<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 Section 240.14a-11(c) or Section
240.14a-12
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
PRELIMINARY COPY
FOREST OIL CORPORATION
1600 BROADWAY, SUITE 2200
DENVER, CO 80202
--------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 8, 1996
--------------
To the Shareholders of
FOREST OIL CORPORATION:
As a shareholder of Forest Oil Corporation, a New York corporation (the
"Company"), you are invited to be present in person or to be represented by
proxy at the Annual Meeting of Shareholders, to be held at the Hyatt Regency
Denver, 1750 Welton Street, Denver, Colorado, on Wednesday, May 8, 1996, at
10:00 a.m., M.D.T., for the following purposes:
1. Elect three (3) Class II Directors and one (1) Class III Director;
2. Approve the amendment and restatement of the 1992 Stock Option Plan;
3. Consider and vote upon the ratification of the appointment of KPMG
Peat Marwick LLP as independent auditors for the Company for the fiscal year
ending December 31, 1996; and
4. Transact such other business as may be properly brought before the
meeting and any adjournments thereof.
Shareholders of the Company of record at the close of business on March 20,
1996 are entitled to vote at the meeting and all adjournments thereof.
A MAJORITY OF THE OUTSTANDING SHARES OF COMMON STOCK OF THE COMPANY MUST
BE REPRESENTED AT THE MEETING TO CONSTITUTE A QUORUM. THEREFORE, ALL
SHAREHOLDERS ARE URGED EITHER TO ATTEND THE MEETING OR TO BE REPRESENTED BY
PROXY. IF A QUORUM IS NOT PRESENT AT THE MEETING, A VOTE FOR ADJOURNMENT
WILL BE TAKEN AMONG THE SHAREHOLDERS PRESENT OR REPRESENTED BY PROXY. IF A
MAJORITY OF THE SHAREHOLDERS PRESENT OR REPRESENTED BY PROXY VOTE FOR
ADJOURNMENT, IT IS THE COMPANY'S INTENTION TO ADJOURN THE MEETING UNTIL A
LATER DATE AND TO VOTE PROXIES RECEIVED AT SUCH ADJOURNED MEETING(S).
IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE,
SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED BUSINESS
REPLY ENVELOPE. If you later find that you can be present or for any other
reason desire to revoke your proxy, you may do so at any time before the
voting.
By order of the Board of Directors
DANIEL L. McNAMARA
SECRETARY
April __, 1996
<PAGE>
PROXY STATEMENT
OF
FOREST OIL CORPORATION
1600 BROADWAY, SUITE 2200
DENVER, COLORADO 80202
April __, 1996
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors (the "Board of Directors") of Forest Oil Corporation
(the "Company") of proxies to be voted at the Annual Meeting of Shareholders
(the "Annual Meeting") to be held on Wednesday, May 8, 1996, at the Hyatt
Regency Denver, 1750 Welton Street, Denver, Colorado, at 10:00 a.m., M.D.T.,
and at any adjournment thereof. Each holder of record at the close of
business on March 20, 1996 of shares of the Company's Common Stock, Par Value
$.10 Per Share (the "Common Stock"), will be entitled to one vote for each
share so held. As of February 29, 1996, there were 24,527,575 shares of
Common Stock issued and outstanding.
Shares represented by properly executed proxy cards received by the
Company at or prior to the Annual Meeting will be voted according to the
instructions indicated on the proxy card. Unless contrary instructions are
given, the persons named on the proxy card intend to vote the shares so
represented for (i) the election of the nominees for directors, (ii) the
amendment and restatement of the 1992 Stock Option Plan, and (iii) the
ratification of the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending December 31, 1996. As to any
other business which may properly come before the meeting, the persons named
on the proxy card will vote according to their judgment. The enclosed proxy
may be revoked prior to the meeting by written notice to the Secretary of the
Company at 1600 Broadway, Suite 2200, Denver, Colorado 80202, or by written
or oral notice to the Secretary at the Annual Meeting at any time prior to
being voted. This Proxy Statement and the Proxy Card enclosed herewith were
first sent to shareholders of the Company on or about April __, 1995.
If a quorum is not present at the meeting, a vote for adjournment will be
taken among the shareholders present or represented by proxy. If a majority
of the shareholders present or represented by proxy vote for adjournment, it
is the Company's intention to adjourn the meeting until a later date and to
vote proxies received at such adjourned meeting(s).
Under the law of New York, the Company's state of incorporation, "votes
cast" at a meeting of shareholders by the holders of shares entitled to vote
are determinative of the outcome of the matter subject to vote. Abstentions
and broker non-votes will not be considered "votes cast" based on the
Company's understanding of state law requirements. A "broker non-vote" occurs
if a broker or other nominee does not have discretionary authority and has
not received instructions with respect to a particular item. Shareholders may
not cumulate their votes.
<PAGE>
ELECTION OF DIRECTORS
The Company's By-laws currently provide that the Board of Directors shall
be divided into four classes as nearly equal in number as possible, with each
class having not less than two members, whose terms of office expire at
different times in annual succession. Currently the number of directors is
fixed at 10, with one vacancy.
Dale F. Dorn, a Class II Director, is not standing for reelection. Each
class of directors is elected for a term expiring at the annual meeting to be
held four years after the date of their election. The Class I Nominees were
elected at the 1995 Annual Meeting, the Class II Directors were elected at
the 1992 Annual Meeting, the Class III Directors were elected at the 1993
Annual Meeting and the Class IV Directors were elected at the 1994 Annual
Meeting. Messrs. Anschutz, Slater and Tempest were appointed to their
respective classes in July 1995. William L. Britton was designated by the
Nominating Committee as a Class II Nominee and Jordan L. Haines was
designated as a Class III Nominee.
A majority of the votes represented at the Annual Meeting by shares of
Common Stock entitled to vote is required to elect a director.
The persons named as proxies in the enclosed proxy, who have been so
designated by the Board of Directors, intend to vote for the election of the
Class II Nominees and the Class III Nominees referred to below as directors
unless otherwise instructed in the proxy.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THESE NOMINEES. Certain
information concerning such nominees, as well as the other current directors,
is set forth below:
PRINCIPAL OCCUPATION,
AGE AND POSITIONS WITH COMPANY
YEARS OF SERVICE AND BUSINESS EXPERIENCE DIRECTOR
NAME WITH COMPANY DURING LAST FIVE YEARS SINCE
---- ------------ ---------------------- ----
CLASS II NOMINEES - TERMS EXPIRING AT THE ANNUAL SHAREHOLDERS' MEETING IN 1996
Robert S. Boswell 46-10 President since November 1993 and 1985
Chief Executive Officer since
December 1995, Vice President
from May 1991 until November 1993.
Member of the Executive Committee
since July 1991. Director of
Franklin Supply Company Ltd. and
Saxon Petroleum Inc.
Drake S. Tempest 42-1 Partner in the law firm of 1995
O'Melveny & Myers since February
1991 and was Special Counsel to
such firm from 1988 to February
1991. Member of the Compensation
Committee.
William L. Britton 64-0 Partner in the law firm of
Bennett Jones Verchere.
CLASS III NOMINEE - TERM EXPIRING AT THE ANNUAL SHAREHOLDERS' MEETING IN 1997
Jordan L. Haines 68-0 Mr. Haines has been a director
of Coleman Company, Inc. since
1992, a director of KN Energy, Inc.
since 1982 and a Director of
the Southern Pacific Rail
Corporation ("SPRC") since
August 1993.
CLASS III DIRECTOR - TERM EXPIRING AT THE ANNUAL SHAREHOLDERS' MEETING IN 1997
Michael B. Yanney 62 - 4 Chairman and Chief Executive 1992
Officer of the America First
Companies, L.L.C. and a
director of Burlington Northern
Inc., FS Communications
Company, Inc. and America First
Reties Inc. Chairman of the
Compensation Committee. Member
of the Nominating Committee.
-2-
<PAGE>
PRINCIPAL OCCUPATION,
AGE AND POSITIONS WITH COMPANY
YEARS OF SERVICE AND BUSINESS EXPERIENCE DIRECTOR
NAME WITH COMPANY DURING LAST FIVE YEARS SINCE
---- ------------ ---------------------- ----
CLASS IV DIRECTORS - TERMS EXPIRING AT THE ANNUAL SHAREHOLDERS' MEETING IN 1998
Richard J. Callahan 54 - 3 Executive Vice President of 1993
US WEST, Inc. since January
1988 and President of US WEST
International and Business
Development Group since
October 1991. Chairman of
Mercury One 2 One since 1993,
Chairman of Russian
Telecommunications Development
Corporation since 1992 and
Vice Chairman of Televest plc.
Member of the Compensation
Committee.
Craig D. Slater 38 - 1 Vice President of Acquisitions 1995
and Investments of The Anschutz
Corporation ("Anschutz") since
1992 and Corporate Secretary of
Anschutz since 1991. Mr. Slater
held other positions with
Anschutz from 1988 to 1992. Member
of the Executive and Audit
Committees.
CLASS I DIRECTORS - TERMS EXPIRING AT THE ANNUAL SHAREHOLDERS' MEETING IN 1999
William L. Dorn 47 - 24 Chairman of the Board and Chairman 1982
of the Executive Committee since
July 1991 and Chief Executive
Officer from February 1990 until
December 1995. Chairman of the
Nominating Committee since July
1995. Member of the Executive
Committee since August 1988.
President from February 1990
until November 1993.
James H. Lee 47 - 5 Managing Partner, Lee, Hite & 1991
Wisda Ltd. Member of the
Executive Committee since
February 1994. Member of the
Audit Committee since July 1995.
Philip F. Anschutz 56 - 1 Director, Chairman of the Board 1995
and President of The Anschutz
Corporation and a Director,
Chairman of the Board and
President of Anschutz Company,
the corporate parent of Anschutz,
since the formation of Anschutz
Company in August 1991.
Mr. Anschutz has been a Director
of Southern Pacific Rail
Corporation ("SPRC") since
June 1988 and Chairman of SPRC
since October 1988. He served
as President and Chief Executive
Officer of SPRC from October 1988
until July 1993. Member of the
Nominating Committee.
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows, as of February 29, 1996, the number of shares
of the Company's Common Stock beneficially owned by each director and
nominee, each of the executive officers named in the Summary Compensation
Table set forth under the caption "Executive Compensation" below, and all
directors and executive officers as a group. Unless otherwise indicated, each
of the persons has sole voting power and sole investment power with respect
to the shares beneficially owned by such person. All share amounts have been
adjusted to give effect to a five-to-one reverse stock split (the "Reverse
Stock Split") that occurred on January 8, 1996.
<TABLE>
<CAPTION>
COMMON STOCK (2)
------------------------------
NAME OF INDIVIDUAL OR NUMBER OF PERCENT
NUMBER IN GROUP (1) SHARES OF CLASS
- ------------------- ------ --------
<S> <C> <C>
Phillip F. Anschutz................ 11,138,888(3)(4) 34.9%
Bulent A. Berilgen................. 8,105(5) *
Robert S. Boswell.................. 28,485(6) *
Richard J. Callahan................ 400 *
Forest D. Dorn..................... 30,607(7) *
William L. Dorn.................... 68,366(8) *
David H. Keyte..................... 14,328(9) *
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK (2)
------------------------------
NAME OF INDIVIDUAL OR NUMBER OF PERCENT
NUMBER IN GROUP (1) SHARES OF CLASS
- ------------------- ------ --------
<S> <C> <C>
James H. Lee...................... 200 *
Craig D. Slater................... 2,500 *
Drake S. Tempest.................. 2,500 *
V. Bruce Thompson................. 5,193(10) *
Michael B. Yanney................. 3,000 *
All directors and executive
officers as a group (15 persons,
including the 12 named above).... 11,340,065(11) 35.4%
</TABLE>
___________
* The percentage of shares beneficially owned does not exceed one percent of
the outstanding shares of the class.
(1) William L. Dorn and Forest D. Dorn are brothers. See "Principal Holders
of Securities."
(2) Amounts reported also include shares held for the benefit of certain
directors and executive officers by the trustee of the Company's
Retirement Savings Plan Trust as of December 31, 1995.
(3) The shares indicated as owned by Philip F. Anschutz are owned of record
by Anschutz, of which Mr. Anschutz is the Chairman of the Board, President
and a director. Mr. Anschutz may be deemed to beneficially own such shares
based on his affiliation with Anschutz. The shares indicated as
beneficially owned by Philip F. Anschutz include (a) 1,240,000 shares
issuable upon conversion of 620,000 shares of the Company's Second Series
Preferred Stock and (b) 6,138,888 shares issuable pursuant to an option and
warrants exercisable within 60 days. Anschutz has also agreed to not
transfer any of its shares of Common Stock, except in limited
circumstances, until after October 31, 1996.
(4) Based on Schedules 13D and 13G and amendments thereto filed with the SEC
and the Company by the reporting person through February 29, 1996 and the
number of shares of Common Stock outstanding on February 29, 1996.
(5) Includes 8,000 Common shares that Bulent A. Berilgen has the vested right
to purchase pursuant to the terms of the Company's 1992 Stock Option Plan
(the "Stock Option Plan").
(6) Includes 20,000 Common shares that Robert S. Boswell has the vested
right to purchase pursuant to the terms of the Stock Option Plan. Does not
include 45 Common shares held by Robert S. Boswell's wife or 166 shares
held by his children, of which shares Mr. Boswell disclaims beneficial
ownership.
