<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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 (S) 240.14a-11(c) or (S) 240.14a-12
Patina Oil & Gas Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Patina Oil & Gas Corporation
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the 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 previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
PATINA OIL & GAS CORPORATION
Notice of 1999 Annual Meeting of Stockholders
and Proxy Statement
April 23, 1999
IMPORTANT: WHETHER OR NOT YOU ARE ABLE TO ATTEND THE MEETING IN PERSON, THE
ACCOMPANYING FORM OF PROXY SHOULD BE COMPLETED, SIGNED AND RETURNED AT YOUR
EARLIEST CONVENIENCE IN THE ENVELOPE PROVIDED
<PAGE>
PATINA OIL & GAS CORPORATION
April 23, 1999
Dear Stockholder:
On behalf of the Board of Directors, it is my pleasure to invite you to attend
our 1999 Annual Meeting of Stockholders. It will be held in Denver, Colorado at
the corporate offices of the Company at 1625 Broadway, Suite 2000 on Thursday,
May 27, 1999 at 9:00 a.m. Mountain Daylight Time.
The matters we will address at the Annual Meeting are described in the
enclosed Notice of Annual Meeting and Proxy Statement. Subsequent to the Annual
Meeting, we plan to review the business and affairs of the Company and our plans
for the coming year. Stockholders may submit questions. The Annual Report for
the year ended December 31, 1998 is enclosed.
Your representation and vote are important. We urge you to vote your shares
whether or not you plan to attend the Annual Meeting. Please consider,
complete, date, sign and return the enclosed proxy card. You may revoke your
proxy prior to or at the meeting and still vote in person if you so desire.
Sincerely yours,
Thomas J. Edelman
Chairman
1625 BROADWAY, SUITE 2000, DENVER, COLORADO 80202 (303) 389-3600
<PAGE>
PATINA OIL & GAS CORPORATION
1625 Broadway, Suite 2000
Denver, Colarado 80202
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TIME AND PLACE:
The 1999 Annual Meeting of Stockholders (the "Annual Meeting") of
Patina Oil & Gas Corporation (the "Company" or "Patina") will be held at the
corporate offices of the Company, 1625 Broadway, 20th floor, Denver, Colorado,
on Thursday, May 27, 1999, at 9:00 a.m. Mountain Daylight Time.
ITEMS OF BUSINESS:
1. To elect a board of eight directors, each for a one year term.
2. To consider and adopt an amendment to the Company's 1996 Employee
Stock Option Plan, which amendment includes an increase in the number
of options to purchase shares of the Company's common stock, par value
$.01 per share (the "Common Stock").
3. To consider and adopt an amendment to the Company's 1998 Stock
Purchase Plan to include an annual renewal of Common Stock reserved
for possible purchase under the plan.
4. To transact any other business which properly may be brought before
the Annual Meeting or any adjournment(s) thereof.
RECORD DATE AND STOCKHOLDERS ENTITLED TO VOTE:
Subject to the provisions of the By-laws of the Company, registered
stockholders as of April 15, 1999 (i) who are individuals may attend and vote at
the Annual Meeting in person or by proxy or (ii) that are corporations may
attend and vote at the Annual Meeting by proxy or by a duly authorized
representative. The list of stockholders entitled to vote at the Annual Meeting
will be open to the examination by any stockholder during ordinary business
hours for a period of ten days prior to the Annual Meeting at the Company's
corporate offices. Such list will also be produced at the Annual Meeting and be
kept open during the Annual Meeting for the inspection by any stockholder who
may be present.
<PAGE>
Patina Oil & Gas Corporation
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
- --------------------------------------------------------------------------------
MEETING ADMISSION:
If your Patina stock is held in a brokerage account or by a bank or other
nominee, you are considered the beneficial owner of shares held in street name
and these proxy materials are being forwarded to you by your broker or nominee.
Your name does not appear on the list of stockholders, and in order to be
admitted to the meeting, you must bring a letter or account statement showing
that you were the beneficial owner of Patina stock on the record date.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE PROVIDED. ANY PERSON
GIVING A PROXY HAS THE POWER TO REVOKE IT AT ANY TIME PRIOR TO ITS EXERCISE AND,
IF PRESENT AT THE ANNUAL MEETING, MAY WITHDRAW IT AND VOTE IN PERSON. ONLY
STOCKHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON APRIL 15, 1999 WILL BE
ENTITLED TO VOTE AT THE ANNUAL MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
David J. Kornder
Secretary
April 23, 1999
Denver, Colorado
2
<PAGE>
PATINA OIL & GAS CORPORATION
1625 BROADWAY
SUITE 2000
DENVER, COLORADO 80202
----------------
PROXY STATEMENT
for
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 27, 1999
----------------
INTRODUCTION
The Board of Directors of Patina Oil & Gas Corporation (the "Company") is
soliciting proxies to be voted at the 1999 Annual Meeting of Stockholders (the
"Annual Meeting") to be held at the Company's corporate offices in Denver,
Colorado on May 27, 1999 at 9:00 a.m. Mountain Daylight Time, and at any
adjournment thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders. This Proxy Statement and the enclosed proxy are
first being mailed to stockholders on or about April 23, 1999.
VOTING AND REVOCABILITY OF PROXIES
The matters covered by this proxy solicitation are (i) the election of
eight directors, each for a one year term, (ii) the proposed amendment to the
Company's 1996 Employee Stock Option Plan increasing the number of options to
purchase shares of the Company's Common Stock, (iii) the proposed amendment to
the Company's Stock Purchase Plan to allow for an annual renewal of the shares
of Common Stock reserved for possible purchase under the plan, and (iv) such
other matters, if any, as may be properly brought before the Annual Meeting.
The proxy permits stockholders to withhold voting for any or all nominees for
election as directors and to vote against or abstain from voting on the other
matters if the stockholder so chooses. At the close of business on April 15,
1999, the record date for determining stockholders entitled to notice of and to
vote at the Annual Meeting, the Company had outstanding 16,217,016 shares of
Common Stock. Each such share of Common Stock is entitled to one vote at the
Annual Meeting. In addition, the Company had outstanding 1,735,031 shares of
8.50% Convertible Preferred Stock (the "8.50% Preferred Stock"). The 8.50%
Preferred Stock entitles the holder to 2.6316 votes for each share held.
Accordingly, the holders of the 8.50% Preferred Stock are entitled to a total of
4,565,907 votes on all matters to be considered at the Annual Meeting. A
majority of the 20,782,923 votes outstanding is necessary for a quorum at the
Annual Meeting.
Any proxy given may be revoked either by a written notice duly signed and
delivered to the Secretary of the Company prior to the exercise of the proxy, by
execution of a subsequent proxy or by voting in person at the Annual Meeting.
Where a stockholder's proxy specifies a choice with respect to a voting matter,
the shares will be voted accordingly. If no such specification is made, the
shares will be voted for the nominees for director and proposals identified
herein.
EXPENSES OF SOLICITATION
The expenses of preparing, printing and mailing this proxy statement and
the proxies will be borne by the Company. In addition, the Company may
reimburse brokerage firms and other persons representing beneficial owners of
shares for their expenses in forwarding solicitation material to such beneficial
owners. Proxies may also be solicited by certain of the Company's directors,
officers and employees, without additional compensation, personally or by
telephone. The Company has retained ChaseMellon Shareholder Services for a fee
of approximately $7,500 to solicit proxies on behalf of the Company.
<PAGE>
Patina Oil & Gas Corporation
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1999
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WHERE YOU CAN FIND MORE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "SEC"). Reports, proxy statements and other information filed
by the Company can be inspected and copied at the public reference facilities
maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the SEC's Regional offices at Seven World Trade Center, Suite 1300, New York,
New York 10048 and CitiCorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material can be obtained by mail
from the Public Reference Section of the SEC at 450 West Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. In addition, reports, proxy
statements and other information concerning the Company may be inspected at the
offices of the New York Stock Exchange, 20 Broad Street, New York, New York
10005. Certain of such reports, proxy statements and other information filed by
the Company are also available on the Internet at the SEC's World Wide Web site
at http://www.sec.gov.
PROPOSAL I -- ELECTION OF DIRECTORS
The Board of Directors has, by resolution, fixed the number of directors at
eight. Each nominee is presently serving as a director and has served as a
director of the Company or its predecessor for the period indicated in his or
her biography. The term of each director presently serving will terminate at
the Annual Meeting when the respective successor of each is elected and
qualified. Each nominee has consented to being named in this Proxy Statement
and to serve if elected. If any nominee should for any reason become
unavailable for election, proxies may be voted with discretionary authority by
the persons named therein for any substitute designated by the Board of
Directors.
