<PAGE>
- --------------------------------------------------------------------------------
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:
[X] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Barrett Resources Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Paul M. Rady, President and Chief Operating Officer
- --------------------------------------------------------------------------------
(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:
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 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
Not applicable
----------------------------------------------------------------------
4. Proposed maximum aggregate value of transaction:
Not applicable
----------------------------------------------------------------------
5. Total fee paid:
Not applicable
----------------------------------------------------------------------
[_] 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: Not applicable
-----------------------------------------------
2. Form Schedule or Registration Statement No.: Not applicable
-------------------------
3. Filing Party: Not applicable
---------------------------------------------------------
4. Date Filed: Not applicable
-----------------------------------------------------------
<PAGE>
BARRETT RESOURCES CORPORATION
1515 Arapahoe Street
Tower 3, Suite 1000
Denver, Colorado 80202
(303) 572-3900
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held June 17, 1997
The Annual Meeting of the stockholders of Barrett Resources Corporation
(the "Company") will be held on June 17, 1997 at 9:00 a.m. (local time) at the
Westin Hotel, 1672 Lawrence Street, Denver, Colorado, for the following
purposes:
1. To elect the 12 members of the Company's Board of Directors;
2. To consider and vote upon a proposal recommended by the Board of
Directors to approve the Company's 1997 Stock Option Plan;
3. To consider and vote upon a proposal recommended by the Board of
Directors to amend the Non-Discretionary Stock Option Plan;
4. To consider and vote upon a proposal recommended by the Board of
Directors to amend the Company's Certificate of Incorporation to
increase the Company's authorized Common Stock from 35,000,000 shares
to 45,000,000 shares;
5. To ratify the selection of Arthur Andersen LLP to serve as the
Company's independent certified accountants for the fiscal year ending
December 31, 1997; and
6. To transact any other business that properly may come before the
meeting.
Only the stockholders of record as shown on the transfer books of the
Company at the close of business on April 21, 1997 are entitled to notice of,
and to vote at, the Stockholder Meeting.
All stockholders, regardless of whether they expect to attend the meeting
in person, are requested to complete, date, sign and return promptly the
enclosed form of proxy in the accompanying envelope (which requires no postage
if mailed in the United States). The person executing the proxy may revoke it
by filing with the Secretary of the Company an instrument of revocation or a
duly executed proxy bearing a later date, or by electing to vote in person at
the Stockholder Meeting.
ALL STOCKHOLDERS ARE EXTENDED A CORDIAL INVITATION TO ATTEND THE
STOCKHOLDER MEETING.
By the Board of Directors
PAUL M. RADY
President and Chief Operating Officer
Denver, Colorado
April 24, 1997
<PAGE>
PROXY STATEMENT
BARRETT RESOURCES CORPORATION
1515 Arapahoe Street
Tower 3, Suite 1000
Denver, Colorado 80202
(303) 572-3900
ANNUAL MEETING OF STOCKHOLDERS
to be held
June 17, 1997
This Proxy Statement is provided in connection with the solicitation of
proxies by the Board of Directors of Barrett Resources Corporation, a Delaware
corporation (the "Company"), to be voted at the Annual Meeting of Stockholders
of the Company to be held at 9:00 a.m. (local time) on June 17, 1997 at the
Westin Hotel, 1672 Lawrence Street, Denver, Colorado or at any adjournment or
postponement of the meeting. The Company anticipates that this Proxy Statement
and the accompanying form of proxy will be first mailed or given to the
Company's stockholders on or about April 24, 1997.
The shares represented by all proxies that are properly executed and
submitted will be voted at the meeting in accordance with the instructions
indicated on the proxies. Unless otherwise directed, the shares represented by
proxies will be voted for each of the 12 nominees for director whose names are
set forth on the proxy card, in favor of the proposal to adopt the Company's
1997 Stock Option Plan, in favor of the proposal to amend the Company's Non-
Discretionary Stock Option Plan, in favor of the proposal to amend the Company's
Certificate of Incorporation to increase the Company's authorized Common Stock
from 35,000,000 shares to 45,000,000 shares, and in favor of ratification of the
selection of Arthur Andersen LLP as the Company's independent auditors, as
described in this Proxy Statement.
A stockholder giving a proxy may revoke it at any time before it is
exercised by delivering written notice of revocation to the Company, by
substituting a new proxy executed at a later date, or by requesting, in person
at the Annual Meeting, that the proxy be returned.
The solicitation of proxies is to be made principally by mail; however,
following the original solicitation, further solicitations may be made by
telephone or oral communication with stockholders of the Company. Officers,
directors and employees of the Company may solicit proxies, but without
compensation for such solicitation other than their regular compensation as
employees of the Company. Arrangements also will be made with brokerage houses
and other custodians, nominees and fiduciaries to forward solicitation materials
to beneficial owners of the shares held of record by those persons. The Company
may reimburse those persons for reasonable out-of-pocket expenses incurred by
them in so doing. All expenses involved in preparing, assembling and mailing
this Proxy Statement and the enclosed material will be paid by the Company. A
majority of the issued and outstanding shares of the Company's Common Stock
entitled to vote, represented either in person or by proxy, constitutes a quorum
at any meeting of the stockholders.
ELECTION OF DIRECTORS
At the Annual Meeting, the stockholders will elect 12 members of the Board
of Directors of the Company. Each director will be elected to hold office until
the next annual meeting of stockholders and
1
<PAGE>
thereafter until his successor is elected and has qualified. The affirmative
vote of a majority of the shares represented at the meeting is required to elect
each director. Cumulative voting is not permitted in the election of directors.
Consequently, each stockholder is entitled to one vote for each share of Common
Stock held in his or her name. In the absence of instructions to the contrary,
the persons named in the accompanying proxy shall vote the shares represented by
that proxy for the persons named below as Management's nominees for directors of
the Company. Each of the nominees currently is a director of the Company.
Each of the nominees has consented to be named herein and to serve on the
Board if elected. It is not anticipated that any nominee will become unable or
unwilling to accept nomination or election, but, if that should occur, the
persons named in the proxy intend to vote for the election of such other person
as the Board of Directors may recommend.
The following table sets forth, with respect to each nominee for director,
the nominee's age, his positions and offices with the Company, the expiration of
his term as a director, and the year in which he first became a director of the
Company. Individual background information concerning each of the nominees
follows the table. For additional information concerning the nominees for
director, including stock ownership and compensation, see "EXECUTIVE
COMPENSATION", "STOCK OWNERSHIP OF DIRECTORS AND PRINCIPAL STOCKHOLDERS", and
"CERTAIN TRANSACTIONS WITH MANAGEMENT AND PRINCIPAL STOCKHOLDERS".
<TABLE>
<CAPTION>
Expiration of
Position with Term as Initial Date
Name Age the Company Director as Director
- ---- --- ----------- ------------- -----------
<S> <C> <C> <C> <C>
William J. Barrett 68 Chief Executive Officer Next Annual 1983
/(1)(2)(5)(7)/ and Chairman of the Meeting
Board of Directors
C. Robert Buford 63 Director Next Annual 1983
/(1)(2)(3)(4)/ Meeting
Derrill Cody /(2)(3)(4)/ 58 Director Next Annual 1995
Meeting
James M. Fitzgibbons 62 Director Next Annual 1987
/(3)(4)(6)/ Meeting
Hennie L.J.M. Gieskes 58 Director Next Annual 1985
/(1)(3)(4)/ Meeting
William W. Grant, III 64 Director Next Annual 1995
/(3)(4)/ Meeting
J. Frank Keller /(5)/ 53 Executive Vice Next Annual 1983
President, Secretary, Meeting
Chief Financial Officer,
and a Director
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Expiration of
Position with Term as Initial Date
Name Age the Company Director as Director
- ---- --- ----------- ------------- --------
<S> <C> <C> <C> <C>
Paul M. Rady /(2)(7)/ 43 President, Chief Next Annual 1994
Operating Officer, and Meeting
a Director
A. Ralph Reed 59 Executive Vice Next Annual 1990
President - Operations Meeting
and a Director
James T. Rodgers /(3)(4)/ 62 Director Next Annual 1993
Meeting
Philippe S.E. Schreiber 56 Director Next Annual 1985
/(2)(3)(4)/ Meeting
Harry S. Welch /(3)(4)/ 73 Director Next Annual 1995
Meeting
- ------------------
</TABLE>
/(1)/ Member of the Executive Committee of the Board of Directors.
/(2)/ Member of the Board Planning and Nominating Committee of the Board of
Directors.
/(3)/ Member of the Audit Committee of the Board of Directors.
/(4)/ Member of the Compensation Committee of the Board of Directors.
/(5)/ Mr. Keller and Mr. Barrett are brothers-in-law.
/(6)/ Mr. Fitzgibbons served as a Director of the Company from July 1987 until
October 1992. He was re-elected to the Board of Directors in January 1994.
/(7)/ The Board of Directors has elected Paul M. Rady to serve as Chief
Executive Officer effective as of July 1, 1997, at which time William J.
Barrett will retire as Chief Executive Officer. Mr. Barrett's retirement
plans include remaining as Chairman of the Board until January 1999.
William J. Barrett has been Chief Executive Officer since December 1983
and Chairman of the Board of Directors of the Company since March 1994. Mr.
Barrett was President of the Company from December 1983 through September 1994.
From January 1979 to February 1982, Mr. Barrett was an independent oil and gas
operator in the western United States in association with Aeon Energy, a
partnership composed of four sole proprietorships. From 1971 to 1978, Mr.