(7) Includes 8,000 Common shares that Forest D. Dorn has the vested right to
purchase pursuant to the terms of the Stock Option Plan. Also includes
5,160 Common shares held of record by Forest D. Dorn as co-trustee of a
trust for the benefit of his mother (see Footnote 8), of which shares
Mr. Dorn disclaims beneficial ownership. Does not include 1,725 Common
shares held by Forest D. Dorn's wife or 5,192 shares held by his children,
of which shares Mr. Dorn disclaims beneficial ownership.
(8) Includes 20,000 Common shares that William L. Dorn has the vested right
to purchase pursuant to the terms of the Stock Option Plan. Also includes
(i) 5,160 Common shares held of record by William L. Dorn as co-trustee of
a trust for the benefit of his mother (see Footnote 7), and (ii) 14,840
Common shares held of record by William L. Dorn as trustee of trusts for
the benefit of related parties, of which shares Mr. Dorn disclaims
beneficial ownership. Does not include 2,998 Common shares held by
William L. Dorn's wife or 7,199 shares held by his children, of which
shares Mr. Dorn disclaims beneficial ownership.
(9) Includes 11,400 Common shares that David H. Keyte has the vested right to
purchase pursuant to the terms of the Stock Option Plan. Also includes
1,400 Common shares that David H. Keyte has the right to acquire upon the
conversion of 2,000 shares of the Company's $.75 Convertible Preferred
Stock.
-4-
<PAGE>
(10) Includes 4,000 Common shares that V. Bruce Thompson has the vested right
to purchase pursuant to the terms of the Stock Option Plan. Also includes
350 common shares that V. Bruce Thompson has the right to acquire upon the
conversion of 500 shares of the Company's $ .75 Convertible Preferred
Stock.
(11) Includes 87,800 Common shares held by various executive officers who
have the vested right to purchase such shares pursuant to the terms of
the Stock Option Plan and 4,270 shares of Common Stock that a director
and three executive officers have the right to acquire upon the conversion
of 6,100 shares of the Company's $.75 Convertible Preferred Stock.
BOARD OF DIRECTORS AND COMMITTEES
During 1995, the Board of Directors met on 12 occasions. The Board of
Directors has appointed four committees, the Executive Committee, the Audit
Committee, the Compensation Committee and the Nominating Committee. The
Royalty Bonus Committee was disbanded at the end of 1995. Only two members
of each committee are necessary to constitute a quorum. During 1995, the
Executive Committee met six times and acted by consent once. Robert S.
Boswell, William L. Dorn, James H. Lee and Craig D. Slater are the members of
the Executive Committee.
The Compensation Committee met three times during 1995. This committee
makes recommendations to the Board of Directors in the area of executive
compensation, including the selection of individual employees to be granted
options from among those eligible under the Company's 1992 Stock Option Plan
and establishes the number of shares issued under each option. Members of the
Compensation Committee are not currently eligible to participate in the
Company's 1992 Stock Option Plan, however, pursuant to the proposed amendment
and restatement of such plan, non-employee directors of the Company will be
automatically awarded shares of Common Stock on an annual basis. See
"Proposal To Amend And Restate The 1992 Stock Option Plan." The members of
the Compensation Committee are Richard J. Callahan, Drake S. Tempest and
Michael B. Yanney. A Report of the Compensation Committee on Executive
Compensation is set forth below.
The Audit Committee is appointed for the purpose of overseeing and
monitoring the Company's independent audit process and discharges its duties,
responsibilities and functions according to a plan designed to provide
assurance to the Board of Directors that the resources allocated to that
process are adequate and utilized effectively. It is also charged with the
responsibility for reviewing all related party transactions for potential
conflicts of interest. This committee met three times during the year, and
its members are James H. Lee and Craig D. Slater.
The Nominating Committee consists of Philip F. Anschutz, William L. Dorn,
and Michael B. Yanney. The Nominating Committee is responsible for, among
other things, (a) review of qualifications and recommendations for
replacement and/or additional nominees to the Board of Directors, and (b)
recommendation of policies regarding directors to the Board. The Nominating
Committee will not consider nominees recommended by security holders, and has
not established any procedures for such recommendations.
During 1995, each incumbent director of the Company, except Michael B.
Yanney, attended at least 75% of the aggregate number of meetings of the
Board of Directors and the committees of the Board of Directors on which he
served.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors consists of Messrs.
Callahan, Tempest and Yanney. The Executive Committee members are Robert S.
Boswell, William L. Dorn, James H. Lee and Craig D. Slater. William L. Dorn
is Chairman of the Board and Robert S. Boswell is President and Chief
Executive Officer. During 1995 there were no compensation committee
interlocks between the Company and any other entity.
-5-
<PAGE>
DIRECTOR COMPENSATION
Each director who is not an employee of the Company is compensated for
services at the rate of $20,000 annually, and in addition, is paid a fee of
$2,500 for attendance in person at each meeting or series of meetings of the
Board of Directors. Shareholders are being asked to approve amendments to
the Company's 1992 Stock Option Plan to provide for, among other things, the
payment of a portion of directors' fees in stock. Subject to shareholder
approval, half of the $20,000 annual amount will be paid in shares of Common
Stock, determined by dividing $10,000 by the average of the fair market value
of a share of Common Stock on the 20 consecutive trading days immediately
preceding the date that is three trading days prior to the date of such
meeting.
All directors, whether employees or not, are reimbursed for all costs
incurred by them in their capacities as directors, including the costs of
attending directors' meetings and committee meetings. The non-employee
directors and the amounts each was paid during 1995 as directors were:
Donald H. Anderson, who resigned as a director in December 1995, received
$30,000 for his services as a director and $3,000 for attendance at meetings
of the Audit Committee. Philip F. Anschutz received $15,000 for his services
as a director. Austin M. Beutner, who resigned as a director in July 1995,
received $16,667 for his services as a director and $1,000 for attendance at
a meeting of the Compensation Committee. Richard J. Callahan received
$32,500 for his services as a director and $2,000 for attendance at meetings
of the Compensation Committee. John C. Dorn, who resigned as a director in
July 1995, received $16,667 for his services as a director. Dale F. Dorn,
who is not standing for reelection, received $32,500 for his services as a
director. Harold D. Hammar, who resigned as a director in July 1995,
received $14,167 for his services as a director. James H. Lee received
$32,500 for his services as a director, $2,000 for attendance at a meeting of
the Audit Committee and $50,000 as payment for his services on the Executive
Committee. Jeffrey W. Miller, who resigned as a director in July 1995,
received $19,167 for his services as a director. Jack D. Riggs, who retired
as a director in July 1995, received $16,667 for his services as a director
and $2,000 for attendance at meetings of the Compensation and Audit
Committees. Craig D. Slater received $15,000 for his services as a director
and $2,000 for attendance at meetings of the Audit Committee. Drake S.
Tempest received $15,000 for his services as a director and $1,000 for
attendance at meetings of the Compensation Committee. Michael B. Yanney
received $30,000 for his services as a director and $2,000 for attendance at
meetings of the Compensation Committee.
No additional amounts were paid for committee participation or special
assignments, except that (i) each member of the Compensation Committee was
paid $1,000 per meeting which he attended up to a maximum of $4,000 per year
for service on that committee, (ii) each member of the Audit Committee was
paid $1,000 per meeting which he attended up to a maximum of $4,000 per year
for service on that committee and (iii) Mr. Lee was paid $50,000 per year for
service on the Executive Committee. The payment of fees to directors for
attendance at committee meetings was discontinued in 1996. If the amendments
to the 1992 Stock Option Plan are approved by the Company's shareholders,
half of Mr. Lee's annual fee will be paid in shares of Common Stock.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
earned during each of the Company's last three fiscal years by the Company's
Chief Executive Officer and each of the Company's four other most highly
compensated executive officers (collectively, the "Named Executive
Officers"), based on salary and bonus earned in 1995. Both William L. Dorn
and Robert S. Boswell served as Chief Executive Officer in 1995.
-6-
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS (4)
-------------------------------------------------- ----------
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND BONUS COMPENSATION UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) ($)(1)(2) ($) (3) OPTIONS (#) ($)(5)
------------------ ---- ---------- --------- ------- ----------- ------
<S> <C> <C> <C> <C> <C> <C>
William L. Dorn, 1995 $300,012 $41,415 $1,873 -0- $17,328
Chairman of the Board 1994 300,012 11,849 2,795 -0- 22,942
1993 250,008 100,159 665 35,000 32,640
Robert S. Boswell, 1995 284,004 41,321 1,699 -0- 16,310
President and Chief 1994 284,004 11,409 2,515 -0- 21,559
Executive Officer 1993 234,000 88,239 607 35,000 30,503
Bulent A. Berilgen, 1995 166,512 17,162 20,354 -0- 8,326
Vice President of 1994 166,512 6,639 -0- -0- 11,507
Operations 1993 137,850 53,336 -0- 20,000 16,458
David H. Keyte, 1995 165,000 32,113 21,619 -0- 8,250
Vice President and 1994 165,000 6,580 21,945 -0- 11,469
Chief Financial Officer 1993 139,494 36,433 18,192 20,000 16,517
Forest D. Dorn, 1995 163,800 20,889 23,977 -0- 9,264
Vice President and 1994 163,800 8,104 18,335 -0- 12,910
General Business Manager 1993 160,650 22,013 324 20,000 20,342
V. Bruce Thompson 1995 165,000 16,292 -0- -0- 8,250
Vice President and 1994 68,750 3,241 6,902 20,000 2,063
General Counsel (6)
</TABLE>
(1) The following amounts indicate the awards made with respect to the
years indicated, under the Forest Oil Corporation Incentive Plan (the
"Incentive Plan"), which was terminated in 1996:
<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
William L. Dorn.................. $30,500 -0- -0-
Robert S. Boswell................ 29,020 -0- -0-
Bulent A. Berilgen............... 18,135 -0- -0-
David H. Keyte................... 16,185 -0- -0-
Forest D. Dorn................... 14,819 -0- -0-
</TABLE>
Distributions of awards were made pursuant to the Incentive Plan in
equal installments over a three-year period. Pursuant to the Incentive
Plan if a participant's employment is terminated prior to the vesting
of awards, the remainder of such awards is reallocated to other
participants. Amounts reallocated in 1995 for the years 1993 and 1994
were as follows: William L. Dorn - $1,472; Robert S. Boswell - $1,378;
Bulent A. Berilgen - $812; David H. Keyte - $821; and
Forest D. Dorn - $946. See "Report of the Compensation Committee on
Executive Compensation - Changes in Compensation Programs."
(2) During 1995, the Company assigned to certain of its executive officers
and other key personnel, as additional compensation, certain bonuses of
undivided interests in overriding royalty interests in the gross
production from certain exploratory oil and gas prospects in which the
Company had an interest. The cost to the Company at the time of the
assignment of such royalty interests was $9,943 each for William L. Dorn,
Robert S. Boswell and Forest D. Dorn, $6,350 for Bulent A. Berilgen,
$6,292 for David H. Keyte, and $6,292 for V. Bruce
-7-
<PAGE>
Thompson. During 1995 interests in twenty exploratory
oil and gas prospects were so awarded by the Royalty Bonus Committee.
This program was discontinued at the end of 1995.
(3) Does not include perquisites and other personal benefits because the
value of these items did not exceed the lesser of $50,000 or 10% of
reported salary and bonus of any of the Named Executive Officers,
except for David H. Keyte, Bulent A. Berilgen, and Forest D. Dorn.
The 1995 total includes a cash auto allowance of $15,000 each for
David H. Keyte and Forest D. Dorn and $13,750 for Bulent A. Berilgen.
(4) No stock appreciation rights or restricted stock awards were granted to
any of the Named Executive Officers during any of the last three fiscal
years. Share numbers give effect to the Reverse Stock Split that
occurred on January 8, 1996.
(5) The 1995 totals include (i) the fair market value of the Company's
matching contribution of Common Stock to the Retirement Savings Plan
in the following amounts: William L. Dorn - $7,500; Robert S.
Boswell - $7,500; Bulent A. Berilgen - $7,500; David H. Keyte - $7,500;
Forest D. Dorn - $7,500; and V. Bruce Thompson - $7,500; and (ii) the
Company's matching contribution pursuant to deferred compensation
agreements in the following amounts: William L. Dorn - $7,501;
Robert S. Boswell - $6,700; Bulent A. Berilgen - $826;
David H. Keyte - $750; Forest D. Dorn - $690; and V. Bruce
Thompson - $750. The 1995 totals also include the following amounts
attributable to the term life portion of premiums paid by the Company
pursuant to a split dollar insurance arrangement: William L. Dorn -
$2,327; Robert S. Boswell - $2,110; and Forest D. Dorn - $1,074. The
remainder of the premium is not included and does not benefit the
Named Executive Officers because the Company has the right to the
cash surrender value of the policy. There were no profit sharing
bonus contributions by the Company in 1995 to the Retirement Savings
Plan or pursuant to the deferred compensation agreements of
William L. Dorn and Robert S. Boswell.
(6) V. Bruce Thompson became an officer of the Company on August 10, 1994.
YEAR END STOCK OPTION VALUES
No stock options were granted to the Named Executive Officers in 1995.
There were no stock option exercises by any Named Executive Officers
during 1995. The following table shows the number of shares covered by both
exercisable and non-exercisable stock options as of December 31, 1995 and
their values at such date. On February 6, 1996, all of the stock options
were exchanged for new options at $11.75.
OUTSTANDING STOCK OPTION VALUES AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS AT FISCAL YEAR END
AT FISCAL YEAR END (#)(1)(2) ($)(3)
------------------------------ ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
William L. Dorn.................. 49,000 21,000 $0 $0
Robert S. Boswell................ 49,000 21,000 0 0
Bulent A. Berilgen............... 28,000 12,000 0 0
David H. Keyte................... 28,000 12,000 0 0
Forest D. Dorn................... 28,000 12,000 0 0
V. Bruce Thompson................ 8,000 12,000 0 0
</TABLE>
___________
(1) The above share numbers give effect to the Reverse Stock Split.
