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TEXOIL, INC.
110 CYPRESS STATION DRIVE, SUITE 200
HOUSTON, TEXAS 77010
Information Statement Pursuant to Section 14(f) of
the Securities Exchange Act of 1934 and SEC Rule 14f-1
(Amendment No. 1)
NOTICE OF CHANGE IN THE
MAJORITY OF THE BOARD OF DIRECTORS
February 9, 2000
The biographical information for Robert K. Reeves given on page 3 under
the caption "Designation of Directors" is hereby amended to read as follows:
"Robert K. Reeves Executive Vice President, General
c/o Ocean Energy, Inc. Counsel, Secretary and Director of OEI
1001 Fannin, Suite 1600 since 2001. Executive Vice President,
Houston, Texas 77002-6714 General Counsel and Secretary since
43 March 1999; Executive Vice President,
General Counsel and Secretary of Ocean's
predecessor from June 1997 to March
1999; Senior Vice President, General
Counsel and Secretary of 43 Ocean's
predecessor from May 1994 to June 1997."
Texoil, Inc.
By: /s/ Frank A. Lodzinski
------------------------------------
Frank A. Lodzinski
President
Dated: February 9, 2001
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TEXOIL, INC.
110 CYPRESS STATION DRIVE, SUITE 200
HOUSTON, TEXAS 77010
Information Statement Pursuant to Section 14(f) of the
Securities Exchange Act of 1934 and SEC Rule 14f-1
NOTICE OF CHANGE IN THE
MAJORITY OF THE BOARD OF DIRECTORS
February 9, 2000
This Information Statement is being furnished to all holders of record of
the common stock, par value $.01 per share (the "Common Stock"), of Texoil,
Inc., a Nevada corporation (the "Company"), in accordance with the requirements
of Section 14(f) of the Securities Exchange Act of 1934 (the "Exchange Act") and
Securities and Exchange Commission ("SEC") Rule 14f-1.
NO VOTE OR OTHER ACTION BY THE COMPANY'S SHAREHOLDERS IS REQUIRED IN RESPONSE TO
THIS INFORMATION STATEMENT. PROXIES ARE NOT BEING SOLICITED AND YOU ARE NOT
REQUESTED TO SEND THE COMPANY A PROXY.
INTRODUCTION
As the Company has previously reported on Schedule 14d-9, filed with the
SEC on January 24, 2001, on January 18, 2001, the Company entered into an
Agreement and Plan of Merger (the "Merger Agreement") with Ocean Energy, Inc., a
Texas corporation ("Ocean"), and OEI Acquisition, Inc., a Nevada corporation
("OEI") and wholly-owned subsidiary of Ocean. Pursuant to the Merger Agreement,
OEI is making an offer (the "Tender Offer") to purchase all of the issued and
outstanding shares of Common Stock of the Company for $8.25 per share net to the
shareholder in cash and all of the issued and outstanding Series A Convertible
Preferred Stock, par value $0.01 per share (the "Preferred Stock"), of the
Company for $18.04 per share net to the shareholder in cash. If a sufficient
number of shares of Common Stock and Preferred Stock are tendered in the Tender
Offer, the Company will be merged (the "Merger") with OEI, with the Company as
the surviving corporation.
As of January 26, 2001, the Company had outstanding 7,410,225 shares of
Common Stock and 2,991,465 shares of Preferred Stock. Each share of Preferred
Stock is convertible into two shares of Common Stock. The Board of Directors
(the "Board") of the Company consists of six Class A Directors, elected by the
holders of Common Stock, and three Class B Directors, elected by the holders of
Preferred Stock. On all matters other than the election of directors, the
holders of Preferred Stock vote together with the holders of Common Stock on an
as-converted basis.
Please read this Information Statement carefully. It contains biographical
and other information concerning the executive officers and the directors to be
appointed as a result of the Tender Offer and the Merger. Additional information
about the transactions contemplated in connection with the Tender Offer and the
Merger is contained in the Company's Schedule 14d-9 on file with the SEC. All
Company filings, and exhibits, may be inspected without charge at the public
reference section of the SEC at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 or obtained on the SEC's world wide website, www.sec.gov.
