ISRAMCO, INC.
11767 Katy Freeway,
Houston, Texas 77079
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that the 2005 annual meeting (the "Annual Meeting") of
stockholders of Isramco, Inc. (the "Company") will be held at the Company's
premises at 11767 Katy Freeway, Houston, Texas, 77079, Suite 711, on June 15,
2005 at 9:00 A.M., local time, for the following purposes:
(i) to elect five directors of the Company to hold office until the next annual
meeting of the stockholders and until their respective successors shall have
been duly elected and qualified;
(ii) to ratify the appointment of Malone Bailey, PC as independent public
accountants of the Company for the year ending December 31, 2005; and
(iii) to transact such other business as may properly come before the Annual
Meeting and any adjournment thereof.
The Board of Directors has fixed the close of business on April 28, 2005, as the
record date for the determination of stockholders entitled to notice of, and to
vote at, the Annual Meeting or any adjournment thereof.
If you do not expect to be personally present at the Annual Meeting but wish
your stock to be voted for the business to be transacted thereat, the Board of
Directors requests that you complete, sign and date the enclosed proxy and
promptly return it by mail in the postage paid envelope provided.
BY ORDER OF THE BOARD OF DIRECTORS
Haim Tsuff
Chairman of the Board
Chief Executive Officer
May 2, 2005
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND PROMPTLY RETURN IT IN THE
ENVELOPE PROVIDED. NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES.
ISRAMCO, INC.
11767 Katy Freeway,
Houston, Texas 77079
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 15, 2005
INTRODUCTION
This Proxy Statement is being sent to stockholders of Isramco, Inc., a Delaware
corporation (the "Company"), in connection with the solicitation of proxies by
the Board of Directors of the Company for use at the 2005 annual meeting (the
"Annual Meeting") of Stockholders of the Company to be held at the Company's
premises at 11767 Katy Freeway, Houston, Texas 77079, Suite 711, on Wednesday,
June 15, 2005 at 9:00 A.M., local time, and any adjournment(s) thereof. The
purposes of the Annual Meeting are:
(i) to elect five directors of the Company to hold office until the next annual
meeting of the stockholders and until their respective successors shall have
been duly elected and qualified;
(ii) to ratify the appointment of Malone & Bailey, PC ("M&B"), as independent
public accountants of the Company for the year ending December 31, 2005; and
(iii) to transact such other business as may properly come before the Annual
Meeting and any adjournment thereof.
If proxy cards in the accompanying form are properly executed and returned, the
shares of Common Stock represented thereby will be voted as instructed on the
proxy. If no instructions are given, such shares will be voted FOR the (i)
election as directors of the nominees of the Board of Directors named below;
(ii) proposal to ratify the appointment of M&B, as independent public
accountants of the Company for the year ending December 31, 2005; and (iii) in
the discretion of the Proxies named in the proxy card, on any other proposals to
properly come before the Annual Meeting or any adjournment thereof.
Any stockholder returning the accompanying proxy may revoke such proxy at any
time prior to its exercise by filing with the Secretary of the Company a duly
executed proxy bearing a later date or a written instrument revoking the proxy
or by personally appearing at the Annual Meeting.
This Proxy Statement will first be mailed to stockholders on or about May 6,
2005.
VOTING RIGHTS AND VOTING SECURITIES
All voting rights are vested exclusively in the holders of the Common Stock.
Only holders of Common Stock of record at the close of business on April 28,
2005 (the "Record Date"), will be entitled to receive notice of and to vote at
the Annual Meeting. As of the Record Date, the Company had outstanding a total
of 2,717,891 shares of Common Stock. Each holder of Common Stock is entitled to
one vote for each share held either in person or by proxy.
The holders of a majority of the issued and outstanding Common Stock, present in
person or by proxy, will constitute a quorum for the transaction of business at
the Annual Meeting or any adjournment thereof. Abstentions and broker non-votes
are counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. Assuming a quorum is present, the
affirmative vote of a plurality of the shares present in person or by proxy is
required for approval of Proposal No. 1 (Election of Directors); and the
affirmative vote of a majority of the shares present in person or by proxy is
required for approval of Proposal No. 2 (Ratification of Independent Public
Accountants). Abstentions will have no effect on Proposal No. 1 and will be
counted as votes against Proposal No. 2. Broker non-votes will have no effect on
Proposals No. 1 and 2.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information, as of the Record Date,
concerning the ownership of the Common Stock by (a) each person who, to the best
of the Company's knowledge, beneficially owned on that date more than 5% of the
outstanding Common Stock (b) each of the Company's directors and Named Executive
Officers (as defined under "Executive Compensation") (c) all current directors,
officers and significant employees of the Company as a group.