Barrett served as Vice President - Exploration and a director of Rainbow
Resources, Inc., a publicly held independent oil and gas exploration company
that merged with a subsidiary of the Williams Companies in 1978. Mr. Barrett
served as President, Exploration Manager and Director for B&C Exploration from
1969 until 1971 and
3
<PAGE>
was chief geologist for Wolf Exploration Company, now known as Inexco Oil Co.,
from 1967 to 1969. He was an exploration geologist with Pan-American Petroleum
Corporation from 1963 to 1966 and worked as an exploration geologist, a
petroleum geologist and a stratigrapher for El Paso Natural Gas Co. at various
times from 1958 to 1963. Mr. Barrett's retirement plans include remaining as
Chairman of the Board until January 1999 and remaining as Chief Executive
Officer until July 1, 1997.
C. Robert Buford has been a director of the Company since December 1983 and
served as Chairman of the Board of Directors from December 1983 through March
1994. Mr. Buford has been President, Chairman of the Board and controlling
shareholder of Zenith Drilling Corporation ("Zenith"), Wichita, Kansas, since
February 1966. Zenith owns approximately ___ percent of the Company's Common
Stock. Since 1993, Mr. Buford has served as a director of Encore Energy, Inc.,
a wholly-owned subsidiary of Zenith engaged in the marketing of natural gas.
Mr. Buford is also a member of the Board of Directors of Intrust Financial
Corporation, a bank holding company. Mr. Buford served as a director of
Lonestar Steakhouse & Saloon, Inc. from March 1992 until his resignation on
January 3, 1997.
Derrill Cody has been a director of the Company since July 1995. From May
1990 until July 1995, Mr. Cody served as a director of Plains Petroleum Company
("Plains"), which merged with a subsidiary of the Company on July 18, 1995.
Since January 1990, Mr. Cody has been an attorney in private practice in
Oklahoma City, Oklahoma. From 1986 to 1990, he was Executive Vice President of
Texas Eastern Corporation, and from 1987 to 1990 he was the Chief Executive
Officer of Texas Eastern Pipeline Company. He has been a director of the
General Partner of TEPPCO Partners, L.P. since January 1990.
James M. Fitzgibbons has been a director of the Company since January 1994,
and previously served as a director of the Company from July 1987 until October
1992. Since October 1990, Mr. Fitzgibbons has been Chairman and Chief Executive
Officer of Fieldcrest Cannon, Inc., a manufacturer of home furnishing textiles.
From January 1986 until October 1990, Mr. Fitzgibbons was President of Amoskeag
Company in Boston, Massachusetts. Prior to 1986, he was President of Howes
Leather Company, a producer of leather. Mr. Fitzgibbons is also member of the
Board of Directors of Lumber Mutual Insurance Company, American Textile
Manufacturers Institute and a Trustee of Dreyfus Laurel Funds, a series of
mutual funds.
Hennie L.J.M. Gieskes has been a director of the Company since November
1985. Mr. Gieskes is the Managing Director of Spaarne Compagnie N.V., a
Netherlands company engaged in the investment business. From before 1976 until
December 1990, Mr. Gieskes was a Managing Director of Vitol Beheer B.V., a
Netherlands trading company engaged primarily in energy-related commodities.
William W. Grant, III has served as a director of the Company since July
1995. From May 1987 until July 1995, Mr. Grant served as a director of Plains.
He has been an advisory director of Colorado National Bankshares, Inc. and
Colorado National Bank since 1993. He was a director of Colorado National
Bankshares, Inc. from 1982 to 1993 and the Chairman of the Board of Colorado
National Bank of Denver from 1986 to 1993. He served as the Chairman of the
Board of Colorado Capital Advisors from 1989 through 1994.
J. Frank Keller has been an Executive Vice President, Secretary and a
director of the Company since December 1983 and Chief Financial Officer of the
Company since July 1995. Mr. Keller was the
4
<PAGE>
President and a co-founder of Myriam Corp., an architectural design and real
estate development firm beginning in 1976, until it was reorganized as Barrett
Energy in February 1982.
Paul M. Rady has been President, Chief Operating Officer, and a director of
the Company since September 1994. Effective as of July 1, 1997, Mr. Rady will
become Chief Executive Officer and William J. Barrett will continue as Chairman
of the Board. Prior to September 1994, Mr. Rady served as Executive Vice
President-Exploration of the Company beginning February 1993. From August 1990
until July 1992, Mr. Rady served as Chief Geologist for the Company, and from
July 1992 until January 1993 he served as Exploration Manager for the Company.
From July 1980 until August 1990, Mr. Rady served in various positions with the
Denver, Colorado regional office of Amoco Production Company ("Amoco"), the
exploration and production subsidiary of Amoco Corporation. Mr. Rady was a
Geologist and Geophysicist for Amoco. While with Amoco, Mr. Rady's areas of
responsibility included the Rocky Mountain Basins, Utah-Wyoming Overthrust Belt,
offshore Alaska, Oklahoma, particularly with respect to the Arkoma Basin, and
the New Ventures Group, which concentrated on the western United States.
A. Ralph Reed has been an Executive Vice President of the Company since
November 1989 and a director since September 1990. From 1986 to 1989, Mr. Reed
was an independent oil and natural gas operator in the Mid-continent region of
the United States, including the period from January 1988 to November 1989 when
he acted as a consultant to Zenith. From 1982 to 1986, Mr. Reed was President
and Chief Executive Officer of Cotton Petroleum Corporation ("Cotton"), a wholly
owned exploration and production subsidiary of United Energy Resources, Inc.
Prior to joining Cotton in 1980, Mr. Reed was employed by Amoco from 1962,
holding various positions including Manager of International Production,
Division Production Manager and Division Engineer.
James T. Rodgers has been a director of the Company since November 1993.
Mr. Rodgers served as the President, Chief Operating Officer and a director of
Anadarko Petroleum Corporation ("Anadarko") from 1986 through 1992. Prior to
1986, Mr. Rodgers was employed in other capacities by Anadarko and Amoco. Mr.
Rodgers taught Petroleum Engineering at the University of Texas in Austin in
1958 and at Texas Tech University in Lubbock from 1958 to 1961. Mr. Rodgers
currently serves as a Director of Louis Dreyfus Natural Gas Corporation and as
an advisor to Ural Petroleum Corporation, a privately held exploration and
production company operating in the former Soviet Union.
Philippe S.E. Schreiber has been a director of the Company since November
1985. Mr. Schreiber is an independent lawyer and business consultant who also
is of counsel to the law firm of Walter, Conston, Alexander & Green, P.C. in New
York, New York. Mr. Schreiber has been affiliated with that law firm as counsel
or partner since August 1985. From 1988 to mid-1992, he also was the Chairman
of the Board and a principal shareholder of HSE, Inc., d/b/a Manhattan Kids
Limited, a privately owned corporation.
Harry S. Welch has been a director of the Company since July 1995. From
May 1986 until July 1995, Mr. Welch served as a director of Plains. Since
August 1989, he has been an attorney in private practice in Houston, Texas. He
served as Vice President and General Counsel of Texas Eastern Corporation from
1988 to July 1989.
5
<PAGE>
Committees and Meetings.
The Board of Directors has a Compensation Committee, an Audit Committee, an
Executive Committee, and a Board Planning and Nominating Committee. The
Compensation Committee has the authority to establish policies concerning
compensation and employee benefits for employees of the Company. The
Compensation Committee reviews and makes recommendations concerning the
Company's compensation policies and the implementation of those policies and
determines compensation and benefits for executive officers. During 1996, the
Compensation Committee, currently consisting of Messrs. Buford, Cody,
Fitzgibbons, Gieskes, Grant, Rodgers, Schreiber (Chairman), and Welch, met four
times. In addition, the Compensation Committee took action in 1996 three times
by unanimous consent.
The Audit Committee performs the following functions: recommending to the
Board of Directors the independent auditors to be employed; discussing the scope
of the independent auditors' examination; reviewing the financial statements and
the independent auditors' report; soliciting recommendations from the
independent auditors regarding internal controls and other matters; establishing
guidelines for the Board of Directors to review related party transactions for
potential conflicts of interest; making recommendations to the Board of
Directors; and performing other related tasks as requested by the Board. During
1996, the Audit Committee, currently consisting of Messrs. Buford (Chairman),
Cody, Fitzgibbons, Gieskes, Grant, Rodgers, Schreiber and Welch, met two times.
The Executive Committee, which held no meetings in 1996, is comprised of
Messrs. Barrett, Buford and Gieskes. The primary responsibility of the
Executive Committee is to exercise the authority of the Board, to the extent
permitted by Delaware law and the Company's Bylaws, during intervals between
regular meetings of the Board.
On January 27, 1997, the Board of Directors established the Board Planning
and Nominating Committee, consisting of Messrs. Barrett, Buford, Cody, Rady and
Schreiber. The primary responsibilities of the Committee are to review the
role, structure and procedures of the Board of Directors and its committees and
to consider and recommend candidates for election to the Board.
During 1996, the Board of Directors met 11 times and took action three
times by unanimous written consent. Each director participated in at least 75
percent of the aggregate of the total number meetings of the Board of Directors
and of all committees of the Board of Directors on which that director served
during 1996.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and
holders of more than 10% of the Company's Common Stock to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
The Company believes that during the fiscal year ended December 31, 1996, its
officers, directors and holders of more than 10% of the Company's Common Stock
complied with all Section 16(a) filing requirements, with the following
exception: Donald H. Stevens, Vice President -- Corporate Relations and Capital
Markets, reported on October 25, 1996 on a Form 4, the sale on September 24,
1996 of 3,750 shares. In making these statements, the Company has relied upon
the written representations of its directors and officers.