-8-
<PAGE>
(2) On February 6, 1996, regrants were made to the Named Executive Officers
in exchange for the cancellation of all previous options held. The
price of the new options was $11.25, and the number of new options held
are as follows: William L. Dorn - 100,000; Robert S. Boswell - 100,000;
Bulent A. Berilgen - 40,000; David H. Keyte - 57,000;
Forest D. Dorn - 40,000 and V. Bruce Thompson - 20,000.
(3) On December 31, 1995, the last reported sales price of the Common
Stock as quoted on the NASDAQ National Market was $2.8125 per share.
After giving effect to the Reverse Stock Split, on February 29, 1996
the last reported sales price of the Common Stock was $11.25. The
option price for the options granted in 1992 was $15.00 per share
and the option price for the options granted in 1993 was $25.00 per
share, after giving effect to the Reverse Stock Split. Since the
last reported sales price at December 31, 1995 was lower than the
option price for the options granted in 1992 and 1993, no value is
ascribed to those options in the above table.
STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the
cumulative total shareholder return on the Common Stock during the five years
ended December 31, 1995 with the cumulative return on the S & P 500 Index and
the Dow Jones Oil, Secondary Index. The graph assumes that $100 was invested
in each category on the last trading day of 1991 and that dividends were
reinvested.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS (1)
[GRAPH]
Forest Oil Corporation
Comparison of Five-Year Cumulative Total Returns:
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
Forest Oil Corporation 100 31 67 92 47 59
Dow Jones Oil Secondary 100 98 99 110 106 123
S&P 500 100 130 140 155 157 215
</TABLE>
(1) In the proxy statement filed for the year ended December 31, 1994, the
Company included the above index measures as well as an index of peer
companies. The companies included in the peer index were American
Exploration Co., DEKALB Energy Company, Devon Energy Corporation, Noble
Affiliates, Inc., Plains Petroleum Company, Presidio Oil Company, Snyder
Oil Corporation and The Wiser Oil Company. During 1995, two of these
peer companies (DEKALB and Plains) were acquired or merged into other
companies and several others were in the process of undertaking similar
transactions; in addition, the size criteria used in selecting the peer
companies was no longer applicable and did not provide a relevant basis
for comparison to the Company. For this reason, Forest has chosen to
discontinue the use of the peer index comparison and to rely instead on
the Dow Jones Oil, Secondary Index which the Company believes provides
an appropriate basis for comparison.
-9-
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The goal of the Compensation Committee is to design the Company's
executive compensation program to enable the Company to attract, retain and
motivate executive personnel deemed necessary to maximize return to
shareholders. The fundamental concept of the program is to align the amount
of an executive's total compensation with his contribution to the success of
the Company in creating shareholder value.
In furtherance of this objective, in November 1995, the Compensation
Committee determined that the program should have the following components:
BASE SALARIES. The Compensation Committee believes that the Company
should offer competitive base salaries to enable it to attract, motivate and
retain capable executives. The Compensation Committee has in the past
determined, and may or may not in the future determine, levels of base
compensation using published compensation surveys for energy and similar
sized companies and information obtained from compensation consultants. The
Compensation Committee may or may not use such surveys or other information
to determine levels of base compensation in the future.
SHORT-TERM INCENTIVES. The Compensation Committee believes that the
Company should offer short-term incentive compensation annually to reward the
Company's executives for achieving certain predetermined corporate and
individual performance objectives. The incentives may be awarded in the form
of cash bonuses, restricted stock and stock options, or a combination of the
foregoing.
LONG-TERM INCENTIVES. The Compensation Committee believes that long-term
compensation should comprise a substantial portion of each executive
officer's total compensation. Long-term compensation provides incentives
that encourage the executive officers to own and hold the Company's stock and
tie their long-term economic interests directly to those of the Company's
shareholders. Long-term compensation can be provided in the form of
restricted stock or stock options.
The Compensation Committee significantly modified the Company's executive
compensation program in 1995 based on the objective of creating shareholder
value and expects to continue to review the executive compensation program
during 1996 to further refine these components. See "Changes in Compensation
Programs" below.
The Compensation Committee's duties include the annual review and approval
of the compensation of the Chairman and the President and Chief Executive
Officer, review and determination of individual elements of compensation for
the Company's executive officers, review of the administration of long-term
incentive plans for management and determining the terms and awards under the
Company's 1992 Stock Option Plan and, prior to its termination of the program
in 1995, review of the administration of the Company's Incentive Plan. Prior
to the elimination of the Company's royalty bonus program described below,
the Royalty Bonus Committee was responsible for granting bonuses of undivided
overriding royalty interests pursuant to such program. The Executive
Committee is responsible for determining the salaries for all officers except
the Chairman and the President and Chief Executive Officer. In 1995, the
Compensation Committee held three meetings.
The Compensation Committee has studied the limitation on the deductibility
of compensation for federal income tax purposes pursuant to Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"). The Compensation
Committee does not currently intend to award levels of compensation that
results in such limitation. The Compensation Committee may authorize
compensation in the future that results in amounts above the limit if it
determines that such compensation is in the best interests of the Company.
In addition, the limitation may affect the future grant of stock options.
CHANGES IN COMPENSATION PROGRAMS. In November 1995, the Compensation
Committee adopted changes in the Company's executive compensation program.
The Compensation Committee terminated the Incentive Plan that became
effective in 1992 and the discretionary cash incentive bonus plan for
managers adopted in 1994, in each case without approving any awards
thereunder for 1994 or 1995, terminated the Company's royalty bonus program
(as
-10-
<PAGE>
described below under "Royalty Bonuses"), terminated the provision of leased
automobiles and club memberships for executives and other employees and
determined not to award Christmas bonuses to executives in 1995. The
Compensation Committee also authorized the adjustments in base salaries,
payment of cash bonuses and grant of replacement and additional stock options
referred to below.
BASE SALARIES. In 1995, the Company adjusted base salaries of certain
officers to reflect promotions and changes of responsibilities and to
partially offset the loss of perquisites.
SHORT-TERM INCENTIVES. In November 1995, the Compensation Committee
authorized senior management of the Company to establish individual annual
performance objectives for managers to earn short-term incentive
compensation. Senior management has undertaken to establish such a program
for 1996. In 1995, the Compensation Committee authorized one-time cash
bonuses for certain officers as additional compensation for their performance
in 1995 and in consideration of the elimination of certain perquisites
referred to above. William L. Dorn and Robert S. Boswell each received a
$30,000 cash bonus.
LONG-TERM INCENTIVES. In November 1995, the Compensation Committee
authorized the issuance of replacement and additional stock options at an
exercise price of $11.25 per share to all officers and employees that had
outstanding options in exchange for such outstanding options, which had
exercise prices of $15.00 and $25.00 per share. The $11.25 options were
issued in February 1996 with a new vesting schedule at the rate of 20% per
year. William L. Dorn and Robert S. Boswell each exchanged old options for
70,000 shares and received new options for 100,000 shares. The exchange and
additional issuance were completed in February 1996.
EXECUTIVE SEVERANCE AGREEMENTS. In March 1995, the Compensation Committee
renewed the Executive Severance Agreements and extended their term to
December 1997. In addition, the definition of change of control was
modified. See "Transactions with Management and Others --- Executive
Severance Agreements."
ROYALTY BONUSES. The Company's royalty bonus program was terminated at
the end of 1995. During 1995, the Company assigned to certain of its
executive officers, other key personnel and certain retirees, as additional
compensation, certain bonuses of undivided interests in overriding royalty
interests equal to approximately 6% of the Company's net interest in all oil,
gas and other minerals produced, saved and sold from certain oil and gas
prospects in which the Company had an interest. The prospects, the size of
the interest and the participants in such bonuses were determined from time
to time by the Royalty Bonus Committee of the Board of Directors. The
interest of each officer and key employee in such bonuses varies according to
his responsibility and salary. The interests of William L. Dorn and Robert
S. Boswell were established based upon their responsibilities as directors
and officers, and on their salaries. By the terms of the issuing documents,
such interests were to terminate, revert to and revest in the Company on
December 31, 1995, unless on such date certain conditions with respect to
production or drilling operations on the properties subject to the royalties
were fulfilled. Certain royalty interests awarded in 1993, 1994 and 1995
(nine in number) terminated, reverted to and revested in the Company during
1995.
The Compensation Committee believes that the graph depicting Five Year
Cumulative Total Return, included above under the caption "Stock Performance
Graph," should be considered with the following graph. The following graph
has been prepared on the same basis as the preceding graph, except that it
shows semi-annual stock performance over the period from July 31, 1991 to
December 31, 1995. In 1991, William L. Dorn was elected Chairman of the
Board. The Company believes that the Dow Jones Oil, Secondary Index is
meaningful because it is an independent, objective view of the performance of
other similarly sized energy companies.
-11-
<PAGE>
[GRAPH]
FOREST OIL CORPORATION
Comparison of Semi-Annual Cumulative Total Returns:
<TABLE>
<CAPTION>
7/31/91 12/31/91 6/30/92 12/31/92 6/30/93 12/31/93 6/30/94 12/30/94 6/30/95 12/29/96
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Forest Oil Corp. 100 95 79 201 363 276 268 142 103 177
DJ, Oil Secondary 100 90 86 91 107 101 105 98 108 113
S&P 500 100 109 108 117 123 129 125 131 157 180
</TABLE>
Date: April , 1996
COMPENSATION COMMITTEE
Michael B. Yanney, Chairman
Richard J. Callahan
Drake S. Tempest
EXECUTIVE COMMITTEE ROYALTY BONUS COMMITTEE
William L. Dorn, Chairman William L. Dorn, Chairman
Robert S. Boswell Robert S. Boswell
James H. Lee James H. Lee
Craig D. Slater
-12-
<PAGE>
PENSION PLAN
The Company's Pension Plan is a qualified, non-contributory defined
benefit plan. On May 8, 1991, the Board of Directors suspended benefit
accruals under the Pension Plan effective as of May 31, 1991.
The following table shows the estimated maximum annual benefits payable
upon retirement at age 65 as a straight life annuity to participants in the
Pension Plan for the indicated levels of average annual compensation and
various periods of service, assuming no future changes in such plan:
<TABLE>
<CAPTION>
ESTIMATED MAXIMUM ANNUAL
PENSION BENEFITS (2)
----------------------------
YEARS OF SERVICE
----------------------------
REMUNERATION (1) 10 20 30
- ---------------- ------ ------- -------
<S> <C> <C> <C>
$100,000............................ 36,846 48,060 53,400
200,000............................ 73,692 96,120 106,800
300,000............................ 79,282 103,412 114,902
400,000............................ 79,282 103,412 114,902
</TABLE>
_____________
(1) For each Named Executive Officer, the level of compensation used to
determine benefits payable under the Pension Plan is such officer's
base salary for 1991.
(2) Normal retirement benefits attributable to the Company's contributions are
limited under certain provisions of the Code to $120,000 in 1996, as
increased annually thereafter for cost of living adjustments.
The amount of the Company's contribution, payment or accrual in respect
to any specified person in the Pension Plan is not and cannot readily be
separately or individually calculated by the Pension Plan actuaries. Annual
benefits at normal retirement are approximately 24% of average annual
earnings (excluding bonuses) for any consecutive 60-month period which
produces the highest amount, in the last 15 years prior to retirement, up to
May 31, 1991, when benefit accruals ceased plus 21% of such earnings prorated
over 20 years of credited service, and 1/2 of 1% of such earnings for each
year of credited service in excess of 20, subject to certain adjustments for
lack of plan participation. There is no Social Security offset. Such benefits
are payable for life with a 10 year certain period, or the actuarial
equivalent of such benefit.
Because benefit accruals under the Pension Plan were suspended effective
May 31, 1991, the years of credited service for the Named Executive Officers
are as follows: William L. Dorn - 20; Robert S. Boswell - 2; Bulent A.
Berilgen - 7; Forest D. Dorn - 14 and David H. Keyte - 4. The estimated
annual accrued benefit payable, based on a life annuity benefit, upon normal
retirement for each of such persons is: William L. Dorn - $50,429; Robert S.
Boswell - $4,616; Bulent A. Berilgen - $11,162; David H. Keyte - $5,097 and
Forest D. Dorn - $17,823. V. Bruce Thompson has no benefit under this plan
because his employment commenced after benefit accruals were suspended.
Certain participants in the Pension Plan have been prevented by the
limits of the Code from receiving the full amount of pension benefits to
which they would otherwise have been entitled. Such persons have had benefits
credited to them under a Supplemental Retirement Plan, which together with
the benefits payable under the Pension Plan, equaled the benefit to which
they would have been entitled under the Pension Plan but for such Code
limits. The Supplemental Retirement Plans for each participant were unfunded,
non-qualified, non-contributory benefit plans. Benefits payable vest to the
same extent as the Pension Plan benefits and are unsecured general
obligations of the Company. Benefit accruals under these plans were suspended
effective May 31, 1991 in conjunction with the suspension of benefit accruals
under the Pension Plan.
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<PAGE>
PRINCIPAL HOLDERS OF SECURITIES
The Company currently has one class of voting securities outstanding. On
February 29, 1996, there were 24,527,575 shares of Common Stock outstanding,
with each such share being entitled to one vote.