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Number of Shares Percent of
Name of Beneficial Owner (1) Beneficially Owned (2) Common Stock (2)
Haim Tsuff, Chairman and CEO 1,354,041(3) 49.82%
Jackob Maimon, President and 38,819(4) 1.43%
Director
Doron Avraham, Vice President -- *
Yossi Levy, Israeli Branch Manager -- *
Max Pridgeon, Director -- *
Donald D. Lovell, Director -- *
Amir Mireskandari, Director -- *
All directors and
Officers as a group (7 persons) 1,392,861 51.2%
* Less than 1%
(1) The address of such person is c/o Isramco, Inc., 11767 Katy Freeway, Houston
Texas.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "SEC") and generally includes voting or
investment power with respect to securities. In accordance with SEC rules,
shares of Common Stock issuable upon the exercise of options or warrants which
are currently exercisable or which become exercisable within 60 days of the
Record Date are deemed to be beneficially owned by, and outstanding with respect
to, the holder of such option or warrant. Except as indicated by footnote, and
subject to community property laws where applicable, to the knowledge of the
Company, each person listed is believed to have sole voting and investment power
with respect to all shares of Common Stock owned by such person.
(3) Haim Tsuff owns 100% of United Kingsway Ltd., which through YHK General
Manager Ltd., controls various entities, which may be deemed to control the
Company.
(4) These shares were issued in March 2005 upon the cashless exercise of options
to purchase up to 69,995 shares Common Stock granted to holder on March 25,
2000.
The following table sets forth, as of the Record Date, certain information with
respect to the beneficial ownership of common stock by each person who, to the
best of the Company's knowledge, beneficially owned on that date more than 5% of
the outstanding Common Stock:
Number of Shares Percent of
Name of Beneficial Owner (1) Beneficially Owned (2) Common Stock (2)
Naphtha Holdings Ltd.* 1,315,222 48.39%
Haim Tsuff * 38,819 1.43%
United Kingsway Ltd. * *
(1) The address of such person is c/o Isramco, Inc., 11767 Katy Freeway, Houston
Texas.
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(2) Beneficial ownership is determined in accordance with the rules of the SEC
and generally includes voting or investment power with respect to securities. In
accordance with SEC rules, shares of Common Stock issuable upon the exercise of
options or warrants which are currently exercisable or which become exercisable
within 60 days of the Record Date are deemed to be beneficially owned by, and
outstanding with respect to, the holder of such option or warrant. Except as
indicated by footnote, and subject to community property laws where applicable,
to the knowledge of the Company, each person listed is believed to have sole
voting and investment power with respect to all shares of Common Stock owned by
such person.
* Haim Tsuff owns and controls 100% of United Kingsway Ltd. (Kingsway) which
holds a 74% interest in YHK Investment Limited Partnership (YHK). Avraham Livnat
Ltd. through its subsidiary Carmen Management and Assets (1997) Ltd. owns 26% of
YHK. The General Partner of YHK is YHK General Managers Ltd. Joseph Tsuff (the
father of Haim Tsuff) is a director of YHK General Managers Ltd. YHK owns of
record approximately 42.4% of Equital Ltd. (formerly known as Pass-port Ltd.),
Equital Ltd. owns approximately 43.64% of J.O.E.L. - Jerusalem Oil Exploration
Ltd. (JOEL), JOEL owns approximately 85.9% of Naphtha Israel Petroleum Corp,
Ltd. ("Naphtha"), which holds 100% of Naphtha Holdings Ltd. JOEL also owns
approximately 8.2% of the shares of Equital Ltd. Naphtha Holdings Ltd. owns of
record approximately 48.39% of the issued and outstanding common stock of the
Company.
Information regarding these relationships is set forth in Schedule 13d filings
and amendments made thereto made on behalf of the above entities, which are on
file with the SEC.
As a result of the foregoing, Haim Tsuff, Kingsway, YHK, Equital Ltd., JOEL,
Naphtha and Naphtha Holdings Ltd. may be deemed to control the Company.
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by, or paid,
for all services rendered to the Company during the Company's fiscal years ended
December 31, 2004, 2003 and 2002 by the Company's Chief Executive Officer and
other "named executive officers," as defined under the rules and regulations of
the Securities Act of 1933, as amended (the "Securities Act").
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
------------------- ------------
Securities
Name and Other Annual Underlying
Principal Position Year Salary($) Bonus($) Compensation($) Options(#)(1)
Haim Tsuff 2004 240,000 150,000 -- --
Chairman of the Board 2003 240,000 125,000 -- --
and Chief Executive 2002 240,000 -- -- --
Officer
Jackob Maimon 2004 240,000 -- -- --
President 2003 240,000 125,000 -- --
2002 240,000 -- -- --
Doron Avraham 2004 180,000 -- -- --
Vice President (1) 2003 -- -- -- --
2002 -- -- -- --
Yossi Levy 2004 85,000 -- -- --
Branch Manager 2003 85,000 -- -- --
2002 104,000 -- -- --
Joshua Folkman 2004 101,000 -- -- --
Exploration Manager 2003 101,000 -- -- --
Branch Office 2002 100,000 -- -- --
(1) Mr. Avraham commenced his employment with the Company in December 2003.
