<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to '240.14a-11(c) or '240.14a-12
UNIT CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
UNIT CORPORATION
NOTICE OF THE ANNUAL MEETING OF OUR STOCKHOLDERS
AND
PROXY STATEMENT
Meeting Date.... Wednesday, May 3, 2000
Meeting Time.... 11:00 a.m.
Meeting Place... Tulsa Room - Ninth Floor
Bank of Oklahoma Tower
One Williams Center
Tulsa, Oklahoma 74172
<PAGE>
Dear Stockholder:
On behalf of the Board of Directors and management, I would like to invite
you to attend our Annual Meeting of Stockholders to be held on Wednesday, May 3,
2000 at 11:00 a.m. This year's meeting will be held in the Tulsa Room on the
ninth floor of the Bank of Oklahoma Tower, One Williams Center, Tulsa, Oklahoma.
By attending the meeting you will have an opportunity to hear a report on
our operations and to meet our directors and officers.
Information about the meeting, including the various matters on which you,
as a stockholder, will act may be found in the attached Notice of Annual Meeting
of Stockholders and Proxy Statement.
Whether or not you plan to attend the meeting in person, it is important
that your shares be represented and voted. Please sign, date and return the
enclosed proxy in the envelope provided.
I look forward to your participation and thank you for your continued
support.
Sincerely,
/s/ King P. Kirchner
King P. Kirchner
Chairman of the Board
<PAGE>
UNIT CORPORATION
1000 Kensington Tower I
7130 South Lewis
Tulsa, Oklahoma 74136
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 3, 2000
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Unit Corporation, a Delaware corporation, will hold its Annual Meeting of
Stockholders in the Tulsa Room on the ninth floor of the Bank of Oklahoma Tower,
One Williams Center, Tulsa, Oklahoma, on Wednesday, May 3, 2000 at 11:00 a.m.,
local time. At the meeting we will:
. elect two directors for a three-year term expiring in 2003 (Item No. 1 on
the Proxy Card);
. ratify the selection of PricewaterhouseCoopers LLP, Tulsa, Oklahoma, as our
independent auditors for our fiscal year 2000 (Item No. 2 on the Proxy
Card);
. increase our authorized common stock (Item No. 3 on the Proxy Card);
. approve certain amendments to our employee stock option plan (Item No. 4 on
the Proxy Card);
. approve the Unit Corporation 2000 Non-Employee Directors' Stock Option Plan
(Item No. 5 on the Proxy Card); and
. transact such other business as may properly come before the meeting or any
adjournment(s) thereof.
Only stockholders of record at the close of business on March 17, 2000, the
record date, are entitled to notice of and to vote at the meeting or any
adjournment(s) of the meeting. A complete list of such stockholders will be open
for examination by any stockholder for any purpose germane to the meeting at our
office at 1000 Kensington Tower I, 7130 South Lewis, Tulsa, Oklahoma 74136, for
a period of ten days prior to the meeting.
Our Proxy Statement and Annual Report are submitted with this notice.
By Order of the Board of Directors,
/s/ Mark E. Schell
Mark E. Schell
Secretary and
General Counsel
YOUR VOTE IS IMPORTANT
Whether or not you plan to attend the meeting, we urge you to vote.
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 3, 2000
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This Proxy Statement and the accompanying proxy card are being mailed to our
stockholders in connection with the solicitation of proxies by the board of
directors for the 2000 Annual Meeting of Stockholders. Mailing of this Proxy
Statement commenced on or about March 30, 2000.
Table of Contents
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QUESTIONS AND ANSWERS.................................................. 1
ITEM 1: ELECTION OF DIRECTORS.......................................... 3
BOARD AND COMMITTEE INFORMATION........................................ 5
DIRECTORS' COMPENSATION AND BENEFITS................................... 5
OWNERSHIP OF OUR COMMON STOCK BY OUR DIRECTORS AND EXECUTIVE OFFICERS.. 6
EXECUTIVE COMPENSATION................................................. 8
TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS........... 9
REPORT OF THE COMPENSATION COMMITTEE................................... 10
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION............ 12
PERFORMANCE GRAPH...................................................... 13
ITEM 2: RATIFICATION OF APPOINTMENT OF AUDITORS........................ 14
ITEM 3: APPROVAL OF AMENDMENT TO OUR RESTATED CERTIFICATE
OF INCORPORATION................................................ 14
ITEM 4: APPROVAL OF AMENDMENTS TO THE UNIT CORPORATION AMENDED
AND RESTATED STOCK OPTION PLAN ................................ 15
ITEM 5: APPROVAL OF THE UNIT CORPORATION 2000 NON-EMPLOYEE DIRECTORS'
STOCK OPTION PLAN............................................... 18
OTHER MATTERS.......................................................... 20
Appendix A: Unit Corporation Amended and Restated Stock Option Plan.... A-1
Appendix B: Unit Corporation 2000 Non-Employee Directors'
Stock Option Plan.................................................... B-1
<PAGE>
QUESTIONS AND ANSWERS
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Q: Who Can Vote?
A: You can vote if you were a stockholder at the close of business on the
record date, March 17, 2000. On that date, there were 33,894,429 shares
outstanding and entitled to vote at the annual meeting.
Q: Who Can Attend The Meeting?
A: All stockholders can attend.
Q: What Am I Voting On?
A: You are voting on:
. The election of two nominees as directors for terms that expire in 2003.
The board of directors' nominees are John Nikkel and John S. Zink.
. The ratification of the appointment of PricewaterhouseCoopers LLP as
independent auditors for 2000.
. An increase in the amount of our authorized common stock.
. The approval of amendments to our employee stock option plan.
. The approval of the 2000 Non-Employee Directors' Stock Option Plan.
The two nominees for director who receive the most votes will be elected.
The affirmative vote of the holders of a majority of our outstanding common
stock entitled to vote is required to approve the proposal to increase the
amount of our authorized common stock. For any of the other proposals to be
approved, more votes must be cast for it than against it.
Q: How Will The Proxies Vote On Any Other Business Brought Up At The Meeting?
A: By submitting your proxy card, you authorize the proxies to use their
judgment to determine how to vote on any other matter brought before the
annual meeting. We do not know of any other business to be considered at the
annual meeting.
The proxies' authority to vote according to their judgment applies only to
shares you own as a stockholder of record.
Q: How Do I Cast My Vote?
A: If you hold your shares as a stockholder of record, you can vote in person
at the annual meeting or you can vote by mail. If you are a street-name
stockholder, you will receive instructions from your bank, broker or other
nominee describing how to vote your shares.
The enclosed proxy card contains instructions for mail voting. The proxies
identified on the back of the proxy card will vote the shares of which you
are the stockholder of record in accordance with your instructions. If you
submit a proxy card without giving specific voting instructions, the proxies
will vote those shares as recommended by the board of directors.
Q: How Does The Board Recommend I Vote On The Proposals?
A: The board recommends you vote for each of the proposals.
Q: Can I Revoke My Proxy Card?