As of February 29, 1996, to the knowledge of the Board of Directors the
only shareholders who owned beneficially more than 5% of the outstanding
shares of Common Stock were:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
TITLE OF CLASS BENEFICIAL OWNERS BENEFICIAL OWNERSHIP OF CLASS
- -------------- ----------------------- -------------------- --------
<S> <C> <C> <C>
Common Stock (1) The Anschutz Corporation 11,138,888(2) 34.9%
2400 Anaconda Tower
555 17th Street
Denver, Colorado 80202
Joint Energy Development 1,680,000 6.8%
Investments, Limited Partnership
P.O. Box 1188
Houston, Texas 77251-1188
</TABLE>
____________________
(1) Based on Schedules 13D and 13G and amendments thereto filed with the SEC
and the Company by the reporting person through February 29, 1996 and the
amount of Common Stock outstanding on February 29, 1996. All share
amounts give effect to the Reverse Stock Split.
(2) The shares indicated as beneficially owned by Anschutz and Philip F.
Anschutz include (a) 1,240,000 shares issuable upon conversion of 620,000
shares of the Company's Second Series Preferred Stock and (b) 6,138,888
shares issuable pursuant to an option and warrants exercisable within 60
days. Anschutz has also agreed to not transfer any of its shares of
Common Stock, except in limited circumstances, until after October 31,
1996.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
RETIREMENT BENEFITS FOR FORMER EXECUTIVES AND DIRECTORS. In December
1990, in consideration of their many years of service, the Company entered
into retirement agreements with seven executives and directors ("Retirees")
pursuant to which the Retirees will receive supplemental retirement payments
in addition to the amounts to which they are entitled under the Company's
retirement plan. In addition, the Retirees and their spouses are entitled to
lifetime coverage under the Company's group medical and dental plans, tax and
other financial services and payments by the Company in connection with
certain club membership dues. The Retirees also participated in the Company's
royalty bonus program until it was terminated at the end of 1995. The Company
has also agreed to maintain certain life insurance policies in effect at
December 1990 for the benefit of each of the Retirees. All of the Retirees
have subsequently resigned as directors. Pursuant to the terms of the
retirement agreements, the Retirees who cease to be a director (or his
spouse) will be paid $2,500 a month until December 2000.
The Company's obligation to one Retiree under a revised retirement
agreement is payable in Common Stock or cash, at the Company's option, in May
of 1996 at approximately $190,000 per year with the balance ($149,000)
payable in May 1997. The retirement agreements for the other six Retirees,
one of whom received in 1991 the payments scheduled to be made in 1999 and
2000, provide for supplemental retirement payments totaling approximately
$938,400 per year through 1998 and approximately $740,400 per year in 1999
and 2000.
EXECUTIVE SEVERANCE AGREEMENTS. The Company has entered into executive
severance agreements (the "Executive Severance Agreements") with certain
executive officers, including the Named Executive Officers. The Executive
Severance Agreements provide for severance benefits for termination without
cause and for termination following a "change of control" of the Company. The
Executive Severance Agreements provide that if an executive's employment is
terminated either (a) by the Company for reasons other than cause or other
than as a consequence of
-14-
<PAGE>
death, disability, or retirement, or (b) by the executive for reasons of
diminution of responsibilities, compensation, or benefits or, in the case of a
change of control, a significant change in the executive's principal place of
employment, the executive will receive certain payments and benefits. In
March 1995, the Compensation Committee renewed the Executive Severance
Agreements and extended their term to December 1997. In addition, the
definition of "change of control" was modified.
In the case of termination of an executive's employment which does not
occur within two years of a change of control, these severance benefits
include (a) payment of the executive's base salary for a term of months equal
to the whole number of times that the executive's base salary can be divided
by $10,000, limited to 30 months (such amounts payable will be reduced by 50%
if the executive obtains new employment during the term of payment) and (b)
continued coverage of the executive and any of his or her dependents under
the Company's medical and dental benefit plans throughout the payment term
without any cost to the executive.
If an executive's employment by the Company is terminated under the
circumstances described above within two years after the date upon which a
change of control occurs, the Company would be obligated to take the
following actions after the last day of the executive's employment:
(a) the Company will pay to the executive an amount equal to 2.5 times
the executive's base salary;
(b) the Company will permit the executive and those of his dependents
who are covered under the Company's medical and dental benefit plans
to be covered by such plans without any cost to the executive for a
two-year period of time;
(c) the Company will cause any and all outstanding options to purchase
stock of the Company held by the executive to become immediately
exercisable in full and cause the executive's accrued benefits under
any non-qualified deferred compensation plans to become immediately
non-forfeitable; and
(d) if any payment or distribution to the executive, whether or not
pursuant to such agreement, is subject to the federal excise tax on
"excess parachute payments," the Company will be obligated to pay to
the executive such additional amount as may be necessary so that the
executive realizes, after the payment of any income or excise tax on
such additional amount, an amount sufficient to pay all such excise
taxes.
The Executive Severance Agreements also provide that the Company will
pay legal fees and expenses incurred by an executive to enforce rights or
benefits under such agreements. Under the Executive Severance Agreements, a
"change of control" of the Company would be deemed to occur if, as modified
in March, 1995, (i) the Company is not the surviving entity in any merger,
consolidation or other reorganization (or survives only as a subsidiary of an
entity other than a previously wholly-owned subsidiary of the Company); (ii)
the Company sells, leases or exchanges all or substantially all of its assets
to any other person or entity (other than a wholly-owned subsidiary of the
Company); (iii) the Company is dissolved and liquidated; (iv) any person or
entity, including a "group" as contemplated by Section 13(d)(3) of the
Exchange Act acquires or gains ownership or control (including, without
limitation, power to vote) of more than 40% of the outstanding shares of the
Company's voting stock (based upon voting power); or (v) as a result of or in
connection with a contested election of directors, the persons who were
directors of the Company before such election cease to constitute a majority
of the Board of Directors.
SECTION 16 REPORTING
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the SEC and the National Association of Security Dealers, Inc.
Officers, directors and greater than 10% shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
-15-
<PAGE>
Based solely on its review of copies of such forms received by it and
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during the period from
January 1, 1995 to February 15, 1996, its officers, directors, and greater
than 10% beneficial owners complied with all applicable filing requirements,
except that Michael B. Yanney was late in filing a monthly report of one
transaction.
PROPOSAL TO AMEND AND RESTATE THE 1992 STOCK OPTION PLAN
At the Annual Meeting, the shareholders will be asked to approve an
amendment and restatement of the 1992 Stock Option Plan, a copy of which
amendment and restatement is attached hereto as Appendix A. Pursuant to the
amendment and restatement, the name of such plan will be changed to the Stock
Incentive Plan (the "Stock Incentive Plan"). The primary differences between
the amended and restated Stock Incentive Plan and the plan as originally
adopted in 1992 are (1) shares of Common Stock subject to certain forfeiture
and/or transfer restrictions may be awarded to employees and (2) shares of
Common Stock subject to certain transfer restrictions will be automatically
awarded to nonemployee directors of the Company ("Nonemployee Directors").
The amended and restated Stock Incentive Plan was unanimously approved
by the Board on March __, 1996, subject to shareholder approval at the Annual
Meeting. The Stock Incentive Plan is designed to enable the Company and its
subsidiaries to provide a means to attract able directors and employees and
to provide a means whereby those individuals upon whom the responsibilities
of the successful administration and management of the Company rest, and
whose present and potential contributions to the welfare of the Company are
of importance, can acquire and maintain stock ownership, thereby
strengthening their concern for the welfare of the Company. A further
purpose of the Stock Incentive Plan is to provide such individuals with
additional incentive and reward opportunities designed to enhance the
profitable growth of the Company. Accordingly, the Stock Incentive Plan
provides for (a) granting to employees stock options that do not constitute
incentive stock options as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), ("Options"), (b) granting to employees
shares of Common Stock that are subject to forfeiture under certain
circumstances and/or certain transfer restrictions ("Restricted Stock"), and
(c) granting to Nonemployee Directors shares of Common Stock that are subject
to certain transfer restrictions ("Director Stock Awards").
Below is a summary of the terms of the amended and restated Stock
Incentive Plan which is qualified in its entirety by reference to the full
text of the Stock Incentive Plan which is attached to this Proxy Statement as
Appendix A. Approval of the Stock Incentive Plan requires the affirmative
vote of a majority of the shares present, or represented, and entitled to
vote at the Annual Meeting.
NUMBER OF SHARES SUBJECT TO THE STOCK INCENTIVE PLAN
The aggregate maximum number of shares of Common Stock that may be
issued under the Stock Incentive Plan cannot, on the date of the grant of any
award thereunder, exceed an amount equal to 10% of the sum of the number of
then outstanding shares of Common Stock plus the aggregate number of shares
of Common Stock then issuable pursuant to the exercise, conversion, or
exchange of outstanding rights, warrants, convertible or exchangeable
securities or options (other than Options granted under the Stock Incentive
Plan). Shares of Common Stock in the Company's treasury are not deemed to be
outstanding for purposes of calculating such limitation. The aggregate
maximum number of shares of Common Stock that may be the subject of Options
or Restricted Stock awards granted to any one employee during a calendar year
beginning on or after January 1, 1996, may not exceed 250,000 shares, subject
to adjustment upon a reorganization, stock split, recapitalization, or other
change in the Company's capital structure.
-16-
<PAGE>
ADMINISTRATION
The Stock Incentive Plan is administered by a committee (the
"Committee") appointed by the Board, constituted so as to comply with Rule
16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and constituted solely of two or more Nonemployee Directors. The
Board has appointed the Compensation Committee to administer the Stock
Incentive Plan. No member of the Committee is eligible to receive an Option
or an award of Restricted Stock under the Stock Incentive Plan, and no person
who has received an Option or an award of Restricted Stock under the Stock
Incentive Plan in the preceding year may serve on the Committee. Members of
the Committee will, however, receive Director Stock Awards under the Stock
Incentive Plan.
The Committee has full authority, subject to the terms of the Stock
Incentive Plan, to establish rules and regulations for the proper
administration of the Stock Incentive Plan, to select the employees to whom
awards of Options or Restricted Stock are granted, and to set the date of
grant and the other terms of the awards. When granting awards, the Committee
considers such factors as an employee's duties and present and potential
contributions to the Company's success.
ELIGIBILITY
All of the employees of the Company and its subsidiaries (including an
employee who may also be a director of any such company) are eligible to
participate in the Stock Incentive Plan. The selection of employees, from
among those eligible, who will receive Options or Restricted Stock awards, or
any combination thereof, is within the discretion of the Committee. Director
Stock Awards will be awarded only to Nonemployee Directors, and Options and
Restricted Stock awards will not be granted to any Nonemployee Director.
TERM OF STOCK INCENTIVE PLAN
The Stock Incentive Plan originally became effective on March 6, 1992.
Subject to approval by the shareholders of the Company at the Annual Meeting,
the amendment and restatement of the Stock Incentive Plan became effective
March __, 1996, the date of its adoption by the Board. No further awards may
be granted under the Stock Incentive Plan after March 5, 2002, and the Stock
Incentive Plan will terminate thereafter once all awards have been satisfied
or expired. The Board of Directors may, however, terminate the Stock
Incentive Plan at any time without prejudice to the holders of any then
outstanding awards.
STOCK OPTIONS
a. TERM OF OPTION. The term of each Option will be as specified by the
Committee at the date of grant. The effect of an employee's termination of
employment by reason of death, retirement, disability or otherwise will be
specified in the contract that evidences each Option grant.
b. OPTION PRICE. The Option price will be determined by the Committee
but such price will be no less than 85% of the fair market value of the
shares on the date that the Option is granted.
c. STATUS OF OPTIONS. Options granted under the Stock Incentive Plan
will not constitute incentive stock options within the meaning of Section 422
of the Code.
d. SIZE OF GRANT. The number of shares for which an Option is granted
to an employee will be determined by the Committee.
e. PAYMENT. The Option price upon exercise may, at the discretion of
the Committee, be paid by an employee in cash, other shares of Common Stock
owned by the employee, or by a combination of cash and Common Stock. The
Stock Incentive Plan also allows the Company, in its discretion, to pay a
cash bonus to an optionee on the date of exercise of an Option in order to
facilitate the payment of all or any portion of the Option exercise price.
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f. OPTION CONTRACT. All Options will be evidenced by a written
contract containing provisions consistent with the Stock Incentive Plan and
such other provisions as the Committee deems appropriate.
g. TRANSFERABILITY. No Option is transferable other than by will or
the laws of descent and distribution or pursuant to a qualified domestic
relations order, and only the employee or his guardian or legal
representative may exercise any Option during the employee's lifetime.
RESTRICTED STOCK
a. RESTRICTED STOCK SUBJECT TO FORFEITURE AND TRANSFER RESTRICTIONS.
