SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
[Amendment No. __________]
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
| | Preliminary Proxy Statement
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Double Eagle Petroleum And Mining Co.
-----------------------------------------------
(Name of Registrant as Specified in Its Charter)
Richard B. Laudon, Chairman Of The Board
-----------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
|X| $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
|_| $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
|_| 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:
Not applicable
2. Aggregate number of securities to which transaction applies:
Not applicable
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
Not applicable
4. Proposed maximum aggregate value of transaction:
Not applicable
* Set forth the amount on which the filing fee is calculated and state
how it was determined.
|_| 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: Not applicable
2. Form Schedule or Registration Statement No.: Not applicable
3. Filing party: Not applicable
4. Date Filed: Not applicable
<PAGE>
DOUBLE EAGLE PETROLEUM AND MINING CO.
777 Overland Trail
Casper, Wyoming 82601
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on June 20, 1996
To our Shareholders:
A Special Meeting of Shareholders of Double Eagle Petroleum and Mining Co.,
a Wyoming corporation (the "Company"), will be held in the Overland Plaza
Building, 777 Overland Trail, Casper Wyoming, on Thursday, June 20, 1996 at
10:00 a.m., to consider and vote upon a proposal recommended by the Board Of
Directors to amend the Company's Articles Of Incorporation to increase the
Company's authorized Common Stock from 5,000,000 to 10,000,000 shares, to
consider and vote upon a proposal recommended by the Board Of Directors to adopt
the Company's 1996 Stock Option Plan, and to consider and act upon such other
matters as may properly come before the meeting or any adjournment thereof.
Only shareholders of record at the close of business on May 20, 1996, are
entitled to notice of, and to vote at, the special shareholders' meeting.
All shareholders are extended a cordial invitation to attend the Special
Meeting of Shareholders.
By Order of the Board of Directors.
CAROL A. OSBORNE
Corporate Secretary
Casper, Wyoming
May 22, 1996
THE FORM OF PROXY IS ENCLOSED. TO ASSURE THAT YOUR SHARES WILL BE VOTED AT THE
MEETING, PLEASE COMPLETE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN
THE ENCLOSED, POSTAGE PREPAID, ADDRESSED ENVELOPE. NO ADDITIONAL POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES. THE GIVING OF A PROXY WILL NOT AFFECT
YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
<PAGE>
PROXY STATEMENT
DOUBLE EAGLE PETROLEUM AND MINING CO.
777 Overland Trail
Casper, Wyoming 82601
SPECIAL MEETING OF SHAREHOLDERS
to be held
June 20, 1996
GENERAL INFORMATION
The enclosed proxy is solicited by and on behalf of the management of
Double Eagle Petroleum and Mining Co. (the "Company") for use at the Company's
Special Meeting of Shareholders (the "Meeting") to be held at 10:00 a.m., in the
Overland Plaza Building, 777 Overland Trail, Casper Wyoming, on Thursday, June
20, 1996, and at any adjournment thereof. It is planned that this Proxy
Statement and the accompany proxy will be mailed to the Company's shareholders
on or about May 21, 1996.
Any person signing and mailing the enclosed proxy may revoke it at any time
before it is voted to by giving written notice of the revocation to the
Company's corporate secretary, or by electing to vote in person at the Meeting.
The cost of soliciting proxies, including the cost of preparing, assembling
and mailing this proxy material to shareholders, will be borne by the Company.
Solicitations will be made only by use of the mails, except that, if necessary,
officers and regular employees of the Company may make solicitations of proxies
by telephone or telegraph or by personal calls. Brokerage houses, custodians,
nominees and fiduciaries will be requested to forward the proxy soliciting
materials to the beneficial owners of the Company's shares held of record by
such persons and the Company will reimburse them for their charges and expenses
in this connection.
All voting rights are vested exclusively in the holders of the Company's
$0.10 par value common stock (the "Common Stock") with each share entitled to
one vote. Only shareholders of record at the close of business on May 20, 1996
are entitled to notice of and to vote at the Meeting or any adjournment thereof.
On May 1, 1996, the Company had 2,712,371 shares outstanding.
STOCK OWNERSHIP OF DIRECTORS AND PRINCIPAL SHAREHOLDERS
The following table summarizes certain information as of May 1, 1996 with
respect to the ownership by each director, by each of the Company's Chairman Of
The Board and President, by all executive officers and directors as a group, and
by each other person known by the Company to be the beneficial owner of more
than five percent of the Common Stock:
<PAGE>
Name and Address of Amount Percent of
Beneficial Owner Beneficially Owned Class
- ------------------- ------------------ ----------
Dr. Richard B. Laudon 569,147 21.0%
3737 West 46th
Casper, Wyoming 82604
Carol A. Osborne 30,000 (1) 1.1%
John R. Kerns 77,203 2.8%
Stephen H. Hollis 544,900 (2)(5) 18.9%
2037 S. Poplar
Casper, Wyoming 82601
William N. Heiss 350,000 (3) 12.9%
Tom R. Creager 500 --- (4)
Directors and Officers 1,221,750 41.9%
(as a group)(Six Persons)
Hollis Oil & Gas Company 350,000 (5) 12.9%
(1) Includes options to purchase 10,000 shares of Common Stock that expire
January 19, 1997, options to purchase 10,000 shares that expire on
January 19 1998, and options to purchase 10,000 shares that expire on
January 22, 1999.
(2) Includes options to purchase 50,000 shares of Common Stock that expire
January 19, 1997, options to purchase 70,000 shares that expire
January 19, 1998, and options to purchase 50,000 shares, that expire
January 22, 1999. In addition to 24,900 shares owned directly by Mr.
