-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GItioben2ic1ffxKKUEllVLcSkJAGTZvMRhxU8POxiyg2Guh2Vkx7QYcY+DWNl8A HcjJoqZeiYeW9oZYI35JWQ== 0001060830-04-000106.txt : 20040423 0001060830-04-000106.hdr.sgml : 20040423 20040423081401 ACCESSION NUMBER: 0001060830-04-000106 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20031230 FILED AS OF DATE: 20040423 EFFECTIVENESS DATE: 20040423 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RESERVE PETROLEUM CO CENTRAL INDEX KEY: 0000083350 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 730237060 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-08157 FILM NUMBER: 04749370 BUSINESS ADDRESS: STREET 1: 6801 N BROADWAY STE 300 CITY: OKLAHOMA CITY STATE: OK ZIP: 73116-9092 BUSINESS PHONE: 4058487551 MAIL ADDRESS: STREET 1: 6801 NORTH BROADWAY STREET 2: SUITE 300 CITY: OKLAHOMA STATE: OK ZIP: 73116-9092 FORMER COMPANY: FORMER CONFORMED NAME: FARMERS ROYALTY HOLDING CO DATE OF NAME CHANGE: 19751015 DEF 14A 1 reservepetroleum2003proxy.txt April 23, 2004 SECURTIES AND EXCHANGE COMMISSION Washington DC Dear Sir: Forwarded herewith is the Proxy Statement, Form of Proxy and Notice of Annual Meeting of the Stockholders, to be held on May 25, 2004. The proxy material will be mailed to the Stockholders on or about April 25 , 2004. Preliminary proxy material was not filed because the only matter to be acted upon is the election of the board of directors. Very truly yours, THE RESERVE PETROLEUM COMPANY /s/ James L. Tyler James L. Tyler Vice President THE RESERVE PETROLEUM COMPANY PROXY OF ANNUAL MEETING OF STOCKHOLDERS May 25, 2004 PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS KNOW ALL MEN BY THESE PRESENTS: That the undersigned holder(s) of common stock of The Reserve Petroleum Company, a Delaware corporation, does hereby constitute and appoint Mason McLain and Robert T. McLain as true and lawful attorneys and proxies for the undersigned, each with full power of substitution and revocation, to vote for and in the name, place and stead of the undersigned at the Annual Meeting of Stockholders of the Company to be held at 6801 N. Broadway, Suite 300, Oklahoma City, Oklahoma, on Tuesday, May 25, 2004, at 3:00 p.m., and any adjournment thereof, all of the stock of the Company which the undersigned would be entitled to vote if then personally present, hereby revoking any Proxy heretofore given. This Proxy will confer discretionary authority to vote upon matters incidental to the conduct of the meeting, matters not known to management prior to the date of the Proxy Statement which are presented to the meeting and the approval of the form of minutes of the 2003 Annual Stockholders' Meeting.