A: Yes. You can revoke your proxy card by:
. Submitting a new proxy card;
1
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. Giving written notice before the meeting to the Secretary of the company
stating that you are revoking your proxy card; or
. Attending the meeting and voting your shares in person.
Q: Who Will Count The Vote?
A: ChaseMellon Shareholder Services LLC, our transfer agent, will count the
vote. Representatives of ChaseMellon Shareholder Services LLC will act as
the inspectors of election.
Q: What Is A "Quorum"?
A: A quorum is the number of shares that must be present to hold the annual
meeting. The quorum requirement for the annual meeting is one-half of the
outstanding shares as of the record date, present in person or represented
by proxy. If you submit a valid proxy card or attend the annual meeting,
your shares will be counted to determine whether there is a quorum.
Abstentions and broker non-votes count toward the quorum. "Broker non-votes"
occur when nominees (such as banks and brokers) that hold shares on behalf
of beneficial owners do not receive voting instructions from the beneficial
owners by ten days before the meeting and do not have discretionary voting
authority to vote those shares.
Q: Will Broker Non-Votes Or Abstentions Affect The Voting Results?
A: Although abstentions and broker non-votes count for quorum purposes, they do
not count as votes for or against a proposal. As a result, abstentions and
broker non-votes will not affect the voting results on the election of
directors or the proposals in Items 2, 4 and 5 requiring approval by a
majority of the votes cast. However, because the proposed charter amendment
to increase our authorized common stock (Item 3) requires the affirmative
vote of the holders of a majority of our outstanding common stock,
abstentions and broker non-votes will have the same effect as a vote against
the proposal.
Q: What Shares Are Included On My Proxy Card?
A: Your proxy card represents all shares registered to your account in the same
social security number and address.
Q: What Does It Mean If I Get More Than One Proxy Card?
A: Your shares are probably registered in more than one account. You should
vote each proxy card you receive. We encourage you to consolidate all your
accounts by registering them in the same name, social security number and
address.
Q: How Many Votes Can I Cast?
A: On all matters you are entitled to one vote per share.
Q: When Are Stockholder Proposals Due For The 2001 Annual Meeting Of
Stockholders?
A: If you want to present a proposal from the floor at the 2001 annual meeting,
you must give us written notice of your proposal no later than February 7,
2001. Your notice should be sent to the General Counsel and Secretary, Unit
Corporation, 1000 Kensington Tower I, 7130 South Lewis, Tulsa, Oklahoma
74136.
If instead of presenting your proposal at the meeting you want your proposal
to be considered for inclusion in next year's proxy statement, you must
submit the proposal in writing to the General Counsel and Secretary so that
it is received at the above address by November 24, 2000.
Q: How Is This Proxy Solicitation Being Conducted?
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A: We hired Regan & Associates, New York, New York, to assist in the
distribution of proxy materials and solicitation of votes for a fee of
$3,500, plus out-of-pocket expenses. We will reimburse brokerage houses and
other custodians, nominees an d fiduciaries for their reasonable out-of-
pocket expenses for forwarding proxy and solicitation materials to
stockholders. In addition, some of our employees may solicit proxies. Regan
& Associates and our employees may solicit proxies in person, by telephone
and by mail. None of our employees will receive special compensation for
these services, which the employees will perform as part of their regular
duties.
ITEM 1: ELECTION OF DIRECTORS
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Item 1 is the election of two directors to the board of directors. Our board is
composed of eight members and is divided into three classes with each director
serving for a three-year term. At each annual meeting, the term of one class
expires. The term of service for those directors serving in Class I expires at
this meeting.
We know of no reason why any nominee may be unable to serve as a director. If
any nominee is unable to serve, your proxy may vote for another nominee proposed
by the board, or the board may reduce the number of directors to be elected.
If any director resigns, dies or is otherwise unable to serve out his or her
term, or the board increases the number of directors, the board may fill the
vacancy until the next annual meeting.
Information concerning each nominee and each continuing director is provided
below.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF ELECTING THE TWO
NOMINEES.
NOMINEES FOR DIRECTOR
Terms John G. Mr. Nikkel joined Unit in 1983 as its President and a
expiring Nikkel director. From 1976 until January 1982 when he co-
at this Age 65 founded Nike Exploration Company, Mr. Nikkel was an
Annual Director officer and director of Cotton Petroleum Corporation,
meeting since serving as the President of Cotton from 1979 until his
(Class I) 1983 departure. Prior to joining Cotton, Mr. Nikkel was
employed by Amoco Production Company for 18 years,
last serving as Division Geologist for Amoco's Denver
Division. Mr. Nikkel presently serves as President and
a director of Nike Exploration Company. Mr. Nikkel
received a Bachelor of Science degree in Geology and
Mathematics from Texas Christian University.
John S. Mr. Zink was elected a director of Unit in May of
Zink 1982. For over 5 years, he has been a principal in
Age 71 several privately held companies engaged in the
Director businesses of designing and manufacturing equipment
since used in the petroleum industry, construction, and
1982 heating and air conditioning services and
installation. He holds a Bachelor of Science degree in
Mechanical Engineering from Oklahoma State University.
He is also a director of Matrix Service Company,
Tulsa, Oklahoma.
3
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CONTINUING DIRECTORS
Terms Earle Mr. Lamborn has been actively involved in the oil
expiring Lamborn field for over 45 years, joining Unit's predecessor in
at 2001 Age 65 1952 prior to its becoming a publicly-held
annual Director corporation. He was elected Vice President, Drilling in
meeting since 1973 and to his current position as Senior Vice President,
Class II) 1979 Drilling and director in 1979.
William Mr. Morgan was elected a director of Unit in February
B. Morgan 1988. Mr. Morgan has been Executive Vice President and
Age 56 General Counsel of St. John Health System, Inc.,
Director Tulsa, Oklahoma, since March 1, 1995 and, since October
since 1, 1996, the President of its principal for-profit
1988 subsidiary Utica Services, Inc. Before that, he was a
Partner in the law firm of Doerner, Saunders, Daniel &
Anderson, Tulsa, Oklahoma, for over 20 years.
John H. Mr. Williams was elected a director of Unit in
Williams December 1988. Prior to retiring on December 31, 1978,
Age 81 he was Chairman of the Board and Chief Executive
Director Officer of The Williams Companies, Inc., where he
since continues to serve as an honorary director. Mr.
1988 Williams also serves as a director of Apco Argentina,
Inc., Westwood Corporation, and Willbros Group, Inc.
In addition, Mr. Williams also serves as a director of
the Gilcrease and Philbrook Museums and is a Trustee
for the Tulsa Performing Arts Center Trust.
Terms King P. Mr. Kirchner, a co-founder of Unit, has been the
expiring Kirchner Chairman of the Board and a director since 1963 and
at 2002 Age 72 was President until November 1983. Mr. Kirchner is a
annual Director Registered Professional Engineer within the State of
meeting since Oklahoma, having received degrees in Mechanical
(Class 1963 Engineering from Oklahoma State University and in
III) Petroleum Engineering from the University of Oklahoma.