Hollis, he is deemed to own 350,000 shares beneficially through his
51.2% ownership of Hollis Oil & Gas Company, which owns 350,000 shares
of Double Eagle common stock.
(3) These shares are owned by Hollis Oil & Gas Company. Mr. Heiss owns
27.3% ownership of Hollis Oil & Gas Company. As indicated above, Mr.
Hollis owns 51.2% of Hollis Oil & Gas Company.
(4) Less than one percent.
(5) The shares owned by Hollis Oil & Gas Company are shown three times in
the table: once as owned by Hollis Oil & Gas Company, and again under
the beneficial ownership of each of Mr. Hollis and Mr. Heiss.
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<PAGE>
PROPOSAL TO INCREASE AUTHORIZED COMMON STOCK
The Board Of Directors of the Company has unanimously approved, subject to
shareholder approval, the amendment (the "Amendment") of the Company's Articles
Of Incorporation to increase from 5,000,000 to 10,000,000 the number of
authorized shares of the Company's Common Stock.
Reasons For The Amendment
The Company desires to obtain additional financing to pursue drilling and
other activities. In order to obtain additional financing, the Company has
entered into a non-binding letter of intent with a regional broker-dealer (the
"Underwriter") with respect to a proposed public offering (the "Proposed
Offering") of approximately 1,000,000 shares of Common Stock and approximately
1,000,000 Common Stock Purchase Warrants (the "Warrants"). In addition, the
Company is seeking shareholder approval of the Company's 1996 Stock Option Plan
(the "1996 Plan") pursuant to which options to purchase up to 200,000 shares of
Common Stock may be granted. See "PROPOSAL TO ADOPT 1996 STOCK OPTION PLAN".
Because the Company currently does not have sufficient authorized and unissued
shares from which to undertake the proposed offering and to reserve sufficient
shares for issuance upon exercise of the Warrants and upon exercise of the
options granted pursuant to the 1996 Plan, it is necessary for the Company to
amend its Articles Of Incorporation to increase the authorized Common Stock in
order to undertake the Proposed Offering and the granting of stock options
pursuant to the 1996 Plan.
If the Company is able to undertake the Proposed Offering, of which there
is no assurance, the offering price of the Common Stock and the Warrants and the
exercise price of the Warrants will be determined by mutual agreement between
the Company and the Underwriter. The Company plans to prepare and file with the
Securities And Exchange Commission (the "SEC") a registration statement relating
to this Proposed Offering as soon as practicable. Any offering will be made by
means of a prospectus. The final terms of the Proposed Offering may vary and
will depend upon many factors, including the Company's financial condition,
market conditions, liquidity for the Company's Common Stock, the market price
for the Company's Common Stock at the time of the Proposed Offering, and other
factors relating to the business of the Company. The Company currently intends
to use the proceeds primarily for its activities in the Christmas Meadows Area
and for additional working capital.
The letter of intent is not binding on the Underwriter, and there are
numerous conditions and circumstances that could prevent the Proposed Offering
from occurring. Therefore, there can be no assurance that the Proposed Offering
will be undertaken successfully.
If the proposed Amendment is approved, the final terms of any offering will
be determined by the Company's Board Of Directors and the proposed Underwriter,
and the Company will not seek further authorization by the shareholders for the
offering or issuance of Common Stock.
Effects Of Amendment
The Company currently has 5,000,000 shares of Common Stock authorized, of
which 2,712,371 shares currently are issued and outstanding, and 200,000 shares
are reserved for exercise of outstanding options, leaving the Company with
2,087,629 shares that may be issued in the future. In the event that the
Amendment is approved, the Company will have 10,000,000 shares of authorized
Common Stock, leaving 7,087,629 shares available for issuance in the future, of
which 200,000 shares will be reserved for issuance pursuant to the 1996 Plan if
it is also approved. The Company believes that the continued ability to have
authorized shares of the Company's Common Stock available for issuance for
various purposes will enable the Company to take advantage of financing,
acquisition or investment activities in the future without the necessity and
related costs and delays of either calling a special shareholders' meeting or of
waiting for the annual meeting of shareholders in order to increase authorized
capital. If in a particular instance shareholder approval were required by law
or otherwise deemed advisable by the Company's Board Of Directors, then the
matter would be referred to the shareholders for their approval regardless of
whether a sufficient number of shares previously had been authorized.
Shareholders of the Company are not entitled to preemptive rights with respect
to the issuance of any authorized but unissued shares. Any additional shares of
the Company's Common Stock which may be issued in the future will have the same
voting, dividend and other rights as other shares of the Company's Common Stock
and will share equally in any proceeds in the event of any liquidation of the
Company.
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<PAGE>
The proposed Amendment is not intended to have any anti-takeover effect and
is not part of any series of anti-takeover measures contained in the Articles Of
Incorporation or the Bylaws of the Company in effect on the date of this Proxy
Statement. However, shareholders should note that the availability of authorized
but unissued shares of capital stock could make any attempt to gain control of
the Company or its Board Of Directors more difficult or more time consuming, and
that the availability of additional authorized but unissued shares might make it
more difficult to remove current management. Although the Board Of Directors
currently has no intention of doing so, shares of Common Stock could be issued
to dilute the percentage of Common Stock owned by a significant shareholder and
increase the cost of, or the number of, voting shares necessary to acquire
control of the Board Of Directors or to meet the voting requirements imposed by
Wyoming law with respect to a merger or other business combination involving the
Company. The Company is not aware of any proposed attempt to take over the
Company.