Election of Directors WITHHOLD VOTE FOR AUTHORITY TO VOTE NOMINEE -------- --------------------- ------- ( ) ( ) Mason McLain ( ) ( ) Robert T. McLain ( ) ( ) Jerry L. Crow ( ) ( ) Robert L. Savage ( ) ( ) Marvin E. Harris, Jr. ( ) ( ) William M. (Bill) Smith ( ) ( ) Doug Fuller
(Continued and to be signed on other side) (Continued from other side) THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE NOMINEES. This Proxy may be revoked at any time before the authority granted therein is exercised; otherwise, it shall remain in full force and effect. IN WITNESS WHEREOF the undersigned has executed this Proxy on the____day of _______________2004. ------------------------------------- Signature ------------------------------------- Signature if held jointly ------------------------------------- Address Please sign your name(s) exactly as it appears on your stock certificate and return this Proxy promptly to save the Company additional mailing expense. Executors, administrators, trustees, guardians and others signing in a representative capacity please give their full titles. When shares are held by joint tenants both should sign. If a corporation, please sign full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. THE RESERVE PETROLEUM COMPANY 6801 N. Broadway, Suite 300 Oklahoma City, Oklahoma 73116-9092 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS May 25, 2004 To The Stockholders: The annual meeting of stockholders of The Reserve Petroleum Company (the "Company") will be held on Tuesday, the 25th day of May, 2004 at 3:00 o'clock p.m. CDT at the offices of the Company at 6801 N. Broadway, Suite 300, Oklahoma City, Oklahoma, for the following purposes: 1. Electing seven (7) directors to serve until the next annual meeting of stockholders or until their respective successors are elected and qualified. 2. Transacting such other business as may properly be brought before the meeting or any adjournment thereof. Only stockholders of record at the close of business on the 25th day of April 2004, will be entitled to notice of or to vote at the meeting or any adjournment thereof. A complete list of the stockholders entitled to vote at the meeting will be open for examination by any stockholder during the ordinary business hours, for a period of ten (10) days preceding the meeting, at the Company's offices at 6801 N. Broadway, Suite 300 Oklahoma City, Oklahoma. The list shall also be produced and kept at the place of the meeting during the whole time thereof and may be inspected by any stockholder who is present. STOCKHOLDERS ARE URGED TO VOTE, SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED PROXY IN THE ENCLOSED PREPAID ENVELOPE. It is desirable that as many stockholders as possible be represented at the meeting. Consequently, whether or not you now plan to attend in person, please vote, sign, date and return the enclosed Proxy. If you attend the meeting you may vote your shares in person even though you have previously signed and returned your proxy. By Order of the Board of Directors, Mason McLain, President United States Securities and Exchange Commission 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: [ ] Preliminary Proxy Statement [ ] Confidential, for use of the Commission only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to 240.14a-11 (c) or 240.14a-12 THE RESERVE PETROLEUM COMPANY ------------------------------------------------ (Name of Registrant as Specified in Its Charter) ------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement if Other than Registrant) Payment of Filing Fee (Check the appropriate box): [X] No Fee Required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1) Title of each class of securities to which transaction applies: 2) Aggregate number of securities to which transaction applies: 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (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 with Preliminary Proxy Statement [ ] 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: THE RESERVE PETROLEUM COMPANY Suite 300 6801 N. Broadway Oklahoma City, Oklahoma 73116-9092 PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 25, 2004 SOLICITATION OF PROXIES The accompanying Proxy is solicited by the Board of Directors of The Reserve Petroleum Company (the "Company") for use at the annual meeting of stockholders of the Company to be held in Oklahoma City, Oklahoma, on Tuesday the 25th day of May, 2004, and at any adjournment thereof. The Company will bear the costs of solicitation, which are estimated to be approximately $22,000, of which amount approximately $18,000 has been spent to date. Solicitation of proxies may be made by personal interview, mail, telephone or telegram by directors, officers, and regular employees of the Company. The Company may also request banking institutions, brokerage firms, custodians, trustees, nominees, and fiduciaries to forward solicitation material to the beneficial owners of common stock held of record by such persons. The Company will reimburse the forwarding expense. When proxies on the enclosed form are returned, properly