Don Cook Mr. Cook has served as a director of Unit since Unit's
Age 75 inception. He is a Certified Public Accountant and was
Director a partner in the accounting firm of Finley & Cook,
since Shawnee, Oklahoma, from 1950 until 1987, when he
1963 retired.
J. Michael Mr. Adcock was elected a director of Unit in December
Adcock 1997. He is an attorney and currently manages a
Age 51 private trust that deals in real estate, oil and gas
Director properties and commercial banking as well as other
since equity investments. He is Chairman of the Board of
1997 Arvest American National Bank & Trust Co. of Shawnee.
Between 1997 and September, 1998 he was the Chairman
of the Board of Ameribank and President and Chief
Executive Officer of American National Bank and Trust
Company of Shawnee, Oklahoma, and Chairman of
AmeriTrust Corporation, Tulsa, Oklahoma. Prior to
holding these positions, he was engaged in the private
practice of law and served as General Counsel for
Ameribank Corporation.
4
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BOARD AND COMMITTEE INFORMATION
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The board held seven meetings during 1999. No director attended fewer than 75%
of the board meetings and the meetings of committees on which he served during
the year.
The board has standing Audit and Compensation committees. The board determines
the membership of each committee from time to time.
Only directors who are not officers of Unit serve on the committees.
The following table identifies the membership of the Audit and the Compensation
Committees and the number of committee meetings held during 1999. A summary of
each committee's responsibilities follows the table.
Director Audit Compensation
----------------- --------- ------------
John S. Zink X X
William B. Morgan X
John H. Williams X
Don Cook X X
J. Michael Adcock X
Number of meetings in 1999 2 1
The Audit Committee:
. Appoints the independent auditors subject to ratification by the board.
. Reviews our annual financial statements.
. Consults with our personnel and the independent auditors to determine the
adequacy of internal accounting controls.
The Compensation Committee:
. Approves the compensation of the Chief Executive Officer and our other
officers.
. Administers our stock option plans.
. Reviews and, in some cases, administers our various benefit plans.
DIRECTORS' COMPENSATION AND BENEFITS
- -------------------------------------------------------------------------------
. We pay non-employee directors an annual fee of $15,000, payable in four
installments, and an annual fee of $2,000 for each committee served on.
Each non-employee director also receives $750 for each board meeting
attended and $500 for each committee meeting attended.
. We reimburse all non-employee directors for travel expenses incurred
attending stockholder, board and committee meetings.
. Each non-employee director automatically receives an option to purchase
2,500 shares of common stock on the first business day following each
annual meeting of our stockholders. The option exercise price is the fair
market value of our common stock on such date. Payment of the exercise
price may be made in cash or in shares of common
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stock that have been held by the director for at least one year. No stock
option may be exercised during the first six months of its term except in
the case of death. Each option has a ten-year term. In 1999 stock options
were granted for an aggregate of 12,500 shares at $6.90 per share. An
aggregate of 77,500 shares are subject to currently outstanding options.
OWNERSHIP OF OUR COMMON STOCK BY OUR DIRECTORS AND EXECUTIVE OFFICERS
- -------------------------------------------------------------------------------
The following table sets forth information concerning the beneficial ownership
of our common stock by each director, each executive officer named in the
Summary Compensation Table, and by all directors and executive officers as a
group. Except as otherwise noted, all shares are directly owned.
STOCK OWNED BY OUR DIRECTORS AND EXECUTIVE OFFICERS AS OF MARCH 17, 2000
Name of Beneficial Aggregate Number of Percent of Outstanding
Owner Beneficially Owned Shares Common Stock (1)
- ------------------ ------------------------- ----------------------
King P. Kirchner 1,165,826 (2)(3) 3.44
Don Cook 25,638 (4) *
Earle Lamborn 310,092 (2)(3)(6) *
William B. Morgan 22,500 (4) *
John G. Nikkel 452,844 (2)(3)(6)(7) 1.33
John H. Williams 21,000 (4) *
John S. Zink 61,000 (4) *
J. Michael Adcock 1,203,873 (4)(5) 3.55
Philip M. Keeley 198,740 (2)(6)(7) *
Larry D. Pinkston 146,761 (2)(3)(6) *
All Directors and
Executive Officers as a 3,681,635 (2)-(7) 10.74
Group (11 individuals)
* Less than 1%
Notes to table:
- ---------------
(1) The number of shares includes the shares presently issued and outstanding
plus the number of shares that any owner has the right to acquire within 60
days after March 17, 2000. For purposes of calculating the percent of the
common stock outstanding held by each owner, the total number of shares
excludes the shares which all other persons have the right to acquire within
60 days after March 17, 2000, pursuant to the exercise of outstanding stock
options.
(2) Includes shares of common stock held under our 401(k) thrift plan as of
March 17, 2000 for the account of: King P. Kirchner, 9,078; Earle Lamborn,
11,616; John G. Nikkel, 29,319; Philip M. Keeley, 30,367; Larry D. Pinkston,
17,986; and directors and officers as a group, 111,129.
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(3) Of the shares listed as being beneficially owned, the following individuals
disclaim any beneficial interest in shares held by spouses or for the
benefit of family members: King P. Kirchner, 28,826; John G. Nikkel 76,000;
Earle Lamborn, 199,460; and Larry D. Pinkston, 2,000.
(4) Includes shares subject to unexercised stock options under the Company's
Non-Employee Directors' Stock Option Plan to each of the following which may
be exercised at the discretion of the holder: Don Cook, 20,000; William B.
Morgan, 12,500; John H. Williams, 20,000; John S. Zink, 20,000 and J.
Michael Adcock, 5,000; all non-Employee Directors, as a group, 77,500.
(5) Of the shares listed as being beneficially owned, 1,193,873 shares are owned
by a trust of which Mr. Adcock is one of three trustees.
(6) Includes shares subject to unexercised stock options under our stock option
plan to each of the following which may be exercised within 60 days at the
discretion of the holder: Earle Lamborn, 46,500; John G. Nikkel 121,000;
Philip M. Keeley, 37,500; Larry D. Pinkston, 31,900; and directors and
executive officers as a group, 268,800.
(7) Includes 7,149 shares and 2,862 shares beneficially owned by Mr. Nikkel and
Mr. Keeley, respectively, held by a private company over which Mr. Nikkel
and Mr. Keeley share voting and investment power.
STOCKHOLDERS WHO OWN AT LEAST 5% OF OUR COMMON STOCK
Amount and Nature of
Name and Address Beneficial Ownership (1) Percent of Class
- ------------------------------ ------------------------ ----------------
Amvescap PLC,
1315 Peachtree Street, N.E. 1,789,400 5.29
Suite 500
Atlanta, Georgia 30309
Dimensional Fund Advisors Inc.