Except as described in subparagraph (b) below, shares of Common Stock awarded
in a Restricted Stock award will be issued or delivered to the employee at
the time the award is made without any payment to the Company (other than for
any payment amount determined by the Committee in its discretion or the
possible requirement that the par value per share be paid), but such shares
will be subject to certain restrictions on the disposition thereof, certain
obligations to forfeit such shares to the Company, and such other
restrictions as may be determined in the discretion of the Committee. The
restrictions on disposition may lapse based on (i) the Company's attainment
of targets established by the Committee that are based on (1) the price of a
share of Common Stock, (2) the Company's earnings per share, (3) the
Company's market share, (4) the market share of a business unit of the
Company designated by the Committee, (5) the Company's sales, (6) the sale of
a business unit of the Company designated by the Committee, or (7) the return
on shareholders' equity achieved by the Company, (ii) the employee's tenure
with the Company, (iii) a combination of both factors or (iv) upon the
occurrence of any event or the satisfaction of any other condition specified
by the Committee in its sole discretion. Upon the issuance to an employee of
shares of Common Stock pursuant to such a Restricted Stock award, except for
the foregoing restrictions, such employee will have all the rights of a
shareholder of the Company with respect to such shares, including the right
to vote such shares and to receive all dividends and other distributions paid
with respect to such shares. The Committee will determine the effect of the
termination of employment of a recipient of such a Restricted Stock award (by
reason of retirement, disability, death or otherwise) prior to the lapse of
any applicable restrictions. If shares of Common Stock issued pursuant to
such a Restricted Stock award are voluntarily or involuntarily transferred by
the employee at any time before they become nonforfeitable, such shares will
be forfeited and canceled.
b. RESTRICTED STOCK SUBJECT ONLY TO TRANSFER RESTRICTIONS. In the
discretion of the Committee, shares of Common Stock that are the subject of a
Restricted Stock award may be subject to restrictions on disposition by the
employee without any obligation of the employee to forfeit and surrender the
shares to the Company under any circumstances. Pursuant to such a Restricted
Stock award, shares of Common Stock will be issued or delivered to the
employee at the time the award is made without any payment to the Company
(other than for any payment amount determined by the Committee in its
discretion or the possible requirement that the par value per share be paid).
An employee who receives Common Stock pursuant to such a Restricted Stock
award will have the right to receive dividends with respect to such Common
Stock, to vote such Common Stock, and to enjoy all other shareholder rights,
except that such Common Stock will be subject to certain transfer
restrictions and the Company will retain custody of the stock until such
transfer restrictions have expired. For a period of time after the date of
grant of such a Restricted Stock award (which period will be established by
the Committee), the employee may not sell, assign, pledge, or otherwise
transfer or dispose of the shares of Common Stock issued in connection with
such award. Upon the expiration of such period or, if earlier, upon the
occurrence of any event or the satisfaction of any condition specified by the
Committee, the transfer restrictions will cease to apply and the Company will
deliver the Common Stock certificate to the employee. Shares of Common Stock
issued pursuant to such a Restricted Stock award will bear a legend to
reflect such transfer restrictions. The Committee intends to award
Restricted Stock that is subject only to transfer restrictions as partial
payment under individual performance agreements (see "Report of the
Compensation Committee on Executive Compensation - Executive Compensation
Incentives").
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DIRECTOR STOCK AWARDS
a. DIRECTOR STOCK AWARDS. On the date of each annual meeting of the
shareholders of the Company (beginning with the Annual Meeting), the Company
will, without cost to the recipient and without the exercise of the discretion
of any person or persons, award and issue to each Nonemployee Director then in
office or elected to the Board on the date of such meeting that number of shares
of Common Stock (rounded up to the nearest whole share) determined by dividing
$10,000 by the average of the fair market values of a share of Common Stock on
the 20 trading days immediately preceding the date that is three trading days
prior to the date of such meeting. If, as of any date that the Stock Incentive
Plan is in effect, there are not sufficient shares of Common Stock available to
allow for the award to each Nonemployee Director of the number of shares
described in the preceding sentence, each Nonemployee Director will receive his
or her pro-rata share of the total number of shares of Common Stock then
available under the Stock Incentive Plan. Shares of Common Stock issued
pursuant to a Director Stock Award will be subject to the restrictions on
transfer described in subparagraph (b) below, and such shares will bear a legend
to reflect such transfer restrictions.
b. TRANSFER RESTRICTIONS. A Nonemployee Director who receives Common
Stock pursuant to a Director Stock Award will have the right to receive
dividends with respect to such Common Stock, to vote such Common Stock, and to
enjoy all other shareholder rights, except that such Common Stock will be
subject to certain transfer restrictions and the Company will retain custody of
the stock until such transfer restrictions have expired. For a period of 24
months after the date of grant of a Director Stock Award, the Nonemployee
Director may not sell, assign, pledge, or otherwise transfer or dispose of the
shares of Common Stock issued in connection with such award. Upon the
expiration of such 24 month period or, if earlier, upon the occurrence of a
Corporate Change (as such term is defined below) or the termination of the
Nonemployee Director's service as a director of the Company for any reason
whatsoever, the transfer restrictions will cease to apply and the Company will
deliver the Common Stock certificate to the Nonemployee Director.
CORPORATE CHANGE
The Stock Incentive Plan provides that, upon a Corporate Change (as
hereinafter defined), the Committee may accelerate the vesting of Options,
cancel Options and make payments in respect thereof in cash, adjust the
outstanding Options as appropriate to reflect such Corporate Change, or provide
that each Option shall thereafter be exercisable for the number and class of
securities or property that the optionee would have been entitled to had the
Option already been exercised. Shares of Common Stock issued pursuant to
Director Stock Awards will cease to be subject to any transfer restrictions upon
the occurrence of a Corporate Change. The Committee may provide at the time of
grant that shares of Common Stock issued pursuant to Restricted Stock awards
that are subject only to transfer restrictions will cease to be subject to any
transfer restrictions upon the occurrence of a Corporate Change. Upon the
occurrence of a Corporate Change, the Committee may fully vest any Restricted
Stock awards that are subject to both forfeiture and transfer restrictions and,
upon such vesting, all restrictions applicable to such stock will terminate.
The Stock Incentive Plan provides that a Corporate Change occurs (a) if the
Company is dissolved and liquidated, (b) if the Company is not the surviving
entity in any merger or consolidation, (c) if the Company sells, leases or
exchanges or agrees to sell, lease or exchange all or substantially all of its
assets, (d) if any person, entity or group acquires or gains ownership or
control of more than 50% of the outstanding shares of the Company's voting stock
or (e) if after a contested election of directors, the persons who were
directors before such election cease to constitute a majority of the Board of
Directors.
AMENDMENTS
The Board of Directors may from time to time amend the Stock Incentive
Plan; however, no amendment which modifies the class of eligible individuals,
increases the number of shares of Common Stock authorized or available under the
Stock Incentive Plan, extends the duration of the Stock Incentive Plan, changes
the minimum option exercise price, changes the terms relating to Director Stock
Awards, or materially increases the benefits accruing to employees may be
adopted without the prior approval of the shareholders of the Company.
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FEDERAL INCOME TAX ASPECTS OF THE STOCK INCENTIVE PLAN
STOCK OPTIONS. As a general rule, no federal income tax is imposed on the
optionee upon the grant of an Option under the Stock Incentive Plan and the
Company is not entitled to a tax deduction by reason of such a grant.
Generally, upon the exercise of an Option, the optionee will be treated as
receiving compensation taxable as ordinary income in the year of exercise in an
amount equal to the excess of the fair market value of the shares on the date of
exercise over the option price paid for such shares. Upon the exercise of an
Option, and subject to the application of Section 162(m) of the Code as
discussed below, the Company may claim a deduction for compensation paid at the
same time and in the same amount as compensation income is recognized to the
optionee assuming any federal income tax withholding requirements are satisfied.
Upon a subsequent disposition of the shares received upon exercise of an Option,
any appreciation after the date of exercise should qualify as capital gain. If
the shares received upon the exercise of an Option are transferred to the
optionee subject to certain restrictions, then the taxable income realized by
the optionee, unless the optionee elects otherwise, and the Company's tax
deduction (assuming any federal income tax withholding requirements are
satisfied) should be deferred and should be measured at the fair market value of
the shares at the time the restrictions lapse. The restrictions imposed on
officers, directors and 10% shareholders by Section 16(b) of the Exchange Act is
such a restriction during the period prescribed thereby if other shares have
been purchased by such an individual within six months of the exercise of an
Option.
RESTRICTED STOCK SUBJECT TO FORFEITURE AND TRANSFER RESTRICTIONS. An
employee who receives a Restricted Stock award under the Stock Incentive Plan
that is subject to both forfeiture and transfer restrictions will not realize
taxable income at the time of grant, and the Company will not be entitled to a
deduction at that time, assuming that the restrictions constitute a substantial
risk of forfeiture for federal income tax purposes. Upon expiration of the
forfeiture restrictions (i.e., as shares become vested), the holder will realize
ordinary income in an amount equal to the excess of the fair market value of the
shares at such time over the amount, if any, paid for such shares, and, subject
to the application of Section 162(m) of the Code as discussed below, the Company
will be entitled to a corresponding deduction. Dividends paid to the holder
during the period that the forfeiture restrictions apply will also be
compensation to the employee and deductible as such by the Company.
Notwithstanding the foregoing, the recipient of such a Restricted Stock award
may elect to be taxed at the time of grant of the award based upon the fair
market value of the shares on the date of the award, in which case (a) subject
to Section 162(m) of the Code, the Company will be entitled to a deduction at
the same time and in the same amount, (b) dividends paid to the recipient during
the period the forfeiture restrictions apply will be taxable as dividends and
will not be deductible by the Company, and (c) there will be no further federal
income tax consequences when the forfeiture restrictions lapse.
RESTRICTED STOCK SUBJECT ONLY TO TRANSFER RESTRICTIONS. Ordinary income
will be recognized by an employee at the time of the grant of a Restricted Stock
award that is subject only to transfer restrictions in an amount equal to the
excess of the fair market value on such date of the shares of Common Stock
subject to such grant over the amount, if any, paid for such shares. However,
if other shares of Common Stock have been purchased by an employee within six
months of the date of grant of such a Restricted Stock award, recognition of the
income attributable to such award may under certain circumstances be postponed
for a period of up to six months from the date of such purchase of such other
shares of Common Stock due to liability to suit under Section 16(b) of the
Exchange Act. If applicable, one effect of any such postponement would be to
measure the amount of the employee's taxable income by reference to the fair
market value of such shares at the time such liability to suit under Section
16(b) of the Exchange Act no longer exists (rather than at the earlier date of
the grant of the Restricted Stock award). With respect to such a Restricted
Stock award under the Stock Incentive Plan, subject to the application of
Section 162(m) of the Code as discussed below, the Company may claim a deduction
for compensation paid at the same time and in the same amount as ordinary income
is recognized by the employee.
DIRECTOR STOCK AWARDS. Ordinary income will be recognized by a Nonemployee
Director at the time of the grant of a Director Stock Award in an amount equal
to the fair market value on such date of the shares of Common Stock subject to
such grant. However, if other shares of Common Stock have been purchased by a
Nonemployee Director within six months of the date of grant of a Director Stock
Award, recognition of the income attributable to such award may under certain
circumstances be postponed for a period of up to six months from the date of
such
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purchase of such other shares of Common Stock due to liability to suit under
Section 16(b) of the Exchange Act. If applicable, one effect of any such
postponement would be to measure the amount of the Nonemployee Director's
taxable income by reference to the fair market value of such shares at the time
such liability to suit under Section 16(b) of the Exchange Act no longer exists
(rather than at the earlier date of the grant of the Director Stock Award).
With respect to a Director Stock Award under the Stock Incentive Plan, the
Company may claim a deduction for compensation paid at the same time and in the
same amount as ordinary income is recognized by the Nonemployee Director.
SECTION 162(m) OF THE CODE. Section 162(m) of the Code, which was enacted
in 1993, precludes a public corporation from taking a deduction in 1994 or
subsequent taxable years for compensation in excess of $1 million paid to its
chief executive officer or any of its four other highest-paid officers.
However, compensation that qualifies under Section 162(m) of the Code as
"performance-based" is specifically exempt from the deduction limit. Based on
Section 162(m) of the Code and the regulations thereunder, the Company's ability
to deduct compensation income generated in connection with the exercise of
Options granted under the Stock Incentive Plan that have an exercise price equal
to or greater than the fair market value of the shares on the date of grant
should not be limited by Section 162(m) of the Code. However, Section 162(m) of
the Code could limit the Company's deduction with respect to compensation income
generated in connection with the exercise of an Option that had an exercise
price less than the fair market value of the shares on the date of grant.
Restricted Stock awards under the Stock Incentive Plan that are subject only to
transfer restrictions will not qualify as performance-based compensation under
Section 162(m) of the Code and, therefore, compensation expense deductions
relating to such Restricted Stock awards will be subject to the Section 162(m)
deduction limitation. The Stock Incentive Plan has been designed to provide
flexibility with respect to whether Restricted Stock awards that are subject to
both forfeiture and transfer restrictions will qualify as performance-based
compensation under Section 162(m) of the Code and, therefore, be exempt from the
deduction limit. If the forfeiture restrictions relating to such a Restricted
Stock award are based solely upon the satisfaction of one of the performance
criteria set forth in the Stock Incentive Plan, then the Company believes that
the compensation expense relating to such an award will be deductible by the
Company if the Restricted Stock award becomes vested. However, compensation
expense deductions relating to such a Restricted Stock award will be subject to
the Section 162(m) deduction limitation if the award becomes vested based upon
any other criteria set forth in such award (such as the occurrence of a
Corporate Change or vesting based upon continued employment with the Company).
The Stock Incentive Plan is not qualified under section 401(a) of the Code.
The comments set forth in the above paragraphs are only a summary of
certain of the Federal income tax consequences relating to the Stock Incentive
Plan. No consideration has been given to the effects of state, local, or other
tax laws on the Stock Incentive Plan or award recipients.
INAPPLICABILITY OF ERISA
Based upon current law and published interpretations, the Company does not
believe the Stock Incentive Plan is subject to any of the provisions of the
Employee Retirement Income Security Act of 1974.