Vote Required
The Company's Articles Of Incorporation and Wyoming law require the
approval of the holders of a majority of the shares of Common Stock represented
at the special shareholders' meeting to approve an Amendment to the Articles Of
Incorporation.
The Board Of Directors of the Company has unanimously approved the
Amendment and recommends a vote FOR the approval of the Amendment.
PROPOSAL TO ADOPT 1996 STOCK OPTION PLAN
The Board Of Directors has adopted, subject to shareholder approval, the
Company's 1996 Stock Option Plan (the "1996 Plan"). The 1996 Plan will terminate
if the 1996 Plan is not approved by the Company's shareholders on or before
May 22, 1996.
Options to purchase 200,000 shares of Common Stock may be granted pursuant
to the 1996 Plan. The Options granted pursuant to the 1996 Plan may be either
Incentive Options or Non-Qualified Options. The 1996 Plan is intended to provide
incentives to key employees and other persons who have or are contributing to
the success of the Company by offering them Options to purchase shares of the
Company's Common Stock. The terms of the 1996 Plan concerning Incentive Options
and Non-Qualified Options are substantially the same except that only employees
of the Company or its subsidiaries are eligible for Incentive Options and
employees and other persons are eligible for Non-Qualified Options. The number
of Options authorized is a maximum aggregate so that the number of Incentive
Options granted reduces the number of Non-Qualified Options that may be granted.
There currently are approximately three employees eligible to receive Incentive
Options and an unspecified number of persons eligible to receive Non-Qualified
Options.
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<PAGE>
The 1996 Plan is administered by the Option Committee, which may consist of
either (i) the Company's Board Of Directors, or (ii) a committee, appointed by
the Board Of Directors, of two or more directors who have not received grants or
awards under any discretionary plan of the Company for at least one year.
However, unless determined otherwise by the Board, grants of Options to officers
or to directors may be made only by an Option Committee consisting of either (i)
the Board Of Directors if each of the Directors is not eligible, and shall not
have been eligible during the preceding year, to receive Options under the 1996
Plan or under any other stock plan of the Company, or (ii) a committee,
appointed by the Board, consisting of two or more directors, none of whom is
eligible, nor shall have been eligible during the preceding year, to receive
Options under the 1996 Plan or under any other stock plan of the Company other
than a formula plan and certain other plans. The Option Committee has discretion
to select the persons to whom Options will be granted ("Optionees"), the number
of shares to be granted, the term of each Option and the exercise price of each
Option. However, no Option may be exercisable more than 10 years after the
granting of the Option, and no Options may be granted under the 1996 Plan after
May 22, 2006.
The exercise price of Options granted cannot be less than the fair market
value of the underlying Common Stock on the date the Options were granted. In
addition, the aggregate fair market value (determined as of the date an Option
is granted) of the Common Stock underlying the Options granted to a single
employee which become exercisable in any single calendar year may not exceed the
maximum permitted by the Internal Revenue Code for incentive stock options. This
amount currently is $100,000. No Incentive Option may be granted to an employee
who, at the time the Option would be granted, owns more than ten percent of the
outstanding stock of the Company unless the exercise price of the Options
granted to the employee is at least 110 percent of the fair market value of the
stock subject to the Option and the Option is not exercisable more than five
years from the date of grant.
Options granted pursuant to the 1996 Plan are not transferable during the
Optionee's lifetime. Subject to the other terms of the 1996 Plan, the Option
Committee has discretion to provide vesting requirements and specific expiration
provisions with respect to the Options granted.
It currently is anticipated that the exercise of the Options will be
covered by an effective registration statement, which will enable an Optionee
exercising Options to receive unrestricted stock that may be transferred or sold
in the open market unless the Optionee is a director, executive officer or
otherwise an "affiliate" of the Company. In the case of a director, executive
officer or other affiliate, the Common Stock acquired through exercise of the
Options may be reoffered or resold only pursuant to an effective registration
statement or pursuant to Rule 144 under the Securities Act or another exemption
from the registration requirements of the Securities Act. It also is anticipated
that sales by affiliates will be covered by an effective registration statement.
In the event a change, such as a stock split, is made in the Company's
capitalization which results in an exchange or other adjustment of each share of
Common Stock for or into a greater or lesser number of shares, appropriate
adjustment shall be made in the exercise price and in the number of shares
subject to each outstanding Option. In the event of a stock dividend, each
Optionee shall be entitled to receive, upon exercise of the Option, the
equivalent of any stock dividend that the Optionee would have received had he or
she been the holder of record of the shares purchased upon exercise. The Option
Committee also may make provisions for adjusting the number of shares subject to
outstanding Options in the event the Company effects one or more
reorganizations, recapitalizations, rights offerings, or other increases or
reductions of shares of the Company's outstanding Common Stock.
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<PAGE>
The Option Committee may at any time terminate the 1996 Plan or make such
amendments or modifications to the 1996 Plan that the Board deems advisable.
The Incentive Options issuable under the 1996 Plan are structured to
qualify for favorable tax treatment provided for "incentive stock options" by
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). All
references to the tax treatment of the Options are under the Code as currently
in effect. Pursuant to Section 422 of the Code, Optionees will not be subject to
federal income tax at the time of the grant or at the time of exercise of an
Incentive Option. In addition, provided that the stock underlying the Option is
not sold less than two years after the grant of the Option and is not sold less
than one year after the exercise of the Option, then the difference between the
exercise price and the sales price will be treated as long-term capital gain or
loss. An Optionee also may be subject to the alternative minimum tax upon
exercise of his Options. The Company will not be entitled to receive any income
tax deductions with respect to the granting or exercise of Incentive Options or
the sale of the Common Stock underlying the Options.
