
Company an aggregate of $6,281,250 principal amount of Debentures convertible
into shares of the Company's Common Stock at the conversion price of $25.125 per
share, the market value of the Common Stock at the date of purchase. The
consideration for the Debentures given by each executive officer was a personal
promissory note payable to the Company in a principal amount
32
equal to the principal amount of the debentures purchased. As a result, the
executive officers were indebted to the Company in the following amounts. The
notes bear interest at the rate of prime (the interest rate payable by the
Company under the debentures) plus 1/8% per annum.
PRINCIPAL AMOUNT OF
NAME POSITION INDEBTEDNESS
- ------------------------ -------------------------------- ------------------
Thomas G. Finck President and Chief Executive $1,507,500
Officer
John P. Tatum Executive Vice President, 1,256,250
Operations
Nick G. De'Ath Senior Vice President, 753,750
Exploration
Robert B. Holland, III Senior Vice President, General 1,005,000
Counsel and Secretary
Peter Rugg Senior Vice President and 1,005,000
Chief Financial Officer
A. E. Turner, III Senior Vice President, 753,750
Operations
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
By letter dated February 10, 1993, the Company requested proposals from
several independent accountants, including KPMG Peat Marwick, the Company's
former independent accountants, to perform audit services regarding the
Company's financial statements. On February 23, 1993, KPMG Peat Marwick advised
the Company that it declined to submit such a proposal and instead resigned as
the Company's independent accounting firm.
The report of KPMG Peat Marwick on the Company's financial statements for
the 1992 fiscal year ended May 31, 1992 did not contain an adverse opinion or a
disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit
scope, or accounting principles. Furthermore, during the fiscal year ended May
31, 1992, and any subsequent interim periods during which KPMG Peat Marwick
served as the Company's independent accountants, there have been no
disagreements with KPMG Peat Marwick on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreement, if not resolved to their satisfaction, would have caused them to
make reference to the subject matter of the disagreement in connection with
their report. In its last annual management letter, KPMG Peat Marwick commented
upon what it considered to be certain material weaknesses in the Company's
internal control structure. The Company does not consider the subsidiaries to
33
which the material weaknesses related to be material to the value of the Company
taken as a whole. The Company has authorized KPMG Peat Marwick to respond fully
to any inquiries by any successor independent accountants concerning all of the
above matters.
After soliciting and considering proposals from accounting firms, the
Board of Directors selected Price Waterhouse as the Company's independent
accounting firm for its fiscal years ending May 31, 1993 and 1994. The Company
has elected to change its fiscal year from May 31 to December 31. Price
Waterhouse has also been selected as the Company's independent accounting firm
for the seven month transition period ending December 31, 1994. Representatives
of Price Waterhouse will be present at the Annual Meeting of Shareholders to
respond to appropriate questions and to make such statements as they desire.
During the Company's two preceding fiscal years through the date on which
Price Waterhouse was engaged, neither the Company nor anyone acting on its
behalf consulted Price Waterhouse regarding either the application of accounting
principles to a completed or proposed specific transaction, the type of audit
opinion that might be rendered on the Company's financial statements, or any
accounting disagreement or reportable event of the type described in paragraphs
304(a)(1)(iv) or (v) of Regulation S-K promulgated by the Securities and
Exchange Commission.
SECTION 16 REQUIREMENTS
Section 16(a) of the Exchange Act requires the Company's directors and
officers, and persons who own more than 10% of a registered class of the
Company's equity securities, to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission (the "SEC") and
the NYSE. Such persons are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it with
respect to the year ended December 31, 1994, or written representations from
certain reporting persons, the Company believes that all filing requirements
applicable to its directors, officers and persons who own more than 10% of a
registered class of the Company's equity securities have been complied with.
SHAREHOLDER PROPOSALS
Any shareholder who desires to present proposals to the Company's 1996
Annual Meeting of Shareholders of the Company and to have such proposals set
forth in the proxy statement mailed in conjunction with such Annual Meeting must
submit such proposals to the Company no later than ___________, 1995. Any
shareholder may submit any such proposal to Triton Energy Corporation,
Attention: Robert B. Holland, III, Esq., Senior Vice President,
34
General Counsel and Secretary, 6688 North Central Expressway, Suite 1400,
Dallas, Texas 75206. All shareholder proposals must comply with Rule 14a-8
promulgated by the Securities and Exchange Commission pursuant to the Exchange
Act.
OTHER MATTERS
The Annual Report to Shareholders for the period ended December 31, 1994,
which includes financial statements, is enclosed herewith. The Annual Report
does not form a part of this Proxy Statement or the materials for the
solicitation of proxies to be voted at the Annual Meeting.