If a quorum is present, the affirmative vote of a plurality of the votes
cast at the Annual Meeting by stockholders present or represented by proxy is
required for the election of directors. A stockholder's abstention from voting
will be counted in determining whether such a plurality vote was cast only if
such stockholder is represented in person or by proxy at the Annual Meeting.
Abstentions by or on behalf of stockholders not so represented and broker non-
votes will be disregarded.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR EACH OF
THE NOMINEES LISTED BELOW.
Nominees for Election at Annual Meeting:
CHRISTOPHER C. BEHRENS (38) has served as a Director of the Company since
February 1999. Mr. Behrens was made General Partner at Chase Capital Partners
during 1998. Chase Capital Partners is the private equity investment affiliate
of The Chase Manhattan Bank and is a General Partner of Chase Venture Capital
Associates, L.P. Before assuming such position, Mr. Behrens was a Vice
President in The Chase Manhattan Corporation's Merchant Banking Group. He
received his Bachelor of Arts from the University of California at Berkeley and
his M.B.A. from Columbia University. Mr. Behrens also serves as a Director of
Portola Packaging and The Pantry, Inc., as well as other private companies.
2
<PAGE>
Patina Oil & Gas Corporation
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1999
- --------------------------------------------------------------------------------
ROBERT J. CLARK (54) has served as a Director of the Company since May
1996. Mr. Clark is the President of Bear Paw Energy Inc., a wholly owned
subsidiary of TransMontaigne, Inc. Mr. Clark formed Bear Paw Energy Inc. in
1995 and joined TransMontaigne in 1996 when TransMontaigne acquired a majority
interest in Bear Paw Energy, Inc. From 1988 to 1995 he was President of SOCO
Gas Systems, Inc. and Vice President - Gas Management for Snyder Oil Corporation
("SOCO"). Mr. Clark was Vice President Gas Gathering, Processing and Marketing
of Ladd Petroleum Corporation, an affiliate of General Electric from 1985 to
1988. Prior to 1985, Mr. Clark held various management positions with NICOR,
Inc. and its affiliate NICOR Exploration, Northern Illinois Gas and Reliance
Pipeline Company. Mr. Clark received his Bachelor of Science Degree from Bradley
University and his M.B.A. from Northern Illinois University. During 1998, Mr.
Clark served on the Audit and Governance and Compensation Committees.
BRIAN J. CREE (35) has served as Executive Vice President, Chief Operating
Officer and Director of the Company since May 1996. Prior to the acquisition of
Gerrity Oil & Gas Corporation by the Company in May 1996 (the "Gerrity
Acquisition"), he served as Chief Operating Officer and a Director of Gerrity
since 1993. From 1992 to 1993, Mr. Cree served as Senior Vice President -
Operations and Chief Accounting Officer of Gerrity. Mr. Cree served as Vice
President of Gerrity and its predecessor since 1990 and served in various
accounting capacities with that company from 1987 to 1990. Prior to that, Mr.
Cree was employed as an accountant with the public accounting firm of Deloitte,
Haskins & Sells. Mr. Cree received his Bachelor of Arts Degree in Accounting
from the University of Northern Iowa. During 1998, Mr. Cree served on the
Dividend Administration Committee.
JAY W. DECKER (47) has served as President since March 1998 and as a
Director of the Company since May 1996. Mr. Decker had been the Executive Vice
President and a Director of Hugoton Energy Corporation, a public independent oil
company since 1995. From 1989 until its merger into Hugoton Energy, Mr. Decker
was the President and Chief Executive Officer of Consolidated Oil & Gas, Inc., a
private independent oil company based in Denver, Colorado and President of a
predecessor company. Prior to 1989, Mr. Decker served as Vice President -
Operations for General Atlantic Energy Company and in various capacities for
Peppermill Oil Company, Wainoco Oil & Gas and Shell Oil Company. Mr. Decker
received his Bachelor of Science Degree in Petroleum Engineering from the
University of Wyoming. Mr. Decker also serves as a Director of FX Energy.
THOMAS R. DENISON (38) has served as a Director of the Company since
January 1998. Mr. Denison is a Managing Director and the General Counsel of
First Reserve Corporation. He joined the corporation in January 1998 and opened
its Denver office. Prior to joining First Reserve, he was a Partner in the
international law firm of Gibson, Dunn & Crutcher LLP, a firm which he joined in
1986 as an Associate. Mr. Denison received his Bachelor of Science degree in
Business Administration from the University of Denver and his Juris Doctor from
the University of Virginia. Mr. Denison also serves as a Director of
TransMontaigne, Inc. During 1998 Mr. Denison served on the Executive and
Compensation Committees and was Chairman of the Audit and Governance Committee.
THOMAS J. EDELMAN (48) has served as Chairman of the Board and Chief
Executive Officer of the Company since its formation and was the Company's
President until March 1998. He co-founded SOCO and was its President from 1981
through February 1997. From 1980 to 1981, he was with The First Boston
Corporation and from 1975 through 1980, with Lehman Brothers Kuhn Loeb
Incorporated. Mr. Edelman received his Bachelor of Arts Degree from Princeton
University and his Masters Degree in Finance from Harvard University's Graduate
School of Business Administration. Mr. Edelman serves as Chairman of Range
Resources Corporation, and is a Director of Petroleum Heat & Power Co. Inc.,
Star Gas Corporation and Paradise Music & Entertainment, Inc. Mr. Edelman is
also a Trustee of The Hotchkiss School. During 1998, Mr. Edelman served as
Chairman of the Executive and Dividend Administration Committees.
3
<PAGE>
Patina Oil & Gas Corporation
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1999
- --------------------------------------------------------------------------------
ELIZABETH K. LANIER (47) has served as a Director of the Company since
January 1998. Mrs. Lanier has served as Vice President and General Counsel of
General Electric Power Systems since August 1998. From 1996 to 1998, Mrs.
Lanier served as Vice President and Chief of Staff of Cinergy Corp. Mrs. Lanier
received her Bachelor of Arts Degree with honors from Smith College in 1973 and
her law degree from Columbia Law School in 1977 where she was a Harlan Fiske
Stone Scholar. Mrs. Lanier was awarded an Honorary Doctorate of Technical
Letters by Cincinnati Technical College in 1991 and an Honorary Doctorate of
Letters in 1995 from the College of Mt. St. Joseph. From 1982 to 1996 she was a
Partner in the Corporate and Litigation Departments of Frost & Jacobs, a law
firm in Cincinnati, Ohio. From 1977 to 1982 she was with the law firm of Davis
Polk & Wardwell in New York City. She is immediate past Chair of the Ohio Board
of Regents. During 1998, Mrs. Lanier served on the Audit and Governance and
Compensation Committees.
ALEXANDER P. LYNCH (47) has served as a Director of the Company since May
1996. Mr. Lynch is currently a General Partner of The Beacon Group, a private
investment and financial advisory firm. From 1995 to 1996, Mr. Lynch had been
Co-President and Co-Chief Executive Officer of The Bridgeford Group, a financial
advisory firm. From 1991 to 1994, he served as Senior Managing Director of
Bridgeford. From 1985 until 1991, Mr. Lynch was a Managing Director of Lehman
Brothers, a division of Shearson Lehman Brothers Inc. Mr. Lynch received his
Bachelor of Arts Degree from the University of Pennsylvania and his M.B.A. from
the Wharton School of Business at the University of Pennsylvania. Mr. Lynch also
serves as a Director of Canadian National Railway Company. During 1998, Mr.
Lynch served on the Executive and Audit and Governance Committees and was
Chairman of the Compensation Committee.
BOARD AND COMMITTEE MEETINGS; COMMITTEES OF THE BOARD
The Board held four meetings in 1998. All directors attended at least 75%
of the aggregate number of meetings of the Board of Directors and committees on
which they served except for Ms. Elizabeth Lanier.
The Board has established four committees to assist in the discharge of its
responsibilities. The committee membership of each Director is included with
his or her biography.
EXECUTIVE COMMITTEE. The Executive Committee may exercise many of the
powers of the Board in the management of the business and affairs of the Company
in the intervals between meetings of the Board. Although the Committee has very
broad powers, in practice it meets only when it would be impractical to call a
meeting of the Board. The Executive Committee did not meet during 1998.