CHANGE IN MAJORITY OF DIRECTORS
Promptly upon the payment by OEI for the shares pursuant to the Tender
Offer and from time to time after that (provided, however, that OEI shall not be
entitled to designate any members to the Board without owning a majority of the
Common Stock and a majority of the Preferred Stock), OEI will be entitled to
designate (1) such number of Class A directors, rounded up to the next whole
number, as is
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equal to the product of the total number of Class A directors on the Board
multiplied by the percentage that the aggregate number of shares of Common Stock
(including Common Stock and Preferred Stock on an as-converted basis)
beneficially owned by Ocean or its affiliates bears to the total number of
shares of Common Stock then outstanding (including Common Stock and Preferred
Stock on an as-converted basis), and (2) such number of Class B directors,
rounded up to the next whole number, as is equal to the product of the total
number of Class B directors multiplied by the percentage that the aggregate
number of shares of Preferred Stock beneficially owned by Ocean or its
affiliates bears to the total number of shares of Preferred Stock then
outstanding. The Company has agreed, upon OEI's request, promptly to take all
actions necessary to cause OEI's designees to be so elected, including, if
necessary, seeking the resignations of one or more existing directors,
increasing the number of authorized directors or amending its bylaws. Until the
effective time of the Merger, however, the Board must have at least two members
who were directors of the Company on the date of the Merger Agreement and not
employees of the Company (the "Independent Directors"). If no Independent
Directors remain, the other directors will designate one person to fill one of
the vacancies who shall be neither an employee of the Company nor an affiliate
of Ocean and that person shall be considered to be an Independent Director for
purposes of the Merger Agreement. Upon OEI's written request, the Company will
cause OEI's designees to constitute the same percentage of representation as is
on the Board after giving effect to (1) and (2) above on: (a) each committee of
the Board; (b) the board of directors of each subsidiary of the Company; and (c)
each committee of each such board of directors.
None of the designees currently is a director of, or holds any positions
with, the Company. Ocean and OEI have advised the Company that, to the best of
their knowledge, none of the designees or any of their affiliates beneficially
owns any equity securities or rights to acquire any securities of the Company,
nor has any designee been involved in any transaction with the Company or any of
its directors, executive officers or affiliates that is required to be disclosed
under the rules and regulations of the SEC, other than with respect to the
Tender Offer and the Merger.
It is expected that the designees may assume office at any time following
the purchase by OEI of a majority of outstanding Common Stock and Preferred
Stock, on a fully-diluted basis, in the Tender Offer, which cannot be earlier
than twenty business days after February 22, 2001 and that, upon assuming
office, the designees will then constitute at least a majority of the Board.
Upon acquisition of a majority of the outstanding shares of Common Stock
and of a majority of the outstanding shares of Preferred Stock, on a
fully-diluted basis, by OEI in the Tender Offer, OEI intends to designate from
among the following designees an appropriate number of persons to the Board. The
election of the designees will result in a change of control of the Company. If
OEI does not acquire a majority of the shares of Common Stock and Preferred
Stock in the Tender Offer, no change in control of the Company will occur.
DESIGNATION OF DIRECTORS
The Board is currently composed of nine directors. If OEI acquires a
majority of the outstanding shares of Common Stock and a majority of the
outstanding shares of Preferred Stock, on a fully-diluted basis, in connection
with the Tender Offer, the Company may seek resignations from current directors
or change the size of the Board according to the Merger Agreement so that OEI
can designate the proportion of directors described above.