A COPY OF THE COMPANY'S TRANSITION REPORT ON FORM 10-K FOR THE TRANSITION
PERIOD ENDED DECEMBER 31, 1994, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES BUT
NOT INCLUDING EXHIBITS, WILL BE FURNISHED AT NO CHARGE TO EACH PERSON TO WHOM A
PROXY STATEMENT IS DELIVERED UPON RECEIPT OF A WRITTEN OR ORAL REQUEST OF SUCH
PERSON ADDRESSED TO TRITON ENERGY CORPORATION, ATTN: INVESTOR RELATIONS, 6688
NORTH CENTRAL EXPRESSWAY, SUITE 1400, DALLAS, TEXAS 75206 (TELEPHONE (214)
691-5200). THE COMPANY WILL ALSO FURNISH SUCH TRANSITION REPORT ON FORM 10-K TO
ANY "BENEFICIAL OWNER" OF SUCH SECURITIES AT NO CHARGE UPON RECEIPT OF A WRITTEN
REQUEST, ADDRESSED TO INVESTOR RELATIONS, AND CONTAINING A GOOD FAITH
REPRESENTATION THAT, AT THE RECORD DATE, SUCH PERSON WAS A BENEFICIAL OWNER OF
SECURITIES OF THE COMPANY ENTITLED TO VOTE AT THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 11, 1995. COPIES OF ANY EXHIBIT TO THE FORM 10-K WILL BE
FURNISHED UPON THE PAYMENT OF A $.15 PER PAGE FEE.
The accompanying proxy is being solicited on behalf of the Board of
Directors of the Company. The expenses of preparing, printing and mailing the
proxy and the materials used in the solicitation thereof will be borne by the
Company.
Georgeson & Co., Inc. has been retained by the Company to aid in the
solicitation of proxies, for a fee of _____________________________ if assigned
and the reimbursement of out-of-pocket expenses. Proxies may also be solicited
by personal interview, telephone and telegram by directors, officers and
employees of the Company who will not receive additional compensation for such
services. Arrangements also may be made with brokerage houses and other
custodians, nominees and fiduciaries for the forwarding of solicitation
materials to the beneficial owners of Common Stock held by such persons, and the
Company will reimburse them for reasonable expenses incurred by them in
connection therewith.
All information contained in the Proxy Statement relating to the
occupations and security holdings of directors and executive officers of the
Company is based upon information received from the individual directors and
executive officers.
35
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD AT YOUR EARLIEST
CONVENIENCE IN THE ENCLOSED RETURN ENVELOPE ADDRESSED TO THE COMPANY. NO POSTAGE
IS REQUIRED IF MAILED IN THE UNITED STATES. A PROMPT RETURN OF YOUR PROXY CARD
WILL BE APPRECIATED AS IT WILL SAVE THE EXPENSE OF FURTHER MAILINGS.
By Order of the Board of Directors
Robert B. Holland, III
SECRETARY
Dallas, Texas
April __, 1995
36
APPENDIX A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), made this __________
day of _________, 1995, by and between Triton Energy Corporation, a Texas
corporation ("Triton-Texas"), and Triton Energy Corporation, a Delaware
corporation and a wholly-owned subsidiary of Triton-Texas ("Triton-Delaware")
(the two corporate parties hereto being sometimes collectively referred to as
the "Constituent Corporations"),
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Boards of Directors of Triton-Texas and Triton-Delaware have
determined that the proposed merger (the "Merger") of Triton-Texas with
Triton-Delaware upon the terms hereinafter set forth is advisable and in the
best interests of the shareholders of such corporations and the Boards of
Directors of Triton-Texas and Triton-Delaware have adopted and approved this
Agreement and both such Boards of Directors have directed that this Agreement be
submitted to the shareholders of Triton-Texas and Triton-Delaware for their
approval; and
WHEREAS, the Merger is intended to constitute a reorganization within the
meaning of Section 368(a)(1)(F) of the Internal Revenue Code of 1986; and
WHEREAS, as and when required by the provisions of this Agreement, all
such action as may be necessary or appropriate shall be taken by Triton-Texas
and Triton-Delaware, as appropriate, in order to consummate the Merger;
NOW, THEREFORE, the Constituent Corporations do hereby agree to merge on
the terms and conditions herein provided, as follows:
ARTICLE I
General
1.1 AGREEMENT TO MERGE. The parties to this Agreement agree to effect
the Merger herein provided for, subject to the terms and conditions set forth
herein.