6
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth in summary form the compensation received
during each of the Company's last three completed fiscal years by the Chief
Executive Officer of the Company and by the four other most highly compensated
executive officers whose compensation exceeded $100,000 during the year ended
December 31, 1996. Beginning with the year ended December 31, 1995, the Company
changed its fiscal year end from September 30 to December 31. The figures in
the following table are for each of the one year periods ended December 31,
1996, 1995, and 1994:
Summary Compensation Table
<TABLE>
<CAPTION>
=============================================================================================================================
Long Term Compensation
- -----------------------------------------------------------------------------------------------------------------------------
Awards Payouts
- -----------------------------------------------------------------------------------------------------------------------------
Restricted Securities
Other Annual Stock Underlying LTIP All Other
Name and Principal Fiscal Salary Bonus Compensation Award(s) Options/SARs Payouts Compensation
Position Year ($) ($)/(1)/ ($)/(2)/ ($)/(3)/ (#)/(4)/ ($)/(5)/ ($)/(6)/
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William J. Barrett 1996 $255,417 $150,000 -0- -0- 100,000 -0- $7,913
Chief Executive
Officer and 1995 $200,000 -0- -0- -0- -0- -0- $4,680
Chairman of the
Board 1994 $200,000 $40,000 -0- -0- 100,000 -0- $4,560
- -----------------------------------------------------------------------------------------------------------------------------
Paul M. Rady 1996 $206,667 $63,000 -0- -0- 52,000 -0- $8,138
President, Chief
Operating Officer, 1995 $175,000 -0- -0- -0- -0- -0- $4,680
and a director
1994 $139,583 $30,000 -0- -0- 70,000 -0- $4,247
- -----------------------------------------------------------------------------------------------------------------------------
A. Ralph Reed 1996 $207,917 $54,000 -0- -0- 40,000 -0- $7,988
Executive Vice
President - 1995 $200,000 -0- -0- -0- -0- -0- $4,680
Operations, and a
director 1994 $164,583 $30,000 -0- -0- 100,000 -0- $4,705
- -----------------------------------------------------------------------------------------------------------------------------
J. Frank Keller 1996 $155,938 $40,000 -0- -0- 19,200 -0- $8,222
Executive Vice
President, 1995 $150,000 -0- -0- -0- -0- -0- $4,560
Chief Financial
Officer, Secretary 1994 $128,750 $25,000 -0- -0- 55,000 -0- $3,922
and a director
- -----------------------------------------------------------------------------------------------------------------------------
Eugene A. Lang, 1996 $141,242 $25,000 -0- -0- 9,600 -0- $7,432
Jr., Senior Vice
President and 1995 $138,422 $ 8,000 -0- -0- -0- -0- $1,500
General Counsel /(7)/
1994 $127,560 -0- -0- -0- 25,460/(8)/ -0- $1,500
=============================================================================================================================
</TABLE>
7
<PAGE>
/(1)/ The dollar value of bonus (cash and non-cash) paid during the year
indicated. In March 1997, cash bonuses were determined by the Compensation
Committee and paid by the Company based upon the Company's performance in 1996.
These bonuses included $250,000 paid to Mr. Barrett, $160,000 paid to Mr. Rady,
$120,000 paid to Mr. Reed, $90,000 paid to Mr. Keller, and $65,000 paid to
Mr. Lang. See "Compensation Committee Report on Executive Compensation--Cash
Bonus Awards".
/(2)/ During the period covered by the Table, the Company did not pay any other
annual compensation not properly categorized as salary or bonus, including
perquisites and other personal benefits, securities or property.
/(3)/ During the period covered by the Table, the Company did not make any
award of restricted stock, including share units.
/(4)/ The sum of the number of shares of Common Stock to be received upon the
exercise of all stock options granted. At the March 20, 1997 meeting of the
Board of Directors, the Board approved the 1997 Plan. See "Option Grants Table"
and "PROPOSAL TO ADOPT 1997 STOCK OPTION PLAN".
/(5)/ Except for stock option plans, the Company does not have in effect any
plan that is intended to serve as incentive for performance to occur over a
period longer than one fiscal year.
/(6)/ Represents the Company's matching contribution under the Company's 401(k)
Plan for each named executive officer. The amounts for 1994 and 1995 for
Mr. Lang represent matching contributions under the Plains 401(k) Plan.
/(7)/ Mr. Lang's compensation was paid by Plains during the period from
January 1, 1994 through July 18, 1995 when Plains merged with a subsidiary of
the Company.
/(8)/ Consists of options to purchase 25,460 shares of common stock of Plains
that became options to purchase 33,097 shares of Common Stock of the Company
upon the merger of Plains with a subsidiary of the Company.
Option Grants in Last Fiscal Year
No stock appreciation rights were granted to any executive officers or
employees in the year ended December 31, 1996. The following table provides
information on stock option grants in the year ended December 31, 1996 to the
named executive officers.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential
Individual Grants Realizable Value
--------------------------------------------------------- -------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees Exercise
Granted in Fiscal Price Expiration
Name (#) Year ($/Share) Date 5% 10%
---- ----------- ---------- --------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
William J. Barrett 100,000(1) 14.13% $23.125 March 5, 2003 $942,119 $2,194,882
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Paul M. Rady 52,000(2) 7.35% $23.125 March 5, 2003 $489,901 $1,141,338
A. Ralph Reed 40,000(2) 5.65% $23.125 March 5, 2003 $376,847 $877,952
J. Frank Keller 19,200(2) 2.71% $23.125 March 5, 2003 $180,886 $421,416
Eugene A. Lang, Jr. 9,600(2) 1.36% $23.125 March 5, 2003 $90,443 $210,708
</TABLE>
- --------------
(1) Half of these option shares became exercisable on March 5, 1997, and the
balance of these option shares are first exercisable on March 5, 1998.
(2) One-fourth of these option shares became exercisable on March 5, 1997, and
an additional one-fourth of these option shares are first exercisable on each of
March 5, 1998, March 5, 1999 and March 5, 2000.
Aggregated Option Exercises And Fiscal Year-End Option Value Table
The following table sets forth information concerning each exercise of
stock options during the fiscal year ended December 31, 1996 by the Company's
Chief Executive Officer and the four other most highly compensated executive
officers of the Company whose compensation exceeded $100,000 during the year
ended December 31, 1996 and the fiscal year-end value of unexercised options
held by these persons:
Aggregated Option Exercises
For Fiscal Year Ended December 31, 1996
And Year-End Option Values (1)
<TABLE>
<CAPTION>
===========================================================================================================================
Number of Securities
Underlying Unexercised Value of Unexercised In-the-
Options at Fiscal Year- Money Options at
End (#)(4) Fiscal Year-End ($)(5)
- ----------------------------------------------------------------------------------------------------------------------------
Shares
Acquired on Value Realized
Name Exercise (2) ($)(3) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
William J. Barrett 20,000 $230,000 5,000 150,000 $125,000 $3,370,000
Chief Executive
Officer and
Chairman of the
Board
- ----------------------------------------------------------------------------------------------------------------------------
Paul M. Rady -0- -0- 35,000 87,000 $951,500 $1,965,500
President, Chief
Operating
Officer, and a
director
- ----------------------------------------------------------------------------------------------------------------------------
A. Ralph Reed 14,952 $347,709 35,048 90,000 $904,454 $2,121,800
Executive Vice
President -
Operations
and a director
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
J. Frank Keller -0- -0- 27,500 46,700 $760,600 $1,135,000
Executive Vice
President,
Chief Financial
Officer, Secretary,
and a director
- ----------------------------------------------------------------------------------------------------------------------------
Eugene A. Lang, Jr. 3,750 $45,825 40,860 9,600 $981,347 $187,200
Senior Vice
President and
General Counsel
============================================================================================================================
</TABLE>
/(1)/ No stock appreciation rights are held by any of the named executive
officers.
/(2)/ The number of shares received upon exercise of options during the fiscal
year ended December 31, 1996.
/(3)/ With respect to options exercised during the Company's fiscal year ended
December 31, 1996, the dollar value of the difference between the option
exercise price and the market value of the option shares purchased on the date
of the exercise of the options.
/(4)/ The total number of unexercised options held as of December 31, 1996,
separated between those options that were exercisable and those options that
were not exercisable.
/(5)/ For all unexercised options held as of December 31, 1996, the aggregate
dollar value of the excess of the market value of the stock underlying those
options over the exercise price of those unexercised options. These values are
shown separately for those options that were exercisable, and those options that
were not yet exercisable, on December 31, 1996. As required, the price used to
calculate these figures was the closing sale price of the Common Stock at year's
end, which was $42.625 per share on December 31, 1996. On April __, 1997, the
closing sale price was $______ per share.
Employee Retirement Plans, Long-Term Incentive Plans, and Pension Plans
-----------------------------------------------------------------------
The Company has an employee retirement plan (the "401(k) Plan") that
qualifies under Section 401(k) of the Internal Revenue Code of 1986, as amended.
Employees of the Company are entitled to contribute to the 401(k) Plan up to 15
percent of their respective salaries. For each pay period through March 31,
1996, the Company contributed on behalf of each employee 50 percent of the
contribution made by that employee, up to a maximum contribution by the Company
of three percent of that employee's gross salary for that pay period. Effective
April 1, 1996, the Company's matching contribution increased to 100 percent of
each participating employee's contribution, up to a maximum of six percent of
base salary, with one-half of the matching contribution paid in cash and one-
half paid in the Company's Common Stock. The Company's matching contribution is
subject to a vesting schedule. Benefits payable to employees upon retirement are
based on the contributions made by the employee under the 401(k) Plan, the
Company's matching contributions, and the performance of the 401(k) Plan's
investments. Therefore, the Company cannot estimate the annual benefits that
will be payable to participants in the 401(k) Plan upon retirement at normal
retirement age. Excluding the 401(k) Plan, the Company has no defined benefit or
actuarial or pension plans or other retirement plans.