ACQUISITIONS
Options may be granted in substitution for options held by officers and
employees of other corporations who are about to, or who have, become employees
of the Company or a subsidiary corporation as a result of a merger,
consolidation, acquisition of assets, or similar transaction by the Company or a
subsidiary. The terms, including the option price, of the substitute Options so
granted may vary from the terms set forth in the Stock Incentive Plan to such
extent as the Committee may deem appropriate to conform, in whole or in part, to
the provisions of the options in substitution for which they are granted.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
APPROVAL OF THE AMENDED AND RESTATED STOCK INCENTIVE PLAN.
APPOINTMENT OF INDEPENDENT AUDITORS
Subject to ratification by the shareholders of the Company, the Board has
designated the firm of KPMG Peat Marwick LLP, Suite 2300, 707 Seventeenth
Street, Denver, Colorado 80202 as independent auditors to examine and audit the
Company's financial statements for the year 1996. This firm has audited the
Company's financial statements for approximately 46 years and is considered to
be well qualified. The designation of such firm as auditors is being submitted
for ratification or rejection at the Annual Meeting. Action by shareholders is
not required under the law for the appointment of independent auditors, but the
ratification of their appointment is submitted by the Board in order to give the
shareholders of the Company the final choice in the designation of auditors. The
Board will be governed by the decision of a majority of the votes entitled to be
cast. A majority of the vote represented at the Annual Meeting by shares of
Common Stock entitled to vote is required to ratify the appointment of KPMG Peat
Marwick LLP.
A representative of KPMG Peat Marwick LLP will be present at the Annual
Meeting with the opportunity to make a statement if he desires to do so and will
also be available to respond to appropriate questions. A representative of the
firm was present at the last Annual Meeting for the same purpose.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
SHAREHOLDER PROPOSALS
Any shareholder proposals to be included in the Board of Directors'
solicitation of proxies for the 1996 Annual Meeting of Shareholders must be
received by Daniel L. McNamara, Secretary, at 2200 Colorado State Bank Building,
1600 Broadway, Denver, CO 80202, no later than December 2, 1996.
GENERAL AND OTHER MATTERS
The Board of Directors knows of no matter, other than those referred to in
this Proxy Statement, which will be presented at the Annual Meeting. However, if
any other matters are properly brought before the meeting or any of its
adjournments, the person or persons voting the proxies will vote them in
accordance with their judgment on such matters. Should any nominee for director
be unwilling or unable to serve at the time of the Annual Meeting, or any
adjournment thereof, the persons named in the proxy will vote it for the
election of such other person for such directorship as the Board of Directors
may recommend unless, prior to the Annual Meeting, the Board of Directors has
eliminated that directorship by reducing the size of the Board of Directors. The
Board of Directors is not aware that any nominee named herein will be unwilling
or unable to serve as a director.
On July 25, 1995, the Company renewed Directors and Officers Liability
Coverages designed to indemnify the directors and officers of the Company and
its subsidiaries against certain liabilities incurred by them in the performance
of their duties and also providing for reimbursement in certain cases to the
Company and its subsidiaries for sums paid by them to directors and officers as
indemnification for similar liability. This type of coverage was originally
purchased by the Company on May 24, 1978. The 1995 renewal was for a one-year
period. Primary insurance of $20,000,000 was renewed with National Union Fire
Insurance Company. Aggregate premiums for the 12-month period ending July 25,
1996 were $440,000. No claims have been filed and no payments have been made to
the Company or its subsidiaries or to any of their directors or officers under
this coverage.
The Restated Certificate of Incorporation of the Company limits the
personal liability of the Company's directors to the fullest extent permitted by
the New York Business Corporation Law ("BCL"), as currently formulated or as it
might be revised in the future. The Restated Certificate of Incorporation
provides that a director will not be liable for damages for any breach of duty
unless it is finally established that (a) the director's acts or omissions were
in
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bad faith or involved intentional misconduct or a knowing violation of law; or
(b) the director personally gained a financial profit or other advantages to
which he was not legally entitled; or (c) the director's acts violated Section
719 of the BCL which provides that directors who vote for, or concur in, certain
types of corporate action proscribed by the BCL will be jointly and severally
liable for any injury resulting from such action.
The cost of preparing, assembling, and mailing this Proxy Statement, the
enclosed proxy card and the Notice of Annual Meeting will be paid by the
Company. Additional solicitation by mail, telephone, telegraph or personal
solicitation may be done by directors, officers, and regular employees of the
Company. Such persons will receive no additional compensation for such services.
Brokerage houses, banks and other nominees, fiduciaries and custodians nominally
holding shares of Common Stock of record will be requested to forward proxy
soliciting material to the beneficial owners of such shares, and will be
reimbursed by the Company for their reasonable expenses.
AVAILABLE INFORMATION. UPON REQUEST OF ANY SHAREHOLDER, THE COMPANY'S
ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 1995 FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION (THE "SEC") ON FORM 10-K, INCLUDING FINANCIAL STATEMENTS,
THE SCHEDULES AND ANY AMENDMENTS THERETO AND ANY DOCUMENTS INCORPORATED BY
REFERENCE THEREIN WILL BE SENT TO THE SHAREHOLDER WITHOUT CHARGE BY FIRST CLASS
MAIL WITHIN ONE BUSINESS DAY OF RECEIPT OF SUCH REQUEST. ALL REQUESTS SHOULD BE
ADDRESSED TO THE SECRETARY OF THE COMPANY AT 2200 COLORADO STATE BANK BUILDING,
1600 BROADWAY, DENVER, COLORADO 80202 OR BY TELEPHONE TO (303) 812-1400.
You are urged to complete, sign, date and return your proxy promptly. You
may revoke your proxy at any time before it is voted. If you attend the Annual
Meeting, as we hope you will, you may vote your shares in person.
By order of the Board of Directors
DANIEL L. McNAMARA
SECRETARY
April __, 1996
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APPENDIX A
FOREST OIL CORPORATION
STOCK INCENTIVE PLAN
[AS AMENDED AND RESTATED EFFECTIVE AS OF ____________, 1996]
I. PURPOSE
The purpose of the FOREST OIL CORPORATION STOCK INCENTIVE PLAN (the "Plan")
is to provide a means through which FOREST OIL CORPORATION, a New York
corporation (the "Company"), and its subsidiaries may attract able persons to
serve as directors or enter the employ of the Company and to provide a means
whereby those individuals upon whom the responsibilities of the successful
administration and management of the Company rest, and whose present and
potential contributions to the welfare of the Company are of importance, can
acquire and maintain stock ownership, thereby strengthening their concern for
the welfare of the Company. A further purpose of the Plan is to provide such
individuals with additional incentive and reward opportunities designed to
enhance the profitable growth of the Company. Accordingly, the Plan provides
for granting Director Stock Awards to the nonemployee directors of the Company
and for granting Options, Restricted Stock Awards, or any combination of the
foregoing to employees.
The Plan as set forth herein constitutes an amendment and restatement,
effective as of _____________________, 1996, of the Forest Oil Corporation 1992
Stock Option Plan, as previously adopted by the Company, and shall supersede and
replace in its entirety such previously adopted plan.
II. DEFINITIONS
The following definitions shall be applicable throughout the Plan unless
specifically modified by any paragraph:
(a) "AWARD" means, individually or collectively, any Director Stock Award,
Option, or Restricted Stock Award.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended. Reference
in the Plan to any section of the Code shall be deemed to include any amendments
or successor provisions to such section and any regulations under such section.
(d) "COMMITTEE" means not less than two members of the Board who are
selected by the Board as provided in Paragraph IV(a).
(e) "COMMON STOCK" means the common stock, par value $.10 per share, of
the Company.
(f) "COMPANY" means Forest Oil Corporation.
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(g) "CORPORATE CHANGE" means an event defined as a "Corporate Change"
under Paragraph X(c).
(h) "DIRECTOR" means an individual elected to the Board by the
shareholders of the Company or by the Board under applicable corporate law who
is serving on the Board on the date the Plan is adopted by the Board or is
elected to the Board after such date.
(i) "DIRECTOR STOCK AWARD" means an Award granted under Paragraph IX of
the Plan to a Nonemployee Director.
(j) An "EMPLOYEE" means any person (including a Director) in an employment
relationship with the Company or any parent or subsidiary corporation (as
defined in section 424 of the Code).
(k) "FAIR MARKET VALUE" means, as of any specified date, the mean of the
high and low sales prices of the Common Stock (i) reported by the National
Market System of NASDAQ on that date or (ii) if the Common Stock is listed on a
national stock exchange, reported on the stock exchange composite tape on that
date; or, in either case, if no prices are reported on that date, on the last
preceding date on which such prices of the Common Stock are so reported. If the
Common Stock is traded over the counter at the time a determination of its fair
market value is required to be made hereunder, its fair market value shall be
deemed to be equal to the average between the reported high and low or closing
bid and asked prices of Common Stock on the most recent date on which Common
Stock was publicly traded. In the event Common Stock is not publicly traded at
the time a determination of its value is required to be made hereunder, the
determination of its fair market value shall be made by the Committee in such
manner as it deems appropriate.
(l) "HOLDER" means an employee who has been granted an Option or
Restricted Stock Award or a Nonemployee Director who has been granted a Director
Stock Award.
(m) "1934 ACT" means the Securities Exchange Act of 1934, as amended.
(n) "NONEMPLOYEE DIRECTOR" means a Director who is not an employee.
(o) "OPTION" means an Award granted under Paragraph VII of the Plan to an
employee.
(p) "OPTION AGREEMENT" means a written agreement between the Company and a
Holder with respect to an Option.
(q) "PLAN" means the Forest Oil Corporation Stock Incentive Plan, as
amended from time to time.
(r) "RESTRICTED STOCK AGREEMENT" means a written agreement between the
Company and a Holder with respect to a Restricted Stock Award.
(s) "RESTRICTED STOCK AWARD" means an Award granted under Paragraph VIII
of the Plan to an employee.
(t) "RULE 16b-3" means SEC Rule 16b-3 promulgated under the 1934 Act, as
such may be amended from time to time, and any successor rule, regulation or
statute fulfilling the same or a similar function.
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(u) "TRADING DAY" means a day during which trading in securities generally
occurs on the principal national or regional securities exchange on which the
Common Stock is listed or, if the Common Stock is not listed on a national or
regional securities exchange, on the National Market System of NASDAQ or, if the
Common Stock is not quoted thereon, on the principal other market on which the
Common Stock is then traded.
III. EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan originally became effective on March 6, 1992. This amendment and
restatement of the Plan shall become effective upon the date of its adoption by
the Board, provided this amendment and restatement of the Plan is approved by
the shareholders of the Company within twelve months thereafter.
Notwithstanding any provision in the Plan, in any Option Agreement or in any
Restricted Stock Agreement, no Option granted on or after the effective date of
this amendment and restatement of the Plan shall be exercisable and no
Restricted Stock Award or Director Stock Award shall be made prior to such
shareholder approval. No further Awards may be granted under the Plan after
March 5, 2002. The Plan shall remain in effect until all Awards granted under
the Plan have been satisfied or expired.
IV. ADMINISTRATION
(a) COMPOSITION OF COMMITTEE. The Plan shall be administered by a
committee which shall be (i) appointed by the Board, (ii) constituted so as to
permit the Plan to comply with Rule 16b-3, and (iii) constituted solely of two
or more "outside directors," within the meaning of section 162(m) of the Code
and applicable interpretive authority thereunder. No member of the Committee
shall be eligible to receive an Award (other than a Director Stock Award) under
the Plan and no person who has received an Award (other than a Director Stock
Award) in the preceding year shall be eligible to serve on the Committee.
(b) POWERS. Subject to the express provisions of the Plan, the Committee
shall have authority, in its discretion, to determine which employees shall
receive an Option and/or Restricted Stock Award, the time or times when such
Award shall be made, and the number of shares to be subject to each Option or
Restricted Stock Award. In making such determinations the Committee shall take
into account the nature of the services rendered by the respective employees,
their present and potential contribution to the Company's success and such other
factors as the Committee in its discretion shall deem relevant.
(c) ADDITIONAL POWERS. The Committee shall have such additional powers as
are delegated to it by the other provisions of the Plan. Subject to the express
provisions of the Plan, this shall include the power to construe the Plan and
the respective agreements executed hereunder, to prescribe rules and regulations
relating to the Plan, to determine the terms, restrictions and provisions of the
agreement relating to each Award, and to make all other determinations necessary
or advisable for administering the Plan. The Committee may correct any defect
or supply any omission or reconcile any inconsistency in the Plan or in any
agreement relating to an Award in the manner and to the extent it shall deem
expedient to carry it into effect. The determinations of the Committee on the
matters referred to in this Paragraph IV shall be conclusive. The provisions of
this Paragraph IV with respect to decisions made by, and authority of, the
Committee shall be subject to the controlling provisions of Paragraph IX.
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V. GRANT OF AWARDS; SHARES SUBJECT TO THE PLAN
(a) STOCK GRANT AND AWARD LIMITS. Director Stock Awards shall be awarded
only to Nonemployee Directors as provided in ParagraphIX, and, except as
expressly authorized by Paragraph IX, no grant of an Award will be made to a
Nonemployee Director. The Committee may from time to time grant Options and/or
Restricted Stock Awards to one or more employees determined by it to be eligible
for participation in the Plan in accordance with the provisions of Paragraph VI.
Subject to Paragraph X, the aggregate number of shares of Common Stock that may
be issued under the Plan shall not, on the date of the grant of any Award,
exceed an amount equal to 10% of the sum of the number of then outstanding
shares of Common Stock plus the aggregate number of shares of Common Stock then
issuable pursuant to the exercise, conversion, or exchange of outstanding
rights, warrants, convertible or exchangeable securities or options (other than
Options granted under the Plan). The shares of Common Stock in the Company's
treasury shall not be deemed to be outstanding for purposes of calculating such
limitation. To the extent that an Award lapses or the rights of its Holder
terminate, any shares of Common Stock subject to such Award shall again be
available for the grant of an Award to the extent permitted under Rule 16b-3.