Non-Qualified Options will not qualify for the special tax benefits given
to Incentive Options under Section 422 of the Code. An Optionee does not
recognize any taxable income at the time he is granted a Non-Qualified Option.
However, upon exercise of the Option, the Optionee recognizes ordinary income
for federal income tax purposes measured by the excess, if any, of the then fair
market value of the shares over the exercise price. The ordinary income
recognized by the Optionee will be treated as wages and will be subject to
income tax withholding by the Company. Upon an Optionee's sale of shares
acquired pursuant to the exercise of a Non-Qualified Option, any difference
between the sale price and the fair market value of the shares on the date when
the Option was exercised will be treated as long-term or short-term capital gain
or loss. Upon an Optionee's exercise of a Non-Qualified Option, the Company will
be entitled to a tax deduction in the amount recognized as ordinary income to
the Optionee provided that the Company effects withholding with respect to the
deemed compensation.
There currently are no Options outstanding under the 1996 Plan. There is no
present plan to grant Options pursuant to the 1996 Plan to any particular
individuals or entities.
The bid and asked prices of the Company's Common Stock, as quoted on the
Nasdaq Small Cap Market System at the close of business on May 20, 1996,
were $1.00 and $1.50, respectively.
The approval of holders of shares representing a majority of the votes
represented at the Special Meeting will be necessary to adopt the 1996 Plan.
The Board recommends a vote "FOR" the proposal to adopt the 1996 Plan.
VOTING PROCEDURES
Votes at the Meeting are counted by inspectors of election appointed by the
chairman of the Meeting. If a quorum is present, an affirmative vote of the
majority of the votes entitled to be cast by those present in person or by proxy
is required for the approval of items submitted to shareholders for their
consideration unless a different number of votes is required by statute or the
Company's Articles Of Incorporation. As stated above, the proposal to approve
the Amendment must be approved by a majority of the shares of Common Stock
represented at the Meeting. Abstentions by those present at the Meeting are
tabulated separately from affirmative and negative votes and do not constitute
affirmative votes. If a shareholder returns his or her proxy card and withholds
authority to vote on the Amendment, the votes represented by the proxy card will
be deemed to be present at the Meeting for purposes of determining the presence
of a quorum but will not be counted as affirmative votes. Shares in the names of
brokers that are not voted are treated as not present.
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<PAGE>
PROPOSALS OF SECURITIES HOLDERS
Proposals of security holders intended to be presented at the next annual
meeting must be received by the Company by August 24, 1996 in order to be
included in the proxy statement and form of proxy relating to that meeting.
AVAILABILITY OF REPORTS ON FORM 10-K
UPON WRITTEN REQUEST, THE COMPANY WILL PROVIDE, WITHOUT CHARGE, A COPY OF
ITS ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED AUGUST 31, 1995 TO ANY
OF THE COMPANY'S SHAREHOLDERS OF RECORD OR TO ANY SHAREHOLDER WHO OWNS THE
COMPANY'S COMMON STOCK LISTED IN THE NAME OF A BANK OR BROKER AS NOMINEE AT THE
CLOSE OF BUSINESS ON MAY 20, 1996. ANY REQUEST FOR A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K SHOULD BE MAILED TO THE SECRETARY, DOUBLE EAGLE
PETROLEUM AND MINING CO., 777 OVERLAND TRAIL, (P.O. BOX 766), CASPER, WYOMING
82601.
OTHER BUSINESS
The Company's management does not know of any matters to be presented
at the meeting other than those set forth in this Proxy Statement. If any other
business should come before the meeting, the persons named in the enclosed form
of proxy will vote such proxy according to their judgment on such matters.
CAROL A. OSBORNE
Corporate Secretary
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<PAGE>
PROXY PROXY
For the Special Meeting Of Shareholders of
DOUBLE EAGLE PETROLEUM AND MINING CO.
Proxy Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Richard B. Laudon and Stephen B. Hollis, or
either of them, as proxies or -----------(shareholders may strike the person(s)
designated by Management and insert name and address of other person(s) to vote
the proxy and mail this proxy to the named proxy holder) with power of
substitution to vote all the shares of the undersigned with all of the powers
which the undersigned would possess if personally present at the Special Meeting
Of Shareholders of Double Eagle Petroleum And Mining Co. (the "Corporation"), to
be held at _____a.m., on June 20, 1996, at The Overland Plaza Building, 777
Overland Trail, Casper, Wyoming, or any adjournments thereof, on the following
matters:
1. Proposal to amend the Corporation's Articles of Incorporation to
increase the Corporation's authorized common stock.
For Against Abstain
---- ---- ----
2. Proposal to adopt the Corporation's 1996 Stock Option Plan.
For Against Abstain
---- ---- ----
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
Unless contrary instructions are given, the shares represented by this
proxy will be voted in favor of Items 1 and 2. This proxy is solicited on behalf
of the Board Of Directors of Double Eagle Petroleum And Mining Co.
EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE VOTE, DATE, SIGN AND RETURN
THIS PROXY IN THE ACCOMPANYING ENVELOPE.
Date:
----------------------------------------
Signature:
-----------------------------------
Signature:
-----------------------------------
(Please sign exactly as shown on your stock
certificate and on the envelope in which this
proxy was mailed. When signing as partner,
corporate officer, attorney, executor,
administrator, trustee, guardian, etc., give
full title as such and sign your own name as
well. If stock is held jointly, each joint
owner should sign.)
DOUBLE EAGLE PETROLEUM AND MINING CO.