AUDIT AND GOVERNANCE COMMITTEE. The Audit and Governance Committee reviews
the professional services provided by the Company's independent public
accountants and the independence of such accountants from management of the
Company. This Committee also reviews the scope of the audit coverage, the
annual financial statements of the Company and such other matters with respect
to the accounting, auditing and financial reporting practices and procedures of
the Company as it may find appropriate or as have been brought to its attention.
The Audit and Governance Committee met twice during 1998.
COMPENSATION COMMITTEE. The Compensation Committee reviews and approves
executive salaries and administers bonus, incentive compensation and stock
option plans of the Company. The Compensation Committee is also responsible for
the administration of the 1998 Stock Purchase Plan. This Committee advises and
consults with management regarding other benefits and significant compensation
policies and practices of the Company. This Committee also considers
nominations of candidates for corporate officer positions. The Compensation
Committee met twice during 1998.
4
<PAGE>
Patina Oil & Gas Corporation
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1999
- --------------------------------------------------------------------------------
DIVIDEND ADMINISTRATION COMMITTEE. The Dividend Administration Committee
authorizes, declares and sets the record date for the dividends that are paid on
the Company's Common Stock, its 7.125% Convertible Preferred Stock and the 8.50%
Preferred Stock. The Dividend Administration Committee will declare the
dividends quarterly unless instructed otherwise by the Board. The Dividend
Administration Committee met eight times in 1998.
DIRECTOR COMPENSATION
During 1998, non-employee directors of the Company received an annual
retainer of $20,000, payable quarterly in shares of the Company's Common Stock
having a market value of $2,500 and cash payments of $2,500. In addition, non-
employee directors receive $1,000 for attendance at each meeting of the Board of
Directors, and $250 for attendance at each meeting of a committee of the Board
of Directors that cannot be held in conjunction with a meeting of the Board, in
each case excluding telephone meetings. Directors are also reimbursed for
expenses incurred in attending Board of Directors and committee meetings,
including those for travel, food and lodging. Directors and members of
committees of the Board of Directors who are employees of the Company or its
affiliates are not compensated for their Board of Directors and committee
activities.
In 1996, the Company adopted a stock option plan for non-employee directors
(the "Directors Plan"). The Directors' Plan provides that the Company will
automatically grant to each non-employee director, on the date of his
appointment, election, reappointment or re-election as a member of the Board of
Directors, a stock option for 5,000 shares of Common Stock. The exercise price
for all director stock options is the fair market value on the date of grant.
The duration of each option is five years from the date of award, and each
option vests as to 30% of the shares covered after one year, an additional 30%
of the shares after two years, and all remaining shares three years after the
date of grant.
5
<PAGE>
Patina Oil & Gas Corporation
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1999
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BENEFICIAL OWNERSHIP OF SECURITIES
The following table provides information as to the beneficial ownership of
Common Stock of the Company as of April 15, 1999 by each person who, to the
knowledge of the Company, beneficially owned 5% or more of the Common Stock of
the Company, each director of the Company, the five most highly compensated
executive officers, including the Chief Executive Officer ("Named Officers"),
and by all executive officers and directors of the Company as a group. No
directors or executive officers of the Company beneficially own any equity
securities of the Company other than Common Stock and warrants. The business
address of each individual listed below is: c/o Patina Oil & Gas Corporation,
1625 Broadway, Suite 2000, Denver, Colorado 80202.
PATINA COMMON STOCK
---------------------------
NUMBER OF PERCENT OF
SHARES CLASS
OWNED(a)(b) OUTSTANDING
------------- ------------
Thomas J. Edelman (c) 1,272,439 6.0%
Jay W. Decker 311,308 1.5
Brian J. Cree 224,588 1.1
David J. Kornder 102,056 *
Christopher C. Behrens (d) 1,780,956 8.6
Robert J. Clark 44,499 *
Thomas R. Denison (e) 2,577,480 12.4
Elizabeth K. Lanier 6,238 *
Alexander P. Lynch 14,499 *
All 13 executive officers
and directors as a group 6,511,217 30.3
Chase Venture Capital Associates, L.P. (d) 1,780,956 8.6
380 Madison Avenue, 12/th/ Floor
New York, New York 10017
First Reserve Fund VII, Limited Partnership (e) 2,574,480 12.5
475 Steamboat Road
Greenwich, Connecticut 06830
Glickenhaus & Co. (f) 1,110,900 5.4
Six East 43/rd/ Street
New York, New York 10017-4641
* Less than 1%
_______________________
6
<PAGE>
Patina Oil & Gas Corporation
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1999
- --------------------------------------------------------------------------------
(a) The number of shares of Common Stock of the Company subject to stock
options exercisable within 60 days after April 15, 1999, are as follows:
Mr. Edelman, 412,400 shares; Mr. Decker, 36,800 shares; Mr. Cree, 122,810
shares; Mr. Kornder, 40,340 shares; Mr. Behrens, 0 shares; Mr. Clark, 9,500
shares; Mr. Denison, 3,000 shares; Mrs. Lanier, 3,000 shares; Mr. Lynch,
9,500 shares; and all 13 executive officers and directors as a group,
711,050 shares.
(b) The number of shares of Common Stock of the Company subject to common
stock warrants exercisable at $12.50, are as follows: Mr. Cree 5,092
shares; Mr. Kornder 109 shares; and all 13 executive officers and
directors as a group 5,527 shares.
(c) The number of shares of Common Stock owned by Mr. Edelman includes 8,000
shares owned by Mr. Edelman's spouse, to which Mr. Edelman disclaims
beneficial ownership.
(d) Mr. Behrens may be deemed to share beneficial ownership of the 645,267
shares of the 8.50% Preferred Stock (convertible into 1,698,085 common
shares) and 82,143 shares of Common Stock owned by Chase Venture Capital
Associates, L.P. through his role with Chase Venture Capital Associates,
L.P. Mr. Behrens disclaims beneficial ownership of such shares of the 8.50%
Preferred Stock and Common Stock.
(e) Mr. Denison may be deemed to share beneficial ownership of the 932,053
shares of the 8.50% Preferred Stock (convertible into 2,452,791 common
shares) and 118,651 shares of Common Stock owned by First Reserve Fund VII,
Limited Partnership through its ownership of common stock of First Reserve
Corporation, which is the sole general partner of First Reserve Fund VII,
Limited Partnership. Mr. Denison disclaims beneficial ownership of such
shares of the 8.50% Preferred Stock and Common Stock.
(f) The number of shares reported is based on information set forth in Schedule
13G dated February 1, 1999 filed by Glickenhaus & Co.
7
<PAGE>
Patina Oil & Gas Corporation
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1999
- --------------------------------------------------------------------------------
Executive Compensation
Shown below is information concerning the annual and long-term compensation
for services in all capacities to the Company for the fiscal year ended December
31, 1998 of the Named Officers.
SUMMARY COMPENSATION TABLE (a)
- ------------------------------
<TABLE>
<CAPTION>
ANNUAL COMPENSATION (b) LONG TERM COMPENSATION
--------------------------- -----------------------------
ALL
RESTRICTED SECURITIES OTHER
NAME AND STOCK UNDERLYING COMPENSA-
PRINCIPAL POSITION YEAR SALARY ($) $BONUS ($)(c) OTHER(d) AWARDS ($)(e) OPTIONS (#)(f) TION ($)(g)
- --------------------------- ----- ---------- --------------- ---------- ------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas J. Edelman (h) 1998 $358,333 $ - $76,436 $ - 108,000 $48,413
Chairman and Chief 1997 303,535 350,000 - 2,652,188 300,000 41,594
Executive Officer 1996 166,667 75,000 - - 100,000 27,974
Jay W. Decker (i) 1998 190,000 75,000 27,626 687,500 96,000 27,580
President
Brian J. Cree 1998 207,500 47,000 14,846 - 62,700 33,324
Executive Vice President 1997 200,000 95,000 - 144,141 40,000 36,594
1996 133,333 325,000 - - 80,000 23,357
David J. Kornder 1998 130,417 30,000 12,663 - 34,800 22,663
Vice President, 1997 121,250 50,000 - 115,313 11,500 23,797
Chief Financial Officer 1996 76,667 10,000 - - 23,000 11,912
Keith M. Crouch (j) 1998 151,667 - 6,023 - 22,800 26,913
Senior Vice President, 1997 150,000 30,000 - 115,313 15,000 30,324
General Counsel 1996 100,000 5,000 - - 30,000 16,624
________________________________
</TABLE>
(a) Excludes the cost to the Company of other compensation that, with respect
to any Named Officer, does not exceed the lesser of $15,000 or 10% of the
Named Officer's salary and bonus.