executed, and in time for the meeting, the shares represented thereby will be voted at the meeting. When a stockholder specifies on the proxy form a choice on a matter with respect to which a ballot is provided, the shares will be voted according to the specifications made. If a stockholder fails to so specify with respect to such proposals, the proxy will be voted for the nominees. The giving of a proxy does not preclude the right to vote in person, should the person giving the proxy so desire. The person giving the proxy has the right to revoke the same by written notice to the Secretary of the Company at any time before it has been exercised. This proxy statement is first being sent to stockholders on or about April 25, 2004. ANNUAL REPORT The Company's annual report for the year ended December 31, 2003, on Form 10-KSB as filed with the Securities and Exchange Commission, is enclosed herewith, but neither the report nor the financial statements included therein are incorporated in this proxy statement or are deemed to be a part of the material for the solicitation of proxies. 1 VOTING RIGHTS AND PRINCIPAL SECURITY HOLDERS Voting rights are vested exclusively in the holders of the Company's common stock, par value $.50 per share, with each share entitled to one (1) vote on each matter coming before the meeting. Only stockholders of record at the close of business on April 25, 2004, will be entitled to receive notice of and to vote at the stockholders' meeting. On the record date, there were 165,858.64 shares of common stock of the Company outstanding and entitled to be voted. The presence, in person or by proxy, of the holders of a majority of the outstanding shares of common stock of the Company entitled to vote is necessary to constitute a quorum at the meeting. The shares represented by any and all proxies received by the Company will be counted towards a quorum, notwithstanding that any such proxies contain thereon an abstention or a broker non-vote. Notwithstanding the record date of April 25, 2004, specified above, the Company's stock transfer books will not be closed and shares may be transferred subsequent to the record date. However, all votes must be cast in the names of the shareholders of record on the record date. All votes will be tabulated by the inspector of election appointed for the meeting, who will separately tabulate affirmative votes, abstentions and broker non-votes. The election of the nominees to the Board of Directors requires the affirmative vote of a majority of the shares of common stock represented at the meeting and entitled to vote, provided a quorum is present. Proxies specifying "withheld" authority will have the same effect as a vote "against" the nominees, while a broker non-vote will have no effect. If sufficient shares are not present to provide a quorum on May 25th, the meeting, after the lapse of at least half an hour, will be adjourned by those present or represented and entitled to vote. Those stockholders entitled to receive notice of and to vote will be sent written notice of an adjournment meeting to be held with a quorum of those present in person or by proxy at such meeting. Under the by-laws of the Company, any number of stockholders, in person or by proxy, will constitute a quorum at the adjournment meeting. DIRECTORS AND OFFICERS In General - ----------- The seven (7) persons named below are nominees for election as directors of the Company to serve until the next annual meeting of stockholders and until their respective successors are elected and qualified. If any nominee is unable to serve, which the Board of Directors has no reason to expect, the persons named in the accompanying proxy intend to vote for the balance of those named and, if they deem it advisable, for a substitute nominee. Each nominee is currently a director and each has served continuously as a director since the date of his first election or appointment to the Board.
Position Held Position/Office Held Continuously Name Age With Company Since ---- --- --------------------- ------------ (1) Mason McLain 77 President May 3, 1955 (1) Robert T. McLain 74 1st Vice President May 2, 1972 Robert L. Savage 56 None May 6, 1975 (1) Jerry L. Crow 67 None (Retired May 4, 1982 December 31, 2003) Marvin E. Harris, Jr. 52 None May 7, 1991 William M. (Bill) Smith 45 None May 5, 1998 Doug Fuller 46 None May 2, 2000 (1) Member of Executive Committee
The persons named below are the executive officers of the Company and at the next board of directors meeting to be held on May 25, 2004, all are expected to be chosen to serve another term of office in the same capacity as they are now serving:
Position Held Position/Office Held Continuously Name Age with Company Since ---- --- --------------------- ------------ Mason McLain 77 President May 6, 1969 Robert T. McLain 74 1st Vice President May 4, 1976 James L. Tyler 56 2nd Vice President, Jan 1, 2004 Secretary/Treasurer
The persons named below are not directors or executive officers of the Company, however they are advisory directors and expected to make significant contributions to the Company.