Excluding the Company's stock option plans, the Company has no long-term
incentive plan to serve as incentive for performance to occur over a period
longer than one fiscal year.
Compensation of Directors
-------------------------
Standard Arrangements. Pursuant to the Company's standard arrangement
----------------------
for compensating directors, no compensation for serving as a director is paid to
directors who also are employees of the Company, and those directors who are not
also employees of the Company ("Outside Directors") receive
10
<PAGE>
an annual retainer of $20,000 paid in equal quarterly installments. In addition,
for each Board of Directors or committee meeting attended, each Outside Director
receives a $750 meeting attendance fee. Effective March 5, 1996, each Outside
Director receives $200 for each telephone meeting lasting more than 15 minutes.
Effective April 1, 1997, the meeting attendance fee was increased to $1,000 and
the fee for telephone meetings lasting more than 15 minutes was increased to
$300. Also effective April 1, 1997, the Chairman of the Compensation and Audit
Committees will receive a $1,500 meeting attendance fee for each committee
meeting. For each Board of Directors or committee meeting attended, each Outside
Director will have options to purchase 500 shares of Common Stock become
exercisable. Although these options become exercisable only at the rate of 500
for each meeting attended, each director will be granted options to purchase
10,000 shares at the time the individual initially becomes a director. (The
Board of Directors has approved, and recommended for stockholder approval,
amendments to the Non-Discretionary Stock Option Plan. If the stockholders
approve the proposed amendments to the Non-Discretionary Stock Option Plan,
options thereunder will become exercisable at the rate of 1,000 shares for each
meeting attended.) Any options that have not become exercisable at the time of
termination of a director's service will expire at that time. At such time that
the options to purchase all 10,000 shares have become exercisable, options to
purchase an additional 10,000 shares will be granted to the director and will be
subject to the same restrictions on exercise as the previously received options.
The options are granted to the Outside Directors pursuant to the Company's Non-
Discretionary Stock Option Plan, and their exercise price is equal to the
closing sales price for the Company's Common Stock on the date of grant. The
options expire upon the later to occur of five years after the date of grant and
two years after the date those options first became exercisable.
Other Arrangements. During the fiscal year ended December 31, 1996,
-------------------
no compensation was paid to directors of the Company other than pursuant to the
standard compensation arrangements described in the previous section.
Employment Contracts and Termination of Employment and Change-in-Control
------------------------------------------------------------------------
Arrangements.
- -------------
The Company does not have any written employment contracts with respect
to any of the executive officers named in the Summary Compensation Table, except
for Mr. Lang. Mr. Lang is a party to an agreement with Plains to which the
Company became bound as a result of the Barrett-Plains merger. That agreement
provides, among other things, that if, within three years after a "change in
control" (as defined in the agreement), Mr. Lang's employment is involuntarily
terminated or is terminated by Mr. Lang for "Good Reason", Mr. Lang is to be
paid a cash amount equal to (a) two times of the higher of (i) his then annual
compensation (including salary, bonuses and incentive compensation) or (ii) the
highest annual compensation (including salary, bonuses and incentive
compensation) paid or payable during any of the three calendar years ending with
the year of his termination, plus (b) an amount equal to any excise taxes
payable by Mr. Lang with respect to these amounts and any excise or income taxes
payable by Mr. Lang as a result of this reimbursement of excise taxes. "Good
Reason" is defined as a reduction in Mr. Lang's compensation or employment
responsibilities, a required relocation outside the greater Denver, Colorado
area or, generally, any conduct that renders Mr. Lang unable to discharge his
employment duties effectively. This agreement terminates on July 18, 1998. The
Company has no other compensatory plan or arrangement that results or will
result from the resignation, retirement, or any other termination of the
employment with the Company and its subsidiaries of the executive officers named
in the Summary Compensation Table or from a change-in-control of the Company or
a change in the responsibilities of any such executive officer following a
change-in-control, except that (i) in January 1994, the Board of Directors
approved a resolution allowing all options outstanding under the
11
<PAGE>
Company's 1990 Stock Option Plan to become exercisable if an announcement is
made concerning a business combination with the Company; and (ii) in September
1994, the Compensation Committee committed to Mr. Reed that all stock options
that had been granted to him as of September 10, 1994 would become exercisable
upon termination of his employment provided that he remains in the employment of
the Company continuously until September 10, 1997, and further provided that the
Compensation Committee, or its successor, determines as of the date of his
termination that his employment performance has satisfied the Company's
employment standards for executive officers.
Compensation Committee Interlocks and Insider Participation
-----------------------------------------------------------
During the year ended December 31, 1996, each of C. Robert Buford,
Derrill Cody, James M. Fitzgibbons, Hennie L.J.M. Gieskes, James T. Rodgers,
Philippe S.E. Schreiber, and Harry S. Welch served as members of the
Compensation Committee of the Board of Directors. Mr. Schreiber served as the
President of Excel Energy Corporation ("Excel") prior to the 1985 merger of
Excel with and into the Company, and Mr. Gieskes served as Chairman of the Board
of Excel at the time of the merger of Excel with and into the Company. No other
person who served as a member of the Compensation Committee during the year
ended December 31, 1996 was, during that year, an officer or employee of the
Company or of any of its subsidiaries, or was formerly an officer of the Company
or of any of its subsidiaries. For a description of transactions involving Mr.
Buford and the Company, please see "CERTAIN TRANSACTIONS WITH MANAGEMENT AND
PRINCIPAL STOCKHOLDERS".
Compensation Committee Report on Executive Compensation
None of the members of the Compensation Committee of the Board of
Directors is an employee of the Company. The Compensation Committee sets and
administers the policies that govern the annual compensation and long-term
compensation of executive officers of the Company. The Compensation Committee
makes all decisions concerning compensation of executive officers and awards of
stock options under the Company's stock option plans, except for awards under
the Non-Discretionary Plan Stock Option Plan for non-employee directors.
Compensation Policies Toward Executive Officers. The Compensation
-----------------------------------------------
Committee's executive compensation policies are designed to provide competitive
levels of compensation that relate compensation with the Company's annual and
long-term performance goals, reward above average corporate performance,
recognize individual initiative and achievements, and assist the Company in
attracting and retaining qualified executives. The Compensation Committee
attempts to achieve these objectives through a combination of base salary, stock
options, and cash bonus awards. To assist the Committee in its activities
reported on in this report, the Compensation Committee utilizes outside
consultants to obtain compensation information concerning comparable companies
in the oil and gas industry.
Base Salary. Executive salaries are reviewed by the Compensation
-----------
Committee on a yearly basis and are set for individual executive officers based
on subjective evaluations of each individual officer's performance, the
Company's performance, and a comparison to salary ranges for executives of other
companies in the oil and gas industry. Through these criteria, the Compensation
Committee believes that salaries may be set in a manner that is both competitive
and reasonable within the Company's industry.
Incentive Stock Options. Stock options are granted to executive officers
-----------------------
and other employees of the Company by the Compensation Committee as a means of
providing long-term incentive to the
12
<PAGE>
Company's employees. The Compensation Committee believes that stock options
encourage increased performance by the Company's employees, including its
officers, and align the interests of the Company's employees with the interests
of the Company's stockholders. Decisions concerning the granting of stock
options are made on the same basis, utilizing the same criteria, as decisions
concerning base salary as discussed in the previous paragraph.
Cash Bonus Awards. The Compensation Committee considers on an annual
-----------------
basis whether to pay cash bonuses to some or all of the Company's employees,
including the Company's executive officers. The Compensation Committee
undertakes considerations concerning the granting of bonuses with the objective
that the Company will remain competitive in its compensation practices and be
able to retain highly qualified executive officers. With respect to cash bonus
awards for the fiscal year ended December 31, 1996, the Compensation Committee
considered the performance of the Company, the Company's accomplishments, the
relative performance of other companies in the oil and gas industry, and the
prospects for the Company as a result of this performance. Based on these
Company performance evaluations, the Committee then determined whether and to
what extent to grant bonuses to the respective executive officers based on an
assessment of their respective contributions to the Company's performance of
each individual executive officer together with a comparison of bonuses and
total compensation paid to executive officers in similar positions with
relatively comparable companies in the oil and gas industry. As a result of this
process and these considerations and determinations, in March 1997, the
Compensation Committee granted to 12 executive officers, including the Chief
Executive Officer, aggregate cash bonuses of $1,047,500 for their respective
contributions to the Company during the fiscal year ended December 31, 1996.
Employee Retirement Plan. The Company's employee retirement plan, the
------------------------
401(k) Plan, was established effective April 1, 1991, and amended effective
April 1, 1996, to provide an additional means of attracting and retaining
qualified employees. Under the 401(k) Plan, as amended, the Company will
contribute on behalf of each employee 100 percent of the contribution made by
that employee, up to a maximum contribution by the Company of six percent of
that employee's gross salary for a particular pay period. One-half of the
Company's matching contribution is paid in cash and one-half is paid in the
Company's Common Stock. The Company's match is subject to a vesting schedule.
Participation in the 401(k) Plan is at the discretion of each individual
employee, and the Compensation Committee is not involved in the administration
of the 401(k) Plan.