Notwithstanding any provision in the Plan to the contrary, the maximum number of
shares of Common Stock that may be subject to Options and/or Restricted Stock
Awards granted to any one individual during any calendar year beginning on or
after January 1, 1996, may not exceed_______________ (subject to adjustment in
the same manner as provided in Paragraph X hereof with respect to shares of
Common Stock subject to Awards then outstanding). The limitation set forth in
the preceding sentence shall be applied in a manner which will permit
compensation generated under the Plan to constitute "performance-based"
compensation for purposes of section 162(m) of the Code, including, without
limitation, counting against such maximum number of shares, to the extent
required under section 162(m) of the Code and applicable interpretive authority
thereunder, any shares subject to Options that are cancelled or repriced.
(b) STOCK OFFERED. The stock to be offered pursuant to the grant of an
Award may be authorized but unissued Common Stock or Common Stock previously
issued and outstanding and reacquired by the Company.
VI. ELIGIBILITY
Options and Restricted Stock Awards may be granted only to persons who, at
the time of grant, are employees. An Award to an employee may be granted on
more than one occasion, and, subject to the limitations set forth in the Plan,
such Award may include an Option, a Restricted Stock Award, or any combination
thereof. Director Stock Awards shall be awarded only to Nonemployee Directors,
and Options and Restricted Stock Awards may not be granted to any Nonemployee
Director.
VII. STOCK OPTIONS
(a) OPTION PERIOD. The term of each Option shall be as specified by the
Committee at the date of grant.
(b) LIMITATIONS ON EXERCISE OF OPTION. An Option shall be exercisable in
whole or in such installments and at such times as determined by the Committee.
(c) NO INCENTIVE STOCK OPTIONS. Options granted under the Plan shall not
constitute incentive stock options within the meaning of Section 422 of the
Code.
(d) OPTION AGREEMENT. Each Option shall be evidenced by an Option
Agreement in such form and containing such provisions not inconsistent with the
provisions of the Plan as the Committee from time to time shall approve. Each
Option Agreement shall specify the effect of termination of employment on the
exercisability of the Option. An Option Agreement may provide for the payment
of the option price, in whole or in part, by the delivery of
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a number of shares of Common Stock (plus cash if necessary) having a Fair Market
Value equal to such option price. Moreover, an Option Agreement may provide for
a "cashless exercise" of the Option by establishing procedures whereby the
Holder, by a properly executed written notice, directs (i) an immediate market
sale or margin loan respecting all or a part of the shares of Common Stock to
which he is entitled upon exercise pursuant to an extension of credit by the
Company to the Holder of the option price, (ii) the delivery of the shares of
Common Stock from the Company directly to a brokerage firm, and (iii) the
delivery of the option price from sale or margin loan proceeds from the
brokerage firm directly to the Company. The terms and conditions of the
respective Option Agreements need not be identical.
(e) OPTION PRICE AND PAYMENT. The price at which a share of Common Stock
may be purchased upon exercise of an Option shall be determined by the Committee
but, subject to adjustment as provided in Paragraph X, such purchase price shall
not be less than 85% of the Fair Market Value of a share of Common Stock on the
date such Option is granted. The Option or portion thereof may be exercised by
delivery of an irrevocable notice of exercise to the Company. The purchase
price of the Option or portion thereof shall be paid in full in the manner
prescribed by the Committee. In connection with the grant of an Option by the
Committee to an employee, the Company, in its discretion, may grant bonuses in
cash to such employee on the date of exercise of such Option in order to
facilitate the payment of the purchase price of such Option.
(f) SHAREHOLDER RIGHTS AND PRIVILEGES. The Holder shall be entitled to
all the privileges and rights of a shareholder only with respect to such shares
of Common Stock as have been purchased under the Option and for which
certificates of stock have been registered in the Holder's name.
(g) OPTIONS IN SUBSTITUTION FOR STOCK OPTIONS GRANTED BY OTHER
CORPORATIONS. Options may be granted under the Plan from time to time in
substitution for stock options held by individuals employed by corporations who
become employees as a result of a merger or consolidation of the employing
corporation with the Company or any subsidiary, or the acquisition by the
Company or a subsidiary of the assets of the employing corporation, or the
acquisition by the Company or a subsidiary of stock of the employing corporation
with the result that such employing corporation becomes a subsidiary.
VIII. RESTRICTED STOCK AWARDS
(a) RESTRICTED STOCK SUBJECT TO TRANSFER AND FORFEITURE RESTRICTIONS.
(i) Except as described in Subparagraph (b) below, shares of Common
Stock that are the subject of a Restricted Stock Award shall be subject to
restrictions on disposition by the Holder and an obligation of the Holder to
forfeit and surrender the shares to the Company under certain circumstances (the
"Forfeiture Restrictions") and further to such other restrictions as shall be
determined by the Committee in its sole discretion. The Forfeiture Restrictions
shall be determined by the Committee in its sole discretion, and the Committee
may provide that the Forfeiture Restrictions shall lapse upon (1) the attainment
of targets established by the Committee that are based on (A) the price of a
share of Common Stock, (B) the Company's earnings per share, (C) the Company's
market share, (D) the market share of a business unit of the Company designated
by the Committee, (E) the Company's sales, (F) the sales of a business unit of
the Company designated by the Committee, or (G) the return on stockholders'
equity achieved by the Company, (2) the Holder's continued employment with the
Company for a specified period of time, or (3) a combination of any two or more
of the factors listed in clauses (1) and (2) of this sentence or upon the
occurrence of any event or the satisfaction of any other condition specified by
the Committee in its sole discretion. Each Restricted Stock Award may have
different Forfeiture Restrictions, in the discretion of the Committee. The
Forfeiture Restrictions applicable to a particular Restricted Stock Award shall
not be changed except as permitted by Subparagraph VIII(a)(ii) or Paragraph X.
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(ii) Common Stock awarded pursuant to a Restricted Stock Award that
includes Forfeiture Restrictions shall be represented by a stock certificate
registered in the name of the Holder of such Restricted Stock Award. The Holder
shall have the right to receive dividends with respect to Common Stock subject
to such a Restricted Stock Award, to vote Common Stock subject thereto and to
enjoy all other shareholder rights, except that (1) the Holder shall not be
entitled to delivery of the stock certificate until the Forfeiture Restrictions
have expired, (2) the Company shall retain custody of the stock until the
Forfeiture Restrictions have expired, (3) the Holder may not sell, transfer,
pledge, exchange, hypothecate or otherwise dispose of the stock until the
Forfeiture Restrictions have expired, and (4) a breach of the terms and
conditions established by the Committee pursuant to the Restricted Stock
Agreement, shall cause a forfeiture of the Restricted Stock Award. At the time
of such Award, the Committee may, in its sole discretion, prescribe additional
terms, conditions or restrictions relating to Restricted Stock Awards,
including, but not limited to, rules pertaining to the termination of employment
(by retirement, disability, death or otherwise) of a Holder prior to expiration
of the Forfeitures Restrictions. Such additional terms, conditions or
restrictions shall be set forth in a Restricted Stock Agreement made in
conjunction with the Award.
(b) RESTRICTED STOCK SUBJECT ONLY TO TRANSFER RESTRICTIONS. In the
discretion of the Committee, shares of Common Stock that are the subject of a
Restricted Stock Award may be subject to restrictions on disposition by the
Holder without any obligation of the Holder to forfeit and surrender the shares
to the Company under any circumstances. Common Stock awarded pursuant to such a
Restricted Stock Award shall be represented by a stock certificate registered in
the name of the Holder of such Award. The Holder shall have the right to
receive dividends with respect to Common Stock subject to such a Restricted
Stock Award, to vote Common Stock subject thereto, and to enjoy all other
shareholder rights, except that (i) the transfer restrictions described in the
following sentence shall apply, (ii) the Holder shall not be entitled to
delivery of the stock certificate until such transfer restrictions have expired,
and (iii) the Company shall retain custody of the stock until such transfer
restrictions have expired. For a period of time (which period shall be
established by the Committee) after the effective date of the grant of such a
Restricted Stock Award or, if earlier, until the occurrence of any event or the
satisfaction of any condition specified by the Committee, the shares of Common
Stock issued in connection with such Award may not be sold, assigned, pledged,
exchanged, hypothecated or otherwise transferred, encumbered or disposed of by
the Holder; provided, however, that such restriction shall not apply to the
transfer of such shares of Common Stock pursuant to a plan of reorganization of
the Company, but the stock, securities or other property received in exchange
therefor shall also become subject to the same transfer restrictions applicable
to the original shares of Common Stock, and shall be held by the Company
pursuant to the provisions hereof. Upon the expiration of such period or, if
earlier, upon the occurrence of such event or the satisfaction of such condition
so specified by the Committee, the transfer restrictions set forth in this
Subparagraph VIII(b) shall cease to apply and the Company shall deliver the
Common Stock certificate to the Holder.
(c) PAYMENT FOR RESTRICTED STOCK. The Committee shall determine the
amount and form of any payment for Common Stock received pursuant to a
Restricted Stock Award, provided that in the absence of such a determination, a
Holder shall not be required to make any payment for Common Stock received
pursuant to a Restricted Stock Award, except to the extent otherwise required by
law.
(d) AGREEMENTS. At the time any Award is made under this Paragraph VIII,
the Company and the Holder shall enter into a Restricted Stock Agreement setting
forth each of the matters contemplated hereby and such other matters not
inconsistent herewith as the Committee may determine to be appropriate. The
terms and provisions of the respective Restricted Stock Agreements need not be
identical.
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IX. DIRECTOR STOCK AWARDS
(a) DIRECTOR STOCK AWARDS. On the date of each annual meeting of the
shareholders of the Company that occurs on or after the date this amendment and
restatement of the Plan is adopted by the Board, the Company shall, without cost
to the recipient and without the exercise of the discretion of any person or
persons, award and issue to each Nonemployee Director then in office or elected
to the Board on the date of such meeting that number of shares of Common Stock
(rounded up to the nearest whole share) determined by dividing $10,000 by the
average of the Fair Market Values of a share of Common Stock on the 20
consecutive Trading Days immediately preceding the date that is three Trading
Days prior to the date of such meeting. If, as of any date that the Plan is in
effect, there are not sufficient shares of Common Stock available under the Plan
to allow for the award to each Nonemployee Director of the number of shares
provided in the preceding sentence, each Nonemployee Director shall receive his
or her pro-rata share of the total number of shares of Common Stock then
available under the Plan. Shares of Common Stock issued pursuant to a Director
Stock Award shall be subject to the restrictions on transfer described in
Subparagraph (b) below, and such shares shall bear a legend to reflect such
transfer restrictions.
(b) DELIVERY OF SHARE CERTIFICATE; TRANSFER RESTRICTIONS. Common Stock
awarded pursuant to a Director Stock Award shall be represented by a stock
certificate registered in the name of the Holder of such Award. The Holder
shall have the right to receive dividends with respect to Common Stock subject
to a Director Stock Award, to vote Common Stock subject thereto, and to enjoy
all other shareholder rights, except that (i) the transfer restrictions
described in the following sentence shall apply, (ii) the Holder shall not be
entitled to delivery of the stock certificate until such transfer restrictions
have expired, and (iii) the Company shall retain custody of the stock until such
transfer restrictions have expired. For a period of 24 months after the
effective date of a Director Stock Award or, if earlier, until the occurrence of
a Corporate Change or the termination of the Holder's service as a Director for
any reason whatsoever, the shares of Common Stock issued in connection with such
Award may not be sold, assigned, pledged, exchanged, hypothecated or otherwise
transferred, encumbered or disposed of by the Holder; provided, however, that
such restriction shall not apply to the transfer of such shares of Common Stock
pursuant to a plan of reorganization of the Company, but the stock, securities
or other property received in exchange therefor shall also become subject to the
same transfer restrictions applicable to the original shares of Common Stock,
and shall be held by the Company pursuant to the provisions hereof. Upon the
expiration of such 24 month period or, if earlier, upon the occurrence of a
Corporate Change or the termination of the Holder's service as a Director for
any reason whatsoever, the transfer restrictions set forth in this Subparagraph
IX(b) shall cease to apply and the Company shall deliver the Common Stock
certificate to the Holder.
(c) NO DISCRETION. Except as expressly provided in this Paragraph IX,
Director Stock Awards shall be subject to the terms and conditions of the Plan;
provided, however, that if there is a conflict between the terms and conditions
of this Paragraph IX and any other term or condition of the Plan, then the terms
and conditions of this Paragraph IX shall control. The Committee may not
exercise any discretion with respect to a Director Stock Award that would be
inconsistent with the intent expressed in Paragraph XII(f) or would cause a
Nonemployee Director to cease to be a "disinterested director" within the
meaning of Rule 16b-3 with respect to the Plan and other stock related plans of
the Company.
X. RECAPITALIZATION OR REORGANIZATION
(a) The existence of the Plan and the Awards granted hereunder shall not
affect in any way the right or power of the Board or the shareholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of debt or equity securities ahead of or
affecting Common Stock or the rights thereof, the dissolution or liquidation of
the Company or any sale, lease, exchange or other disposition of all or any part
of its assets or business or any other corporate act or proceeding.