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OPTIONS GRANTED IN 2004
None of the Named Executive Directors were granted any options during the year
ended December 31, 2004.
AGGREGATED OPTION EXERCISES IN 2004 AND 2004 YEAR END OPTION VALUES
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options at in-the-Money Options
Acquired on Value December 31, 2004(#) at December 31, 2004($)(1)
Name Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
Haim Tsuff -- (2) -- 69,550 / 0 $66,768 / 0
Jackob Maimon -- (2) -- 69,550 / 0 66,768 / 0
Joshua Folkman -- -- 2,000 / 0 0 / 0
(1) Based upon the difference between the exercise price of such options and the
closing price of the Common Stock ($5.24) on December 31, 2004, as reported on
NASDAQ.
(2) In March 2005, 38,819 shares were issued upon the cashless exercise of these
options.
EMPLOYMENT/CONSULTING AGREEMENTS
In May of 1996 the Company entered into a consulting agreement with Goodrich
Global L.T.D. B.V.I., a company owned and controlled by Haim Tsuff, the Chairman
of the Board of Directors and Chief Executive Officer of the Corporation.
Pursuant to the terms of this Consulting Agreement which was amended in April
1997, the Company pays to the consultant the sum of $240,000 per annum in
installments of $20,000 per month in addition to reimbursing all reasonable
expenses incurred in connection with services rendered on behalf of the Company.
The agreement continues in effect through May 31, 2006 and contains certain
customary confidentiality and non-compete provisions. If the consulting
agreement is terminated by the Company other than for cause, then the entity is
entitled to receive the equivalent of payments due through the remaining term of
the agreement.
In November of 1999 the Company entered into a consulting agreement with
Worldtech Inc., a Mauritius company of which Jackob Maimon, the President of the
Company, is a director. Pursuant to this Consulting Agreement which is in effect
through May 31, 2006, the Company agreed to pay the sum of $240,000 per annum in
installments of $20,000 per month, in addition to reimbursing all reasonable
business expenses incurred during the term in connection with the performance of
services on behalf of the Company. The agreement contains certain customary
confidentiality and non-compete provisions. If the consulting agreement is
terminated by the Company other than for cause, then the entity is entitled to
receive the equivalent of payments due through the remaining term of the
agreement.
In December 2003 the Company entered into an employment agreement with Doron
Avraham, its Vice President. . Pursuant to this Consulting Agreement which is in
effect through November 30, 2007, the Company agreed to pay the sum of $180,000
per annum in installments of $15,000 per month, in addition to reimbursing all
reasonable business expenses incurred during the term in connection with the
performance of services on behalf of the Company. The agreement contains certain
customary confidentiality and non-compete provisions.
In November of 1996 the Company entered into an Employment Agreement with Yossi
Levy, the Managing Director of Naphtha Israel Petroleum Company Ltd. to employ
Mr. Levy as the General Manager of the Israel Branch of the Company. Pursuant to
the terms of his employment, Mr. Levy was paid an annual amount of $85,000 in
2004.
Joshua Folkman is employed as Explorations Manager pursuant to which he was paid
an annual salary of $101,000 in 2004. In the event that the Company elects to
terminate Mr. Folkman's employment hereunder for any reason other than cause,
then Mr. Folkman is entitled to a one-lump sum payment of $69,000.
5
INFORMATION RELATING TO AN EXECUTIVE OFFICER WHO IS NOT A DIRECTOR NOMINEE
The following individual is not a director or director nominees, but serves as
an Executive Officer of the Company or its subsidiaries.
NAME AGE POSITION
Doron Avraham 30 Vice President
Yossi Levy 53 Branch Manager, Israel Branch
Dr. Joshua Folkman 64 Exploration - Manager, Branch Office
Doron Avraham was appointed to the position of Vice President as of December 9,
2003. Until his employment with the Company, Mr. Avraham was Vice President of
Operations of Silverled Ltd., an European based company primarily engaged in the
field of asset management where he supervised operations control, business
development and strategy and operations, a position he held from November 2001.
Mr. Avraham received a BA in Economics and Business Management from Tel Aviv
University in March 2001.
Yossi Levy has been Branch Manager of the Company's Branch Office in Israel
since August 1996. Since 1988 Mr. Levy has held the position of General Manager
of Naphtha - Israel Petroleum Corp. Ltd. (Naphtha), a public company in the oil
and gas business in Israel. Since January 1, 2002, Mr. Levy has been the general
manager of J.O.E.L. - Jerusalem Oil Exploration Ltd. (JOEL), an affiliate of the
Company.