Chief Executive Officer Compensation. The compensation of the Company's
------------------------------------
Chief Executive Officer is determined in the same manner as the compensation for
other executive officers of the Company as described above. As a result, the
compensation of the Company's Chief Executive Officer is largely dependent upon
the overall performance of the Company as well as the compensation being paid to
the chief executive officers by other relatively comparable companies in the oil
and gas industry. The Chief Executive Officer's long-term compensation from
stock options also is largely dependent upon Company performance. The decision
to pay a cash bonus to the Chief Executive Officer for the past fiscal year, and
the amount of that bonus, resulted from the determination by the Compensation
Committee that the cash bonus was merited and justified based on the Company's
overall performance
13
<PAGE>
and the contributions of the Chief Executive Officer to that performance,
including in particular his crucial role in the Company's reserve growth, in the
Company's increase in production, in the continued integration of Plains into
the Company, and in the successful completion of the Company's Common Stock
offering in June 1996, as well as a comparison of total compensation paid to
chief executive officers of other relatively comparable companies in the oil and
gas industry.
Compensation Committee of the Board of Directors:
C. Robert Buford
Derrill Cody
James M. Fitzgibbons
Hennie L.J.M. Gieskes
William W. Grant, III
James T. Rodgers
Philippe S.E. Schreiber, Chairman
Harry S. Welch
14
<PAGE>
Performance Graph
The following line graph compares the yearly percentage change in the
cumulative total stockholder return, assuming reinvestment of dividends, for
(i) the Common Stock, (ii) a peer group (the "Peer Group") of companies selected
by the Company that are predominantly independent exploration and production
companies with properties predominantly located in the United States, and
(iii) the Standard & Poors 500 Stock Index. The companies in the Peer Group are
Cabot Oil & Gas Corporation, Devon Energy Corporation, Louis Dreyfus Natural Gas
Corporation, Parker & Parsley Petroleum Company, Pogo Producing Company, Seagull
Energy Corporation, United Meridian Corporation, and Vintage Petroleum, Inc. The
comparison shown in the graph is for the years ended December 31, 1992, 1993,
1994, 1995 and 1996. The cumulative total stockholder return on the Company's
Common Stock was measured by dividing the difference between the Company's share
price at both the end and at the beginning of the measurement period by the
share price at the beginning of the measurement period. Because the Company did
not pay dividends on its Common Stock during the measurement period, the
calculation of the cumulative total stockholder return on the Common Stock did
not include dividends.
[GRAPH OF TOTAL RETURN TO STOCKHOLDERS APPEARS HERE]
<TABLE>
<CAPTION>
TOTAL RETURN ANALYSIS
Measurement period BARRET RESOURCES
(Fiscal Year Covered) CORP PEER GROUP S&P 500
<S> <C> <C> <C>
Measurement Pt -
12/31/91 $ 100.00 $ 100.00 $ 100.00
FYE 12/31/92 $ 254.00 $ 151.00 $ 107.60
FYE 12/31/93 $ 248.00 $ 229.00 $ 118.40
FYE 12/31/94 $ 490.00 $ 192.00 $ 119.90
FYE 12/29/95 $ 701.00 $ 261.00 $ 164.90
FYE 12/31/96 $1018.00 $ 419.00 $ 202.80
</TABLE>
15
<PAGE>
STOCK OWNERSHIP OF DIRECTORS AND PRINCIPAL STOCKHOLDERS
April 21, 1997 has been fixed by the Board of Directors of the Company as
the record date for determination of stockholders entitled to notice of and to
vote at the Annual Meeting. On that date there were __________ shares of Common
Stock outstanding. The following table summarizes certain information as of
April 21, 1997 with respect to the ownership by each director, by each executive
officer named in the "Executive Compensation" section above, 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:
<TABLE>
<CAPTION>
Name of Amount/Nature of Percent of Class
Beneficial Owner Beneficial Ownership Beneficially Owned
---------------- -------------------- ------------------
<S> <C> <C>
William J. Barrett _______ Shares/(1)/ ___%
C. Robert Buford _______ Shares/(2)/ ___%
Derrill Cody _______ Shares/(3)/ *
James M. Fitzgibbons _______ Shares/(3)/ *
Hennie L.J.M. Gieskes _______ Shares/(3)/ ___%
William W. Grant, III _______ Shares/(3)/ *
J. Frank Keller _______ Shares/(3)/ *
Eugene A. Lang, Jr. _______ Shares/(3)/ *
Paul M. Rady _______ Shares/(3)/ *
A. Ralph Reed _______ Shares/(4)/ *
James T. Rodgers _______ Shares/(3)/ *
Philippe S.E. Schreiber _______ Shares/(3)/ *
Harry S. Welch _______ Shares/(3)/ *
All Directors and Executive _______ Shares/(5)/ ___%
Officers as a Group (20
persons)
Fidelity Management and Research _______ Shares/(6)/ ___%
Corporation
82 Devonshire Street
Boston, MA 02109
</TABLE>
16
<PAGE>
State Farm Mutual _______ Shares/(6)(7)/ ___%
Automobile Insurance
Company and affiliates
One State Farm Plaza
Bloomington, IL 61710
____________________
* Less than 1% of the Common Stock outstanding.
/(1)/ The number of shares indicated includes 36,292 shares owned by Mr.
Barrett's wife, 230,000 shares owned by the Barrett Family L.L.L.P., a Colorado
limited liability limited partnership for which Mr. Barrett and his wife are
general partners and owners of an aggregate of 62.92294 percent of the
partnership interests, and ______ shares underlying options that currently are
exercisable or become exercisable within 60 days following April 21, 1997.
Pursuant to Rule 16a-1(a)(4) under the Securities Exchange Act of 1934 (the
"1934 Act"), Mr. Barrett disclaims ownership of all but 144,723 shares held by
the Barrett Family L.L.L.P., which constitutes Mr. and Mrs. Barrett's
proportionate share of the shares held by the Barrett Family L.L.L.P.
/(2)/ C. Robert Buford is considered a beneficial owner of the 598,210 shares
of which Zenith is the record owner. Mr. Buford owns approximately 89 percent of
the outstanding common stock of Zenith. The number of shares of the Company's
stock indicated for Mr. Buford also includes 10,000 shares that are owned by
Aguilla Corporation, which is owned by Mr. Buford's wife and adult children. Mr.
Buford disclaims beneficial ownership of the shares held by Aguilla Corporation
pursuant to Rule 16a-1(a)(4) under the 1934 Act. The number of shares indicated
also includes ______ shares underlying stock options are currently exercisable
or that become exercisable within 60 days following April 21, 1997.
/(3)/ The number of shares indicated consists of or includes the following
number of shares underlying options that currently are exercisable or that
become exercisable within 60 days following April 21, 1997 that are held by each
of the following persons: Derrill Cody, _____; James M. Fitzgibbons, _____;
Hennie L.J.M. Gieskes, _____; William W. Grant, III, ______; J. Frank Keller,
______; Eugene A. Lang, Jr., ______; Paul M. Rady, ______; James T. Rodgers,
_____; Philippe S.E. Schreiber, _____; and Harry S. Welch, ______.
/(4)/ The number of shares indicated includes 10,150 shares owned by Mary C.
Reed, Mr. Reed's wife and ______ shares underlying options that currently are
exercisable or that become exercisable within 60 days following April 21, 1997.
/(5)/ The number of shares indicated includes the shares owned by Zenith that
are beneficially owned by Mr. Buford as described in note /(1)/ and the
aggregate of _______ shares underlying the options described in notes /(1)/,
/(2)/, /(3)/ and /(4)/, an aggregate of ______ shares owned by seven executive
officers not named in the above table, and an aggregate of ______ shares
underlying options that currently are exercisable or that are exercisable within
60 days following April 21, 1997 that are held by those seven executive
officers.
17
<PAGE>
/(6)/ Based on information included in a Schedule 13G filed with the Securities
and Exchange Commission by the named stockholders and from information obtained
from other sources.
/(7)/ The number of shares indicated includes the shares owned by entities
affiliated with State Farm Mutual Automobile Insurance Company ("SFMAI"). Those
entities and SFMAI may be deemed to constitute a "group" with regard to the
ownership of shares reported on a Schedule 13G under the Securities Exchange Act
of 1934, as amended.
CERTAIN TRANSACTIONS WITH MANAGEMENT
AND PRINCIPAL STOCKHOLDERS
On April 10, 1996, the Company acquired all the Piceance Basin oil and gas
interests of Zenith for $2.7 million, and the Company, through a merger of Grand
Valley Corporation ("GVC") into a subsidiary company, acquired all the stock of
GVC in exchange for 350,000 shares of the Company's Common Stock. These
transactions were effective March 1, 1996. Pursuant to the respective
agreements with Zenith and GVC, Zenith and the shareholders of GVC are
responsible for liabilities that accrue on or before March 1, 1996 and the
Company is responsible for liabilities accruing after March 1, 1996.
The terms of these transactions were negotiated with Zenith and GVC by a
Special Committee of the Board of Directors of the Company consisting of William
W. Grant, III, James T. Rodgers, Philippe S.E. Schreiber, and Harry S. Welch,
each of whom is an outside director. The Company obtained an opinion from an
investment banking firm that the terms of these transactions were fair to the
Company.
Prior to the Company's acquisition of these interests as described above,
Zenith owned a working interest in many of the leases for which the Company is
the operator. For the period from January 1, 1996 through the effective date of
the acquisition, Zenith paid to the Company, as operator, approximately $77,000
as Zenith's portion of the lease operating expenses and development costs for
those leases. Also as a result of its working interests, which ranged from
three to 50 percent in leases for which the Company is the operator, Zenith
received approximately $448,000 as its share of revenues. All terms and
arrangements between Zenith and the Company with respect to these working
interests were the same as those between the Company and the other working
interest owners in the leases. Zenith is 89 percent owned by Mr. Buford.
Mr. Buford also was a director of GVC, which owned a 10.4 percent interest
in the pipeline gathering system and related facilities on the Company's Grand
Valley Gathering System. Until acquired by the Company, as described above, ten
percent of GVC was owned by Mr. Buford, and 90 percent of GVC was owned by Mr.