Position Held Position/Office Held Continuously Name Age with Company Since ---- --- --------------------- ------------ Cameron R. McLain 45 Exploration Manager May 9, 1982 Kyle L. McLain 49 Production Manager May 12, 1984
Mason McLain, Director and President, and Robert T. McLain, Director and Vice President, are brothers. Cameron R. McLain, Exploration Manager, and Kyle L. McLain, Production Manager, are sons of Mason McLain. Mason McLain became President of the Company on May 6, 1969. He had previously served as First Vice President since May 3, 1966, and as Second Vice President since May 6, 1958. Mr. McLain devotes substantially all of his time to the affairs of the Company, although he is permitted to and does devote part of his time and efforts to the activities of affiliated and family organizations. These organizations are Mesquite Minerals, Inc., (formerly Royalty Pooling Company), Mid-American Oil Company, Lochbuie Holding Company and Lochbuie Limited Partnership, all of which are engaged in varying aspects of the oil and gas industry, Mr. McLain holds a Bachelors degree in petroleum engineering from the University of Oklahoma. Mr. McLain is also a director of Webber Investment Company, Mid-American Oil Company, Mesquite Minerals, Inc., and Lochbuie Holding Company. Robert T. McLain has served as Vice President of the Company since May 4, 1976. Prior to that date, he was Secretary-Treasurer of the Company from May 2, 1972. He is Chairman of the Board of the Mull Corporation. He had previously served 3 as Chairman and Chief Executive Officer of Bunte Candies, Inc., from 1972 to 1991. He devotes only a small portion of his time to the affairs of the Company. Mr. McLain holds a Bachelor of Science degree in Business Administration and a Bachelor of Law degree from the University of Oklahoma. Mr. McLain is also a director of Mid-American Oil Company, Mesquite Minerals, Inc., and Lochbuie Holding Company. Robert L. Savage is President of Leonard Securities, Inc., a NASD Broker Dealer, which he formed. He is also President of Leonard Agency, Inc. and Leonard Investment Advisors, Inc. He was Vice President with Century Investment Group, Inc., from May, 1994 to October, 1997. He was previously employed as an Account Executive with Park Avenue Securities, Inc., from January, 1989 to May 1994. Mr. Savage has a Bachelors degree in business administration from Trinity University, San Antonio, Texas, and a Master of Business Administration degree from Southern Methodist University, Dallas, Texas. Jerry L. Crow was employed by the Company from April 7, 1976, until he retired December 31, 2003. He served as Secretary-Treasurer and Second Vice President during his employment. Mr. Crow holds a Bachelors and Masters degree in Business Administration from West Texas A&M University and is a Certified Public Accountant in both Texas and Oklahoma. Mr. Crow is also a director of Mid-American Oil Company and Mesquite Minerals, Inc. The Company's Board of Directors has determined that Mr. Crow is an "audit committee financial expert" as that term is defined in Item 401 (e) (2) of Regulation S-B. Mr. Crow is not "independent" as that term is used in Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act. Marvin E. Harris, Jr. is President of Tetron Software, a computer software company, which he formed on January 3, 1994. Until that date he had been employed as President of RDA Services, Inc., a computer software company, since April 15, 1991. He was previously employed by Intel Corporation from 1984 until his resignation in 1991. Mr. Harris holds a Bachelor of Science degree from the University of Alabama, a Master of Science degree from the University of Alabama in Birmingham and a Master of Business Administration degree from Southern Methodist University. William