Dr. Joshua Folkman has been Exploration Manager of the Company's Israel branch
office since 1987.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 2004 and 2003, the Company paid Naphtha, respectively, $226,000 and
$197,000 in respect of office services for its Israeli Branch office. Mr. Haim
Tsuff, the Company's Chairman and Chief Executive Officer, is deemed to control
Naphtha.
On January 1, 2001 the Company retained the services of I.O.C. Israel Oil
Company ("I.O.C.") in connection with the operation of Jay Petroleum LLC and Jay
Management Company LLC (wholly owned subsidiaries of the Company). In
consideration thereof, the Company paid I.O.C. $120,000 for each of 2004 and
2003. Mr. Haim Tsuff, the Company's Chairman and Chief Executive Officer, is
deemed to control I.O.C.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") requires the Company's executive officers, directors and persons who
beneficially own more than 10% of a registered class of the Company's equity
securities (collectively, the "Reporting Persons") to file certain reports
regarding ownership of, and transactions in, the Company's securities with the
Securities and Exchange Commission (the "SEC"). These officers, directors and
stockholders are also required by SEC rules to furnish the Company with copies
of all Section 16(a) reports that they file with the SEC.
Based solely on review of the copies of such forms received by the Company with
respect to 2004, the Company believes that all of the filing obligations of
officers, directors and 10% stockholders under Section 16 (a) during 2004 have
been complied with.
PERFORMANCE GRAPH
The following graph compares the yearly percentage of change in the Company's
cumulative stockholder return on its Common Stock (assuming reinvestment of
dividends at date of payment into Common Stock of the Company) to the cumulative
total return on the NASDAQ Market Index ("NASDAQ Index") and the cumulative
total return on the GICS (Global Industry Classification Standard) Standard &
Poor's Oil & Gas Exploration and Production Index ("Peer Index") for the period
of five years commencing on December 31, 1999 and ending on December 31, 2004.
The graph assumes that $100 was invested on December 31, 1999 in the common
stock of the Company, The NASDAQ Index and Peer Index, and further assumes no
payment or reinvestment of dividends. The stock price performance on the
following graph is not necessarily indicative of future stock price performance.
6
The graph shall not be deemed filed or incorporated by reference into any filing
under the Securities Act of 1933 or under the Securities Exchange Act of 1934,
except to the extent that the Company specifically incorporates this graph by
reference.
PEER
YEAR NASDAQ INDEX COMPANY
$ $ $
12/31/99 100.0 100.0 100.0
12/31/00 60.9 156.9 165.9
12/31/01 47.9 122.5 100.5
12/31/02 32.8 119.2 70.3
12/31/03 49.2 145.5 159.0
12/31/04 53.3 152.7 135.0
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of five (5) members.
The persons named below have been nominated by the Board of Directors for
election to hold office until the next annual meeting and until their successors
are elected and have been qualified.
It is the intention of the persons named in the accompanying proxy to vote FOR
the election of the persons named below as directors of the Company, unless
authority to do so is withheld. Proxies cannot be voted for a greater number of
persons than the nominees named. If events not now known or anticipated make any
of the nominees unwilling or unable to serve, the proxies will be voted (in the
discretion of the holders of such proxies) for other nominees not named herein
in lieu of those unwilling or unable to serve. The Board of Directors is not
aware of any circumstances likely to cause any nominee to become unavailable for
election.
NAME AGE POSITION
Haim Tsuff 48 Chairman of the Board, Chief Executive
Officer and Director
Jackob Maimon 49 President, Director
Max Pridgeon 37 Director
Donald D. Lovell 72 Director
Amir Mireskandari 36 Director
All officers serve until the next annual meeting of directors and until their
successors are elected and qualified.
Haim Tsuff has been a director of the Company since January 1996 and the
Chairman of the Board of Directors and Chief Executive Officer since May 1996.
Mr. Tsuff is the sole director and owner of United Kingsway Ltd. and a Direcor
of YHK General Manager Ltd. (which entity effectively controls Equital Ltd.,
JOEL, Naphtha and Naphtha Holdings Ltd.) and may be deemed to control the
Company.
Jackob Maimon has been President of the Company since November 1999. Mr. Maimon
is the Chairman of the Board of Directors of Naphtha Israel Petroleum
Corporation Ltd. ("Naphtha"), an Israeli entity, which holds indirectly through
Naphtha Holdings, Ltd., another Israeli entity, over 50% of the issued and
outstanding stock of the Company. Mr. Maimon has held the position at Naphtha
since August 1996.