Buford's three adult children. From January 1, 1996 through the effective date
of the acquisition, GVC's proportionate share of the pipeline gathering system's
expenses, not including depreciation, was approximately $33,000, and its share
of the pipeline gathering system's revenues was approximately $101,000. All
terms and arrangements between GVC and the Company with respect to this
gathering system are the same as those between the Company and the other owners
of the gathering system.
18
<PAGE>
PROPOSAL TO ADOPT 1997 STOCK OPTION PLAN
The Board of Directors has adopted, subject to stockholder approval, the
Company's 1997 Stock Option Plan (the "1997 Plan"). The 1997 Plan will
terminate, and all options granted under the 1997 Plan will be void, if the 1997
Plan is not approved by the Company's stockholders on or before March 20, 1998.
Options to purchase 1,500,000 shares of Common Stock may be granted
pursuant to the 1997 Plan. The Options granted pursuant to the 1997 Plan may be
either Incentive Options or Non-Qualified Options. The 1997 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 effect of the adoption of the 1997
Plan will be to increase the number of shares issuable upon the exercise of
options that may be granted under all the Company's stock option plans, which
will allow the Company to grant more options from time to time and thereby
augment its program of providing incentives to employees and other persons. The
terms of the 1997 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
who have contributed or are contributing to the success of the Company 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 ___ employees eligible to receive Incentive Options and an
unspecified number of persons eligible to receive Non-Qualified Options.
Grants of options under the 1997 Plan, which are subject to the
stockholders' approval of the 1997 Plan, are disclosed below under the heading
"New Plan Benefits".
The 1997 Plan will be 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, except for grants pursuant to a formula plan such as the
Company's Non-Discretionary Stock Option Plan and certain other exceptions.
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 1997
Plan or under any other stock plan of the Company, or (ii) a committee,
appointed by the Board, consisting of two or more directors, neither of whom is
eligible, nor shall have been eligible during the preceding year, to receive
Options under the 1997 Plan or under any other stock plan of the Company other
than a formula plan, such as the Company's Non-Discretionary Stock Option Plan,
and certain other plans. The Board of Directors has determined that the
Compensation Committee will act as the Option Committee at all times that the
members of the Compensation Committee meet these criteria. 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 1997 Plan after March 20, 2007.
The exercise price of Options granted cannot be less than the fair market
value of the underlying Common Stock on the date the Options are granted. In
addition, the aggregate fair market value
19
<PAGE>
(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.
All options granted under the 1997 Plan will become fully exercisable upon
the occurrence of a change in control of the Company or certain mergers or other
reorganizations or asset sales described in the 1997 Plan.
Options granted pursuant to the 1997 Plan will not be transferable during
the Optionee's lifetime. Subject to the other terms of the 1997 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.
The Board of Directors may at any time terminate the 1997 Plan or make such
amendments or modifications to the 1997 Plan that the Board of Directors deems
advisable, except that no amendments may impair previously outstanding Options
and amendments that materially modify eligibility requirements for receiving
Options, that materially increase the benefits accruing to persons eligible to
receive Options, or that materially increase the number of shares under the 1997
Plan must be approved by the Company's stockholders.
The Incentive Options issuable under the 1997 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
20
<PAGE>
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 options to purchase 968,050 shares of Common Stock
outstanding under the 1994 Plan. The Option Committee may grant additional
options to purchase 900 shares pursuant to the 1994 Plan. There also are
options to purchase 302,223 shares of Common Stock outstanding under the
Company's 1990 Plan, and no additional options may be granted under the 1990
Plan. In addition there are options to purchase 100,871 shares of Common Stock
under the former Plains employee option plans. No additional options will be
granted under the former Plains plans.
In March 1997, the Company granted options pursuant to the 1997 Plan that
will be void if the stockholders do not approve the 1997 Plan prior to March 20,
1998. The following table sets forth information concerning the portion of
these conditional grants of stock options made pursuant to the 1997 Plan to the
Company's Chief Executive Officer and each other executive officer of the
Company whose total salary and bonus exceeded $100,000 in the fiscal year ended
December 31, 1996, to all current executive officers of the Company as a group,
to any person who received five percent of such options, and to all employees,
including all current officers who are not executive officers, as a group. No
grants of options were made to any current directors who are not executive
officers under the 1997 Plan.
21
<PAGE>
NEW PLAN BENEFITS
1997 STOCK OPTION PLAN
<TABLE>
<CAPTION>
Aggregate Exercise
Price Of Number Of Shares
Name And Position Options($) /*/ Underlying Options
----------------- --------------------------- ------------------
<S> <C> <C>
William J. Barrett, Chief Executive $ 1,643,750 50,000
Officer and Chairman of the Board
Paul M. Rady, President, Chief 1,643,750 50,000
Operating Officer, and a director
A. Ralph Reed, Executive Vice President- -0- -0-
Operations, and a director
J. Frank Keller, Executive Vice 877,763 26,700
President, Chief Financial Officer,
Secretary, and a director
Eugene A. Lang, Jr., Senior Vice 1,078,300 32,800
President and General Counsel
All Current Executive Officers as a 8,180,944 248,850
Group (12 Persons)
All Employees as a Group (Excluding 10,168,238 309,300
Executive Officers; 53 Persons)
__________________
</TABLE>
/*/ The dollar value shown is the aggregate exercise price of all options
granted to the person or group indicated.
The closing sale price of the Company's Common Stock, as quoted on the New
York Stock Exchange, at the close of business on April __, 1997 was $______.
The approval of holders of shares representing a majority of the votes
represented at the Annual Meeting will be necessary to adopt the 1997 Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
ADOPT THE 1997 PLAN.
PROPOSAL TO AMEND NON-DISCRETIONARY STOCK OPTION PLAN
The Board Of Directors has adopted, subject to stockholder approval, an
amendment to the Company's Non-Discretionary Stock Option Plan to increase from
200,000 to 300,000 the number of shares of Common Stock issuable pursuant to
options granted under the Non-Discretionary Stock Option Plan (the "Non-
Discretionary Plan") and the manner in which options under the Non-Discretionary
Plan
22
<PAGE>
become exercisable. The exercise terms of the Non-Discretionary Plan have
been amended to provide that options to purchase 1,000 shares shall become
exercisable for each director for each Board of Directors meeting attended,
other than a meeting attended by telephone conference call. The Non-
Discretionary Plan previously provided that options become exercisable at the
rate of 500 shares per meeting, including telephone conference calls, that were
at least four hours in length and allowed meetings of less than four hours
occurring within a 365-day period to be aggregated. Other than the preceding
changes, there are no additional amendments to the Non-Discretionary Plan.
The Non-Discretionary Plan is intended to reward non-employee directors for
their participation and contributions to the Company. The effect of the
increase in the number of shares issuable upon the exercise of options granted
under the Non-Discretionary Plan is to allow the Company to grant more options
from time to time, and the change in the number of options that become
exercisable for each board meeting attended should increase the rate at which
options become exercisable and new options are granted, allowing the Company to
thereby augment its program of providing incentives to non-employee directors.
There currently are eight non-employee directors eligible to receive options
pursuant to the Non-Discretionary Plan.
The Non-Discretionary Plan, as amended, provides that, upon inception of
the Plan, the Company would grant options to purchase 10,000 shares to each non-
employee director of the Company. Thereafter, at any time that a non-employee
director owns no options that may become exercisable, the Company will grant
that person options to purchase 10,000 shares of the Company's Common Stock.
The exercise price for the options shall be the fair market value of the
Company's Common Stock on the date the options are granted. Shares acquired
upon exercise of these options cannot be sold for six months following the date
of grant. If not previously exercised, options that have been granted expire
upon the later to occur of five years after the date of grant and two years
after the date those options first became exercisable. The options also expire
90 days after the optionholder ceases to be a director of the Company.
Options granted pursuant to the Non-Discretionary Plan will not qualify for
special tax benefits given to incentive stock options under Section 422 of the
Internal Revenue Code.
Options granted pursuant to the Non-Discretionary Plan are not transferable
during the optionee's lifetime other than by will, by the laws of descent and
distribution, or by a court order in a domestic relations proceeding. The
Options are exercisable during the optionee's lifetime only by the optionee or
by the optionee's guardian or legal representative.
In the event a change, such as a stock split, is made in the Company's
Common Stock 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
Company 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.
23
<PAGE>
There are options to purchase 120,000 shares of Common Stock outstanding
under the Non-Discretionary Plan and options to purchase an additional 70,000
shares may be granted. See "EXECUTIVE COMPENSATION--Compensation Of Directors"
for information concerning options granted to non-employee directors of the
Company. Although there is no present plan to grant additional options pursuant
to the Non-Discretionary Plan to any particular non-employee directors, pursuant
to the terms of the Non-Discretionary Plan, each non-employee director
automatically will receive options to purchase an additional 10,000 shares at
such time that all the options previously granted to that non-employee director
become exercisable.
The closing sale price of the Company's Common Stock, as quoted on the New
York Stock Exchange at the close of business on April __, 1997, was $______ per
share.
The approval of holders of shares representing a majority of the votes
represented at the Annual Meeting will be necessary to amend the Non-
Discretionary Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND THE NON-
DISCRETIONARY PLAN.
PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED COMMON STOCK
The Board has unanimously approved and proposed for stockholder approval an
amendment to the Company's Certificate of Incorporation to increase the
Company's authorized Common Stock from 35,000,000 to 45,000,000 shares. The
Company's Certificate of Incorporation currently authorizes the issuance of
35,000,000 shares of Common Stock and 1,000,000 shares of preferred stock. As
of April __, 1997, _________ shares of the Company's Common Stock were issued
and outstanding, and _______ shares of Common Stock were reserved for issuance
under the Company's stock option plans. If the stockholders approve the 1997
Plan, an additional 1,500,000 shares of the Company's Common Stock will be
reserved for issuance pursuant to the 1997 Plan. If the stockholders approve
the amendment to the Non-Discretionary Plan, an additional 100,000 shares of the
Company's Common Stock will be reserved for issuance pursuant to the Non-
Discretionary Plan. Without amending the Certificate of Incorporation, the
Company would be able to issue ______ additional shares of Common Stock (______
additional shares of Common Stock if the stockholders approve the 1997 Plan and
the amendment to the Non-Discretionary Plan). If the proposed change in
authorized capital is approved by stockholders, the Company will have _______
shares of unissued and unreserved shares of Common Stock available for issuance
in the future.
The Board believes that the additional shares of Common Stock resulting
from the amendment of the Certificate of Incorporation should be available for
issuance from time to time as may be required for various purposes, including
the issuance of Common Stock in connection with financing or acquisition
transactions and the issuance or reservation of Common Stock for employee stock
options. The Company anticipates that in the future it will consider a number
of possible financing and acquisition transactions that may involve the issuance
of additional equity, debt or convertible securities. If the proposed increase
in authorized capital is approved, the Board would be able to authorize the
issuance of shares for these purposes without the necessity, and related costs
and delays, of either calling a special stockholders' meeting or of waiting for
the regularly scheduled annual meeting of stockholders in order to increase the
authorized capital. If in a particular instance stockholder approval were
required by law, New York
24
<PAGE>
Stock Exchange rule or otherwise deemed advisable by the Board, then the matter
would be referred to the stockholders for their approval regardless of whether a
sufficient number of shares previously had been authorized. For example, the
current rules of the New York Stock Exchange would require approval by the
Company's stockholders if the number of shares of Common Stock to be issued
equaled or exceeded 20 percent of the shares of Common Stock outstanding
immediately prior to that issuance. The stockholders of the Company are not
entitled to preemptive rights with respect to the issuance of any authorized but
unissued shares.
The proposed change in capital is not intended to have any anti-takeover
effect and is not part of any series of anti-takeover measures contained in any
debt instruments or the Certificate of Incorporation or the Bylaws of the
Company in effect on the date of this Proxy Statement. However, stockholders
should note that the availability of additional authorized and unissued shares
of Common Stock could make any attempt to gain control of the Company or the
Board more difficult or time consuming and that the availability of additional
authorized and unissued shares might make it more difficult to remove current
management. Although the Board currently has no intention of doing so, shares
of Common Stock could be issued by the Board to dilute the percentage of Common
Stock owned by a significant stockholder and increase the cost of, or the number
of, voting shares necessary to acquire control of the Board or to meet the
voting requirements imposed by Delaware 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 or of any attempt to acquire a large
block of the Company's Common Stock. The Company has no present intention to
use the increased authorized Common Stock for anti-takeover purposes.
The affirmative vote of a majority of the outstanding shares of the Common
Stock entitled to vote at the Annual Meeting of Stockholders is required to
approve the proposed amendment to the Certificate of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL CONCERNING THE
INCREASE IN AUTHORIZED CAPITAL.
PROPOSAL TO RATIFY THE SELECTION OF
ARTHUR ANDERSEN LLP AS AUDITORS
The Board of Directors recommends that the stockholders of the Company vote
in favor of ratifying the selection of the certified public accounting firm of
Arthur Andersen LLP of Denver, Colorado as the auditors who will continue to
audit financial statements, review tax returns, and perform other accounting and
consulting services for the Company for the fiscal year ending December 31, 1997
or until the Board of Directors, in its discretion, replaces them. Arthur
Andersen LLP has audited the Company's financial statements since the fiscal
year ended September 30, 1992.
An affirmative vote of the majority of shares represented at the meeting is
necessary to ratify the selection of auditors. There is no legal requirement
for submitting this proposal to the stockholders; however, the Board of
Directors believes that it is of sufficient importance to seek ratification.
Whether the proposal is approved or defeated, the Board may reconsider its
selection of Arthur Andersen LLP. It is expected that one or more
representatives of Arthur Andersen LLP will be present at the Annual Meeting and
will be given an opportunity to make a statement if they desire to do so and to
respond to appropriate questions from stockholders.
25
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO RATIFY THE
SELECTION OF ARTHUR ANDERSEN LLP AS AUDITORS.
OTHER BUSINESS
The Board of Directors of the Company is not aware of any other matters
that are to be presented at the Annual Meeting, and it has not been advised that
any other person will present any other matters for consideration at the
meeting. Nevertheless, if other matters should properly come before the Annual
Meeting, the stockholders present, or the persons, if any, authorized by a valid
proxy to vote on their behalf, shall vote on such matters in accordance with
their judgment.
VOTING PROCEDURES
Votes at the Annual Meeting of Stockholders are counted by Inspectors of
Election appointed by the Chairman of the meeting. If a quorum is present, an
affirmative vote of a 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
stockholders for their consideration, including the election of directors,
unless a different number of votes is required by statute or the Company's
Certificate of Incorporation. Abstentions by those present at the meeting are
tabulated separately from affirmative and negative votes and do not constitute
affirmative votes. If a stockholder returns his proxy card and withholds
authority to vote for any or all of the nominees, 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 name of brokers that are not voted are treated as not
present.
RESOLUTIONS PROPOSED BY INDIVIDUAL STOCKHOLDERS
In order to be considered for inclusion in the Company's Proxy Statement
and form of proxy relating to the Company's next Annual Meeting of Stockholders
following the end of the Company's 1997 fiscal year, proposals by individual
stockholders must be received by the Company no later than December 26, 1997.
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 DECEMBER 31, 1996, TO
ANY OF THE COMPANY'S STOCKHOLDERS OF RECORD OR TO ANY STOCKHOLDER WHO OWNS THE
COMPANY'S COMMON STOCK LISTED IN THE NAME OF A BANK OR BROKER AS NOMINEE, AT THE
CLOSE OF BUSINESS ON APRIL 21, 1997. ANY REQUEST FOR A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K SHOULD BE MAILED TO THE SECRETARY, BARRETT RESOURCES
CORPORATION, 1515 ARAPAHOE STREET, TOWER 3, SUITE 1000, DENVER, COLORADO 80202,
(303) 572-3900.
26
<PAGE>
This Notice and Proxy Statement are sent by order of the Board of
Directors.
Dated: April 24, 1997 Paul M. Rady
President and Chief Operating Officer
* * * * *
27
<PAGE>
THIS YOUR PROXY.
YOUR VOTE IS IMPORTANT.
Regardless of whether you plan to attend the
Annual Meeting of Stockholders, you can ensure
your shares are represented at the Meeting by
promptly completing and returning your proxy
(attached below) in the enclosed envelope.
Thank you for your attention to this important
matter.
DETACH HERE
- --------------------------------------------------------------------------------
PROXY PROXY
For the Annual Meeting Of Stockholders of
BARRETT RESOURCES CORPORATION
Proxy Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Paul M. Rady and J. Frank Keller, or either
of them, as proxies or ______________ (stockholders may strike the person(s)
designated by Management and insert name and address of other person(s) to vote
the proxy and mail proxy to 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 Annual Meeting Of
Stockholders of Barrett Resources Corporation (the "Corporation"), to be held at
9:00 A.M. on June 17, 1997, at the Westin Hotel, 1672 Lawrence Street, Denver,
Colorado, or any adjournments thereof, on the following matters:
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
- --------------------------------------------------------------------------------
X Please mark
votes as in
this example.
Unless contrary instructions are given, the shares represented by this proxy
will be voted in favor of Items 1, 2, 3, 4 and 5. This proxy is solicited on
behalf of the Board of Directors of Barrett Resources Corporation.
1. ELECTION OF DIRECTORS
<PAGE>
Nominees: William J. Barrett, C. Robert Buford, Derrill Cody, James M.
Fitzgibbons, Hennie L.J.M. Gieskes, William W. Grant, III, J. Frank Keller,
Paul M. Rady, A. Ralph Reed, James T. Rodgers, Philippe S.E. Schreiber, Harry
S. Welch
FOR ALL NOMINEES [_] WITHHELD FROM ALL NOMINEES [_]
FOR ALL NOMINEES EXCEPT AS NOTED ABOVE [_] MARK HERE FOR ADDRESS CHANGE AND
NOTE BELOW [_]
2. Proposal to adopt the Corporation's 1997 Stock Option Plan.
___For ___Against ___Abstain
3. Proposal to amend the Corporation's Non-Discretionary Stock Option Plan.
___For ___Against ___Abstain
4. Proposal to authorize and approve amendment to the Certificate of
Incorporation to increase this authorized Common Stock from 35,000,000
shares to 45,000,000 shares.
___For ___Against ___Abstain
5. Proposal to ratify the selection by the Board of Directors or Arthur
Andersen LLP as the independent certified accountants for the Corporation
for the fiscal year ending December 31, 1997.
6. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE VOTE, DATE, SIGN AND RETURN
THIS PROXY IN THE ACCOMPANYING ENVELOPE.
(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.)
Signature: ____________________________ Date: _________________
Signature: ____________________________ Date: _________________
<PAGE>
BARRETT RESOURCES CORPORATION ANNEX A
1997 STOCK OPTION PLAN -------
As Adopted As Of March 20, 1997
This 1997 Stock Option (the "Plan") is adopted by Barrett Resources
Corporation (the "Company") effective as of March 20, 1997.
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 $.01 par value common stock of the Company.