1299 Ocean Avenue 1,847,400 5.46
11th Floor
Santa Monica, CA. 90401
Wellington Management
Company LLP 1,908,900 5.64
75 State Street
Boston, Massachusetts 02109
Forstmann-Leff Associates, LLC
590 Madison Avenue 4,309,367 12.7
New York, New York 10022
Notes to Table:
- ---------------
(1) Beneficial ownership is based on the Schedule 13G most recently filed by the
stockholder. Beneficial ownership may under certain circumstances include
both voting power and investment power. Information is provided for
reporting purposes only and should not be construed as an admission of
actual beneficial ownership.
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EXECUTIVE COMPENSATION
- -------------------------------------------------------------------------------
The following Summary Compensation Table shows compensation information for the
Chief Executive Officer and each of our other four most highly compensated
executive officers for services in all capacities in 1997, 1998 and 1999.
SUMMARY COMPENSATION TABLE
Long Term Compensation
-----------------------------
Annual Compensation (1) Awards Payouts
----------------------------- --------------------- -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- ----------- ------ ------- ------- ------- ---------- ---------- ------- ------
Other All
Annual Restricted Securities Other
Name and Compen- Stock Underlying LTIP Compen-
Principal Salary Bonus sation Award(s) options Payout sation
Position(s) Year ($) ($) ($)(2) ($) (#) ($) ($)(3)
- ----------- ------ ------- ------- ------- ---------- ---------- ------ -------
King P. 1999 250,000 0 0 0 0 0 7,200
Kirchner 1998 250,000 0 0 0 0 0 6,000
Chairman 1997 220,000 0 0 0 0 0 9,286
and CEO
John G. 1999 250,000 108,333 7,011 0 0 0 8,000
Nikkel 1998 250,000 71,666 7,225 0 40,000 0 5,833
President 1997 230,000 35,000 7,210 0 0 0 9,456
and COO
Earle 1999 170,000 71,666 1,949 0 0 0 8,000
Lamborn 1998 170,000 58,333 1,766 0 15,000 0 9,154
Sr. Vice 1997 130,000 43,333 3,767 0 0 0 8,602
President -
Drilling
Philip M. 1999 170,000 71,666 7,841 0 0 0 8,000
Keeley 1998 170,000 50,000 7,434 0 15,000 0 8,025
Sr. Vice 1997 165,000 25,000 7,434 0 0 0 6,200
President
Exploration
& Production
Larry D. 1999 122,500 39,000 0 0 0 0 6,816
Pinkston 1998 122,500 33,333 0 0 12,000 0 7,182
V. P., CFO 1997 117,500 27,000 0 0 0 0 6,859
and
Treasurer
Notes to Table:
- ---------------
(1) Compensation deferred at the election of an executive is included in the
year earned.
(2) The amount listed under the Other Annual Compensation column represents the
dollar value associated with the use of a company vehicle by the named
executive officer.
(3) "All Other Compensation" represents Unit's matching contributions to Unit's
401(k) thrift plan for the named executive officer.
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Stock Options
There were no stock options granted in 1999 to the Chief Executive Officer or to
any of the other four most highly compensated executive officers.
The following table shows options that the named officers exercised during 1999
and the number of shares and the value of options outstanding as of December 31,
1999 for each named officer.
AGGREGATE OPTION EXERCISES IN 1999 AND FISCAL YEAR END OPTION VALUES
(a) (b) (c) (d) (e)
- ---------------- -------- -------- ------------------- -------------------
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options
Shares Options at FY-End at FY-End
Acquired (#) ($)(2)
on Value ------------------- -------------------
Exercise Realized Exercis- Unexercis- Exercis- Unexercis-
Name (#) ($)(1) able able able able
- ---------------- -------- -------- -------- ---------- -------- ----------
King P. Kirchner N/A N/A 0 0 0 0
John G. Nikkel 19,960 118,513 121,000 44,000 494,625 120,000
Earle Lamborn 25,000 148,438 46,500 16,000 194,475 45,000
Philip M. Keeley 25,000 148,438 37,500 16,000 148,305 45,000
Larry D. Pinkston 10,000 59,375 31,900 12,600 129,675 36,000
Notes to Table:
- ---------------
(1) Value realized equals fair market value of the stock on date of exercise,
less the exercise price, times the number of shares acquired.
(2) The value of unexercised in-the-money options at year end assumes a fair
market value for the Company's common stock of $7.50, the average of the
high and low prices of the Company's common stock on the New York Stock
Exchange on December 31, 1999. Value is calculated on the basis of the
difference between $7.50 and the option exercise price multiplied by the
number of shares of common stock underlying the options.
Long term Performance Plans and Pension Plans
We do not currently have any long term performance plans or pension plans.
TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
- -------------------------------------------------------------------------------
Stock Option Plan.
Our stock option plan contains a provision vesting all stock options in the
event of a "change-in-control" of us. A "change-in-control" is deemed to have
occurred at such time as any person or group, other than Unit or an Exempt
Person, is or become s the beneficial owner, directly or indirectly, of our
securities representing 50% or more of
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the combined voting power of our then outstanding securities. An Exempt Person
is generally defined to be any person (or estate or trust of such person) who ,
on the date of the plan, owned securities representing more than 20% of the
combined voting power of our then outstanding securities, and any spouse, parent
or issue of such person.
Separation Benefit Plan.
On December 20, 1996, effective as of January 1, 1997, the board adopted the
Separation Benefit Plan of Unit Corporation and Participating Subsidiaries (the
"Plan"). The Plan is generally applicable to all of our full time salaried
employees and to the employees of our two principal subsidiaries, excluding any
employees who are also our directors, who have been with their employer for at
least one year. Subject to the terms of the Plan, any eligible employee whose
employment is terminated is en titled to receive a separation benefit in an
amount calculated by dividing the eligible employee's average annual base salary
in effect immediately prior to such employee's separation by 52 to determine a
weekly separation benefit amount. The number of weekly separation benefit
payments then payable to an eligible employee is calculated based on the
employee's years of service in accordance with a schedule set forth in the Plan.
Employees who voluntarily leave their employment are not entitled t o receive a
separation benefit unless they have completed at least 20 years of service. Any
eligible employee who has completed 20 years of service or more is vested in his
or her separation benefit, subject to fulfilling the other requirements of the
Plan. Separation benefit payments are limited to a maximum of 104 weekly
payments. The Plan also provides that, unless otherwise provided by our board of
directors prior to a "change-in-control" of us, as defined in the Plan, all
eligible employees shall be vested in their separation benefit as of the date of
such "change-in-control" based on their years of service. As a condition to
receiving the separation benefits, employees must sign a separation agreement
waiving any claims the employee m ay have against our subsidiaries or us.
Senior Management Separation Benefit Plan.
On October 28, 1997, the board adopted the Separation Benefit Plan for Senior
Management. This plan is similar in terms to the benefits and requirements
described above for the Separation Benefit Plan, with the exception that the
compensation committee determines who will participate in this plan. In
addition, the committee is given the authority to increase (up to a maximum of
104) the number of weekly separation benefit payments a participant would
otherwise be entitled to receive under the pl an if the participant is
involuntarily terminated. Currently, only Messrs. Kirchner, Lamborn and Nikkel
are participants in this plan.