(b) The salary amounts in the table are for the periods January 1, 1998 through
December 31, 1998, January 1, 1997 through December 31, 1997 and May 2,
1996 through December 31, 1996. Prior to May 2, 1996 (the effective date
of the Gerrity Acquisition), the Company had no employees.
(c) Bonuses are paid in March of each year based on performance during the
preceding year. Bonus amounts are accrued in the year preceding the year
in which the bonus is paid. Bonus amounts for 1998 for Messrs. Decker,
Cree and Kornder were paid in shares of common stock contributed to the
Company's deferred compensation plan on their behalf.
(d) Other annual compensation relates to the purchase of the Company's Common
Stock at a discount to market under the 1998 Stock Purchase Plan.
Participants purchased shares with cash or a portion of their 1997 bonus
under the plan during 1998 as follows: Mr. Edelman, 108,076 shares; Mr.
Decker, 40,000 shares; Mr. Cree, 27,832 shares; Mr. Kornder, 19,220 shares;
and Mr. Crouch, 10,561 shares.
8
<PAGE>
Patina Oil & Gas Corporation
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1999
- --------------------------------------------------------------------------------
(e) The 1998 restricted stock award of 100,000 shares, valued at the grant date
price of $6.875 per share, totaled $687,500. This award, valued at the
year-end per share price of $2.9375, totaled $293,750. The award was
granted to Mr. Decker in conjunction with his appointment as President and
generally vests at 33% per year in March 1999, 2000 and 2001. The 1997
restricted stock award, valued at the 1997 year-end per share price of
$7.6875, was granted to certain officers and key managers of the Company in
conjunction with the October 1997 transactions that resulted in the
elimination of SOCO's ownership in the Company. These shares generally
vest at 25% per year on January 1, 1998, 1999, 2000 and 2001.
(f) Stock options were granted in May 1996, February 1997, October 1997,
February 1998, March 1998 and May 1998. In future years, stock options will
generally be granted in February or March of each year based in part on
performance during the preceding year.
(g) Includes amounts accrued or contributed for the year for the Named Officers
under the Company's Profit Sharing and Savings Plan and as matching
contributions under the Company's Deferred Compensation Plan for Select
Employees as follows:
<TABLE>
<CAPTION>
PROFIT DEFERRED
SHARING PLAN COMPENSATION PLAN
------------ -----------------
<S> <C> <C> <C>
Thomas J. Edelman 1998 $12,580 $35,833
1997 16,594 25,000
1996 15,474 12,500
Jay W. Decker 1998 8,580 19,000
Brian J. Cree 1998 12,580 20,750
1997 16,594 20,000
1996 13,357 10,000
David J. Kornder 1998 9,621 13,042
1997 11,672 12,125
1996 6,162 5,750
Keith M. Crouch 1998 11,746 15,167
1997 15,324 15,000
1996 9,124 7,500
</TABLE>
(h) Mr. Edelman waived his 1998 bonus and has voluntarily reduced his salary
for the final nine months of 1999 to an annual rate of $120,000. In
consideration of these and other compensation arrangements, and to further
align his interests with those of the stockholders, he was awarded 100,000
shares of restricted Common Stock in April 1999 and was simultaneously
granted options to purchase 300,000 common shares. The options, granted
subject to stockholder approval of Proposal II, are exercisable at a price
of $3.9375 per share, the fair market value of the Common Stock on the date
of grant, and will vest over the next three years.
(i) Mr. Decker joined the Company as President in March 1998. His annual
salary is $240,000.
(j) Mr. Crouch served as the Company's Senior Vice President and General
Counsel during 1998 and left the Company in February 1999.
9
<PAGE>
Patina Oil & Gas Corporation
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1999
- --------------------------------------------------------------------------------
STOCK OPTION GRANTS AND EXERCISES
In 1996, the Company adopted the Employee Stock Option Plan which is
administered by the Compensation Committee and provides for the granting of
options to purchase shares of Common Stock to key employees of the Company and
certain other persons who are not employees of the Company, but who from time to
time provide substantial advice or other assistance or services to the Company.
The plan permits options to acquire the lesser of three million shares of Common
Stock or 10% of outstanding Common Stock at the time of the grant. The Company
is proposing to amend the 1996 Employee Stock Option Plan to increase the number
of options to purchase shares of Common Stock through Proposal II. During 1996,
options to purchase 512,000 shares of Common Stock were granted to 50 employees
at an average exercise price of $7.75 per share. During 1997, options to
purchase 271,000 shares of Common Stock were granted to 56 employees at an
average exercise price of $9.25 per share. During 1998, options to purchase
614,000 shares of Common Stock were granted to 65 employees at an average
exercise price of $7.03 per share. The exercise price of all such options was
equal to the fair market value of the Common Stock on the date of grant. All
such options granted during 1996, 1997 and 1998 were for a term of five years,
with 30% of the options becoming exercisable after one year, an additional 30%
becoming exercisable after two years and the remaining options becoming
exercisable after three years. In addition to the above, and in accordance with
his employment agreement, Mr. Edelman was granted a five year fully vested
option in October 1997 to purchase 250,000 shares of Common Stock at $9.875 per
share.
STOCK OPTION GRANTS
The following table sets forth information for the fiscal year ended December
31, 1998 with respect to the grant of stock options to the Named Officers. The
stock options were granted at the market price on the date of grant. No stock
appreciation rights have been granted by the Company.
<TABLE>
<CAPTION>
STOCK OPTION GRANTS
-----------------------------------------------------------------------------------
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE VALUE
SECURITIES OPTIONS AT ASSUMED ANNUAL RATES OF
UNDERLYING GRANTED TO EXERCISE STOCK PRICE APPRECIATION
OPTIONS GRANTED EMPLOYEES IN PRICE EXPIRATION FOR OPTION TERMS (a)
NAME # FISCAL YEAR $/SHARE DATE 5% 10%
- ------------------- --------------- ------------ -------- ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Thomas J. Edelman 108,000 17.6% $7.0625 2/19/03 $210,734 $465,667
Jay W. Decker 96,000 15.6 6.8750 3/13/03 182,346 402,937
Brian J. Cree 62,700 10.2 7.0625 2/19/03 122,343 270,345
David J. Kornder 34,800 5.7 7.0625 2/19/03 67,903 150,048
Keith M. Crouch 22,800 3.7 7.0625 2/19/03 44,488 98,307
</TABLE>
___________________
(a) The assumed annual rates of stock price appreciation used in showing the
potential realizable value of stock option grants are prescribed by rules
of the Securities and Exchange Commission. The actual realized value of
the options may be significantly greater or less than the amounts shown.
For options granted during 1998 at an exercise price of $7.06, the values
shown for 5% and 10% appreciation equate to a common stock price of $9.01
and $11.37, respectively, at the expiration date of the options. For
options granted during 1998 at an exercise price of $6.88, the values shown
for 5% and 10% appreciation equate to a common stock price of $8.77 and
$11.07 respectively, at the expiration date of the options.
10
<PAGE>
Patina Oil & Gas Corporation
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1999
- --------------------------------------------------------------------------------
YEAR-END OPTION VALUES TABLE
The following table sets forth information at December 31, 1998 with
respect to exercisable and non-exercisable options held by the Named Officers.
The table also includes the value of "in-the-money" options, which represents
the spread between the exercise price of the existing stock options and the
year-end Common Stock price of $2.9375 per share.
<TABLE>
<CAPTION>
AGGREGATE OPTION EXERCISES IN 1998 AND YEAR-END VALUES
-----------------------------------------------------------------------------------
VALUE OF
NUMBER OF UNEXERCISED UNEXERCISED IN-THE-MONEY
OPTIONS AT YEAR END 1998 OPTIONS AT YEAR END 1998 (a)
SHARES ACQUIRED VALUE -------------------------- ----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------- --------------- -------- ----------- ------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Thomas J. Edelman - - 325,000 183,000 - -
Jay W. Decker - - 4,500 101,500 - -
Brian J. Cree - - 60,000 122,700 - -
David J. Kornder - - 17,250 52,050 - -
Keith M. Crouch - - 22,500 45,300 - -
</TABLE>
________________
(a) As of December 31, 1998, all outstanding stock options were priced at a
level above the share price on December 31, 1998 of $2.9375 per Common
share. As such, there is no value attributed to these options. Actual
gains, if any, on exercise will depend on the value of the Common Stock on
the date of exercise.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
The Compensation Committee of the Board of Directors, which is comprised of
non-employee directors of the Company, establishes the general compensation
policies of the Company, establishes the compensation plans and compensation
levels for officers and certain other key employees and administers the
Company's stock option plan, deferred compensation plan and stock purchase plan.