7
Max Pridgeon has been a director of the Company since April 2001. Since December
2002, Mr. Pridgeon has served as a director and executive officer of Griffin
Decorations, a business which he founded. From March 1995 through December 2002,
he served as director of MAXIM Wholesale and Marketing Co., a company which he
founded. Concurrently, from February 1999, Mr. Pridgeon has also served as a
manager of sales for Europe and the Middle East for Blenfin XI, Netherlands, a
company that engages in the distribution of wooden picture frames. From April
1996 through January 1999, Mr. Pridgeon served as a property acquisitions
consultant to M.A. Realistic Estate, Netherlands, a company engaged in the
ownership and management of hotels in the Netherlands. From September 1989
through March 1995, Mr. Pridgeon served as account manager and then export
manager at VERNO Holland, a company engaged in the marketing and distribution of
oil paintings.
Donald D. Lovell has been a director since March 25, 2004. Mr. Lovell, a
certified public accountant, has been in private practice in Houston, Texas
since 1984, focusing on advising emerging and medium sized businesses and
providing tax planning.
Amir Mireskandari has been a director since August 2004. Since September 1995
Mr. Mireskandari has been employed as a Financial and Operations Principal at
the Lugano Group where he is responsible for financial analysis. The Lugano
Group is a New Orleans based broker-dealer and consulting firm. Prior to his
association with the Lugano Group, from 1991 to 1993, Mr. Mireskandari worked as
an Investment Analyst at the International Finance Corporation (IFC) in
Washington D.C. In the past, Mr. Mireskandari was also retained as an advisor on
privatization to the Ministry of Mines and Heavy industry of the Kingdom of
Morocco to conduct a competitive study of the private sector.
There are no family relationships between any of the above executive officers,
and there is no arrangement or understanding between any of the above executive
officers and any other person pursuant to which he was selected as an officer.
Each of the above executive officers was elected by the Board of Directors to
hold office until the next annual election of officers and until his successor
is elected and qualified or until his earlier resignation or removal.
DIRECTOR RESIGNATIONS
Mr Eyal Gibor a non-employee director resigned from the Board of Directors on
August 9, 2004 and was replaced by Mr. Amir Mireskandari.
Dr. Avihu Ginzburg, a non-employee director, resigned on March 25, 2004 from the
Board of Directors and was replaced by Mr. Donald D. Lovell.
DIRECTOR COMPENSATION
During 2004, directors who are not employees of the Company were paid a fee of
$750 for each meeting of the Board that they attend (whether in person or by
telephone).
INFORMATION ABOUT THE BOARD OF DIRECTORS
INDEPENDENCE AND MEETINGS
During the fiscal year ended December 31, 2004, the Board met once and acted by
unanimous written consent on eight occasions. During the fiscal year ended
December 31, 2004, each Board member attended 75% or more of the aggregate of
the meetings of the Board and of the committees on which he served, held during
the period for which he was a director or committee member, respectively.
The Board does not have a formal policy with respect to Board members attendance
at annual stockholder meetings, though it encourages directors to attend such
meetings. While none of the directors attended the annual meeting in 2004, the
Company expects that its Chairman of the Board and Chief Executive Officer will
attend the 2005 Annual Meeting.
The Board of directors has determined that Max Pridgeon, Donald D. Lovell and
Amir Mireskandari are independent as defined in the listing standards of the
Nasdaq SmallCap Market.
8
BOARD COMMITTEES
Prior to April 2004, the only standing committee of the Board of Directors was
the Audit Committee. Prior to April 2004, matters involving the compensation of
the Company's executive officers and the nomination of directors were addressed
by the entire Board of Directors. In April 2004, the Board established a
standing compensation committee (the "Compensation Committee") and a standing
nominating committee (the "Nominating Committee").
AUDIT COMMITTEE
The members of the Audit Committee are Max Pridgeon, Donald D. Lovell and Amir
Mireskandari, each of whom meets the independence standards of the Nasdaq
SmallCap Market. Mr. Lovell is the chairman of the Audit Committee. The Board
has determined that Mr. Lovel is an "audit committee financial expert" as
defined by the rules of the Securities and Exchange Commission. The Audit
Committee met 4 times in 2004. Eyal Gibor resigned from the committee and the
Board of directors in August 2004.
The Board has adopted a charter governing the duties and responsibilities of the
Audit Committee. The principal function of the Audit Committee is to assist the
Board in its oversight responsibilities relating to the financial accounting,
reporting and controls. The Audit Committee monitors and evaluates periodic
reviews of the adequacy of the accounting and financial reporting processes and
systems of internal control that are conducted by senior management and the
independent auditors, is directly responsible for the appointment, compensation
and oversight of the work of the Company's independent auditors, reviews and
evaluates the qualifications, independence and performance of the independent
auditors, monitors the Company's compliance with legal and regulatory
requirements, monitors the performance of internal audit function and
facilitates communication among independent auditors, senior management and the
Board.