REPORT OF THE COMPENSATION COMMITTEE
- -------------------------------------------------------------------------------
The following report of the compensation committee shall not be incorporated by
reference into any of our prior filings under the Securities Act of 1933 or the
Securities Exchange Act of 1934 that incorporated future filings or portions
thereof (including this proxy statement or the "Executive Compensation" section
of this proxy statement), except to the extent that we specifically incorporate
this information by reference.
The compensation committee is responsible for setting and overseeing the
compensation of our executive officers. The committee is composed entirely of
independent outside directors. There are no interlocking relationships between
any of our executive
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officers and any entity whose directors or executive officers serve on the
committee. The members of the committee are John S. Zink, Don Cook, J. Michael
Adcock and John H. Williams.
Objectives and Considerations
The objectives of the committee in determining executive compensation are to
retain and reward qualified individuals serving as our executive officers. To
achieve these objectives, the committee relies primarily on salary, annual
bonuses (awardable either in stock or cash) and awards under our stock option
plan. In making its decisions, the committee takes into account the conditions
within our industry, our income and cash flow and the attainment of any
designated business objectives. Individual performances are also reviewed,
taking into account the individual's responsibilities, experience and potential,
his or her period of service and current salary and the individual's
compensation level as compared to similar positions at other companies. The
committee's evaluation of these considerations is, for the most part, subjective
and, to date, it has not established any specific written compensation plans or
formulas pursuant to which the executive officers' annual compensation is deter
mined.
Base Salary
We do not currently have an employment agreement with any of our executive
officers. In determining the base salaries for the executive officers for 1999
the committee relied primarily on its evaluation of the compensation being paid
to individuals holding comparable positions in the industry. In doing so, the
committee relied, to a large extent, on the results of the KPMG Peat Marwick LLP
1998 Energy Compensation Survey, which surveyed the compensation and benefit
programs of 140 oil and gas, related companies, one of which was us. It was the
committee's objective to set the executives' base salary at approximately the
competitive mid-range reflected in the survey. Within this range, the committee
then made any adjustments based on individual performance evaluations. Taking
these factors into consideration, the committee decided not to increase the 1999
salaries of the named executive officers.
Bonuses
Executive officers are eligible to earn annual bonuses either in cash or in
stock. Stock bonuses are awarded pursuant to the bonus plan approved by our
stockholders on May 1, 1985 and, as amended, on May 3, 1995. The amount and type
of any bonuses awarded to executive officers is determined solely at the
subjective discretion of the committee. The committee does not base its
decisions on predetermined formulas, choosing instead to rely on its evaluation
of the various considerations set forth above. In addition, when appropriate,
bonuses are awarded to recognize short-term individual performance.
Stock Options
Stock options are granted under the stock option plan approved by our
stockholders on May 2, 1984 and, as amended, on May 3, 1989 and May 3, 1995. The
committee believes that stock options provide an incentive for the executive
officers to maximize long-term stockholder value. Historically, although not
required, stock option grants are made at 100% of the market price on the date
of grant. Options become exercisable in annual 20% increments after one year and
have a ten-year life. The number of options that are granted to an executive
officer is based on the individual's performance and level of responsibility.
Option awards will vary in size based on position level (more senior managers
receive a higher multiple). Stock options are granted to the executive officers
at the discretion of the committee. The committee's decisions with respect to
awarding stock options are generally made
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late each year thus allowing the committee to evaluate our annual results as
part of its decision making process. No stock options were granted to the
executive officers in 1999.
Chief Executive Officer
Mr. Kirchner's salary and bonus are determined by the committee substantially in
accordance with the policies described above relating to all executive officers.
Based on its review, the committee choose not to raise Mr. Kirchner's 1999
salary.
1993 OBRA - Executive Compensation Tax Deductibility
Beginning in 1995, the Internal Revenue Code, Section 162(m), limits our ability
to deduct, for federal income tax purposes, certain non-performance based
compensation in excess of $1 million per year paid to individual officers named
in the Summary Compensation Table. Based on the amount of compensation paid to
each of the named officers in fiscal 1999, it does not appear that Section
162(m) will have a significant impact on us in the near term. However, the
committee will continue to monitor whether its executive compensation plans
should be amended to meet the deductibility requirements of the tax law.
Members of the Compensation Committee:
John S. Zink
Don Cook
John H. Williams
J. Michael Adcock
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
- -------------------------------------------------------------------------------
During 1999, the following directors (none of whom was or had been an officer or
employee of the company or any of its subsidiaries) served on the compensation
committee: Jack Zink, Don Cook, John Williams and J. Michael Adcock. There are
no committee interlocks with other companies within the meaning of the
Securities and Exchange Commission's rules during 1999.
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PERFORMANCE GRAPH
- -------------------------------------------------------------------------------
The performance graph and the related disclosure contained in this section of
the Proxy Statement shall not be incorporated by reference into any of our prior
filings under the Securities Act of 1933 or the Securities Exchange Act of 1934
that incorporated future filings or portions thereof (including this proxy
statement or the "Executive Compensation" section of this proxy statement),
except to the extent that we specifically incorporate this information by
reference.
The following graph reflects a comparison of the cumulative total return (change
in stock price plus reinvested dividends, assuming $100 invested on December 31,
1994) in our common stock during the five-year period from December 31, 1994
through Dec ember 31, 1999, with the Standard & Poor's 500 Composite Index and
the S&P Oil - Integrated Domestic Index. The comparisons in this table are
required by the Securities and Exchange Commission and, therefore, are not
intended to forecast or be indicative of possible future performance of our
stock.
(Graph)
DOLLAR VALUE OF $100 INVESTMENT AT DECEMBER 31,
----------------------------------------------------
1994 1995 1996 1997 1998 1999
------- ------- ------- ------- ------- -------
Unit $100.00 $158.33 $329.17 $320.83 $139.60 $256.27
S&P 500 $100.00 $137.58 $169.17 $225.60 $290.08 $351.12
S&P Oil-Integ. $100.00 $113.85 $143.98 $171.31 $139.08 $172.69
13
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ITEM 2: RATIFICATION OF APPOINTMENT OF AUDITORS
- -------------------------------------------------------------------------------
The board has unanimously selected PricewaterhouseCoopers LLP as our independent
auditors for our 2000 fiscal year. The board is asking you to ratify and approve
this action. A representative of PricewaterhouseCoopers LLP, who will attend the
annual meeting, will have the opportunity to make a statement if he or she
desires to do so and will be available to answer appropriate questions.
Although the law does not require such ratification, the board believes that you
should be given the opportunity to express your views on this matter. However,
even if you ratify the selection, the board may still appoint new independent
auditors at any time if it believes that such change would be in the best
interest of the company and its stockholders. Failure to ratify such selection
is not binding on the board .