1996 STOCK OPTION PLAN
As Adopted As Of _________, 1996
This 1996 Stock Option (the "Plan") is adopted by Double Eagle Petroleum
and Mining Co. (the "Company") effective as of April 1, 1996.
1. Definitions.
Unless otherwise indicated or required by the particular context, the
terms used in this Plan shall have the following meanings:
Board: The Board Of Directors of the Company.
Code The Internal Revenue Code of 1986, as amended.
Common Stock: The $.10 par value common stock of the Company.
Company: Double Eagle Petroleum and Mining Co., a corporation
incorporated under the laws of Wyoming, any current or future wholly owned
subsidiaries of the Company, and any successors in interest by merger, operation
of law, assignment or purchase of all or substantially all of the property,
assets or business of the Company.
Date Of Grant: The date on which an Option, as defined below, is granted
under the Plan.
Disinterested Person: A director who has not been granted or awarded
equity securities pursuant to any plan of the Company or of any of the Company's
affiliates during the one year prior to that director's service as an
administrator of the Plan, except as otherwise provided in Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), with respect to (a) participation in formula plans or ongoing securities
acquisitions plans, and (b) an election to receive securities for an annual
retainer fee.
Fair Market Value: The Fair Market Value of the Option Shares (defined
below). The Fair Market Value as of any date shall be as reasonably determined
by the Option Committee (defined below); provided, however, that if there is a
public market for the Common Stock, the Fair Market Value of the Option Shares
as of any date shall not be less than the last reported sale price for the
Common Stock on that date (or on the preceding stock market business day if such
date is a Saturday, Sunday, or a holiday), on a national securities exchange, as
reported in The Wall Street Journal, or if not reported in The Wall Street
Journal, as reported in The Denver Post, Denver, Colorado or, if no last sale
price for a national securities exchange is available, then the last reported
sale price on either another stock exchange or on a national or local
over-the-counter market, as reported by The Wall Street Journal, or if not
available there, in The Denver Post; provided further, that if no such published
last sale price is available and a published bid price is available from one of
those sources, then the Fair Market Value of the shares shall not be less than
such last reported bid price for the Common Stock, and if no such published bid
price is available, the Fair Market Value of such shares shall not be less than
the average of the bid prices quoted as of the close of business on that date by
any two independent persons or entities making a market for the Common Stock,
such persons or entities to be selected by the Option Committee.
<PAGE>
Incentive Options: "Incentive stock options" as that term is defined in
Code Section 422 or the successor to that Section.
Key Employee: A person designated by the Option Committee who is
employed by the Company and whose continued employment is considered to be in
the best interests of the Company; provided, however, that Key Employees shall
not include those members of the Board who are not employees of the Company.
Key Individual: A person, other than an employee of the Company, who is
committed to the interests of the Company; provided, however, that Key
Individuals shall not include those members of the Board who are not employees
of the Company.
Non-Qualified Options: Options that are not intended to qualify, or
otherwise do not qualify, as "incentive stock options" under Code Section 422 or
the successor to that Section. To the extent that Options that are designated by
the Option Committee as Incentive Options do not qualify as "incentive stock
options" under Code Section 422 or the successor to that Section, those Options
shall be treated as Non-Qualified Options.
Option: The rights to purchase Common Stock granted pursuant to the
terms and conditions of an Option Agreement (defined below).
Option Agreement: The written agreement (including any amendments or
supplements thereto) between the Company and either a Key Employee or a Key
Individual designating the terms and conditions of an Option.
Option Committee: With respect to grants of Options to Employees other
than Officers and Directors of the Company, the Plan shall be administered by an
Option Committee ("Option Committee") composed of the Board or at least two
members of the Board. With respect to grants of Options to Officers or to
Directors, the Plan shall be administered by the Board, if each member is a
Disinterested Person, or by a committee, selected by the Board, consisting of
two or more Directors, each of whom is a Disinterested Person. Such committee
may also be deemed an Option Committee.
Option Shares: The shares of Common Stock underlying an Option granted
pursuant to this Plan.
Optionee: A Key Employee or Key Individual who has been granted an
Option.
2. Purpose And Scope.
(a) The purpose of the Plan is to advance the interests of the Company
and its stockholders by affording Key Employees and Key Individuals, upon whose
initiative and efforts, in the aggregate, the Company is largely dependent for
the successful conduct of its business, an opportunity for investment in the
Company and the incentive advantages inherent in stock ownership in the Company.
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<PAGE>
(b) This Plan authorizes the Option Committee to grant Incentive Options
to Key Employees and to grant Non-Qualified Options to Key Employees and Key
Individuals, selected by the Option Committee while considering criteria such as
employment position or other relationship with the Company, duties and
responsibilities, ability, productivity, length of service or association,
morale, interest in the Company, recommendations by supervisors, the interests
of the Company, and other matters.
3. Administration Of The Plan.
(a) The Plan shall be administered by the Option Committee. The Option
Committee shall have the authority granted to it under this Section and under
each other section of the Plan.
(b) In accordance with and subject to the provisions of the Plan, the
Option Committee shall select the Optionees and shall determine (i) the number
of shares of Common Stock to be subject to each Option, (ii) the time at which
each Option is to be granted, (iii) whether an Option shall be granted in
exchange for the cancellation and termination of a previously granted option or
options under the Plan or otherwise, (iv) the purchase price for the Option
Shares, provided that the purchase price shall be a fixed, and cannot be a
fluctuating, price, (v) the option period, (vi) the manner in which the Option
becomes exercisable, including whether portions of the Option become exercisable
at different times, and (vii) such other terms and conditions as the Option
Committee may deem necessary or desirable. The Option Committee shall determine
the form of Option Agreement to evidence each Option.