------------
Company: Barrett Resources Corporation, a corporation
-------
incorporated under the laws of Delaware, 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 the New York Stock
Exchange ("NYSE"), 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 the NYSE 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
<PAGE>
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.
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. This committee
also may 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.
-2-
<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, including provisions for the
termination of the Option prior to the expiration of the exercise period upon
the occurrence of certain events, (vi) the manner in which the Option becomes
exercisable, including whether portions of the Option become exercisable at
different times and including whether the portion not yet exercisable shall
become exercisable upon the occurrence of certain events, 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 Delaware, 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.
-3-
<PAGE>
(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.
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 1,500,000 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 1,500,000 shares or into which such 1,500,000 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
-4-
<PAGE>
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.
(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 exercisable according to its terms on the date
of termination, may be exercised only to the extent determined by the Option
Committee at the time of grant of the Option, but in no case more than three
months after termination. 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.
-5-
<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.
-6-
<PAGE>
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 March 20, 1998 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 Delaware, the Plan shall be deemed effective as
of March 20, 1997. 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.
-7-
<PAGE>
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),
then all Options granted pursuant to the Plan shall become exercisable
immediately at the time of such Change In Control, 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, and, in addition, 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 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) (i), it shall be
deemed to have been exercised for purposes of Section 4
hereof; and
(ii) 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 Subparagraph 19(a)(i) above.
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)
-8-
<PAGE>
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),
then all Options granted pursuant to the Plan shall become exercisable
immediately at the time of such Reorganization Event, except that this
acceleration would not occur with respect to any Incentive Options for which the
advance would result in a violation of Section 16 of this Plan, and, in
addition, 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) 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
(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
shall not result in the Optionee receiving less value than
is possible pursuant to any or all of Subparagraphs
19(b)(i) and 19(b)(ii) 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:
(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.
-9-
<PAGE>
(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 Colorado, except in those instances where the rules of conflicts
of laws would require application of the laws of the State of Delaware.
* * * * *
-10-
<PAGE>
BARRETT RESOURCES CORPORATION ANNEX B
-------
NON-DISCRETIONARY STOCK OPTION PLAN
As Amended March 20, 1997
This Non-Discretionary Stock Option Plan (the "Plan") is adopted by Barrett
Resources Corporation (the "Company") effective as of May 1, 1991 and as amended
as of March 20, 1997.
1. Definitions.
-----------
Unless otherwise indicated or required by the particular context, the
terms used in this Plan shall have the following meaning:
Board: The Board of Directors of the Company.
-----
Code: The Internal Revenue Code of 1986, as amended.
----
Common Stock: The $.01 par value common stock of the Company.
------------
Company: Barrett Resources Corporation, a corporation incorporated
-------
under the laws of Delaware, 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.
Fair Market Value: Fair Market Value of the Common Stock as of a
-----------------
certain date shall be calculated as follows: (i) if there is a public market
for the Common Stock, the Fair Market Value of the Common Stock shall be equal
to and not 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 either a national or local over-the-counter market, as
reported by The Denver Post, Denver, Colorado, or if not available there, in the
---------------
Wall Street Journal; (ii) 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 Common Stock shall be equal to and not less than such last
reported bid 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), and (iii)
if no such published bid price is available, the Fair Market Value of the Common
Stock shall be equal to and not less than the average of the bid prices quoted
as of the close of business on that date (or on the preceding stock market
business day if such date is a Saturday, Sunday, or a holiday) by any two
independent persons or entities making a market for the Common Stock.
Non-Employee Director: A person who is a member of the Board of
---------------------
Directors and who is not an employee of the Company.
Option: The rights to purchase Common Stock granted pursuant to the
------
terms and conditions of an Option Agreement (defined below).
<PAGE>
Option Agreement: The written agreement (including any amendments or
----------------
supplements thereto) between the Company and a Non-Employee Director designating
the terms and conditions of an Option.
Option Shares: The shares of Common Stock underlying an Option
-------------
granted pursuant to this Plan.
Optionee: A Non-Employee Director 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 Non-Employee Directors, whose participation
and guidance contributes to the successful operation of the Company, an
opportunity for investment in the Company and the incentive advantages inherent
in stock ownership in the Company.
(b) This Plan provides that Options be granted to Non-Employee
Directors according to the formula set forth in Section 3 of this Plan.
3. Operation Of The Plan.
---------------------
(a) Grant Of Options: Amount And Timing. Options to purchase 300,000
-----------------------------------
shares of Common Stock shall be granted under the Plan to each Non-Employee
Director at the later to occur of (i) May 1, 1991 and (ii) the date he or she
becomes a Non-Employee Director of the Company. In addition, on the date that
all of an Optionee's Options to purchase 10,000 shares either have become
exercisable, as provided in Section 3(c), or have expired, as provided in
Section 3(d), Options to purchase an additional 10,000 shares shall be granted
to the Optionee provided that, at that time, he or she is a Non-Employee
Director. All Options shall be exercisable only as set forth in Section 3(c)
below and shall be subject to the other terms and conditions set forth in this
Plan or otherwise established by the Company.
(b) Option Exercise Price. The exercise price for the Options shall
---------------------
be the Fair Market Value of the Common Stock on the Date Of Grant.
(c) Exercise. For each Board of Directors' meeting attended by an
--------
Optionee subsequent to March 20, 1997, Options to purchase 1,000 shares of
Common Stock will become exercisable. For purposes of the Plan, a "Board of
Directors' meeting attended" shall mean a board of Directors' meeting which is
attended by the Optionee in person and shall not include meetings attended by
telephone conference call.
(d) Term. The Options shall expire upon the later to occur of (i)
----
five years from the Date Of Grant and (ii) two years after the Options to
purchase those shares first become exercisable. Notwithstanding the foregoing,
Options shall expire, if not exercised, 90 days after the Optionee ceases to be
a director of the Company.
(e) Amendments. This Plan may be changed or modified from time to
----------
time provided, however, that (A) no such change or modification shall impair any
Option previously granted under the Plan, (B) the provisions relating to the
amount, price and timing of the options shall not be amended more
-2-
<PAGE>
than once every six months other than to comport with changes in the Code, the
Employee Retirement Income Security Act, or rules promulgated thereunder, and
(C) 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 Delaware, 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 Non-Employee
Directors under the Plan; or
(iii) materially increase the number of shares of Common Stock
that may be issued under the Plan.
4. Number of Shares.
----------------
The Board is authorized to appropriate, issue and sell for the
purposes of the Plan an aggregate maximum of 300,000 shares of Common Stock,
including both treasury and newly issued shares, or the number and kind of
shares of stock or other securities which in accordance with Section 8 shall be
substituted for the 300,000 shares or into which such 300,000 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 other Options under the Plan.
5. Eligibility.
-----------
Options shall be granted under the Plan only to Non-Employee Directors
provided that any Non-Employee Director may waive his right to participate in
the Plan.
6. Exercise Of Options.
-------------------
(a) During the lifetime of the Optionee, the Option shall be
exercisable only by the Optionee; provided that, subject to Section 3(c) and
3(d), in the event of the legal disability of an Optionee, the guardian or
personal representative of the Option may exercise the Option.
(b) 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 7
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.
(c) No Option Shares may be sold, transferred or otherwise disposed of
for a period of at least six months following the Date Of Grant of the Option.
-3-
<PAGE>
7. Payment For Option Shares.
-------------------------
(a) For any single purchase by an Optionee of Option Shares at a total
purchase price in excess of $1,000, the Company, 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 Company acting in its sole discretion as is necessary, in the
opinion of the Company, 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 Company 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 Company, 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 or certified funds.
8. 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 Company shall
adjust 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 in
order to prevent dilution or enlargement of rights and (ii) such adjustments
shall be effective and binding for all purposes of the Plan.
-4-
<PAGE>
9. Status As Director.
------------------
Nothing contained in the Plan, or in any Option granted or Option
Shares issued pursuant to the Plan, (i) shall confer upon any Optionee any right
with respect to continuance of his position as a director of the Company, or
(ii) shall interfere in any way with the right of the Company at any time to
elect not to continue or to terminate the Optionee's position as a director of
the Company.
10. Nontransferability Of Option.
----------------------------
No option granted under the Plan shall be transferable by the
Optionee, either voluntarily or involuntarily, except by will or by the laws of
descent and distribution, or 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 an Option shall void the Option.
11. 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 8, no adjustments shall be made
for dividends or other distributions or other rights as to which there is an
earlier record date.
12. 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.
13. 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 Share will be sold for at least six months
following the Date Of Grant of the Option; (c) 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; (d) that he
will report all sales of Option Shares to the Company in writing on a form
prescribed by the Company; and (e) that if he is subject to reporting
requirements under Section 16(a) of the Securities Exchange Act of 1934, as
amended (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.
-5-
<PAGE>
14. Effective Date Of Plan; Termination Date Of Plan.
------------------------------------------------
Subject to the approval of the amendment to the Plan on or before
March 19, 1998 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 laws of the State of Delaware, the Plan shall be deemed
effective as of May 1, 1991 and shall terminate at midnight on May 1, 2001,
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 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 Delaware, except with respect to any Options then outstanding under
the Plan.
15. Withholding Taxes.
-----------------
The Option Agreement shall provide that the Company may take 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.
16. Other Provisions.
----------------
The following provisions are also in effect under the Plan:
(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. The adoption of the Plan by the
stockholders of the Company shall not 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 Colorado, except in those instances where the rules of conflicts
of laws would require application of the laws of the State of Delaware.
BARRETT RESOURCES CORPORATION
By: /s/ William J. Barrett
------------------------
William J. Barrett, Chief Executive Officer
-6-