THE NOMINATING COMMITTEE
In April 2004, the Board of Directors formed the Nominating Committee to address
Board development matters. The current members of the Nominating Committee are
Donald D. Lovell and Max Pridgeon, each of whom meets the independence standards
of the Nasdaq SmallCap Market. Mr. Lovell is the Chairman of the Committee.
The Board has adopted a charter governing the duties and responsibilities of the
Nominating Committee.
The Nominating Committee will consider candidates that are nominated by its
stockholders. The name, together with the business experience and other relevant
background information of a candidate, should be sent to the Chairman of the
Board who will then forward such information to the Nominating Committee for its
review and consideration. The process for determining whether to nominate a
director candidate put forth by a stockholder is the same as that used for
reviewing candidates submitted by directors. Other than candidates submitted by
its directors and executive officers, the Company has never received a proposed
candidate for nomination from any security holder that beneficially owned more
than 5% of the Company's voting Common Stock.
COMPENSATION COMMITTEE
The Compensation Committee was established in April 2004 and is responsible for
reviewing the compensation arrangements in effect for the Company's executive
officers. This committee currently consists of Mr.Donald D. Lovell and Max
Pridgeon each of whom meets the independence standards of the Nasdaq SmallCap
Market.
The principal functions of the compensation committee are to review our
incentive compensation programs for executive officers and approve the annual
compensation for executive officers.
CODE OF BUSINESS ETHICS AND CONDUCT
The Company has adopted a Code of Business Ethics and Conduct (the "Code of
Conduct") that applies to all of its employees. If the Company makes any
substantive amendment to the Code of Conduct or grants any waiver from a
provision of the Code of Conduct to any executive officer or director, the
Company will promptly disclose the nature of the amendment or waiver.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Although the Company does not have formal procedures for stockholder
communication, stockholders of the Company are encouraged to communicate
directly with the members of the Board. Persons interested in communicating with
the independent directors their concerns or issues may address correspondence to
a particular director, or to the independent directors generally in care of the
Chief Executive Officer and Chairman of the Board, Mr. Haim Tsuff. If no
particular director is named, letters will be forwarded, depending on the
subject matter, to the Chair of the Auditor Nominating Committee. Company
personnel will not screen or edit such communications and will forward them
directly to the intended member of the Board.
9
REPORT OF THE AUDIT COMMITTEE
THE FOLLOWING REPORT OF THE AUDIT COMMITTEE DOES NOT CONSTITUTE SOLICITING
MATERIAL AND SHOULD NOT BE DEEMED FILED OR INCORPORATED BY REFERENCE INTO ANY
OTHER OF THE COMPANY'S FILINGS UNDER THE SECURITIES ACT OF 1933 OR UNDER THE
SECURITIES ACT OF 1934, EXCEPT TO THE EXTENT THE COMPANY SPECIFICALLY
INCORPORATE THIS REPORT BY REFERENCE.
The following is the report of the Audit Committee with respect to the Company's
audited financial statements for the fiscal year ended December 31, 2004, which
include the consolidated balance sheets of the Company as of December 31, 2004
and 2003, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 2004 and the notes thereto.
REVIEW WITH MANAGEMENT. The Audit Committee has reviewed and discussed the
Company's audited financial statements with management.
REVIEW AND DISCUSSIONS WITH INDEPENDENT ACCOUNTANTS. The Audit Committee has
discussed with Mann, the Company's independent accountants, the matters required
to be discussed by SAS 61 (Codification of Statements on Accounting Standards)
that includes, among other items, matters related to the conduct of the audit of
the Company's financial statements. The Audit Committee has also received
disclosures and the letter from Mann required by Independence Standards Board
Standard No. 1 (that relates to the accountant's independence from the Company
and its related entities) and has discussed with the auditors its independence
from the Company.
CONCLUSION. Based on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the Company's audited
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2004.
Dated: April 21, 2005
AUDIT COMMITTEE
MR. MAX PRIDGEON
MR. DONALD D. LOVELL
MR. AMIR MIRESKANDARI
Dr. Avihu Ginzburg was a member of the Audit Committee until his resignation
from the Board of Directors on March 25, 2004. Mr. Eyal Gibor was also a member
of the Audit Committee until his resignation from the Board of Directors on
August 9, 2004.
REPORT OF THE COMPENSATION COMMITTEE
The following report of the Compensation Committee is provided solely to the
stockholders of the Company pursuant to the requirements of Schedule 14A
promulgated under the Securities Exchange Act of 1934, and shall not be deemed
to be "filed" with the SEC for the purpose of establishing statutory liability.