(c) The Option Committee from time to time may adopt such rules and
regulations for carrying out the purposes of the Plan as it may deem proper and
in the best interests of the Company. The Option Committee shall keep minutes of
its meetings and those minutes shall be distributed to every member of the
Board.
(d) The Board from time to time may make such changes in and additions
to the Plan as it may deem proper and in the best interests of the Company
provided, however, that no such change or addition shall impair any Option
previously granted under the Plan, and that the approval by written consent of a
majority of the holders of the Company's securities entitled to vote, or by the
affirmative votes of the holders of a majority of the Company's securities
entitled to vote at a meeting duly held in accordance with the applicable laws
of the State of Wyoming, shall be required for any amendment which would do any
of the following:
(i) materially modify the eligibility requirements for receiving
Options under the Plan;
(ii) materially increase the benefits accruing to Key Employees
or Key Individuals under the Plan; or
(iii) materially increase the number of shares of Common Stock
that may be issued under the Plan.
(e) Each determination, interpretation or other action made or taken by
the Option Committee, unless otherwise determined by the Board, shall be final,
conclusive and binding on all persons, including without limitation, the
Company, the stockholders, directors, officers and employees of the Company, and
the Optionees and their respective successors in interest. No member of the
Option Committee shall be personally liable for any action, determination, or
interpretation made in good faith with respect to the Plan, and all members of
the Option Committee shall be, in addition to rights they may have as directors
of the Company, fully protected by the Company with respect to any such action,
determination or interpretation. If the Board makes a determination contrary to
the Option Committee's determination, interpretation or other action, then the
Board's determination shall be final and conclusive in the same manner.
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4. The Common Stock.
The Board is authorized to appropriate, issue and sell for the purposes
of the Plan, and the Option Committee is authorized to grant Options with
respect to, a total number not in excess of 200,000 shares of Common Stock,
either treasury or authorized and unissued, or the number and kind of shares of
stock or other securities which in accordance with Section 9 shall be
substituted for the 200,000 shares or into which such 200,000 shares shall be
adjusted. All or any unsold shares subject to an Option, that for any reason
expires or otherwise terminates before it has been exercised, again may be made
subject to Options under the Plan.
5. Eligibility.
Incentive Options may be granted only to Key Employees. Non-Qualified
Options may be granted both to Key Employees and to Key Individuals. Key
Employees and Key Individuals may hold more than one Option under the Plan and
may hold Options under the Plan as well as options granted pursuant to other
plans or otherwise.
6. Option Price.
The Option Committee shall determine the purchase price for the Option
Shares; provided, however, that the purchase price to be paid by Optionees for
the Option Shares shall not be less than 100 percent of the Fair Market Value of
the Option Shares on the Date Of Grant and provided further that the purchase
price shall be a fixed, and cannot be a fluctuating, price.
7. Duration And Exercise Of Options.
(a) Except as provided in Section 17, the option period shall commence
on the Date Of Grant and shall continue for the period designated by the Option
Committee up to a maximum of ten years from the Date Of Grant.
(b) During the lifetime of the Optionee, the Option shall be exercisable
only by the Optionee; provided that, subject to the following sentence and
paragraph (d) of this Section 7, in the event of the legal disability of an
Optionee, the guardian or personal representative of the Optionee may exercise
the Option. If the Option is an Incentive Option, it may be exercised by the
guardian or personal representative of the Optionee only if the guardian or
personal representative obtains a ruling from the Internal Revenue Service or an
opinion of counsel to the effect that neither the grant nor the exercise of such
power is violative of Code Section 422(b)(5) or the successor to that provision.
Any opinion of counsel must be both from counsel acceptable to the Option
Committee and in a form acceptable to the Option Committee.
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<PAGE>
(c) If the Optionee's employment or affiliation with the Company is
terminated for any reason including the Optionee's death, any Option then held,
to the extent that the Option was exercis- able according to its terms on the
date of termination, may be exercised for up to, and not more than, three months
after termination. The duration, if any, of the exercise period of the Option
subsequent to termination will be determined by the Option Committee. Any
options remaining unexercised shall expire at the later of termination or the
end of the extended exercise period, if any.
(d) Each Option shall be exercised in whole or in part by delivering to
the office of the Treasurer of the Company written notice of the number of
shares with respect to which the Option is to be exercised and by paying in full
the purchase price for the Option Shares purchased as set forth in Section 8
herein; provided, that an Option may not be exercised in part unless the
purchase price for the Option Shares purchased is at least $1,000.
(e) No Option Shares may be sold, transferred or otherwise disposed of
within six months of the Date Of Grant by any person who is subject to the
reporting requirements of Section 16(a) of the Exchange Act on the Date Of
Grant.
8. Payment For Option Shares.
(a) If the purchase price of the Option Shares purchased by any Optionee
at one time exceeds $1,000, the Option Committee, in its sole discretion, upon
request by the Optionee, may permit all or part of the purchase price for the
Option Shares to be paid by delivery to the Company for cancellation shares of
the Common Stock previously owned by the Optionee ("Previously Owned Shares")
with a Fair Market Value as of the date of the payment equal to the portion of
the purchase price for the Option Shares that the Optionee does not pay in cash.
Notwithstanding the above, an Optionee shall be permitted to exercise his Option
by delivering Previously Owned Shares only if he has held, and provides
appropriate evidence of such, the Previously Owned Shares for more than six
months prior to the date of exercise. This period (the "Holding Period") may be
extended by the Option Committee acting in its sole discretion as is necessary,
in the opinion of the Option Committee, so that, under generally accepted
accounting principles, no compensation shall be considered to have been or to be
paid to the Optionee as a result of the exercise of the Option in this manner.