1.2 EFFECTIVE TIME OF THE MERGER. The Merger shall be effective in
accordance with the laws of the States of Texas and Delaware. The date and time
the Merger becomes effective is referred to as the "Effective Time of the
Merger".
1.3 SURVIVING CORPORATION. Upon the Effective Time of the Merger,
Triton-Texas shall be merged with and into Triton-Delaware, and Triton-Delaware
shall be the surviving corporation, governed by the laws of the State of
Delaware (hereinafter sometimes called the "Surviving Corporation").
A-1
1.4 CERTIFICATE/ARTICLES OF INCORPORATION AND BYLAWS. Upon the
Effective Time of the Merger, the Certificate of Incorporation and Bylaws of
Triton-Delaware in effect immediately prior to the Effective Time of the Merger
shall be the Certificate of Incorporation and Bylaws of the Surviving
Corporation, subject always to the right of the Surviving Corporation to amend
its Certificate of Incorporation and Bylaws in accordance with the laws of the
State of Delaware and the provisions of the Certificate of Incorporation.
1.6 DIRECTORS AND OFFICERS. The directors and officers of
Triton-Texas in office at the Effective Time of the Merger shall be and
constitute the directors and officers of the Surviving Corporation, each holding
the same office and/or directorship in the Surviving Corporation as he or she
held in Triton-Texas for the terms elected and/or until their respective
successors shall be elected or appointed and qualified.
1.7 EFFECT OF THE MERGER. On and after the Effective Time of the
Merger, the separate existence of Triton-Texas and Triton-Delaware shall cease
and the Surviving Corporation shall succeed, without further action, to all the
properties and assets of Triton-Texas and Triton-Delaware of every kind, nature
and description and to Triton-Texas's and Triton-Delaware's business as a going
concern. The Surviving Corporation shall also succeed to all rights, title and
interests to all real estate and other property owned by Triton-Texas or
Triton-Delaware without reversion or impairment, without further act or deed,
and without any transfer or assignment having occurred, but subject to any
existing liens thereon. All liabilities and obligations of Triton-Texas or
Triton-Delaware shall become the liabilities and obligations of the Surviving
Corporation, and any proceedings pending against Triton-Texas or Triton-Delaware
will be continued as if the Merger had not occurred.
1.8 FURTHER ASSURANCES. Triton-Texas hereby agrees that at any
time, or from time to time, as and when requested by the Surviving Corporation,
or by its successors and assigns, it will execute and deliver, or cause to be
executed and delivered in its name by its last acting officers, or by the
corresponding officers of the Surviving Corporation, all such conveyances,
assignments, transfers, deeds or other instruments, and will take or cause to be
taken such further or other action and give such assurances as the Surviving
Corporation, its successors or assigns may deem necessary or desirable in order
to evidence the transfer, vesting of any property, right, privilege or franchise
or to vest or perfect in or confirm to the Surviving Corporation, its successors
and assigns, title to and possession of all the property, rights, privileges,
powers, immunities, franchises and interests referred to in this Article I and
otherwise to carry out the intent and purposes thereof. Triton-Delaware, as the
Surviving Corporation, agrees that it will promptly pay to any dissenting
shareholder of any Constituent Corporation, in accordance with the applicable
provisions of Texas or Delaware law, as applicable, such amount as such
dissenting shareholder shall be entitled to receive under Texas or Delaware law,
as applicable, as a dissenting shareholder.
A-2
ARTICLE II
Capital Stock of the Constituent Corporations
2.1 TRITON-DELAWARE CAPITAL STOCK. Upon the Effective Time of the
Merger, by virtue of the Merger and without any action on the part of
Triton-Texas, Triton-Delaware or the holders of any of the common stock
("Triton-Delaware Common Stock") of Triton-Delaware, each issued and outstanding
share of Triton-Delaware Common Stock shall be cancelled.
2.2 TRITON-TEXAS CAPITAL STOCK. Upon the Effective Time of the
Merger, by virtue of the Merger and without any action on the part of
Triton-Texas, Triton-Delaware or the holders of any of the common stock
("Triton-Texas Common Stock") of Triton-Texas, (i) each issued and outstanding
share of Triton-Texas Common Stock, including any rights attached thereto, and
each share of Common Stock of Triton-Texas, including any rights attached
thereto, held in the treasury of Triton-Texas, shall be converted into one
share of Triton-Delaware Common Stock, (ii) each issued and outstanding share of
Triton-Texas Series A Preferred Stock, and each share of Triton-Texas Series A
Preferred Stock held in the treasury of Triton-Texas, shall be converted into
one share of Triton-Delaware Series A Preferred Stock and (iii) each issued and
outstanding share of Triton-Texas 5% Convertible Preferred Stock, and each share
of Triton-Texas 5% Convertible Preferred Stock held in the treasury of
Triton-Texas, shall be converted into one share of Triton-Delaware 5%
Convertible Preferred Stock.