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" APPROVAL,
WHICH VOTE WILL ACT TO RATIFY THE SELECTION OF
PRICEWATERHOUSECOOPERS LLP.
ITEM 3: APPROVAL OF AMENDMENT TO OUR RESTATED CERTIFICATE OF INCORPORATION
- -------------------------------------------------------------------------------
The board of directors has proposed that we amend our restated certificate of
incorporation to increase the number of authorized shares of common stock from
40 million shares to 75 million shares. The terms of the additional shares will
be the same as those that apply to our currently authorized shares.
As of March 17, 2000, 33,894,429 of our 40 million authorized shares of common
stock were issued and outstanding. In addition, approximately 536,617 shares
were reserved for issuance pursuant to various stock-based compensation and
benefit plans and 1.8 million shares were reserved for issuance in connection
with a pending acquisition. As a result, there were approximately 36.2 million
issued or reserved for issuance, leaving approximately 3.8 million shares of
authorized common stock available for future issuances. The board believes it is
in our best interest to increase the number of shares of authorized common stock
to make available additional shares for possible future stock splits, stock
dividends, employee benefit plan issuances, equity financings to raise capital,
acquisitions and other corporate purposes. We have no specific plans currently
calling for issuance of any of the additional shares of common stock, other than
as described above.
Although the proposed increase in our authorized common stock could be construed
as having potential anti-takeover effects, we do not view this proposal in that
perspective. Nevertheless, we could use the additional shares to frustrate
persons seeking to gain control of us by, for example, privately placing shares
to purchasers who might side with our board in opposing a hostile takeover bid.
Shares of common stock could also be issued to persons who would thereafter have
sufficient voting power to assure that any proposal to amend or repeal our by-
laws or charter would not receive the required vote. Such uses of our
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common stock could make it more difficult or discourage an attempt to gain
control of us if the board opposed such transactions. Further, the issuance of
additional shares could have an adverse effect on the potential realizable value
of a stockholder's investment in our common stock. In the absence of a
proportionate increase in our earnings and book value, an increase in the
aggregate number of our outstanding shares of common stock would dilute the
earnings per share and book value per share of all of our outstanding shares of
common stock. These factors, if reflected in the price per share of our common
stock, could adversely affect the realizable value of a stockholder's investment
in our common stock. We are not aware of any attempts to obtain control of us at
this time.
As amended, the first sentence of Article Four of our restated certificate of
incorporation would read as follows:
"The aggregate number of shares of all classes of stock which the corporation
shall have authority to issue is 80,000,000, 75,000,000 of which shall be Common
Stock of the par value of $.20 per share (hereinafter called "Common Stock") and
5,000,000 of which shall be Preferred Stock of the par value of $1.00 per share
(hereinafter called "Preferred Stock")."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THIS
PROPOSAL.
ITEM 4: APPROVAL OF AMENDMENTS TO THE UNIT CORPORATION AMENDED AND RESTATED
STOCK OPTION PLAN
- -------------------------------------------------------------------------------
On February 15, 2000, our board adopted, subject to stockholder approval,
various amendments to the Unit Corporation Amended and Restated Stock Option
Plan. This plan, as amended, will become effective upon approval by our
stockholders at the annual meeting.
As of March 17, 2000, options to purchase an aggregate of 637,200 shares were
outstanding and options to purchase 689,500 shares had been exercised under the
plan. There were 173,300 shares available for future grants under the plan.
The following discussion provides you with certain information regarding the
amendments and the plan, as so amended.
Q: Who Participates In The Plan?
A: Our key employees, including our officers, are eligible to participate in
the plan.
Q: How Long Has The Plan Been In Existence?
A: The plan was first approved by our stockholders on May 2, 1984 and amended
by our stockholders on May 3, 1989 and May 3, 1995.
Q: What Is The Purpose Of The Plan?
A: The purpose of the plan is to help us attract and retain the best available
executive officers and other key personnel. Competition for such persons is
intense and we believe an attractive option package is a material inducement
to attract and retain such persons.
Q: What Will The Participants Receive?
A: Each participant who receives an option under the plan will, depending on
the award granted to the participant by the committee, receive a
nonqualified
15
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option or an incentive option to purchase a specified number of shares of
our common stock .
Q: What Is The Market Value Of The Common Stock Underlying The Options?
A: The closing sales price of our common stock on March 16, 2000 was $9.437 per
share.
Q: What Are The Amendments Intended To Do?
A: . increase the number of shares of common stock available for issuance under
the plan from 1,500,000 to 2,700,000;
. mandate that all future options must be granted at 100% of the closing
stock price of the common stock on the date of grant;
. prohibit the repricing of outstanding stock options to lower the option
exercise price; and
. extend the term of the plan from May 30, 2000 to May 30, 2010.
Q: Who Will Administer The Plan?
A: The compensation committee of the board of directors. This committee has the
authority to exercise all the powers and authorities either specifically
granted to it under the plan or necessary or advisable in the administration
of the plan, including, without limitation, to construe and interpret the
plan and any award; to prescribe, amend and rescind rules and regulations
relating to the plan; to determine the terms and provisions of the
agreements evidencing awards; and to make all other determinations deemed
necessary or advisable for the administration of the plan.
Q: Can The Exercise Price Of An Option Be Repriced?
A: No. Once an option has been granted, the plan prohibits the subsequent
repricing of that option's exercise price.
Q: What Happens If An Option Award Is Cancelled Or Forfeited?
A: If any option granted under the plan is forfeited, canceled, or surrendered
or if an option otherwise terminates or expires without having been
exercised, the shares of common stock with respect to the option will, to
the extent of any such forfeiture, cancellation, surrender, termination or
expiration, again be available for issuance under the plan.
Q: How Will A Participant Be Entitled To Pay The Exercise Price Of An Option?
A: The exercise price may be paid in cash, by the surrender of shares of common
stock previously owned by the participant (provided that any shares of
common stock so surrendered must have been held by participant for such
period of time as may be prescribed by the committee), or a combination of
cash and shares. A participant may also elect to pay all or a portion of the
exercise price by having shares of common stock with a fair market value on
the date of exercise equal to all or the applicable portion of the exercise
price withheld by us.
Q: When Can A Participant Exercise An Award?
A: Each option awarded under the plan will have a term of ten years and can be
exercised in 20% increments commencing one year after it is granted.
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Q: Can An Option Be Transferred?
A: Options may not be transferred by a participant except by will or the laws
of descent and distribution, may be exercised during the lifetime of a
participant only by such participant or his or her guardian or legal
representative and may not be subject to any encumbrance, claim or charge of
any kind.
Q: Can The Plan Be Amended Or Terminated?
A: Yes. Our board of directors may at any time and from time to time alter,
amend, suspend or terminate the plan in whole or in part except that,
without our stockholders' approval, within 12 months before or after the
date of such amendment's adoption, no amendment shall:
. change the number of shares subject to the plan;
. change the designation of the class or employees eligible to receive
options;
. decrease the price at which options may be granted;
. increase the maximum term of options; or
. remove the administration of the plan from the compensation committee.
