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EXHIBIT (e)(18)
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table reflects all forms of compensation for the years
ended December 31, 1999, 1998 and 1997, for Messrs. Lodzinski, Crews and Mury
and for Mr. Ruben Medrano, who served as Chief Executive Officer until the
merger with Cliffwood. Except as shown below, no executive officer, other than
Mr. Medrano, had salary and bonus which exceeded $100,000.
ANNUAL COMPENSATION LONG TERM COMPENSATION
--------------------------------------------------------------------------------
SECURITIES
OTHER AWARDS UNDER- PAYOUTS
ANNUAL RESTRICTED LYING ------- ALL OTHER
COMPEN- STOCK OPTIONS/ LTIP COMPENSA-
YEAR SALARY BONUS SATION AWARDS SARS (#) PAYOUTS TION
------- ---------- ---------- ----------- ----------- ----------- -------- -----------
Frank A. Lodzinski 1999 $ 94,000 $ 35,000 -- -- -- -- --
Chairman of the 1998 $ 58,000 -- -- -- -- -- --
Board and Chief Executive 1997 -- -- -- -- -- -- --
Officer (1)
Jerry M. Crews 1999 $ 85,500 $ 32,500 -- -- -- -- --
Executive Vice 1998 $ 77,700 --
President (2)
Francis M. Mury 1999 $ 87,500 $ 27,500 -- -- -- -- --
Executive Vice 1998 $ 82,950 -- -- -- -- -- --
President (2)
Ruben Medrano 1997 $ 72,940 $ 10,000 $18,253
Former President
and Chief Executive
Officer (3)
(1) As a result of the Merger, Mr. Lodzinski became Chairman of the Board,
President, Chief Executive Officer and Director on December 31, 1997.
Mr. Lodzinski received no compensation from Texoil in 1997.
(2) As a result of the Merger, Messrs. Crews and Mury became Executive Vice
Presidents on December 31, 1997.
(3) Mr. Medrano resigned as President and Chief Executive Officer effective
December 31, 1997.
CLIFFWOOD OPTIONS
Prior to the Merger, Cliffwood granted options to purchase 573,000
shares of Common Stock under Cliffwood's 1997 Stock Option Plan and Non-Employee
Director Stock Option Plan. Pursuant to the Merger agreement, these options were
canceled and replaced by options to purchase 6.74 shares of Texoil Common Stock
for every share that could have been purchased under the Cliffwood plans. In
June 1999, the replacement options were adjusted for the net 1-for-6 reverse
stock split. The table below reflects the number of shares underlying options
and the related exercise price, both as adjusted. There were no amendments to
the terms or conditions of the options, except for proportional changes in the
number and exercise price.
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OPTION GRANTS
As described above, new options were granted to current Executive
Officers of the Company, following the Merger as a result of the conversion of
Cliffwood options as described in "Cliffwood Options." No new options were
granted to the Executive Officers in 1998 or 1999, so the table below only
reflects the adjustment for the stock split in June. The following table sets
forth additional information with respect to these stock option grants.
PERCENT OF
TOTAL
NUMBER OF OPTIONS/SARS
TEXOIL GRANTED TO
SHARES EXERCISE EMPLOYEES
UNDERLYING OR BASE EFFECTIVE
OPTIONS PRICE JANUARY 1, EXPIRATION
NAME GRANTED ($/SHARE) 1997 DATE
- ---------------------------------------------- -------------- --------- -------------- ----------------
Frank A. Lodzinski......................... 112,333 $3.12 21.1% August 12, 2007
Francis M. Mury............................ 101,100 $3.12 18.9% August 12, 2007
Jerry M. Crews............................. 101,100 $3.12 18.9% August 12, 2007
OPTION EXERCISES AND YEAR-END VALUES
The following table sets forth information with respect to Cliffwood
options issued to the named executive officers of the Company.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS AT OPTIONS/SARS AT
DECEMBER 31, 1999 DECEMBER 31, 1999
---------------------------------- ----------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------- ---------------- -------------- ----------------
Frank A. Lodzinski............... 112,333 0 $204,446 $0.00
Francis M. Mury 101,100 0 $184,002 $0.00
Jerry M. Crews................... 101,100 0 $184,002 $0.00
EMPLOYMENT AGREEMENT
In connection with the issuance of Series A Convertible Preferred
Stock, Messrs. Lodzinski, Crews, Mury and one other officer entered into
employment agreements with Texoil that generally provide for a competitive base
salary and certain benefits and expense reimbursements consistent with
established policies of the Company. The base annual salaries specified in the
employment agreements for Messrs. Lodzinski, Crews and Mury are $120,000,
$110,000 and $110,000, respectively. The term of the agreements is to the
earliest of (a) the first date the holders of preferred stock cease to own
preferred or conversion shares, (b) the effective date of any sale transaction
(as defined by the preferred stock agreement) or (c) the resignation or
termination of the employee. Should the employee resign or be terminated, such
employee is contractually restricted from certain activities as provided by
non-compete provisions of the employment agreement.