The Committee also establishes salary and bonus ranges for officers and certain
key employees, and generally approves specific amounts within those ranges on
the recommendation of management.
In establishing compensation policies, the Committee believes that the cash
compensation of executive officers, as well as other key employees, should be
competitive with other similar size oil and gas companies or other business
opportunities available to such executive officers while, within the Company,
being fair and discriminating on the basis of personal performance. Annual
awards of stock options and stock grants are intended both to retain executives
and to motivate them to accomplish long-term growth objectives and improve long-
term stock market performance.
In establishing the base salary and bonus ranges for its executive
officers, the Company targets the median cash compensation of competitor's
executives having similar responsibilities. Adjustments, in large part
subjective, are made to account for cases in which the responsibilities of
Company executives differ from the responsibilities of executives from the
companies surveyed. Base salaries have historically been set below the median,
as bonuses, which are primarily determined by individual performance together
with the Company's overall operational and financial performance, will typically
constitute a larger portion of cash compensation. The Committee is advised as
to compensation levels of
11
<PAGE>
Patina Oil & Gas Corporation
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1999
- --------------------------------------------------------------------------------
competitors based on detailed data believed to be most
comparable to the Company as well as the results of more general surveys.
Guided by this information, compensation ranges are established, and individual
executive compensation within these ranges is determined based upon the
individual's responsibilities and performance.
Mr. Edelman's has an employment agreement with the Company that provides
for a yearly target bonus equal to his base salary, which was increased by 2.9%
to $360,000 effective March 1, 1998. Mr. Edelman's bonus is based primarily on
Company performance. The Committee has not established any particular formula
or identified particular factors as more important than others in determining
Company performance. The Committee considers various factors, including growth
in reserves, net income and cash flow, as well as performance of the Company's
Common Stock. The Committee also considers other matters, such as the extent to
which these factors were influenced by management and its ability to position
the Company for future growth. During 1998, the Committee specifically
considered the excellent operational performance and optimization of production
from the Company's core assets. The capital development program results
exceeded expectations and contributed to an increase in proved reserves and the
elimination of the long-term production decline on the Company's properties
during the second half of 1998. However, despite the positive operational
results, the Company's financial performance and stock price suffered due to the
sharp decline in oil and gas prices during the year. As a result, the Committee
and Mr. Edelman agreed to waive any 1998 bonus and Mr. Edelman voluntarily
agreed to reduce his salary for the final nine months of 1999 to an annual rate
of $120,000. In consideration of these and other compensation arrangements, and
to further align his interests with those of the stockholders, Mr. Edelman was
awarded 100,000 shares of restricted Common Stock in April 1999 and was
simultaneously granted options to purchase 300,000 common shares. The options,
granted subject to stockholder approval of Proposal II, are exercisable at a
price of $3.9375 per share, the fair market value of the Common Stock on the
date of grant, and will vest over the next three years. Bonuses for other
officers and key managers are influenced by the Company's overall performance,
but are determined primarily on senior management's assessment of individual
performance and pre-established goals.
Stock options are granted annually to Mr. Edelman and other officers and
key employees to retain and motivate the grantees to improve long-term stock
market performance. Options are granted only at the prevailing market price and
will have value only if the price of the Company's Common Stock increases.
Generally, options have a term of five years and vest 30% after one year, an
additional 30% after two years and are fully vested after three years; an
employee must be employed by the Company at the time of vesting in order to
exercise the options.
The Committee generally determines the number of options granted to Mr.
Edelman and to other executives and key employees based on a formula under which
the number of options granted is equal to a percentage, which varies with the
degree to which an individual's responsibilities might affect the long-term
price of the Company's Common Stock, of the individual's base salary. The
Committee occasionally grants additional options when the Committee believes
additional incentives are appropriate. During 1998, the Committee awarded
25,000 additional incentive options to certain officers and 15,000 incentive
options to other key employees.
The Committee maintains a Deferred Compensation Plan for select employees
as a means to provide additional incentive for key employees to remain in the
employ of the Company. Under the plan, key employees selected by the Committee
are permitted to defer a portion of their compensation for periods determined by
them or until their employment by the Company ceases. The Committee also
determines annually the matching contribution to be made by the Company and may,
in addition, authorize additional Company contributions to be made on behalf of
designated individuals. Company matching contributions vest at 33% per year
over three years, and any additional Company contributions vest over the period
determined by the Committee. The Committee designated 13 key employees in 1998
as eligible to participate and determined that Company contributions would equal
one hundred percent of each participant's contribution up to a maximum Company
contribution of ten percent of any participant's salary.
12
<PAGE>
Patina Oil & Gas Corporation
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1999
- --------------------------------------------------------------------------------
The Committee also maintains a Stock Purchase Plan as a means to provide
additional incentive and to further promote the alignment of interests of our
officers and stockholders. The plan, which was approved by the stockholders in
1998, allows certain officers, directors and managers, to purchase restricted
common shares at a discount from the closing price of the stock on the trading
day prior to the purchase. During 1998, the Compensation Committee approved
291,250 common shares for possible purchase at 75% of the closing price during
the current plan year. As of April 15, 1999 participants have purchased 257,632
shares of common stock, including 76,712 purchased with participant's 1997
bonuses, at prices ranging from $3.69 to $7.31 per share ($2.77 to $5.48 net
price per share), resulting in cash proceeds to the Company of $1.3 million. Mr.
Edelman purchased 108,076 shares under the plan, resulting in other compensation
of $76,436.
The foregoing report has been furnished by the members of the Compensation
Committee.
COMPENSATION COMMITTEE
Alexander P. Lynch, Chairman
Robert J. Clark
Thomas R. Denison
Elizabeth K. Lanier
13
<PAGE>
Patina Oil & Gas Corporation
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1999
- --------------------------------------------------------------------------------
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the percentage change in the
cumulative total stockholder return on the Company's Common Stock against the
total return of the Dow Jones Equity Market Index and the Dow Jones Secondary
Oils Index for the period May 1996 through December 1998. The Secondary Oils
Index is composed of thirteen companies, all of which are significantly larger
than the Company, selected by Dow Jones & Company, Inc. to represent non-major
oil producers that generally do the bulk of their business domestically. The
graph assumes that the value of the investment in the Company's Common Stock and
each index was $100 on May 3, 1996 and that all dividends were reinvested. The
closing sales price of the Company's Common Stock on the last trading day of
1998 was $2.9375.
COMPARISON OF 32 MONTH CUMULATIVE RETURN
PATINA OIL & GAS CORPORATION
DJ EQUITY MARKET INDEX AND DJ SECONDARY OILS INDEX
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
MAY 1996 DEC 1996 DEC 1997 DEC 1998
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
DJ Equity Market Index $100 $117 $157 $202
DJ Secondary Oil Index 100 114 121 88
Patina Oil & Gas Corporation 100 119 99 38
</TABLE>
14
<PAGE>
Patina Oil & Gas Corporation
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1999
- --------------------------------------------------------------------------------
EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
In July 1997, the Company entered into an employment agreement with the
Chairman of the Board and Chief Executive Officer of the Company. The agreement
became effective on October 21, 1997 with the closing of certain transactions
that eliminated SOCO's ownership in the Company. In February 1998, the
agreement was amended and restated to clarify certain provisions thereof. The
agreement has a term ending on January 1, 2001 and provides Mr. Edelman with a
base salary of $350,000 and a yearly target bonus in a like amount to be
determined by the Compensation Committee in its sole discretion. Increases in
Mr. Edelman's salary are at the discretion of the Compensation Committee. On
February 19, 1998, the Compensation Committee approved an increase in Mr.
Edelman's Base Salary to $360,000, effective March 1, 1998. The agreement
provides Mr. Edelman with certain protections in the event of a change in
control of the Company and with certain other compensation plans, benefits and
perquisites commensurate with his executive positions with the Company.