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(b) The shares with respect to which Options may be granted are shares of
Common Stock as presently constituted, but if, and whenever, prior to the
expiration of an Option theretofore granted, the Company shall effect a
subdivision or consolidation of shares of Common Stock or the payment of a stock
dividend on Common Stock without receipt of consideration by the Company, the
number of shares of Common Stock with respect to which such Option may
thereafter be exercised (i) in the event of an increase in the number of
outstanding shares shall be proportionately increased, and the purchase price
per share shall be proportionately reduced, and (ii) in the event of a reduction
in the number of outstanding shares shall be proportionately reduced, and the
purchase price per share shall be proportionately increased. Any fractional
share resulting from such adjustment shall be rounded up to the next whole
share.
(c) If the Company recapitalizes, reclassifies its capital stock, or
otherwise changes its capital structure (a "recapitalization"), the number and
class of shares of Common Stock covered by an Option theretofore granted shall
be adjusted so that such Option shall thereafter cover the number and class of
shares of stock and securities to which the Holder would have been entitled
pursuant to the terms of the recapitalization if, immediately prior to the
recapitalization, the Holder had been the holder of record of the number of
shares of Common Stock then covered by such Option. If (i) the Company shall
not be the surviving entity in any merger or consolidation (or survives only as
a subsidiary of an entity other than a previously wholly owned subsidiary of the
Company), (ii) the Company sells, leases or exchanges or agrees to sell, lease
or exchange all or substantially all of its assets to any other person or entity
(other than a wholly owned subsidiary of the Company), (iii) the Company is to
be dissolved and liquidated, (iv) any person or entity, including a "group" as
contemplated by Section 13(d)(3) of the 1934 Act, acquires or gains ownership or
control (including, without limitation, power to vote) of more than 50% of the
outstanding shares of the Company's voting stock (based upon voting power), or
(v) as a result of or in connection with a contested election of directors, the
persons who were directors of the Company before such election shall cease to
constitute a majority of the Board (each such event is referred to herein as a
"Corporate Change"), no later than (x) ten days after the approval by the
shareholders of the Company of such merger, consolidation, reorganization, sale,
lease or exchange of assets or dissolution or such election of directors or (y)
thirty days after a Corporate Change of the type described in clause (iv), the
Committee, acting in its sole discretion without the consent or approval of any
Holder, shall effect one or more of the following alternatives, which may vary
among individual Holders and which may vary among Options held by any individual
Holder: (1) accelerate the time at which Options then outstanding may be
exercised so that such Options may be exercised in full for a limited period of
time on or before a specified date (before or after such Corporate Change) fixed
by the Committee, after which specified date all unexercised Options and all
rights of Holders thereunder shall terminate, (2) require the mandatory
surrender to the Company by selected Holders of some or all of the outstanding
Options held by such Holders (irrespective of whether such Options are then
exercisable under the provisions of the Plan) as of a date, before or after such
Corporate Change, specified by the Committee, in which event the Committee shall
thereupon cancel such Options and pay to each Holder an amount of cash per share
equal to the excess, if any, of the amount calculated in Subparagraph (d) below
(the "Change of Control Value") of the shares subject to such Option over the
exercise price(s) under such Options for such shares, (3) make such adjustments
to Options then outstanding as the Committee deems appropriate to reflect such
Corporate Change (provided, however, that the Committee may determine in its
sole discretion that no adjustment is necessary to Options then outstanding) or
(4) provide that the number and class of shares of Common Stock covered by an
Option theretofore granted shall be adjusted so that such Option shall
thereafter cover the number and class of shares of stock or other securities or
property (including, without limitation, cash) to which the Holder would have
been entitled pursuant to the terms of the agreement of merger, consolidation or
sale of assets and dissolution if, immediately prior to such merger,
consolidation or sale of assets and dissolution, the Holder had been the holder
of record of the number of shares of Common Stock then covered by such Option.
(d) For the purposes of clause (2) in Subparagraph (c) above, the "Change
of Control Value" shall equal the amount determined in clause (i), (ii) or
(iii), whichever is applicable, as follows: (i) the per share price offered to
shareholders of the Company in any such merger, consolidation, sale of assets or
dissolution transaction, (ii) the price per share offered to shareholders of the
Company in any tender offer or exchange offer whereby a Corporate Change takes
place, or (iii) if such Corporate Change occurs other than pursuant to a tender
or exchange offer, the fair market value per share of the shares into which such
Options being surrendered are exercisable, as determined by the
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Committee as of the date determined by the Committee to be the date of
cancellation and surrender of such Options. In the event that the consideration
offered to shareholders of the Company in any transaction described in this
Subparagraph (d) or Subparagraph (c) above consists of anything other than cash,
the Committee shall determine the fair cash equivalent of the portion of the
consideration offered which is other than cash.
(e) In the event of changes in the outstanding Common Stock by reason of
recapitalization, reorganizations, mergers, consolidations, combinations,
exchanges or other relevant changes in capitalization occurring after the date
of the grant of any Restricted Stock Award, such Award and any agreement
evidencing such Award shall be subject to adjustment by the Committee at its
discretion as to the number and price of shares of Common Stock or other
consideration subject to such Award. In the event of any such change in the
outstanding Common Stock, the aggregate number of shares available under the
Plan may be appropriately adjusted by the Committee, whose determination shall
be conclusive.
(f) Any adjustment provided for in the above Subparagraphs shall be
subject to any required shareholder action.
(g) Except as hereinbefore expressly provided, the issuance by the Company
of shares of stock of any class or securities convertible into shares of stock
of any class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number of
shares of Common Stock subject to Awards theretofore granted or the purchase
price per share, if applicable.
(h) Plan provisions to the contrary notwithstanding, with respect to any
Restricted Stock Awards described in Subparagraph VIII(a) that are outstanding
at the time a Corporate Change as described in Subparagraph (c) above occurs,
the Committee may, in its discretion and as of a date determined by the
Committee, fully vest any or all Common Stock awarded to the Holder pursuant to
such Restricted Stock Award and then outstanding and, upon such vesting, all
restrictions applicable to such Restricted Stock Award shall terminate as of
such date. Any action by the Committee pursuant to this Subparagraph may vary
among individual Holders and may vary among the Restricted Stock Awards held by
any individual Holder.
XI. AMENDMENT AND TERMINATION OF THE PLAN
The Board in its discretion may terminate the Plan at any time with respect
to any shares of Common Stock for which Awards have not theretofore been
granted. The Board shall have the right to alter or amend the Plan or any part
thereof from time to time; provided that no change in any Award theretofore
granted may be made which would impair the rights of the Holder without the
consent of the Holder, and provided, further, that the Board may not, without
approval of the shareholders, amend the Plan:
(a) to increase the maximum number of shares of Common Stock which may be
issued on exercise of Options or pursuant to Director Stock Awards or Restricted
Stock Awards, except as provided in Paragraph X;
(b) to change the minimum Option price;
(c) to change the class of individuals eligible to receive Awards or
materially increase the benefits accruing to individuals under the Plan;
(d) to extend the maximum period during which Awards may be granted under
the Plan;
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(e) to modify materially the requirements as to eligibility for
participation in the Plan;
(f) to change the provisions of Paragraph IX; or
(g) to decrease any authority granted to the Committee hereunder in
contravention of Rule 16b-3.
XII. MISCELLANEOUS
(a) NO RIGHT TO AN AWARD. Neither the adoption of the Plan nor any action
of the Board or of the Committee shall be deemed to give an employee any right
to be granted an Option, a right to a Restricted Stock Award, or any other
rights hereunder except as may be evidenced by an Option Agreement or a
Restricted Stock Agreement duly executed on behalf of the Company, and then only
to the extent and on the terms and conditions expressly set forth therein. The
Plan shall be unfunded. The Company shall not be required to establish any
special or separate fund or to make any other segregation of funds or assets to
assure the payment of any Award.
(b) NO EMPLOYMENT RIGHTS CONFERRED. Nothing contained in the Plan shall
(i) confer upon any employee any right with respect to continuation of
employment with the Company or any subsidiary or (ii) interfere in any way with
the right of the Company or any subsidiary to terminate his or her employment at
any time.
(c) OTHER LAWS; WITHHOLDING. The Company shall not be obligated to issue
any Common Stock pursuant to any Award granted under the Plan at any time when
the shares covered by such Award have not been registered under the Securities
Act of 1933 and such other state and federal laws, rules or regulations as the
Company or the Committee deems applicable and, in the opinion of legal counsel
for the Company, there is no exemption from the registration requirements of
such laws, rules or regulations available for the issuance and sale of such
shares. No fractional shares of Common Stock shall be delivered, nor shall any
cash in lieu of fractional shares be paid. The Company shall have the right to
deduct in connection with all Awards any taxes required by law to be withheld
and to require any payments required to enable it to satisfy its withholding
obligations.
(d) NO RESTRICTION ON CORPORATE ACTION. Nothing contained in the Plan
shall be construed to prevent the Company or any subsidiary from taking any
corporate action which is deemed by the Company or such subsidiary to be
appropriate or in its best interest, whether or not such action would have an
adverse effect on the Plan or any Award made under the Plan. No employee,
Nonemployee Director, beneficiary or other person shall have any claim against
the Company or any subsidiary as a result of any such action.
(e) RESTRICTIONS ON TRANSFER. Except to the extent otherwise provided
herein, an Award shall not be transferable otherwise than by will or the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined by the Code or Title I of the Employee Retirement Income Security Act of
1974, as amended, or the rules thereunder. An Award shall be exercisable during
the lifetime of a Holder only by such Holder or the Holder's guardian or legal
representative.
(f) RULE 16b-3. It is intended that the Plan and any grant of an Award
made to a person subject to Section 16 of the 1934 Act meet all of the
requirements of Rule 16b-3. If any provision of the Plan or any such Award
would disqualify the Plan or such Award under, or would otherwise not comply
with, Rule 16b-3, such provision or Award shall be construed or deemed amended
to conform to Rule 16b-3.
(g) GOVERNING LAW. This Plan shall be construed in accordance with the
laws of the State of New York.
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FOREST OIL CORPORATION
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS
The undersigned shareholder of Forest Oil Corporation, a New York
corporation (the Company), hereby appoints William L. Dorn, Robert S. Boswell
and Daniel L. McNamara, or any one of them, attorneys, agents and proxies of
the undersigned, with full power of substitution to each of them, to vote all
the shares of Common Stock, Par Value $.10 Per Share, of the Company which
are entitled to one vote per share and which the undersigned may be entitled
to vote at the Annual Meeting of Shareholders of the Company to be held at
the Hyatt Regency Denver, 1750 Welton Street, Denver, Colorado, on Wednesday,
May 8, 1996, at 10:00 A.M., M.D.T., and at any adjournment of such meeting,
with all powers which the undersigned would possess if personally present:
1. Elect three (3) Class II Directors and one (1) Class III Director;
2. Approve the amendment and restatement of the 1992 Stock Option Plan;
3. Consider and vote upon the ratification of the appointment of KPMG
Peat Marwick LLP as independent auditors for the Company for the
fiscal year ended December 31, 1996; and
4. Vote upon such other matters as may be properly brought before the
meeting or any adjournment thereof hereby revoking all previous
proxies and ratifying all that any of said proxies, their substitutes,
or any of them, may lawfully do by virtue hereof.
IF NO DIRECTIONS ARE GIVEN, THE INDIVIDUALS DESIGNATED ABOVE WILL VOTE
FOR THE ABOVE PROPOSALS AND, AT THEIR DISCRETION, ON ANY OTHER MATTER THAT
MAY COME BEFORE THE MEETING.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement of the Company.
(CONTINUED AND TO BE VOTED, DATED AND SIGNED ON REVERSE SIDE)
<PAGE>
FOREST OIL CORPORATION
Common Stock Proxy One (1) Vote Per Share
PLEASE MARK VOTES /X/ or /X/
The Board of Directors recommends a Vote FOR the following Proposals:
No. 1. Election of Directors.
Nominees are Robert S. Boswell, Drake S. Tempest, William L. Britton
and Jordan L. Haines (To withhold authority to vote for all nominees
check the block marked "Withheld". To withhold authority to vote for
any individual nominee write that nominee's name on the space provided
below.)
______________________________________________________________________
FOR WITHHELD
/ / / /
No. 2 Approval of amendment and restatement of 1992 Stock Option Plan.
FOR AGAINST ABSTAIN
/ / / / / /
No. 3. Ratification of the Appointment of Independent Auditors.
FOR AGAINST ABSTAIN
/ / / / / /
No. 4 Vote upon other matters brought before the meeting or any adjournment
thereof, hereby revoking all previous proxies and ratifying all that
any of said proxies, their substitutes, or any of them, may lawfully
do by virtue hereof.
FOR AGAINST ABSTAIN
/ / / / / /
(Signature(s) should agree with names on Stock Certificates as shown herein.
Attorneys, executors, administrators, trustees, guardians or custodians
should give full title as such.) Please complete, date and sign this proxy
and return it promptly in the enclosed envelope whether or not you plan to
attend
Dated:__________________________________________, 1996
_______________________________________________________
_______________________________________________________
Signature of Shareholder(s)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Attendance Form (see attached)
<PAGE>
1996 Annual Meeting
Attendance Form
I am a Forest Oil Corporation shareholder and plan to
attend the Annual Meeting of Shareholders.
PLEASE PRINT
<TABLE>
<C> <S>
- ---------------------------------------
Name If you plan to attend the Annual Meeting of
Shareholders, please complete and return this form.
- ---------------------------------------
Address Please send your Proxy Card in the enclosed envelope.
Include this Attendance Form ONLY if you plan to
- --------------------------------------- attend the Annual Meeting.
City, State, Zip
- --------------------------------------- (SEE OTHER SIDE)
Signature
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