M. (Bill) Smith has served as Manager of Geology at Bracken Operating, LLC since 1994, and is also a part owner. He joined Bracken Exploration Co., as an Exploration Geologist in 1981, and became Vice President of Geology until 1986. In 1986 he assisted in forming Bracken Energy Company, for whom he is an employee and a part owner. Mr. Smith earned a Bachelor of Science degree in Geology from the University of Oklahoma in 1980, and was employed by Samedan Oil Corporation from 1980 through 1981. Doug Fuller Since 1992 Mr. Fuller has been Sr. Vice President, Director of Business Banking for Western Oklahoma, with the Bank of Oklahoma. Before that, he was Executive Vice President, Manager of Commercial Lending, Private Banking and Special Assets with Founders Bank. Mr. Fuller has a Bachelor of Business Administration degree in Finance from the University of Oklahoma and a Masters of Business Administration degree from Oklahoma City University. Cameron R. McLain was employed by the Company on May 9, 1982 as Exploration Manager and has served in that capacity continuously since his employment. Mr. McLain devotes substantially all of his time to Company affairs; however, he devotes a part of his time and efforts to the activities of affiliated 4 organizations. Mr. McLain was previously employed from May, 1980 to May 1982 as a Southern Oklahoma exploration geologist for Cities Service Oil and Gas Company. Mr. McLain has a Bachelor of Science degree in Geology from the University of Oklahoma and a Master of Business Administration degree from Oklahoma City University. Mr. McLain is a director of Mid-American Oil Company and an advisory director of Mesquite Minerals, Inc. Kyle McLain was employed as Production Manager for the Company on May 12, 1984 and continues to serve in that capacity. Mr. McLain devotes substantially all of his time to the affairs of the Company, although he spends a part of his time and efforts on the activities of affiliated organizations. Mr. McLain was previously employed as a reservoir engineer for Gulf Oil Corporation from May, 1980 to May, 1984. Mr. McLain has a Bachelor of Science degree in Petroleum Engineering from the University of Oklahoma. Mr. McLain is a director of Mesquite Minerals, Inc. and an advisory director of Mid-American Oil Company. James L. Tyler was employed by the Company on August 1, 2003, and was elected Second Vice President/Secretary-Treasurer effective January 1, 2004, to replace Jerry L. Crow. Mr. Tyler devotes substantially all of his time to the affairs of the Company, although he devotes a part of his time and efforts to the activities of the affiliated organizations. Mr. Tyler holds a Bachelors degree from the University of Central Oklahoma, Edmond, Oklahoma and is a Certified Public Accountant in Oklahoma. Security Ownership of Certain Beneficial Owners and Management - --------------------------------------------------------------------- The following table sets forth information regarding the only persons known by management to be beneficial owners of over 5% of the Company's voting stock at April 25, 2004.
Name and Address Amount & Nature Percent of of Beneficial of Beneficial Owner Ownership Class (2) ------------------ ----------------- --------- Mason McLain (1) 26,608 Directly 16.04 6801 N. Broadway, Suite 300 2,433 By Wife 1.47 Oklahoma City, OK 73116-9092 Robert T. McLain (1) 11,732 Directly 7.07 6403 N. Grand, #203 3,333 By Wife 2.01 Oklahoma City OK 73116
(1) Mason McLain and Robert T. McLain are brothers. (2) Calculations of percent of class is based on the number of shares of common stock outstanding as of April 25, 2004, excluding shares held by or for the Company. 5 The following table sets forth information regarding the Company's stock beneficially owned by its officers and directors at April 25, 2004.