In June 1997, the Company adopted a Change In Control Plan (the "Plan")
which established three levels of severance benefits in the event of a change in
control of the Company. The Executives of the Company, as defined in the Plan,
receive the highest level of compensation in the event of a change in control
with the Key Managers, as identified by the Board, and Regular Employees, as
defined in the Plan, receiving more limited severance benefits. Upon a change
in control, all non-vested securities of the Company held by employees will
automatically vest as will all non-vested rights under or in connection with all
the Company's benefit plans, including the 401(k) plan, deferred compensation
plan, stock purchase plan and restricted stock grant.
If an Executive is terminated within one year of a change in control or if
an Executive resigns after a Material Change, as defined in the Plan, occurring
within one year of a change in control, the Executive will receive an Executive
Payment which consists of 150% of Base Compensation as defined in the Plan,
accrued but unpaid bonuses and the greater of the Executive's most recent annual
bonus or the projected annual bonus for the year in which the change in control
occurs. If a Key Manager or a Regular Employee is terminated without cause
within one year of a change in control, or resigns within 30 days of a reduction
in Base Compensation occurring within one year of a change in control, the Key
Manager will receive a Key Manager Payment and the Regular Employee will receive
a Regular Employee Payment. A Key Manager Payment consists of 100% of Base
Compensation, accrued but unpaid bonuses and the greater of the most recent
annual bonus or the projected annual bonus for the year in which the change in
control occurs. A Regular Employee Payment consists of one quarter of Base
Compensation, accrued but unpaid bonuses and the greater of one quarter of the
most recent annual bonus or one quarter of the projected annual bonus for the
year in which the change in control occurs.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Edelman was previously the President and a Director of SOCO. He
resigned those positions in February 1997, but continues to be a significant
SOCO shareholder. Mr. Edelman is also the Chairman of Range Resources
Corporation, an oil and gas exploration and production company. SOCO owned
approximately 74% of the Common Stock of the Company until October 21, 1997 when
a series of transactions were closed that eliminated SOCO's ownership in the
Company. During 1998, SOCO, Range Resources Corporation and the Company did not
hold interests or participate together in any transactions involving the same
oil and gas properties. During 1998, SOCO provided the Company with support
pursuant to a corporate services agreement that was entered into in conjunction
with the Gerrity Acquisition. As of May 31, 1998, the Company terminated this
agreement and no longer utilizes any corporate services from SOCO. The Company
continues to sublease certain office space from SOCO through 2001. The Company
paid approximately $600,000 to SOCO under the corporate services and sublease
agreements in 1998.
15
<PAGE>
Patina Oil & Gas Corporation
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1999
- --------------------------------------------------------------------------------
In October 1997, the shareholders approved a special stock grant and
purchase for certain officers and managers ("Management Investors") in
conjunction with the redistribution of SOCO's ownership of the Company. The
plan, which was amended effective December 31, 1997, provided for the grant of
496,250 restricted common shares, net of forfeitures, to the Management
Investors. These shares will generally vest at 25% per year on January 1, 1998,
1999, 2000 and 2001. As such, 50% of the grant is currently vested. The
Management Investors simultaneously purchased 303,797 common shares from the
Company at $9.875 per share. A portion of this original purchase price
($850,000) was financed by the Company and is secured by all purchased and
granted shares outstanding.
In connection with his election as President of the Company on March 16,
1998, Jay W. Decker was granted 100,000 restricted shares of the Company's
Common Stock. The shares are subject to a Restricted Stock Agreement dated
March 16, 1998 which provides that the restrictions on the transfer of the
granted shares lapse at the rate of 33.33% per year commencing March 16, 1999 or
upon the death or disability of Mr. Decker. The Restricted Stock Agreement also
provides for the pro-rata forfeiture of the granted shares against which the
transfer restrictions have not lapsed should Mr. Decker's employment with the
Company terminate, if such termination is by the Company without Cause or by him
for Good Reason, as defined in the Agreement. The shares were issued at no cost
to Mr. Decker as an inducement for him to accept employment with the Company.
Mr. Decker is entitled to vote the granted shares and receive any dividends that
might be paid in connection with the Common Stock even though the restrictions
against the transfer of such shares have not lapsed.
In connection with his election as President of the Company on March 16,
1998, Mr. Decker purchased 100,000 shares of Common Stock at a per share price
of $6.875 for a total purchase price of $687,500. The Company loaned Mr. Decker
$584,375, or 85% of the total purchase price, represented by a recourse
promissory note which bears interest at the rate of 8.5% per annum payable each
March 31 until the note is paid. The maturity date of Mr. Decker's note is
March 16, 2001. Mr. Decker's obligation is secured by all of the shares
purchased and granted to him in connection with his employment with the Company.
INDEBTEDNESS OF MANAGEMENT
In October 1997, the Company closed a series of transactions which
eliminated the ownership interest of SOCO in the Company. The transactions
included: (i) the sale by SOCO of 10.9 million common shares of its Company
stock to the public in a secondary offering, (ii) the repurchase and retirement
by the Company of SOCO's remaining Common Shares, (iii) the sale by the Company
of $40 million of the 8.50% Preferred Stock and 160,000 Common Shares to certain
institutional investors and (iv) the sale of $3.0 million of Common Shares and
the grant of 496,250 restricted Common Shares, net of forfeitures, to certain
officers and key managers of the Company. In conjunction with these
transactions, Mr. Edelman purchased 202,532 Common Shares at $9.875 per share
for a total of $2.0 million. A total of 85% of the remaining $1.0 million of
Common Shares purchased by other officers and key managers was financed by the
Company. As a result, the following Executive Officers of the Company were
indebted to the Company as of April 15, 1999:
<TABLE>
<CAPTION>
NAME TITLE AMOUNT
---- ----- --------
<S> <C> <C>
Brian J. Cree Executive Vice President $106,250
David J. Kornder Vice President-Chief Financial Officer 85,000
David R. Macosko Vice President 63,750
Terry L. Ruby Vice President 63,750
David W. Siple Vice President 63,750
</TABLE>
16
<PAGE>
Patina Oil & Gas Corporation
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1999
- --------------------------------------------------------------------------------
The Company loaned an additional $297,500 to a total of ten other key
managers of the Company who purchased shares of Common Stock in the
transactions. The indebtedness of each officer and key manager is in the form
of a recourse promissory note which bears interest at the rate of 8.50% per
annum payable each March 31 until the notes are paid. The maturity date for the
indebtedness is January 2, 2001. The obligation of each officer and key manager
is secured by all of the shares purchased and granted to him or her in the
transactions described above.
In connection with his election as President of the Company on March 16,
1998, Mr. Decker purchased 100,000 shares of Common Stock at a per share price
of $6.875 for a total purchase price of $687,500. The Company loaned Mr. Decker
$584,375, or 85% of the total purchase price, represented by a recourse
promissory note which bears interest at the rate of 8.5% per annum payable each
March 31 until the note is paid. The maturity date of Mr. Decker's note is
March 16, 2001. Mr. Decker's obligation is secured by all of the shares
purchased and granted to him in connection with his employment with the Company.
The interest due March 31, 1999, under the arrangements discussed above, was
forgiven by the Company.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers, directors and persons who beneficially own more than ten percent of
the Company's stock to file initial reports of ownership and reports of changes
of ownership with the Securities and Exchange Commission and the New York Stock
Exchange. Copies of such reports are required to be furnished to the Company.
Based solely on a review of such forms furnished to the Company and certain
written representations from the Executive Officers and Directors, the Company
believes that all Section 16(a) filing requirements applicable to its Executive
Officers, Directors and greater than ten percent beneficial owners were complied
with on a timely basis.
17
<PAGE>
Patina Oil & Gas Corporation
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1999
- --------------------------------------------------------------------------------
PROPOSAL II -- APPROVAL OF AMENDMENT TO THE
COMPANY'S 1996 EMPLOYEE STOCK OPTION PLAN
On February 18, 1999, the Board of Directors unanimously approved a
proposed amendment to the Company's 1996 Employee Stock Option Plan to (i) amend
the definition of Stock, as defined in the plan, to include common stock which
is convertible from the Company's outstanding preferred stock, and (ii) amend
the aggregate number of shares of Stock to be issued pursuant to the exercise of
the Options from (a) the lesser of three million shares of Stock or 10% of the
outstanding Stock at the time of the grant, to (b) the greater of three million
shares of Stock or 10% of the outstanding Stock at the time of the grant. The
Company currently has two preferred stock issues outstanding that are
convertible into approximately 8,761,000 shares of Common Stock consisting of
the following: (1) 7.125% Preferred Stock with 1,444,926 shares outstanding,
convertible into common stock at $8.61 per share, or 2.9036 common shares for
each 7.125% preferred share; (2) 8.50% Preferred Stock with 1,735,031 shares
outstanding, convertible into common stock at $9.50 per share, or 2.6316 common
shares for each 8.50% preferred. The proposed amendment, if approved by the
stockholders, would immediately increase the aggregate number of options to
purchase shares of Common Stock from approximately 1,617,000 to the greater of
2,498,000 (10% of outstanding Common Stock plus convertible common shares plus
existing Options) or three million. The proposed amendment, a copy of which is
set forth in Exhibit A, is being submitted at the Annual Meeting for Stockholder
approval.