Prior to November 1999, Mr. Lodzinski was the only officer or employee
with an employment agreement. That agreement provided for an annual salary of
$90,000, subject to
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increases at the discretion of the Board of Directors, and a bonus at the sole
discretion of the Board of Directors. That agreement also provided for the grant
of options to purchase Common Stock. Mr. Lodzinski voluntarily reduced his
annual salary in April 1998 from $90,000 to $48,000 as part of a corporate
initiative to reduce general and administrative costs in response to declining
oil prices. Messrs. Crews and Mury also incurred voluntary salary reductions in
April 1998. In July 1999 the Board increased the salaries of Messrs. Lodzinski,
Mury and Crews to prior levels.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL
OWNERS
The following table sets forth, as of September 15, 2000, the number of
shares of the Company's equity securities owned by (i) each person known by the
Company (based on publicly-available filings with the Commission) to be the
holder of more than five percent of its voting securities, (ii) each Director
and each executive officer of the Company, and (iii) all of the Company's
directors and executive officers as a group. Unless otherwise indicated, each
holder has sole voting and investment power with respect to the shares of
capital stock owned by such holder.
COMMON STOCK CONVERTIBLE PREFERRED(19)
------------------------------ ---------------------------
AMOUNT AND AMOUNT AND
NATURE OF PERCENT NATURE OF PERCENT
NAME OF BENEFICIAL OWNER BENEFICIAL OF BENEFICIAL OF
(ADDRESS INDICATED IF NOT A DIRECTOR OR AN OFFICER) OWNERSHIP CLASS OWNERSHIP CLASS
- --------------------------------------------------- -------------- ---------- ----------- -----------
Frank A. Lodzinski, Director, President and Chief Executive
Officer ............................................ 2,442,883(1) 31.54% 456,250 15.54%
Michael A. Vlasic, Director ................................. 2,318,633(2) 30.26% 456,250 15.54%
Jerry M. Crews, Director, Executive Vice President and ...... 393,503(3) 5.80% 6,250 .21%
Secretary
Robert E. LaJoie, Director .................................. 174,117(4) 2.60% -- --
T. W. Hoehn, III, Director .................................. 461,688(5) 6.93% -- --
Thomas A. Reiser, Director .................................. 89,921(6) 1.34% 6,767 .23%
S. Wil VanLoh, Jr., Director ................................ 4,059,950(7) 37.85% 2,029,975 69.13%
Toby R. Neugebauer, Director ................................ 4,059,950(8) 37.85% 2,029,975 69.13%
Jeffrey A. Jones, Director .................................. 4,059,950(9) 37.85% 2,029,975 69.13%
Francis M. Mury, Executive Vice President ................... 211,682(17) 3.13% -- --
All Directors and Executive Officers as a group (9 persons) . 7,861,827(18) 64.84% 2,499,242 85.11%
Quantum Energy Partners, L.P. ............................... 4,059,950(10) 37.85% 2,029,975 69.13%
777 Walker
2530 Two Shell Plaza
Houston, Texas 77002
RIMCO ....................................................... 609,124(11) 9.14% -- --
22 Waterville Road
Avon, Connecticut 06001-2000
The Lincoln National Life Insurance Company ................. 880,413(12) 12.65% -- --
200 East Berry Street
Ft. Wayne, Indiana 46802
First Union Capital Partners, Inc. .......................... 562,604(13) 8.21% -- --
1001 Fannin, Suite No. 2255
Houston, Texas 77002
V&C Energy Limited Partnership .............................. 2,290,550(14) 30.00% 456,250 15.54%
710 Woodward
Bloomfield Hills, Michigan 45304
Vlasic Investments, L.L.C ................................... 2,318,633(15) 30.26% -- --
710 Woodward
Bloomfield Hills, Michigan 45304
EnCap Investments, L.L.C .................................... 1,239,862(16) 16.58% 405,995 13.83%
1100 Louisiana, Suite No. 3150
Houston, Texas 77002
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(1) Includes 1,321,883 shares of Common Stock, 56,167 shares of Common
Stock underlying presently exercisable warrants and 456,250 purchased
shares of Series A Convertible Preferred Stock beneficially owned
through V&C Energy Limited Partnership ("V&C"), of which Energy
Resource Associates, Inc. ("ERA"), a Texas corporation owned and
controlled by Mr. Lodzinski, is a general partner. Includes 112,333
shares of Common Stock underlying presently exercisable options owned
by Mr. Lodzinski. Mr. Lodzinski, through ERA, has sole voting power for
all matters associated with securities held by V&C, except in
connection with the disposition of all or substantially all such
securities, which requires the approval of the limited partner. Mr.