At the time the Option is exercised, the Optionee shall provide an affidavit,
and such other evidence and documents as the Option Committee shall request, to
establish the Optionee's Holding Period. As indicated above, an Optionee may
deliver shares of Common Stock as part of the purchase price only if the Option
Committee, in its sole discretion, agrees, on a case by case basis, to permit
this form of payment.
(b) If payment for the exercise of an Option is made other than by the
delivery to the Company for cancellation of shares of the Common Stock, the
purchase price shall be paid in cash, certified funds, or Optionee's check.
Payment shall be considered made when the Treasurer of the Company receives
delivery of the payment at the Company's address, provided that a payment made
by check is honored when first presented to the Optionee's bank.
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<PAGE>
9. Change In Stock, Adjustments, Etc.
In the event that each of the outstanding shares of Common Stock (other
than shares held by dissenting stockholders which are not changed or exchanged)
should be changed into, or exchanged for, a different number or kind of shares
of stock or other securities of the Company, or if further changes or exchanges
of any stock or other securities into which the Common Stock shall have been
changed, or for which it shall have been exchanged, shall be made (whether by
reason of merger, consolidation, reorganization, recapitalization, stock
dividends, reclassification, split-up, combination of shares or otherwise), then
there shall be substituted for each share of Common Stock that is subject to the
Plan but not subject to an outstanding Option hereunder, the number and kind of
shares of stock or other securities into which each outstanding share of Common
Stock (other than shares held by dissenting stockholders which are not changed
or exchanged) shall be so changed or for which each outstanding share of Common
Stock (other than shares held by dissenting stockholders) shall be so changed or
for which each such share shall be exchanged. Any securities so substituted
shall be subject to similar successive adjustments.
In the event of any such changes or exchanges, (i) the Option Committee
shall determine whether, in order to prevent dilution or enlargement of rights,
an adjustment should be made in the number, or kind, or option price of the
shares or other securities that are then subject to an Option or Options granted
pursuant to the Plan, (ii) the Option Committee shall make any such adjustment,
and (iii) such adjustments shall be made and shall be effective and binding for
all purposes of the Plan.
10. Relationship To Employment Or Position.
Nothing contained in the Plan, or in any Option or Option Share granted
pursuant to the Plan, (i) shall confer upon any Optionee any right with respect
to continuance of his employment by, or position or affiliation with, or
relationship to, the Company, or (ii) shall interfere in any way with the right
of the Company at any time to terminate the Optionee's employment by, position
or affiliation with, or relationship to, the Company.
11. Nontransferability Of Option.
No Option granted under the Plan shall be transferable by the Optionee,
either voluntarily or involuntarily, except by will or the laws of descent and
distribution, or except pursuant to a qualified domestic relations order as
defined in the Code, the Employee Retirement Income Security Act, or rules
promulgated thereunder. Except as provided in the preceding sentence, any
attempt to transfer the Option shall void the Option.
12. Rights As A Stockholder.
No person shall have any rights as a stockholder with respect to any
share covered by an Option until that person shall become the holder of record
of such share and, except as provided in Section 9, no adjustments shall be made
for dividends or other distributions or other rights as to which there is an
earlier record date.
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13. Securities Laws Requirements.
No Option Shares shall be issued unless and until, in the opinion of the
Company, any applicable registration requirements of the Securities Act of 1933,
as amended, any applicable listing requirements of any securities exchange on
which stock of the same class is then listed, and any other requirement of law
or of any regulatory bodies having jurisdiction over such issuance and delivery,
have been fully complied with. Each Option Agreement and each Option Share
certificate may be imprinted with legends reflecting federal and state
securities laws restrictions and conditions, and the Company may comply
therewith and issue "stop transfer" instructions to its transfer agent and
registrar in good faith without liability.
14. Disposition Of Shares.
To the extent reasonably requested by the Company, each Optionee, as a
condition of exercise, shall represent, warrant and agree, in a form of written
certificate approved by the Company, as follows: (a) that all Option Shares are
being acquired solely for his own account and not on behalf of any other person
or entity; (b) that no Option Shares will be sold or otherwise distributed in
violation of the Securities Act of 1933, as amended, or any other applicable
federal or state securities laws; (c) that he will report all sales of Option
Shares to the Company in writing on a form prescribed by the Company; and (d)
that if he is subject to reporting requirements under Section 16(a) of the
Exchange Act, (i) he will not violate Section 16(b) of the Exchange Act, (ii) he
will furnish the Company with a copy of each Form 4 and Form 5 filed by him, and
(iii) he will timely file all reports required under the federal securities
laws.
15. Effective Date Of Plan; Termination Date Of Plan.
Subject to the approval of the Plan on or before _____________, 1997 by
the affirmative vote of the holders of a majority of the shares of Common Stock
entitled to vote and represented at a meeting duly held in accordance with the
applicable laws of the State of Wyoming, the Plan shall be deemed effective as
of April 1, 1996. The Plan shall terminate at midnight on the date that is ten
years from that date, except as to Options previously granted and outstanding
under the Plan at that time. No Options shall be granted after the date on which
the Plan terminates. The Plan may be abandoned or terminated at any earlier time
by the Board, except with respect to any Options then outstanding under the
Plan.