Q: What Are The Federal Income Tax Consequences Of Awards Under The Plan?
A: A participant will not recognize any taxable income upon the grant of a
nonqualified stock option, and we will not be entitled to a tax deduction
with respect to the grant of a nonqualified stock option. Upon exercise, the
excess of the fair market value of a share of common stock on the exercise
date over the option exercise price will be taxable as ordinary income to
the participant and will be subject to applicable withholding taxes. We will
generally be entitled to a tax deduction at such time in the amount of such
ordinary income. In the event of a sale of a share of common stock received
upon the exercise of a nonqualified stock option, any appreciation or
depreciation after the exercise date will be taxed as capital gain or loss
and will be long-term capital gain or loss if the requisite long-term
capital gains holding period for the common stock has been satisfied.
A participant who is granted an incentive stock option does not recognize
taxable income at the time the option is granted or upon its exercise,
although the exercise is an adjustment item for alternative minimum tax
purposes and may subject the participant to the alternative minimum tax.
Upon a disposition of the shares more than two years after grant of the
option and one year after exercise of the option, any gain or loss is
treated as long-term capital gain or loss. Net capital gains on shares held
more than 12 months may be taxed at a maximum federal rate of 20%. Capital
losses are allowed in full against capital gains and up to $3,000 against
other income. If these holding periods are not satisfied, the participant
recognizes ordinary income at the time of disposition equal to the
difference between the exercise price and the lower of (i) the fair market
value of the shares at the date of the option exercise or (ii) the sale
price of the shares. Any gain or loss recognized on such a premature
disposition of the shares in excess of the amount treated as ordinary income
is treated as long-term or short-term capital gain or loss, depending on the
holding period. A different rule for measuring ordinary income upon such a
premature disposition may apply if the participant
17
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is also an officer, director, or
greater than 10% stockholder. We are generally is entitled to a deduction in
the same amount as the ordinary income recognized by the participant.
The above discussion is only brief summary of the amendments to the plan, the
plan as amended and the tax consequences under the plan. It is not intended to
be exhaustive. The full text of the plan, as amended, as adopted by the board of
directors, is printed as Appendix A, beginning on page A-1. We encourage you to
read the plan document.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THIS
PROPOSAL.
ITEM 5: APPROVAL OF THE UNIT CORPORATION 2000 NON-EMPLOYEE DIRECTORS' STOCK
OPTION PLAN
- -------------------------------------------------------------------------------
On February 15, 2000, our board adopted, subject to stockholder approval, the
Unit Corporation 2000 Directors' Stock Option Plan. This plan is intended to
replace the current non-employee directors' stock option plan that expires in
May 2000. If approved by our stockholders, this new plan will become effective
May 3, 2000 and no new options will be granted under the old plan.
The following discussion provides you with certain information regarding the
proposed plan.
Q: Who Will Participate In The Plan?
A: Only our directors who are not also employees will participate in the plan.
Q: Why Has The Board Proposed That The Plan Be Adopted?
A: Our board believes that our continued growth and profitability depends, in
part, upon our ability to attract and retain highly qualified outside
directors. One way we have achieved this objective is through the benefits
we have been able to provided to our directors, including the benefits
available under our current non-employee directors stock option plan.
Q: How Many Shares Will Be Reserved For Issuance Under The Plan?
A: 200,000 shares plus the 10,000 shares remaining available under the current
plan.
Q: What Will The Participants Receive?
A: Each participant will receive, on the day after each annual meeting of
stockholders, a nonqualified option to purchase 3,500 shares of our common
stock. Currently we have five directors who are not also employees. Each
option can be exercised six months after it is granted The option price will
be set at the closing price of our common stock on the date of grant.
Q: What Is The Market Value Of The Common Stock Underlying The Options?
A: The closing sales price of our common stock on March 16, 2000 was $9.437 per
share.
Q: Who Will Administer The Plan?
A: The compensation committee of the board of directors. This committee has the
authority to exercise all the powers and authorities either specifically
18
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granted to it under the plan or necessary or advisable in the administration
of the plan.
Q: Can The Exercise Price Of An Option Be Repriced?
A: No. Once an option has been granted, the plan prohibits the subsequent
repricing of that option's exercise price.
Q: What Happens If An Option Award Is Cancelled Or Forfeited?
A: If any option granted under the plan is forfeited, canceled, or surrendered
or if an option otherwise terminates or expires without having been
exercised, the shares of common stock with respect to the option will, to
the extent of any such f orfeiture, cancellation, surrender, termination or
expiration, again be available for issuance under the plan.
Q: How Will A Participant Be Entitled To Pay The Exercise Price Of An Option?
A: The exercise price may be paid in cash, by the surrender of shares of common
stock previously owned by the participant (provided that any shares of
common stock so surrendered must have been held by participant for such
period of time as may be prescribed by the committee), or a combination of
cash and shares.
Q: When Can A Participant Exercise An Option?
A: An award will have an exercise period of ten years and can be exercised
starting six months from when it is granted.
Q: Can An Option Be Transferred?
A: Options may not be transferred by a participant except by will or the laws
of descent and distribution, may be exercised during the lifetime of a
participant only by such participant or his or her guardian or legal
representative and may not be subject to any encumbrance, claim or charge of
any kind.
Q: Can The Plan Be Amended Or Terminated?
A: Yes. Our board of directors may at any time and from time to time alter,
amend, suspend or terminate the plan in whole or in part. However, any such
amendment will be subject to stockholder approval if and to the extent such
stockholder approval is required by applicable law or the rules of the
national securities exchange on which the common stock is principally
traded. Notwithstanding the foregoing, no amendment, suspension or
termination may affect adversely any of the rights of a participant under an
outstanding award without such participant's consent. Unless earlier
terminated by the board pursuant to the provisions of the plan, the plan
will terminate on May 20, 2010.
Q: What Are The Federal Income Tax Consequences Of Awards Under The Plan?
A: A participant will not recognize any taxable income upon the grant of a
nonqualified stock option, and we will not be entitled to a tax deduction
with respect to the grant of a nonqualified stock option. Upon exercise, the
excess of the fair market value of a share of common stock on the exercise
date over the option exercise price will be taxable as ordinary income to
the participant and will be subject to applicable withholding taxes. We will
generally be entitled to a tax deduction at such time in the amount of such
ordinary income. In the event of a sale of a share of common stock received
upon the exercise of a nonqualified
19
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stock option, any appreciation or depreciation after the exercise date will
be taxed as capital gain or loss and will be long-term capital gain or loss
if the requisite long-term capital gains holding period for such common
stock has been satisfied.
The above discussion is only brief summary of the plan and the tax consequences
under the plan. It is not intended to be exhaustive. The full text of the plan,
as adopted by the board of directors, is printed as Appendix B, beginning on
page B-1. We encourage you to read the plan document.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THIS
PROPOSAL.