The following table gives the name, business address and present principal
occupation or employment and material occupations, positions, offices or
employment of the past five years of each designee. Each designee has consented
to serve as a director of the Company if appointed or elected. Unless otherwise
indicated, each such person is a citizen of the United States, and each
occupation set forth opposite an individual's name refers to employment with
Ocean. Neither Ocean, OEI nor any of the individuals listed below has been
convicted in a criminal proceeding in the past five years. In addition, neither
Ocean, OEI nor any of the individuals listed below was a party to any judicial
or administrative proceeding during the past five years that resulted in a
judgment, decree or final order enjoining that person from future
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violations of, or prohibiting activities subject to federal or state securities
laws, or a finding of any violation of federal and state securities laws.
NAME OF BUSINESS INDIVIDUAL PRINCIPAL OCCUPATION OR EMPLOYMENT
- ---------------- ---------------------------------------------
James T. Hackett Chairman of the Board, President, Chief Executive Officer of
c/o Ocean Energy, Inc. Ocean. Director, New Jersey Resources Corporation and
1001 Fannin, Suite 1600 Temple-Inland Corp. Director of Ocean since 1998. President
Houston, Texas 77002-6714 and Chief Executive Officer since March 1999 and Chairman of
47 the Board of Directors of Ocean since January 2000;
President and Chief Executive Officer of Ocean from
September 1998 and Chairman of the Board of Ocean from
January 1999 to March 1999; Group President of Duke Energy's
unregulated operations and Executive Vice President of
Panenergy from January 1996 to September 1998. Prior to
joining Duke Energy, he was Senior Vice President of NGC
Corporation (formerly Natural Gas Clearinghouse) and
President of NGC's gathering, processing and liquids
marketing division. He became Executive Vice President,
partner and a member of the management committee of Natural
Gas Clearinghouse in 1993.
William L. Transier Executive Vice President and Chief Financial Officer of
c/o Ocean Energy, Inc. Ocean since March 1999; Executive Vice President and Chief
1001 Fannin, Suite 1600 Financial Officer of Ocean from September 1998 to March
Houston, Texas 77002-6714 1999; Senior Vice President and Chief Financial Officer of
46 Ocean from May 1996 to September 1998; For the previous 20
years, he held a variety of positions at KPMG LLP including
partner from July 1986 until April 1996.
Robert K. Reeves Executive Vice President, General Counsel, Secretary and
c/o Ocean Energy, Inc. Director of OEI since 2001. Executive Vice President,
1001 Fannin, Suite 1600 General Counsel and Secretary of Ocean since March 1999;
Houston, Texas 77002-6714 Executive Vice President, General Counsel and Secretary of
43 Ocean's predecessor, from June 1997 to March 1999; Senior
Vice President, General Counsel and Secretary of Ocean's
predecessor from May 1994 to June 1997.
John D. Schiller, Jr. Executive Vice President, Operations since March 2000;
c/o Ocean Energy, Inc. Senior Vice President, North America Onshore and
1001 Fannin, Suite 1600 International Operations from March 1999 to March 2000;
Houston, Texas 77002-6714 Senior Vice President, Operations of Ocean from September
41 1998 to March 1999; Production Manager -- Gulf Coast
Division of Burlington Resources from October 1997 to August
1998; Engineering Manager -- Offshore Division of Burlington
Resources from April 1994 to September 1997.
William S. Flores, Jr. Senior Vice President, Drilling since March 1999; Vice
c/o Ocean Energy, Inc. President, Drilling of Ocean's predecessor from March 1998
1001 Fannin, Suite 1600 to Mach 1999; Vice President, Operations of Ocean's
Houston, Texas 77002-6714 predecessor from August 1993 to March 1998.
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Scott A. Griffiths Senior Vice President of International Exploration since
c/o Ocean Energy, Inc. March 1999; Senior Vice President Domestic Exploration of
1001 Fannin, Suite 1600 Ocean from September 1998 to March 1999; Vice President
Houston, Texas 77002-6714 Domestic Exploration of Ocean from May 1997 to September
47 1998; Vice President of Domestic Exploration of Ocean from
October 1996 to May 1997; Vice President of Exploration of
Global Natural Resources from 1992 to October 1996.