Lodzinski has an economic interest in a portion of such securities.
(2) Includes 1,321,883 shares of Common Stock, 56,167 shares of Common
Stock underlying presently exercisable warrants and 456,250 purchased
shares of Series A Convertible Preferred Stock beneficially owned
through V&C Energy Limited Partnership, of which Vlasic Investments
L.L.C. ("Vlasic Investments") is the limited partner. Mr. Vlasic is the
Chief Executive Manager of Vlasic Investments. Includes 28,083 shares
of Common Stock underlying presently exercisable options assigned by
Mr. Vlasic to Vlasic Investments. Mr. Vlasic, in his capacity as Chief
Executive Manager of Vlasic Investments, has an economic interest in
Texoil securities held by V&C. Mr. Vlasic does not have voting rights
associated with such securities, but has certain approval rights
related to the disposition of such securities.
(3) Includes 101,100 shares of Common Stock owned by Mr. Crews, underlying
presently exercisable options and 6,250 purchased shares of Series A
Convertible Preferred Stock.
(4) Includes 140,417 shares of Common Stock held by Mr. LaJoie, as General
Partner to a family limited partnership, and 33,700 shares of Common
Stock underlying presently exercisable options owned by Mr. LaJoie.
(5) Includes 357,116 shares of Common Stock held by Mr. Hoehn, as Executor
of the Estate of T. W. Hoehn, Jr.
(6) Includes 28,083 shares of Common Stock owned by Mr. Reiser, underlying
presently exercisable options, 6,250 purchased shares of Series A
Convertible Preferred Stock and 517 shares of Series A Convertible
Preferred Stock paid in dividends.
(7) Includes 1,875,000 purchased shares of Series A Convertible Preferred
Stock and 154,975 shares of Series A Convertible Preferred Stock paid
in dividends, beneficially owned through Quantum Energy Partners, L.P.
of which Mr. VanLoh is a co-founder and principal.
(8) Includes 1,875,000 purchased shares of Series A Convertible Preferred
Stock and 154,975 shares of Series A Convertible Preferred Stock paid
in dividends, beneficially owned through Quantum Energy Partners, L.P.
of which Mr. Neugebauer is a co-founder and principal.
(9) Includes 1,875,000 purchased shares of Series A Convertible Preferred
Stock and 154,975 shares of Series A Convertible Preferred Stock paid
in dividends, beneficially owned through Quantum Energy Partners, L.P.
of which Mr. Jones is a co-founder and principal.
(10) Includes 1,875,000 purchased shares of Series A Convertible Preferred
Stock and 154,975 shares of Series A Convertible Preferred Stock paid
in dividends.
(11) Includes 30,000 shares of Common Stock beneficially owned through RIMCO
Partners, LP; 225,215 shares of Common Stock beneficially owned through
RIMCO Partners, LP II; 96,521 shares of Common Stock beneficially owned
through RIMCO Partners, LP III; and 257,388 shares of Common Stock
beneficially owned through RIMCO Partners, LP IV.
(12) Includes 293,471 shares of Common Stock underlying presently
exercisable warrants.
(13) Includes 188,158 shares of Common Stock, underlying presently
exercisable warrants.
(14) Includes 1,321,883 shares of Common Stock, 56,167 shares of Common
Stock underlying presently exercisable warrants and 456,250 purchased
shares of Series A Convertible Preferred Stock beneficially owned
through V&C Energy Limited Partnership, of which Energy Resource
Associates, Inc. ("ERA"), a Texas corporation owned and controlled by
Mr. Lodzinski, is a general partner. Mr. Vlasic, in his capacity as
Chief Executive Manager of Vlasic Investments, has an economic interest
in Texoil securities held by V&C. Mr. Vlasic does not have voting
rights associated with such securities, but has certain approval rights
related to the disposition of such securities.