16. Limitation On Amount Of Option.
The aggregate Fair Market Value of the Option Shares underlying all
Incentive Options that have been granted to a particular Optionee and that
become exercisable for the first time during the same calendar year shall not
exceed $100,000, provided that this amount shall be increased or decreased, from
time to time, as Code Section 422 or the successor to that Section is amended,
so that this amount at all times shall equal the amount of the limitation set
forth in the Code. For purposes of the preceding sentence, Fair Market Value of
the Shares underlying any particular Option shall be determined as of the date
that Option is granted.
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17. Ten Percent Stockholder Rule.
No Incentive Option may be granted to a Key Employee who, at the time
the Incentive Option is granted, owns stock possessing more than 10 percent of
the total combined voting power of all classes of stock of the Company or of any
"parent corporation" or "subsidiary corporation", as those terms are defined in
Section 424, or its successor provision, of the Code, unless at the time the
Incentive Option is granted the purchase price for the Option Shares is at least
110 percent of the Fair Market Value of the Option Shares on the Date Of Grant
and the Incentive Option by its terms is not exercisable after the expiration of
five years from the Date Of Grant. For purposes of the preceding sentence, stock
ownership shall be determined as provided in Section 424, or its successor
provision, of the Code.
18. Withholding Taxes.
The Option Agreement shall provide that the Company may take such steps
as it may deem necessary or appropriate for the withholding of any taxes which
the Company is required by any law or regulation or any governmental authority,
whether federal, state or local, domestic or foreign, to withhold in connection
with any Option including, but not limited to, the withholding of all or any
portion of any payment or the withholding of issuance of Option Shares to be
issued upon the exercise of any Option.
19. Effect Of Changes In Control And Certain Reorganizations.
(a) In event of a Change In Control of the Company (as defined below),
the Option Committee, in its sole discretion, shall have the right, but not the
obligation, to do any or all of the following:
(i) provide that all Options granted pursuant to the Plan shall
become exercisable immediately at the time of such Change In
Control (or at such other time as the Committee shall
determine), except that this acceleration would not occur
with respect to any Incentive Options for which the
acceleration would result in a violation of Section 16 of
this Plan;
(ii) provide for an Optionee to surrender an Option (or portion
thereof) and to receive in exchange a cash payment, for each
Option share underlying the surrendered Option, equal to the
excess of the aggregate Fair Market Value of the Option
Share on the date of surrender over the exercise price for
the Option Share. To the extent any Option is surrendered
pursuant to this Subparagraph 19(a) (ii), it shall be deemed
to have been exercised for purposes of Section 4 hereof; and
(iii) make any other adjustments, or take any other action, as the
Option Committee, in its discretion, shall deem appropriate
provided that any such adjustments or actions would not
result in an Optionee receiving less value than pursuant to
any or all of Subparagraphs 19(a)(i) or 19(a) (ii) above.
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<PAGE>
For purposes of this Section 19, a "Change In Control" of
the Company shall mean a change in control of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Exchange Act regardless of whether the Company is then
subject to such reporting requirement.
(b) In the event that the Company enters into, or the Board shall
propose that the Company enter into, a Reorganization Event (as defined below),
the Option Committee, in its sole discretion, may make any or all of the
following adjustments:
(i) by written notice to each Optionee provide that such
Optionee's Options shall be terminated or cancelled, unless
exercised within 30 days (or such other period as the Option
Committee shall determine) after the date of such notice;
(ii) advance the dates upon which any or all outstanding Options
shall be exercised, except that this advance will not occur
with respect to any Incentive Options for which the advance
would result in a violation of Section 16 of this Plan;
(iii) provide for termination or cancellation of an Option in
exchange for payment to the Optionee of an amount in cash or
securities equal to the excess, if any, over the exercise
price of that Option of the Fair Market Value of the Option
Shares subject to the Option at the time of such termination
or cancellation; and
(iv) make any other adjustments, or take any other action, as the
Option Committee, in its discretion, shall deem appropriate,
provided that any such adjustments or actions shall not
result in the Optionee receiving less value than is possible
pursuant to any or all of Subparagraphs 19(b)(i), 19(b)(ii),
and 19(b) (iii) above. Any action taken by the Option
Committee may be made conditional upon the consummation of
the applicable Reorganization Event.
For purposes of this Section 19, a "Reorganization Event"
shall be deemed to occur if (A) the Company is merged or consolidated with
another corporation, (B) one person becomes the beneficial owner of all of the
issued and outstanding equity securities of the Company (for purposes of this
Section 19(b), the terms "person" and "beneficial owner" shall have the meanings
assigned to them in Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder), (C) a division or subsidiary of the Company
is acquired by another corporation, person or entity, (D) all or substantially
all the assets of the Company are acquired by another corporation, or (E) the
Company is reorganized, dissolved or liquidated.
20. Other Provisions.
The following provisions are also in effect under the Plan:
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(a) The use of a masculine gender in the Plan shall also include within
its meaning the feminine, and the singular may include the plural, and the
plural may include the singular, unless the context clearly indicates to the
contrary.
(b) Any expenses of administering the Plan shall be borne by the
Company.
(c) This Plan shall be construed to be in addition to any and all other
compensation plans or programs. Neither the adoption of the Plan by the Board
nor the submission of the Plan to the stockholders of the Company for approval
shall be construed as creating any limitations on the power or authority of the
Board to adopt such other additional incentive or other compensation
arrangements as the Board may deem necessary or desirable.
(d) The validity, construction, interpretation, administration and
effect of the Plan and of its rules and regulations, and the rights of any and
all persons having or claiming to have an interest therein or thereunder shall
be governed by and determined exclusively and solely in accordance with the laws
of the State of Wyoming.
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