Stephen A. Thorington Senior Vice President, Finance, Treasury and Corporate
c/o Ocean Energy, Inc. Development since March 1999; Vice President, Finance and
1001 Fannin, Suite 1600 Treasurer of Ocean from May 1996 to March 1999; Managing
Houston, Texas 77002-6714 Director of Chase Securities Inc. from April 1994 to May
46 1996.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table reflects all forms of compensation for the years ended
December 31, 2000, 1999, and 1998 for the Chief Executive Officer and the four
most highly compensated executive officers (the "Named Executive Officers").
LONG TERM
COMPENSATION
ANNUAL COMPENSATION ---------------
------------------------------------ SECURITIES
OTHER ANNUAL UNDERLYING
YEAR SALARY BONUS COMPENSATION(1) OPTIONS/SARS(#)
---- -------- ------- --------------- ---------------
Frank A. Lodzinski................. 2000 $118,032 $57,500 -- --
Chairman of the Board and 1999 $ 94,000 $35,000 -- 20,000
Officer Chief Executive 1998 $ 58,000 -- -- --
Jerry M. Crews..................... 2000 $114,375 $37,500 -- --
Executive Vice President 1999 $ 85,500 $32,500 -- 20,000
1998 $ 77,700 -- -- --
Francis M. Mury.................... 2000 $114,167 $32,500 $1,163 --
Executive Vice President 1999 $ 87,500 $27,500 -- 20,000
1998 $ 82,950 -- -- --
Mandel C. Selber, III.............. 2000 $ 86,167 $29,000 $ 588 3,746
Vice President 1999 $ 77,000 $12,000 -- --
1998 $ 73,500 $10,000 -- 5,000
Peggy C. Simpson................... 2000 $ 79,167 $22,500 $ 813 --
Vice President 1999 $ 61,271 $14,500 -- 20,000
1998 $ 54,146 $10,000 -- --
- ---------------
(1) Consists of the Company's contribution to its 401(k) plan.
OPTION GRANTS
New options granted to the executive officers in 2000 are listed below. The
following table sets forth additional information with respect to these stock
option grants.
PERCENT OF
NUMBER OF TOTAL
TEXOIL OPTIONS/SARS
SHARES EXERCISE GRANTED TO
UNDERLYING OR BASE EMPLOYEES
OPTIONS PRICE EFFECTIVE IN EXPIRATION
NAME GRANTED ($/SHARE) 2000 DATE
- ---- ---------- --------- ------------ ----------------
Mandel C. Selber, III.................... 3,746 $3.12 33.5% January 25, 2010
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OPTION EXERCISES AND YEAR-END VALUES
The following table sets forth information with respect to options issued
to the Named Executive Officers of the Company. No options were exercised by any
executive officer in 2000.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS
AT DECEMBER 31, 2000 AT DECEMBER 31, 2000
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
Frank A. Lodzinski............................ 119,000 13,333 $596,336 $40,132
Francis M. Mury............................... 107,767 13,333 $538,711 $40,132
Jerry M. Crews................................ 107,767 13,333 $538,711 $40,132
Mandel C. Selber, III......................... 31,416 5,413 $151,565 $22,968
Peggy C. Simpson.............................. 45,984 13,333 $221,764 $40,132
EMPLOYMENT AGREEMENTS
In connection with the issuance of the Preferred Stock in 1999, Messrs.
Lodzinski, Crews, Mury and Ms. Simpson entered into employment agreements with
Texoil that generally provide for a competitive base salary, subject to annual
adjustment, 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, Mury and Ms. Simpson are
$120,000, $110,000, $110,000 and $75,000, respectively. The term of the
agreements is to the earliest of (a) the first date the holders of Preferred
Stock cease to own Preferred Stock 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 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.