Title of Amount & Nature of Percent Directors Class Beneficial Ownership of Class --------- --------- ---------------------- --------- Mason McLain Common 26,608 Owned Directly 16.04 2,433 By Wife 1.47 Robert T. McLain Common 11,732 Owned Directly 7.07 3,333 By Wife 2.01 Robert L. Savage Common 1,269 Owned Directly .77 1,200 Owned as Custodian .72 Jerry L. Crow Common 5,379 Owned Directly 3.24 ------ ----- Total Directors 51,954 31.32 ====== ===== Total Officers & Directors as a Group 51,954 31.32 ====== =====
INFORMATION RELATED TO THE BOARD OF DIRECTORS Meetings - -------- The Board of Directors held three meetings during the Company's year ended December 31, 2003. All directors were present at all meetings with the exception of R.T. McLain who was present at two meetings. Compensation - ------------ Directors are compensated on a per meeting basis and only for those board meetings attended. The amount of compensation is set by a vote of the directors at each board meeting. In the years ended December 31, 2003 and December 31 2002, the directors were compensated in the amount of $1,000 for each of the meetings attended, in the year ended December 31, 2001 the directors were compensated in the amount of $500 for the first meeting and $1,000 for each of the remaining two meetings. Officers of the Company do not receive additional compensation for committee meetings. Standing Committees - -------------------- The Company has no standing audit, nominating or compensation committees of the Board of Directors, or committees performing similar functions. The Company is a small business issuer whose securities are not quoted on NASDAQ or listed on any exchange. The Company's stock is traded by private transactions or over the counter. Over the counter bid information is quoted in the Pink Sheets OTC Market Report. 6 Based on the Company's history and experience without standing committees of the Board, the Board of Directors believes that it is appropriate for the Company to continue operations without a standing nominating committee. Each Director, including non-management Directors, participates in the consideration of the director nominees in accordance with the Company's Bylaws. Directors Marvin E. Harris, Jr., and William M. Smith are considered independent under the listing standards of NASDAQ. The Board is committed to good governance practices and is in the process of considering the adoption of written governance principles based on the Board's business judgment. Among the issues under consideration is the creation of a standing nominating committee. INFORMATION RELATED TO THE NOMINATING PROCESS Candidates Recommended by Security Holders - ---------------------------------------------- Based on the Company's history and experience without such a written policy, the Board of Directors believes that it is appropriate for the Company to continue operations without a written policy with regard to the consideration of any director candidates recommended by security holders. The Board is committed to good governance practices and is in the process of considering the adoption of written governance principles based on the Board's business judgment. Among the issues under consideration is a written policy with regard to the consideration of any director candidates recommended by security holders. Minimum Qualifications - ----------------------- Based on the Company's history and experience without such a written policy, the Board of Directors believes that it is appropriate for the Company to continue operations without a written policy with regard to the specific, minimum qualifications that must be met by a nominee for a position on the Board of Directors. The Board is committed to good governance practices and is in the process of considering the adoption of written governance principles based on the Board's business judgment. Among the issues under consideration is a written policy with regard to the specific, minimum qualifications that must be met by a nominee for a position on the Board of Directors. Nomination Process - ------------------- The Board of Directors identifies and evaluates qualified nominees for director using the same process regardless of whether the nominee is recommended by an officer, director or shareholder. SHAREHOLDER COMMUNICATIONS TO DIRECTORS A shareholder may contact one or more members of the Board of Directors by writing addressed to the Company's Secretary. Anyone who has a concern about the Company's conduct, or about the Company's accounting, internal accounting controls or auditing matters, may communicate that concern directly to the Company's Secretary. Such communications may be confidential or anonymous. All such concerns will be forwarded to the appropriate Directors for review. The Board is committed to good governance practices and is in the process of considering the adoption of written governance principles based on the Board's business judgment. Among the issues under consideration is a written policy with regard to shareholder communications to the Board of Directors. 7 INFORMATION REGARDING COMMUNICATIONS WITH AUDITORS As required by the Securities and Exchange Commission Regulation S-B, Item 306, the Board of Directors has: 1. Reviewed and discussed the audited financial statements of the Company for the year ended December 31, 2003, with the appropriate company employees. 