ARTICLE III
Termination and Amendment
3.1 TERMINATION. This Agreement may be terminated and abandoned at
any time prior to the Effective Time of the Merger, whether before or after
action thereon by the shareholders of the Constituent Corporations, by the
mutual written consent of the Boards of Directors of Triton-Texas and
Triton-Delaware.
3.2 CONSEQUENCES OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to the provisions of Section 3.1 hereof,
this Agreement shall be of no further force or effect.
3.3 MODIFICATION, AMENDMENT, ETC. Any of the terms or conditions of
this Agreement may be waived at any time, whether before or after action thereon
by the shareholders of the Constituent Corporations, by the party entitled to
the benefits thereof, and this Agreement may be modified or amended at any time,
whether before or after action thereon by the shareholders of the Constituent
Corporations, to the full extent permitted by the corporate laws of the States
of Texas and Delaware. Any waiver, modification or amendment shall be effective
only if reduced to writing and executed by the duly authorized representatives
of the Constituent Corporations.
A-3
ARTICLE IV
Miscellaneous
4.1 EXPENSES. The Surviving Corporation shall pay all expenses of
carrying this Agreement into effect and accomplishing the Merger herein provided
for.
4.2 HEADINGS. Descriptive headings are for convenience only and shall
not control or affect the meaning or construction of any provisions of this
Agreement.
4.3 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be
an original instrument, and all such counterparts together shall constitute only
one original.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed on its behalf by an officer duly authorized thereunto as of the
date first above written.
Triton Energy Corporation, a Texas
corporation
By______________________________________
Its_____________________________________
Triton Energy Corporation, a Delaware
corporation
By_____________________________________
Its____________________________________
A-4
TRITON ENERGY CORPORATION
PROXY - ANNUAL MEETING OF SHAREHOLDERS
P
R
O The undersigned hereby appoints Thomas G. Finck and Robert B. Holland,
X III, each with power to act without the other and with full power of
Y substitution, as Proxies to represent and to vote, as designated on the
reverse side, all stock of Triton Energy Corporation owned by the
undersigned, at the Annual Meeting of Shareholders to be held at the Royal
Oaks Country Club, 7915 Greenville Avenue, Dallas, Texas 75231 on Thursday,
May 11, 1995, ______________ A.M., local time, upon such business as may
properly come before the meeting or any adjournment including the following
as set forth on the reverse side.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO SPECIFIC DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED (I) FOR THE ELECTION OF THE NOMINEES FOR
DIRECTOR, (II) FOR APPROVAL OF THE REINCORPORATION OF THE COMPANY FROM
TEXAS TO DELAWARE BY APPROVING THE AGREEMENT AND PLAN OF MERGER BETWEEN
TRITON ENERGY CORPORATION, A TEXAS CORPORATION, AND TRITON ENERGY
CORPORATION, A DELAWARE CORPORATION AND (III) AT THE DISCRETION OF THE
PROXY HOLDERS WITH REGARD TO ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE
THE MEETING OR ANY ADJOURNMENT THEREOF.
(Continued, and to be signed and dated on reverse side)
/x/ PLEASE MARK
YOUR CHOICES
LIKE THIS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
-------------------------
COMMON
1. Election as Directors of the nominees listed below (except as indicated to
the contrary below).
Nominees: Thomas G. Finck, Fitzgerald S. Hudson,
William I. Lee, ____________________and_____________________
FOR WITHHELD
/ / / /
/ /
-------------------------------------------
For all nominees except as noted above
2. Approval of reincorporation of the Company from Texas to Delaware by
approving the Agreement and Plan of Merger between Triton Energy
Corporation, a Texas corporation, and Triton Energy Corporation, a
Delaware corporation, as more fully described in the accompanying Proxy
Statement.
FOR AGAINST ABSTAIN
/ / / / / /
3. In their discretion on any other matter that may properly come before the
meeting or any adjournment thereof.
Please date, sign exactly as shown herein and mail promptly this proxy in the
enclosed envelope. When there is more than one owner, each should sign. When
signing as an attorney, administrator, executor, guardian or trustee, please add
your title as such. If executed by a corporation or trustee, please add your
title as such. If executed by a corporation, the proxy should be signed by a
duly authorized officer. If executed by a partnership, please sign in the
partnership name by an authorized person.
Signature: Date
--------------------------------- ------------------------
Signature: Date
--------------------------------- ------------------------