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SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of January 26, 2001, the number of
shares of the Company's equity securities owned by (1) 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, (2) each director and
each Named Executive Officer of the Company, and (3) all of the Company's
directors and executive officers as a group. With the exception of RIMCO, all of
the beneficial owners listed below have agreed, directly or indirectly, to
tender their shares to OEI in the Tender Offer and are therefore deemed to share
voting and dispositive power with OEI with respect to such shares.
CONVERTIBLE
COMMON STOCK PREFERRED(15)
---------------------- --------------------
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 OFFICER) OWNERSHIP CLASS OWNERSHIP CLASS
- ------------------------------------------------ ---------- ------- ---------- -------
Frank A. Lodzinski, Director, President and Chief
Executive Officer................................ 2,407,698(1) 28.93% 456,250 15.25%
Michael A. Vlasic, Director........................ 2,308,013(2) 27.73% 456,250 15.25%
Jerry M. Crews, Director, Executive Vice President
and Secretary.................................... 362,566(3) 4.88% 6,250 0.21%
Robert LaJoie, Director............................ 161,372(4) 2.18% -- --
T.W. Hoehn, III, Director.......................... 461,688(5) 6.23% -- --
Thomas A. Reiser, Director......................... 79,605(6) 1.07% 6,919 0.23%
S. Wil VanLoh, Jr., Director....................... 4,151,326(7) 35.91% 2,075,663 69.39%
Toby R. Neugebauer, Director....................... 4,151,326(8) 35.91% 2,075,663 69.39%
Jeffrey A. Jones, Director......................... 4,151,326(9) 35.91% 2,075,663 69.39%
Francis M. Mury, Executive Vice President.......... 180,745 2.44% -- --
Mandel C. Selber, III, Vice President.............. 39,130 .53% -- --
Peggy C. Simpson, Vice President................... 82,391 1.11% -- --
All Directors and Executive Officers as a group.... 7,943,984(16) 63.55% 2,545,082 85.08%
Quantum Energy Partners............................ 4,151,326(10) 35.91% 2,075,663 69.39%
777 Walker
2530 Two Shell Plaza
Houston, Texas 77002
RIMCO.............................................. 579,124(11) 7.82% -- --
22 Waterville Rd
Avon, Ct. 06001-2066
The Lincoln National Life Insurance Company........ 675,950 9.12% -- --
200 East Berry Street
Ft. Wayne, Indiana 46802
First Union Capital Partners, Inc. ................ 476,393 6.43% -- --
1001 Fannin, Suite 2255
Houston, Texas 77002
V&C Energy Limited Partnership..................... 2,290,550(12) 27.52% 456,250 15.25%
710 Woodward
Bloomfield Hills, Michigan 45304
Vlasic Investments, L.L.C.......................... 2,308,013(13) 27.73% -- --
710 Woodward
Bloomfield Hills, Michigan 45304
EnCap Investments, L.L.C........................... 1,258,138(14) 15.27% 415,133 13.88%
1100 Louisiana, Suite 3150
Houston, Texas 77002
- ---------------
(1) Includes 1,378,050 shares of Common Stock and 912,500 shares of Common
Stock issuable upon conversion of 456,250 shares of Preferred Stock,
beneficially owned through V&C Energy Limited
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Partnership ("V&C"), of which Energy Resource Associates, Inc. ("ERA"), a
Texas corporation owned and controlled by Mr. Lodzinski, is a general
partner. Except as noted above, 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 1,378,050 shares of Common Stock and 912,500 shares of Common
Stock issuable upon conversion of 456,250 shares of Preferred Stock,
beneficially owned through V&C, of which Vlasic Investments L.L.C. ("Vlasic
Investments") is the limited partner. Mr. Vlasic is the Chief Executive
Manager of 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 12,500 shares of Common Stock issuable upon conversion of 6,250
shares of Preferred Stock.
(4) Includes 140,417 shares of Common Stock held by Mr. LaJoie, as General
Partner to a family limited partnership, and 20,955 shares of Common Stock
owned by Mr. LaJoie.