2. Discussed with the Company's independent auditors, Grant Thornton LLP, the matters required to be discussed by the American Institute of Certified Public Accountants' Auditing Standards Board's Statement on Auditing Standards Number 61, "Communication with Audit Committees", as amended. 3. Received the written disclosure and letter from Grant Thornton LLP required by Independent Standards Board Standard Number 1, "Independence Discussions with Audit Committees", as amended, and discussed with the independent accountant the independent accountant's independence. 4. Based on the above noted review and discussions, the Board of Directors approved the inclusion of the Company's audited financial statements, for and as of the year ended December 31, 2003, in the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2003, for filing with the Securities and Exchange Commission. Members of the Board of Directors are Mason McLain, Robert T. McLain, Robert L. Savage, Jerry L. Crow, Marvin E. Harris, Jr., William M. Smith and Doug Fuller. SECTION 16(a) REPORTING. Section 16(a) of the Securities Exchange Act of 1934 requires executive officers, directors and persons beneficially owning more than 10% of the Company's stock to file initial reports of ownership and reports of changes in ownership with the Securities and Exchange Commission and with the Company. Based solely on a review of the reports sent to the Company and written representations from the executive officers and directors, the Company believes that all of these persons complied with their Section 16(a) filing obligations. CODE OF ETHICS FOR SENIOR OFFICERS The Company has adopted a code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions meeting the criteria set forth in Item 406 of Regulation S-B. The Company undertakes to provide to any person without charge, upon written request addressed to the Company's Secretary, a copy of such code of ethics. EXECUTIVE COMPENSATION In General - ----------- As disclosed above, under "DIRECTORS AND OFFICERS" the Company qualifies as a "small business issuer" as defined under applicable Securities and Exchange 8 Commission Regulations; therefore, only that information as to executive compensation required of small business issuers is presented. Compensation of Executive Officers The following table sets forth summary information regarding the compensation paid to Mason McLain, President, who functions as Chief Executive Officer. Information as to the compensation of other executive officers is not presented because no person's combined annual salary and bonus exceeded $100,000 during the year ended December 31, 2003. Summary Compensation Table
Annual Name and Current Cash Compensation Long Term All Other Principal Position Year Salary Bonus Compensation Compensation - ------------------ ---- ------ ----- ------------ ------------- Mason McLain 2003 $ 58,212 $ 4,851 NONE $ 8,435 President 2002 $ 60,480 $ 5,040 NONE $ 3,000 2001 $ 60,480 $ 5,040 NONE $ 2,500
All Other Compensation includes director fees of $3,000 paid in 2003, $3,000 paid in 2001 and $2,500 paid in 2001. For 2003, all other compensation also includes $5,435 for life insurance premiums paid by the Company for a policy owned by Mason McLain. RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS In General - ----------- For the current year the executive officers will recommend the Board of Directors approve Grant Thornton LLP as the Company's principal public accountants. Grant Thornton LLP served in that capacity for the year ended December 31, 2003. Representatives of Grant Thornton LLP are not expected to be at the annual meeting of the stockholders; however, if questions arise which require their comments, arrangements have been made to solicit their response. Audit Fees The aggregate fees billed for professional services rendered for the audit of the Company's annual financial statements by Grant Thornton LLP for the fiscal years ended December 31, 2002 and 2003, and the reviews of the financial statements included in the Company's Form 10-QSB for those years totaled $23,088 for 2002 and $32,602 for 2003. Audit - Related Fees The aggregate fees billed for audit related services rendered by Grant Thornton, LLP were $412 for 2002 and $250 for 2003. 9 Tax Fees The aggregate fees billed for Tax services rendered by Grant Thornton LLP were $7,475 for 2002 and $10,785 for 2003. All such fees were for Federal and state income tax return preparation. All Other Fees None 10 APPROVAL OF MINUTES OF ANNUAL MEETING Approval of the form of minutes of the 2003 annual meeting does not amount to ratification of any action taken at such meeting. PROPOSALS OF SECURITY HOLDERS Proposals of security holders intended to be presented at the next annual meeting of the stockholders which is scheduled for May 24, 2005, should be received in the Company's offices at 6801 N. Broadway, Suite 300, Oklahoma City, Oklahoma 73116-9092, not later than Friday, December 31, 2004. OTHER MATTERS Management knows of no other business which will be presented for consideration at the annual meeting, other than the matters described in the Notice of Annual Meeting, but if other matters are presented, it is the intention of the persons designated as proxies or their substitutes to vote in accordance with their judgment on such matters. By Order of the Board of Directors, /s/ Mason McLain Mason McLain, President Dated April 23, 2004 Oklahoma City, Oklahoma 11 -----END PRIVACY-ENHANCED MESSAGE-----