Unless otherwise specifically incorporated by reference, this report shall not
be deemed to be incorporated by reference in any document previously or
subsequently filed with the SEC that incorporates by reference all or any
portion of this Proxy Statement.
EXECUTIVE COMPENSATION PHILOSOPHY
The Company's executive compensation policy is designed with the goals of
ensuring that an appropriate relationship exists between executive pay and
corporate performance, while at the same time motivating and retaining highly
qualified executive officers, and providing total compensation that is
competitive with companies in comparable industries or other companies of
comparable size, growth and performance.
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EXECUTIVE COMPENSATION COMPONENTS
The key components of the Company's compensation program are base salary,
eligibility for annual incentive bonus awards and equity participation in the
form of stock options. Executive officers are also entitled to customary
benefits generally available to all Company employees.
CHIEF EXECUTIVE OFFICER COMPENSATION
During 2004, Mr. Tsuff's, annual salary was $240,000, the same level it has been
since 2001. The base salary for Mr. Tsuff was fixed with reference to his
experience, responsibilities and performance and the competitive marketplace.
The appropriate level of bonuses and increases for the Chief Executive Officer,
if any, will be based in large part on Company performance.
INDEPENDENT DIRECTORS
MR. DONALD D. LOVELL
MR. AMIR MIRESKANDARI
MAX PRIDGEON
April 21, 2005
Dr. Avihu Ginzburg resigned from the Board on March 25, 2004 and Mr. Eyal Gibor
resigned from the Board of Directors on August 9, 2004.
BOARD RECOMMENDATION: THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
THE ELECTION OF ALL OF THE NOMINEES TO THE BOARD OF DIRECTORS.
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
On January 20, 2005, the audit committee of the board of directors (the "Audit
Committee") accepted the resignation of UHY - Mann Frankfort Stein & Lipp CPAS,
LLP ("UHY LLP") (formerly - Mann Frankfort Stein & Lipp CPAS, L.L.P.) as the
Company's independent accountants. Concurrent with UHY LLP's resignation, the
Audit Committee appointed Malone & Bailey, PC ("M&B"") as the independent
accounting firm to audit the financial statements of the Company for the year
ended December 31, 2004. The reports by UHY LLP with respect to the Company's
financial statements for each of the years ended December 31, 2002 and 2003 did
not contain any adverse opinion or disclaimer of opinion and were not qualified
or modified as to uncertainty, audit scope or accounting principles. During the
fiscal years ended December 31, 2002 and 2003 and during the subsequent interim
period, there were no disagreements between the Company and UHY LLP on any
matter of accounting principles or practices, financial statement disclosure or
auditing scope or procedure, which, if not resolved to the satisfaction of UHY
LLP, would have caused it to make reference to the subject matter thereof in
connection with its reports.
During the fiscal years ended December 31, 2002 and 2003 and through the date of
their resignation, UHY LLP did not advise the Company with respect to any
matters described in paragraphs (a)(1)(v)(A) through (D) of Item 304 of
Regulation S-K. During the fiscal years ended December 31, 2002 and 2003 and
through the date of their appointment, the Company did not consult with M&B
regarding either (i) the application of accounting principles to a specified
transaction, either completed or proposed; (ii) the type of audit opinion that
might be rendered on the Company's financial statements; (iii) any matter that
was either the subject of disagreement (as defined in Item 304(a)(1)(iv) of
Regulation S-K) or a reportable event (as defined in Item 304(a)(1)(v) of
Regulation S-K).
It is anticipated that a member of M&B will be present at the stockholder
meeting and will be available to respond to your questions.
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FEES
The following table presents fees for professional audit services rendered by
M&B and Mann for the audit of, respectively, the Company's annual financial
statements for 2004 and 2003, and fees billed for other services rendered by
each, as the case may be, during 2004 and 2002.
Type of Service/Fee Fiscal 2004 Fiscal 2003
Audit Fees (1) $107,744 $105,670
Audit Related Fees (2) $0 $0
Tax Fees (3) $45,221 $64,269
All Other Fees (4) $- $1,877
(1) Audit Fees consist of fees for professional services rendered for the audit
of our consolidated financial statements included in the Annual Report on Form
10-K and the review of the interim financial statements included in the
Quarterly Reports on Form 10-Q, and for the services that are normally provided
in connection with regulatory filings or engagements.
(2) Includes fees associated with assurance and related services that are
reasonably related to the performance of the audit or review of the Company's
financial statements. This category includes fees related to consultation
regarding generally accepted accounting principles.
(3) Tax Fees consist of fees for tax compliance, tax advice and tax planning.
(4) All Other Fees consist of fees for products and services not included in the
above categories.