(5) Includes 357,116 shares of Common Stock owned by the Estate of T.W. Hoehn
Jr., for which T.W. Hoehn III serves as Executor.
(6) Includes 65,767 shares of Common Stock owned by Mr. Reiser and 13,838
shares of Common Stock issuable upon conversion of 6,919 shares of
Preferred Stock.
(7) Includes 4,151,326 shares of Common Stock issuable upon conversion of
2,075,663 shares of Preferred Stock, beneficially owned through Quantum
Energy Partners, L.P. ("Quantum"), of which Mr. VanLoh is a co-founder and
principal.
(8) Includes 4,151,326 shares of Common Stock issuable upon conversion of
2,075,663 shares of Preferred Stock, beneficially owned through Quantum, of
which Mr. Neugebauer is a co-founder and principal.
(9) Includes 4,151,326 shares of Common Stock issuable upon conversion of
2,075,663 shares of Preferred Stock, beneficially owned through Quantum, of
which Mr. Jones is a co-founder and principal.
(10) Includes 4,151,326 shares of Common Stock issuable upon conversion of
2,075,663 shares of Preferred Stock.
(11) Includes 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 1,378,050 shares of Common Stock and 912,500 shares of Common
Stock issuable upon conversion of 456,250 shares of Preferred Stock,
beneficially owned through V&C, of which ERA, 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.
(13) Includes 1,378,050 shares of Common Stock and 912,500 shares of Common
Stock issuable upon conversion of 456,250 shares of Preferred Stock,
beneficially owned through V&C, of which Vlasic Investments is the limited
partner. Mr. Vlasic is the Chief Executive Manager of Vlasic Investments.
Also Includes 17,463 shares of Common Stock 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.
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(14) Includes 320,904 shares of Common Stock and 318,118 shares of Common Stock
issuable upon conversion of 159,059 shares of Preferred Stock, 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 207,566 shares of Common Stock issuable upon conversion
of 103,783 shares of Preferred Stock, beneficially owned through Energy
Capital Investment Company PLC, for which EnCap Investments L.L.C. serves
as investment advisor. In addition, includes 304,582 shares of Common Stock
issuable upon conversion of 152,291 shares of Preferred Stock, beneficially
owned through El Paso Capital Investment Company, LLC.
(15) Preferred Stock is immediately convertible into Common Stock on a 2-for-1
basis. At any time after December 31, 2002, the 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.
(16) Includes only the number of shares held by each executive officer and
director so that shares are not double counted.
The holders of Preferred Stock have certain approval rights related to: (a)
a consolidation or merger of the Company with or into any other business entity
in which the holders of the voting securities of the Company outstanding
immediately prior to such transaction do not continue to hold more than 50% of
the total voting securities of the surviving entity outstanding immediately
after such transaction, (b) the sale or other transfer of all or substantially
all of the assets of the Company, or (c) the liquidation, dissolution,
winding-up or reorganization of the Company.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
CONVERTIBLE PREFERRED STOCK
In November 1999 the Company closed a private placement of the 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 Preferred Stock. Mr. Frank A. Lodzinski, a director and Chief
Executive Officer of the Company, 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 the Company purchased 375,000 shares of the Preferred
Stock.
(3) Mr. Jerry M. Crews, a director and Executive Vice President,
purchased 6,250 shares of the Preferred Stock.
(4) Mr. Thomas A Reiser, a director, purchased 6,250 shares of the
Preferred Stock.
All investments by related parties were made on the same terms and
conditions as third-party non-affiliated investors.
CLIFFWOOD ACQUISITION 1996 LIMITED PARTNERSHIP
In May 1998 the Company acquired a number of 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,
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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.
WINDROCK CAPITAL, LTD.
Pursuant to an oral agreement ratified by the Board, the Company has agreed
to pay Windrock Capital, Ltd., an investment banking firm with which Mr. S. Wil
VanLoh, Jr., a director of the Company, is associated, a fee of $325,000 for
investment banking and financial advisory services provided in 2000 and in
connection with the Tender Offer and the Merger.
DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS
Robert E. LaJoie, (age 75), has been a Director of the Company since
December 31, 1997, and was a Director of Cliffwood since July 1996. Mr. LaJoie
retired in 1977 and is a private investor with more than 40 years experience in
the oil and natural gas, real estate and food services industries. He is a
graduate of the University of Michigan.
Thomas A. Reiser, (age 49), has been a Director of the Company since
December 31, 1997, and was a Director of Cliffwood since April 1996. For more
than the past five years he has served as Chairman and President of Technical
Risks, Inc., a private insurance brokerage firm which he founded. He is a
graduate of the College of William and Mary.
Jeffrey A. Jones, (age 45), has been a Director of the Company since
November 1999. He is a co-founder and principal of Quantum Energy Partners,
L.P., and has been the lead geologist/geophysicist of the West Texas based
energy companies Jones Company Ltd. and JHJ Exploration, Ltd. since 1978. Mr.
Jones is a graduate of West Texas State University with a degree in Geology.
Toby R. Neugebauer, (age 30), has been a Director of the Company since
November 1999. He is a co-founder and principal of Quantum Energy Partners, L.P.
("Quantum"), a Houston-based private equity fund focused on making corporate
equity investments in North America exploration, acquisition and exploitation
companies, and is also a co-founder and director of Windrock, an energy
investment banking firm. Mr. Neugebauer is a former investment banker with
Kidder, Peabody & Co. and also currently serves on the board of directors of
several private companies engaged in various oil and gas activities. He holds a
finance degree from New York University.
S. Wil VanLoh, Jr., (age 30), has been a Director of the Company since
November 1999. He is a co-founder and principal of Quantum. Mr. VanLoh is also a
director and co-founder of Windrock. He is a former investment banker with
Kidder, Peabody & Co. and NCNB/NationsBank. Mr. VanLoh also currently serves on
the board of directors of several private companies engaged in various oil and
gas activities. He is a graduate of Texas Christian University with a degree in
Finance.
T. W. Hoehn, III (age 50), has been a Director of the Company since 1984.
He is President and General Manager of Hoehn Motors, Inc., a multi-line
automobile agency located in Carlsbad, California, where he has been employed
since 1975. He is a graduate of Stanford University. Mr. Hoehn's term expires in
2001.
Michael A. Vlasic (age 40), has been a Director of the Company since
December 31, 1997, and was a Director of Cliffwood since July 1996. For more
than the past five years, he has been a principal with Vlasic Investments,
L.L.C. He is a graduate of Brown University. Mr. Vlasic's term expires in 2001.
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PRINCIPAL EXECUTIVE OFFICERS
Frank A. Lodzinski (age 51), has been Chairman of the Board, President,
Chief Executive Officer and a Director of the Company since December 31, 1997.
He has been President and a Director of Cliffwood since he founded the
predecessor entity and commenced operations in 1996. From 1992 to 1995 he served
as President and a Director of Hampton Resources Corporation, a public
corporation which he co-founded. From 1995, when Hampton was sold to Bellwether
Exploration Company, to 1996, he was self-employed and was a consultant to
Bellwether Exploration Company. From 1984 to 1992, Mr. Lodzinski was engaged in
the oil and natural gas business through Energy Resource Associates, Inc., a
closely held Texas corporation which he owned and controlled. Prior to 1984, he
was employed in public accounting with Arthur Andersen LLP and in various
capacities with independent oil and gas companies. He is a Certified Public
Accountant and holds a BSBA degree from Wayne State University.
Jerry M. Crews (age 50), has been an Officer and Director of the Company
since December 31, 1997, and was an Officer and Director of Cliffwood since
1996. For the preceding 12 years he was an Officer of Citation Oil & Gas Corp.
and was responsible for all production operations. His experience includes
acquisitions, drilling and development operations in most of the producing
basins of the United States. Prior experience was with Conoco and Lear
Petroleum. He is a registered Professional Engineer in the state of Texas and
holds a B.S. in Petroleum Engineering from Texas A&M University.