REASONS FOR PROPOSED AMENDMENT
The purpose of the plan is to provide an incentive for officers and key
employees of the Company to remain in the service of the Company and align their
interests in the growth and future prospects of the Company with those of the
stockholders. Options are granted only at the prevailing market price and will
have value only if the price of the Company's Common Stock increases.
The stockholders originally approved the plan in May 1996 at which time the
Company had 20.0 million shares of Common Stock outstanding and one preferred
stock issue outstanding that was convertible into approximately 4.6 million
common shares. The definition of Stock under the plan inadvertently excluded
common shares convertible from the preferred stock issue. In October 1997, a
series of transactions took place that eliminated SOCO's ownership in the
Company. These transactions resulted in significant changes to the Company's
capital structure. The Company purchased and retired over three million common
shares and issued $40.0 million of 8.50% convertible preferred stock to certain
institutional investors. The Company has continued to repurchase its Common
Stock resulting in approximately four million less common shares outstanding.
In eliminating SOCO's ownership in the Company and continuing to repurchase
Common Stock, it was not the Board of Directors intent to reduce the number of
stock options available to award key executives and employees. The Company
currently has 1,607,860 options outstanding, with a weighted average exercise
price of over $7.00 per common share. Under the existing plan, less than 14,000
options are currently available for issuance as result of the changes made to
the Company's capital structure over the last two years. The Board of Directors
believes that stock options are an important incentive to attract and retain key
personnel and to increase stock ownership by such employees to increase their
proprietary interest in the Company's success. This Amendment would correct the
inadvertent reduction in available employee stock options and make available a
sufficient number of options to comply with both the formula under which options
are normally granted and the agreement reached with Mr. Edelman in April 1999.
18
<PAGE>
Patina Oil & Gas Corporation
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1999
- --------------------------------------------------------------------------------
REQUIRED VOTE AND RECOMMENDATION
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE OUTSTANDING SHARES ENTITLED TO
VOTE IN PERSON OR BY PROXY AT THE ANNUAL MEETING IS REQUIRED FOR APPROVAL OF THE
PROPOSED AMENDMENT. ABSTENTIONS AND BROKER NON-VOTES WILL NOT BE CONSIDERED AS
VOTES CAST AT THE ANNUAL MEETING AND ACCORDINGLY, WILL HAVE NO EFFECT ON THE
OUTCOME OF THE VOTE WITH RESPECT TO PROPOSAL II. THE BOARD OF DIRECTORS
BELIEVES THAT THE PROPOSAL IS IN THE BEST INTERESTS OF THE COMPANY AND ITS
STOCKHOLDERS AND RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE PROPOSED
AMENDMENT.
PROPOSAL III -- APPROVAL OF AMENDMENT TO THE
COMPANY'S 1998 STOCK PURCHASE PLAN
In April 1999, the Board of Directors unanimously approved a proposed
amendment to the Company's 1998 Stock Purchase Plan. The Company is proposing to
amend the plan to allow for an annual renewal of the 500,000 shares of Common
Stock reserved for possible purchase under the plan. The purpose of the 1998
Stock Purchase Plan is to both retain directors, officers, key employees and
consultants and advisors on whom the Company depends ("Participants") and align
their interests in the growth and future prospects of the Company with those of
the stockholders of the Company.
The 1998 Stock Purchase Plan will continue to be administered by the
Compensation Committee which has the sole power to determine the terms and
conditions of making shares of Common Stock available for purchase under the
plan, including the selection of the Participants, the number of shares that
will be available to each Participant and the applicable discount from the
closing price at which shares may be purchased. In 1998, the Compensation
Committee approved 291,250 common shares (exclusive of shares available for
purchase with Participants' salaries and bonuses) for possible purchase by
Participants at 75% of the closing price. During the plan year, participants
purchased 257,632 shares of common stock, including 76,712 shares purchased with
Participant's 1997 bonuses, at prices ranging from $3.69 to $7.31 per share
($2.77 to $5.48 net price per share), resulting in cash proceeds to the Company
of $1.3 million. The proposed amendment, a copy of which is set forth in Exhibit
B, is being submitted at the Annual Meeting for Stockholder approval.
REASONS FOR PROPOSED AMENDMENT
The 1998 Stock Purchase Plan, as previously approved by shareholders,
allowed for the issuance of 500,000 common shares. To date, 257,632 shares have
been issued under the plan, resulting in 242,368 remaining shares reserved for
possible purchase under the plan. The Board of Directors believes the plan is
an excellent means of promoting the further alignment of the interests of the
Company's officers, directors and key employees with that of the stockholders.
This amendment would provide the Compensation Committee with more flexibility in
determining shares available for purchase under the plan.
19
<PAGE>
Patina Oil & Gas Corporation
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1999
- --------------------------------------------------------------------------------
REQUIRED VOTE AND RECOMMENDATION
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE OUTSTANDING SHARES ENTITLED TO
VOTE IN PERSON OR BY PROXY AT THE ANNUAL MEETING IS REQUIRED FOR APPROVAL OF THE
PROPOSED AMENDMENT. ABSTENTIONS AND BROKER NON-VOTES WILL NOT BE CONSIDERED AS
VOTES CAST AT THE ANNUAL MEETING AND ACCORDINGLY, WILL HAVE NO EFFECT ON THE
OUTCOME OF THE VOTE WITH RESPECT TO PROPOSAL III. THE BOARD OF DIRECTORS
BELIEVES THAT THE PROPOSAL IS IN THE BEST INTERESTS OF THE COMPANY AND ITS
STOCKHOLDERS AND RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE PROPOSED
AMENDMENT.
OTHER BUSINESS
The Board does not know of any business to be presented for consideration
at the Annual Meeting other than as stated in the Notice. It is intended,
however, that the persons authorized under the accompanying proxy will, in the
absence of instructions to the contrary, vote or act in accordance with their
judgment with respect to any other proposal properly presented for action at
such meeting.
SUBMISSION OF PROPOSALS BY STOCKHOLDERS FOR THE COMPANY'S 2000 ANNUAL MEETING
In order to be eligible for inclusion in the Company's proxy statement for
the 2000 Annual Meeting of Stockholders, any proposal of a stockholder must be
received by the Company at its corporate offices in Denver, Colorado by December
31, 1999.
RELATIONSHIP WITH INDEPENDENT AUDITORS
Arthur Andersen LLP is the principal accountant selected by the Company.
Representatives of such firm are expected to be present at the Annual Meeting,
with the opportunity to make a statement if they desire to do so, and will be
available to respond to appropriate questions.
ANNUAL REPORT AND FORM 10-K
The 1998 Annual Report of the Company for the fiscal year ended December
31, 1998, including audited financial statements, is being forwarded to each
stockholder of record as of April 15, 1999, together with this Proxy Statement.
A COPY OF THE COMPANY'S REPORT ON FORM 10-K FOR 1998, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, WILL BE FURNISHED WITHOUT CHARGE TO
STOCKHOLDERS ON REQUEST TO:
Patina Oil & Gas Corporation
1625 Broadway, Suite 2000
Denver, Colorado 80202
Attention: Investor Relations
20
<PAGE>
Patina Oil & Gas Corporation
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1999
- --------------------------------------------------------------------------------
OTHER MATTERS
The accompanying form of proxy has been prepared at the direction of the
Company, of which you are a stockholder, and is sent to you at the request of
the Board of Directors. The proxies named therein have been designated by your
Board of Directors.
The Board of Directors of the Company urges you, even if you presently plan
to attend the meeting in person, to execute the enclosed proxy and mail it as
indicated immediately. You may revoke your proxy and vote in person if you are
in fact able to attend.