(15) Includes 1,321,883 shares of Common Stock, 56,167 shares of Common
Stock underlying presently exercisable warrants and 456,250 purchased
shares of Series A Convertible Preferred Stock beneficially owned
through V&C Energy Limited Partnership, of which Vlasic Investments
L.L.C. ("Vlasic Investments") is the limited partner. Mr. Vlasic is the
Chief Executive Manager of Vlasic Investments.
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Includes 28,083 shares of Common Stock underlying presently exercisable
options assigned by Mr. Vlasic to Vlasic Investments. Mr. Vlasic, in
his capacity as Chief Executive Manager of Vlasic Investments, has an
economic interest in Texoil securities held by V&C. Mr. Vlasic does not
have voting rights associated with such securities, but has certain
approval rights related to the disposition of such securities.
(16) Includes 320,904 shares of Common Stock and 143,682 purchased shares of
Series A Convertible Preferred Stock and 11,876 shares of Series A
Convertible Preferred Stock paid in dividends, beneficially owned
through EnCap Equity 1996 Limited Partnership, of which EnCap
Investments, L.L.C., is the general partner. Also includes 106,968
shares of Common Stock and 93,750 purchased shares of Series A
Convertible Preferred Stock and 7,749 shares of Series A Convertible
Preferred Stock paid in dividends, beneficially owned through Energy
Capital Investment Company PLC, for which EnCap Investments L.L.C.
serves as investment advisor. In addition, includes 137,568 purchased
shares of Series A Convertible Preferred Stock and 11,370 shares of
Series A Convertible Preferred Stock paid in dividends, beneficially
owned through El Paso Capital Investment Company, LLC.
(17) Includes 101,100 shares of Common Stock owned by Mr. Mury, underlying
presently exercisable options.
(18) Includes only the number of shares held by each executive officer and
director so that shares are not double counted.
(19) The Series A Preferred Stock is immediately convertible into Common
Stock on a 2-for-1 basis. At any time after December 31, 2002, the
Series A Convertible Preferred Stock is mandatorily convertible into
Class B Common Stock, based on the Company's achievement of certain net
asset and per share values, on a 2-for-1 basis, subject to
anti-dilution adjustments.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
CONVERTIBLE PREFERRED STOCK
In November 1999 the Company closed a private placement of Series A
Convertible Preferred Stock. Certain officers, directors and shareholders
participated in the offering as follows:
1) The V&C Energy Limited Partnership ("V&C") purchased 456,250
shares of the Series A Convertible Preferred Stock. Mr. Frank
A. Lodzinski, a director and Chief Executive Officer of
Texoil, is the general partner of V&C through a wholly-owned
Texas corporation. Mr. Michael A. Vlasic, a director, has
interests in V&C through Vlasic Investments, L.L.C.
2) Certain affiliates of EnCap Investments, L.L.C. who are
shareholders of Texoil purchased 375,000 shares of the Series
A Convertible Preferred Stock.
3) Mr. Jerry M. Crews, a director and Executive Vice President,
purchased 6,250 shares of the Series A Convertible Preferred
Stock.
4) Mr. Thomas A Reiser, a director, purchased 6,250 shares of the
Series A Convertible Preferred Stock.
All investments by related parties were made on the same terms and
conditions as third-party non-affiliated investors.
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CLIFFWOOD ACQUISITION 1996 LIMITED PARTNERSHIP
In May 1998 the Company acquired certain properties from the Cliffwood
Acquisition 1996 Limited Partnership, an affiliated partnership, in which the
Company owned a 10% interest. Proceeds to Limited Partners were $4.5 million
cash and 149,667 shares of common stock.
TECHNICAL RISKS, INC.
As a normal part of its business, the Company purchases various
performance bonds and insurance, including but not limited to general liability
insurance, automobile insurance, well control insurance, pollution liability
insurance, and directors and officers liability insurance. The Company purchases
these coverages on a competitive basis. Technical Risks, Inc. has been in the
past, and may be in the future, the broker used by the Company for these
purchases. Mr. Thomas A. Reiser, a director of the Company, is Chairman and
President of Technical Risks, Inc.