Francis M. Mury (age 49), has been an Officer of the Company since December
31, 1997, and was an Officer of Cliffwood since 1996. For the preceding 4 years
he was Vice president of Operations for Hampton Resources Corporation. Prior
experience was with Energy Resource Associates, Inc., Wainoco Oil and Gas
Company and Texaco, Inc. He holds a B.S. degree from Nichols State University.
Peggy C. Simpson (age 52), has been an officer of the Company since
December 31, 1997, and was an Officer of Cliffwood Oil and Gas Corp. since 1996.
Prior experience includes 4 years as Manager of Accounting for Hampton Resources
Corporation and four years with Energy Resource Associates, Inc. Prior to 1990,
Ms. Simpson served in various accounting capacities before serving as controller
for a division of a $400 million company. She has also served as an accounting
instructor at North Harris Community College. She holds a BBA and an MBA from
Lamar University and is a Certified Public Accountant.
Mandel C. Selber, III (age 44), has been an officer of the Company since
1996. For the preceding two years he was an independent consultant conducting
due diligence, economic and financial related services in the oil and gas
industry. From 1992 to 1994 he served as land manager for KEPCO, Inc. From 1980
to 1992 he served in various positions with Mobil Exploration and Producing U.S.
Inc./The Superior Oil Company, including district land supervisor. He is a
Registered Professional Landman and holds a BBA degree from the University of
Texas, Austin, Texas and Finance degree from Bason College.
BOARD AND COMMITTEE ACTIVITIES -- STRUCTURE AND COMPENSATION
The Company's operations are managed under the broad supervision and
direction of the Board, which has the ultimate responsibility for the
establishment and implementation of the Company's general operating philosophy,
objectives, goals and policies. Pursuant to delegated authority, certain Board
functions are discharged by the Board's three current standing committees, the
Executive, Audit and Compensation Committees. The Board has no standing
nominating or similar committee. During the fiscal year ended December 31, 2000,
the Board of Directors held one meeting; the Executive Committee held two
meetings; the Audit Committee held one meeting; and the Compensation Committee
held two meetings. Incumbent members of the Board attended or participated in at
least 75% of the aggregate number of Board meetings and committee meetings held
by all committees of the Board on which they served.
The Executive Committee is authorized to exercise, to the extent permitted
by law, the power of the full Board when a meeting of the full Board is not
practicable or necessary. The Executive Committee is currently comprised of
Messrs. Lodzinski, Crews, LaJoie, VanLoh and Vlasic.
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The Audit Committee recommends to the Board the independent accountants of
the Company and reviews the Company's annual report on Form 10-KSB, internal
controls and accounting operations and any transactions of the Company in which
management or controlling persons of the Company have an interest. The Board has
adopted a written charter for the Audit Committee. The Compensation Committee is
responsible for formulating and adopting or recommending to the Board, executive
compensation plans and policies, including those relating to incentive
compensation and benefits. The Audit Committee is currently comprised of Messrs.
Hoehn, LaJoie and VanLoh. The Compensation Committee is currently comprised of
Messrs. LaJoie, Reiser and VanLoh.
Directors who are not employed by the Company are authorized to be paid a
fee of $1,000 for each meeting of the Board attended (including Committee
meetings, if any, held in conjunction therewith). For 2000, this fee was waived
by the Board. The Company also reimburses each director for actual and necessary
expenses reasonably incurred in connection with attending meetings of the Board
and its committees.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORT COMPLIANCE
The Company is not aware of any transactions in its outstanding securities
by or on behalf of any director, executive officer or 10% holder of the Common
Stock which would require the filing of any report pursuant to Section 16(a)
that was not filed.
Texoil, Inc.
By: /s/ FRANK A. LODZINSKI
----------------------------------
Frank A. Lodzinski
President
Dated: February 9, 2001
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