The Audit Committee reviewed the non-audit services rendered for fiscal 2004 and
fiscal 2003 as set forth in the above table and concluded that such services
were compatible with maintaining the accountants' independence. The Audit
Committee's policy is to pre-approve all audit services and all non-audit
services that Company's independent auditor is permitted to perform for Company
under applicable federal securities regulations. As permitted by the applicable
regulations, the Audit Committee's policy utilizes a combination of specific
pre-approval on a case-by-case basis of individual engagements of the
independent auditor and general pre-approval of certain categories of
engagements up to predetermined dollar thresholds that are reviewed annually by
the Audit Committee. Specific pre-approval is mandatory for the annual financial
statement audit engagement, among others.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE RATIFICATION OF THE APPOINTMENT OF MALONE & BAILEY, PC AS INDEPENDENT
AUDITORS.
OTHER MATTERS
Management does not intend to present to the meeting any matters other than
matters referred to herein, and as of this date Management does not know of any
matter that will be presented by other persons named in the attached proxy to
vote thereon in accordance with their best judgment on such matters.
STOCKHOLDER PROPOSALS
Under the rules of the SEC, proposals of stockholders intended to be presented
at the 2006 Annual Meeting of Stockholders must be made in accordance with the
By-laws of the Company and received by the Company, at its principal executive
offices, for inclusion in the Company's proxy statement for that meeting, no
later than January 6, 2006. The Company's Board of Directors will review any
stockholder proposals that are filed as required and will determine whether such
proposals meet applicable criteria for inclusion in its 2006 proxy statement.
ANNUAL AND QUARTERLY REPORTS
Enclosed is the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2004. Such Annual Report on Form 10-K does not form any part of the
material for the solicitation of proxies.
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SOLICITATION OF PROXIES
The Company will pay the cost of the solicitation of proxies. Solicitation of
proxies may be made in person or by mail, telephone, or telecopy by directors,
officers, and employees of the Company. The Company may also engage the services
of others to solicit proxies in person or by telephone or telecopy. In addition,
the Company may also request banking institutions, brokerage firms, custodians,
nominees, and fiduciaries to forward solicitation material to the beneficial
owners of Common Stock held of record by such persons, and the Company will
reimburse such persons for the costs related to such services.
It is important that your shares be represented at the Annual Meeting. If you
are unable to be present in person, you are respectfully requested to sign the
enclosed proxy and return it in the enclosed stamped and addressed envelope as
promptly as possible.
BY ORDER OF THE BOARD OF DIRECTORS
/S/ HAIM TSUFF
HAIM TSUFF
CHAIRMAN OF THE BOARD
MAY 2, 2005
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ISRAMCO, INC.
11767 KATY FREEWAY
HOUSTON, TEXAS 77079
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY FOR THE ANNUAL MEETING OF STOCKHOLDERS ON JUNE 15, 2005
The undersigned hereby constitutes and appoints HAIM TSUFF AND J. MONROE CUTLER,
and each of them, with full power of substitution, attorneys and proxies to
represent and to vote all the shares of common stock, par value $.001 per share,
of ISRAMCO, INC. (the "Company"), that the undersigned would be entitled to
vote, with all powers the undersigned would possess if personally present, at
the Annual Meeting of Stockholders of the Company, to be held on June 15, 2005,
and at any adjournment thereof, on the matters set forth on the reverse side and
such other matters as may properly come before the meeting.
1. ELECTION OF DIRECTORS. Nominees: HAIM TSUFF, JACKOB MAIMON, MAX PRIDGEON,
DONALD D. LOVELL AND AMIR MIRESKANDARI (Mark only one of the following boxes.)
|_| VOTE FOR ALL NOMINEES LISTED ABOVE, EXCEPT VOTE WITHHELD AS TO THE FOLLOWING
NOMINEES (IF ANY):
|_| VOTE WITHHELD FROM ALL NOMINEES.
2. PROPOSAL TO RATIFY THE APPOINTMENT OF MALONE & BAILEY, PC AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005.
|_| FOR |_| AGAINST |_| ABSTAIN
3. In Their Discretion, Upon Any Other Business That May Properly Come Before
the Meeting or Any Adjournment Thereof.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If no direction is made, this proxy will be voted
FOR the election as directors of the nominees of the Board of Directors, FOR the
ratification of the appointment of Malone & Bailey, PC as the Company's
independent auditors for the fiscal year ending December 31, 2005 and in the
discretion of the Proxies named herein on any other proposals to properly come
before the Annual Meeting.
The undersigned acknowledges receipt of the accompanying Proxy Statement dated
May 2, 2005.
SIGNATURE OF SHAREHOLDER(S)
(When signing as attorney, trustee, executor, administrator, guardian, corporate
officer, etc., please give full title. If more than one trustee, all should
sign. Joint owners must each sign.)
Please date and sign exactly as name appears above.
I plan I do not plan
to attend the Annual Meeting.
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