PATINA OIL & GAS CORPORATION
By Order of the Board of Directors
David J. Kornder
Secretary
Denver, Colorado
April 23, 1999
21
<PAGE>
EXHIBIT A
AMENDMENT NO. 1 TO THE
1996 EMPLOYEE STOCK OPTION PLAN
OF PATINA OIL & GAS CORPORATION
THIS AMENDMENT NO. 1 to the 1996 Employee Stock Option Plan of Patina Oil &
Gas Corporation (this "Amendment"), dated as of May 28, 1999, is entered into by
Patina Oil & Gas Corporation, pursuant to authority granted to it in Section 9
of the 1996 Employee Stock Option Plan of Patina Oil & Gas Corporation, dated as
of May 2, 1996 (the "Stock Option Plan").
WHEREAS, Section 9 of the Stock Option Plan provides that the Board of
Directors may, insofar as permitted by law, with respect to any shares [which]
at the time are not subject to Options, revise or amend the Stock Option Plan in
any respect whatsoever; provided, however, that without the approval of the
holders of a majority of the outstanding shares of voting stock of all classes
of the Corporation, no such revision or amendment shall change the number of
shares of the Stock subject to the Plan; and
WHEREAS, on February 18, 1999 the Board of Directors approved a proposed
amendment to the Stock Option Plan to (i) amend the definition of Stock as
defined in the Stock Option Plan to include Common Stock to be issued pursuant
to the conversion of any convertible preferred stock outstanding and (ii) amend
the aggregate number of shares of Stock to be issued pursuant to the exercise of
all Options from (a) the lesser of three million shares of Stock or 10% of the
number of shares of Stock outstanding at the time of grant to (b) the greater of
three million shares of Stock or 10% of the number of shares of Stock
outstanding at the time of grant (the "Proposed Amendment"); and
WHEREAS, on May 27, 1999, holders of a majority of the outstanding shares
of voting stock of all classes of the Corporation approved the Proposed
Amendment;
NOW, THEREFORE, the Stock Option Plan is hereby amended as follows:
1. AMENDMENT RELATING TO DEFINITION OF STOCK. Section 1.13 of the Stock
Option Plan is hereby amended as follows:
"1.13 "Stock" shall mean the Corporation's authorized $.01 par value
common stock together with any Common Stock to be issued pursuant to the
conversion of any convertible preferred stock outstanding."
2. AMENDMENT RELATING TO DESCRIPTION OF STOCK AND MAXIMUM SHARES
ALLOCATED. Paragraph 2.1 of the Stock Option Plan is amended by replacing the
second paragraph thereof with the following:
"Subject to Paragraph 2.2 and to the adjustments in Paragraph 6.6 hereof,
the aggregate number of shares of Stock to be issued pursuant to the
exercise of all Options granted hereunder that have not theretofore
expired, terminated or been exercised may equal the greater of 3,000,000
shares of Stock or 10% of the number of shares of Stock outstanding at the
time of such grant."
3. CAPITALIZED TERMS. Capitalized terms used but not defined herein are
used as defined in the Stock Option Plan. This Amendment will be governed by
and construed in accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, this Amendment has been executed as of the date first
written above.
PATINA OIL & GAS CORPORATION
By:________________________________
David J. Kornder
Secretary
<PAGE>
EXHIBIT B
AMENDMENT NO. 1 TO THE
1998 STOCK PURCHASE PLAN
OF PATINA OIL & GAS CORPORATION
THIS AMENDMENT NO. 1 to the 1998 Stock Purchase Plan of Patina Oil & Gas
Corporation (this "Amendment"), dated as of May 28, 1999, is entered into by
Patina Oil & Gas Corporation, pursuant to authority granted to it in Article X
of the 1998 Stock Purchase Plan of Patina Oil & Gas Corporation, dated as of
February 19, 1998 (the "Stock Purchase Plan").
WHEREAS, Article X of the Stock Purchase Plan provides that the Board of
Directors may, insofar as permitted by law, modify or amend the Stock Purchase
Plan in any respect whatsoever; provided, however, that any amendment that would
materially increase the cost of the Stock Purchase Plan to the Company must be
approved by the stockholders of the Company; and
WHEREAS, in April 1999 the Board of Directors approved a proposed amendment
to the Stock Purchase Plan to amend Article IV to allow for the annual renewal
of 500,000 shares of Common Stock to be reserved for possible purchase under the
Stock Purchase Plan (the "Proposed Amendment"); and
WHEREAS, on May 27, 1999, holders of a majority of the outstanding shares
of voting stock of all classes of the Corporation approved the Proposed
Amendment;
NOW, THEREFORE, the Stock Purchase Plan is hereby amended as follows:
1. AMENDMENT RELATING TO SHARES. Article IV of the Stock Purchase Plan is
hereby amended by replacing the Paragraph in Article IV with the following:
"There shall be 500,000 shares of Common Stock reserved under the Plan,
subject to adjustment in accordance with Article IX hereof. The 500,000
shares of Common Stock reserved for purchase under the Plan will be
automatically renewed each Plan Year, with the cancellation of any
remaining unpurchased shares from the previous Plan Year. The shares of
Common Stock subject to the Plan shall be shares of authorized but unissued
Common Stock"
2. CAPITALIZED TERMS. Capitalized terms used but not defined herein are
used as defined in the Stock Purchase Plan. This Amendment will be governed by
and construed in accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, this Amendment has been executed as of the date first
written above.
PATINA OIL & GAS CORPORATION
By:________________________________
David J. Kornder
Secretary
<PAGE>
PATINA OIL & GAS CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 1999 ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders (the "Annual Meeting") of Patina Oil &
Gas Corporation (the "Company") will be held at the corporate offices of the
Company, 20th floor, 1625 Broadway, Denver, Colorado, on Thursday, May 27,
1999, at 9:00 a.m. Mountain Daylight Time. The list of stockholders entitled to
vote at the Annual Meeting will be open to the examination by any stockholder
during ordinary business hours for a period of ten days prior to the Annual
Meeting at the Company's corporate offices. Such list will also be produced at
the Annual Meeting and be kept open during the Annual Meeting for inspection by
any stockholder who may be present. The purposes for which the Annual Meeting is
to be held are as follows:
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
_FOLD AND DETACH HERE_
<PAGE>
The Board of Directors recommends that the stockholders vote FOR EACH of the
nominees and proposals listed below.
Please Mark
your vote as
indicated in
this example [X]
<TABLE>
<S> <C> <C> <C>
1. To elect a board of eight directors, each for a one year term.
Nominees for Election at Annual Meeting FOR WITHHELD
Christopher C. Behrens, Robert J. Clark, Brian J. Cree, Jay W. Decker, FOR ALL
Thomas R. Denison, Thomas J. Edelman, Elizabeth K. Lanier, Alexander P. [_] [_]
Lynch
WITHHELD FOR: (Write in Nominee's name in the space provided below)
____________________________________________
2. To consider and adopt an amendment to the Company's 1998 Employee Stock FOR AGAINST ABSTAIN
Option Plan, which amendment includes an increase in the number of options [_] [_] [_]
to purchase shares of the Company's common stock.
3. To consider and adopt an amendment to the Company's 1998 Stock Purchase
Plan to include an annual renewal of Common Stock reserved for possible [_] [_] [_]
purchase under the plan.
4. To transact any other business which properly may be brought before the
Annual Meeting or any adjournment(s) thereof. [_] [_] [_]
</TABLE>
Subject to the provisions of the By-laws of the Company, registered stockholders
as of April 15, 1999 (i) who are individuals may attend and vote at the Annual
Meeting in person or by proxy or (ii) that are corporations may attend and vote
at the Annual Meeting by proxy or by a duly authorized representative.
Whether or not you plan to attend the Annual Meeting, please complete, date and
sign the enclosed proxy and return it in the envelope provided. Any person
giving a proxy has the power to revoke it at any time prior to its exercise and,
if present at the Annual Meeting, may withdraw it and vote in person. Attendance
at the Annual Meeting is limited to stockholders, their proxies and invited
guests of the Company.
___________________________________
(Signature)
___________________________________
(Signature if held jointly)
Date: _____________________________
(Please sign exactly as your name appears hereon. If stock is registered in
more than one name, each holder should sign. When signing as an attorney,
administrator, executor, guardian or trustee, please add your title as such. If
executed by a corporation or other entity, the proxy should be signed by a duly
authorized officer or other representative.)
_FOLD AND DETACH HERE_