OTHER MATTERS
- -------------------------------------------------------------------------------
Certain Transactions Between the Company and Its Officers, Directors, Nominees
for Directors and Their Associates
Since 1984, one of our subsidiaries, or its predecessor, has formed employee-
limited partnerships for investment by certain of our employees and directors.
The limited partnerships participate with Unit Petroleum Company, a subsidiary
of ours, in its exploration and production operations. Since January 1, 1999,
Mr. John G. Nikkel, a director and our President, invested $40,000 in the Unit
1999 Employee Oil and Gas Limited Partnership and $60,000 in the Unit 2000
Employee Oil and Gas Limited Partnership. In addition, Nike Exploration Company,
which is owned 71.4% by Mr. Nikkel, invested $76,000 in the 1999 program and
$76,000 in the 2000 program.
With respect to their review and approval of any material transactions between
us and any related party, including, if applicable, those discussed above, our
board of directors considers the terms that are or would be available to the
company in similar transactions with non-affiliated parties dealing at arm's-
length.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our
directors and officers and persons who own more than 10% of a registered class
of our equity securities to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission and the New
York Stock Exchange. These persons are required by Securities and Exchange
Commission regulation to furnish us with copies of all Section 16(a) forms they
file.
Based solely on our review of the forms received by us with respect to fiscal
1999, or written representations from certain reporting persons, we believe that
each of our directors, officers and greater than 10% owners have complied with
all Section 16(a) filing requirements, except that a report on Form 4 filed by
each of Messers. Nikkel, Lamborn, Keeley, Pinkston and Schell was filed one
business day late.
Matters Which May Come Before the Meeting
The board does not intend to bring any other matters before the meeting, nor do
we know of any matters that other persons intend to bring before the meeting.
However, should other matters not mentioned in this proxy
20
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statement properly come before the meeting, the persons named in the
accompanying proxy card will vote on them in accordance with their best
judgment.
Form 10-K Annual Report to the Securities and Exchange Commission
COPIES OF OUR ANNUAL REPORT (FORM 10-K) FOR THE FISCAL YEAR ENDED DECEMBER 31,
1999, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, MAY BE OBTAINED
WITHOUT CHARGE BY WRITING TO: MARK E. SCHELL, SECRETARY, UNIT CORPORATION, P. O.
BOX 702500, TULSA, OKLAHOMA 74170.
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Appendix A
UNIT CORPORATION
Amended and Restated
Stock Option Plan
(Restated Effective as of February 15, 2000)
SECTION 1.
Purpose
This Stock Option Plan (the "Plan") is intended as an incentive and to
encourage stock ownership by certain directors, officers and other key employees
of Unit Corporation (the "Corporation") or of its parent or its subsidiary
corporations as that term is defined in Section 3, below (the "Subsidiaries"),
so that they may acquire or increase their proprietary interest in the success
of the Corporation and Subsidiaries, and to encourage them to remain in the
employ of the Corporation or of the Subsidiaries. It is further intended that
options issued pursuant to this Plan may constitute incentive stock options
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), to the extent such options are embodied in an incentive
stock option agreement containing such provisions as are required by this Plan
with respect to such options.
SECTION 2.
Administration
The Plan shall be administered by the Compensation Committee appointed by
the Board of Directors of the Corporation (the "Committee"). The Committee shall
consist of not less than two members of the Corporation's Board of Directors all
of who m shall be non-employee directors. The Board of Directors may from time
to time remove members from, or add members to, the Committee. Vacancies on the
Committee, howsoever caused, shall be filled by the Board of Directors. The
Committee shall select one of its members as Chairman, and shall hold meetings
at such times and places as it may determine. Acts approved by a majority of the
Committee at which a quorum is present, or acts reduced to or approved in
writing by a majority of the members of the Committee, shall be the valid acts
of the Committee. The Committee shall from time to time at its discretion select
the key employees who shall be granted options by the Committee which shall also
determine the amount of stock to be optioned to each.
Committee shall have the power, subject to and within the limits of the
express provisions of the Plan:
(a) To determine from time to time which of the eligible persons shall be
granted options under the Plan, and the time or times when, and the number of
shares for which, an option or options shall be granted to such persons;
(b) To prescribe the other terms and provisions (which need not be
identical) of each option granted under the Plan to eligible persons;
(c) To construe and interpret the Plan and options granted under it and to
establish, amend, and revoke rules and regulations for administration. The
Committee, in the exercise of this power, may correct any defect or supply any
omission, or reconcile any inconsistency in the Plan, or in any option
agreement, in the manner and to the extent it shall deem necessary or
A-1
<PAGE>
expedient to make the Plan fully effective. In exercising this power, the
Committee may retain counsel at the expense of the Corporation. All decisions
and determinations by the Committee in exercising this power shall be final and
binding upon the Corporation and the optionees;
(d) To determine the duration and purposes of leaves of absence which may be
granted to an optionee without constituting a termination of his or her
employment for purposes of the Plan; and
(e) Generally, to exercise such powers and to perform such acts as are
deemed necessary or expedient to promote the best interests of the Corporation
with respect to the Plan.
No member of the Board of Directors or the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
option granted under it.
SECTION 3.
Eligibility To Receive Incentive Stock Options
The persons who shall be eligible to receive incentive stock options shall
be such key employees (including officers, whether or not they are directors) of
the Corporation or its parent corporation or its subsidiaries (as such terms are
defined in Section 425 of the Code) existing from time to time as the Committee
shall select from time to time. An optionee may hold more than one incentive
stock option, but only on the terms and subject to the restrictions hereafter
set forth. No person shall be eligible to receive an incentive stock option for
a larger number of shares than is recommended for him by the Committee.
SECTION 4.
Eligibility To Receive Non-Qualified Stock Options
The persons who shall be eligible to receive non-qualified stock options
shall be such directors and employees (including officers, whether or not they
are directors) of the Corporation or its parent corporation or its subsidiaries
(as such terms are defined in Section 425 of the Code) existing from time to
time as the Committee shall select from time to time. An optionee may hold more
than one non-qualified stock option, but only on the terms and subject to the
restrictions hereafter set forth. No person shall be eligible to receive a non-
qualified stock option for a larger number of shares than is recommended for him
by the Committee.
SECTION 5.
Stock Subject To Options
The stock subject to the options shall be shares of the Corporation's
authorized but unissued or reacquired Twenty Cents ($00.20) par value common
stock hereafter sometimes called Common Stock. The aggregate number of shares,
which may be issued under options pursuant to the Plan, shall not exceed
2,700,000 shares of Common Stock.
SECTION 6.
Limitations On Incentive Stock Options
In no event may the aggregate fair market value (determined as of the date
the option is granted) of the Common Stock for which any person may be granted
incentive stock options in any calendar year beginning prior to January 1, 1987,
under the Plan and under all other incentive
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stock option plans of his employer corporation and its parent and subsidiary
corporations, exceed $100,000 plus any unused limit carry over (as defined by
Section 422A(c)(4) of the Code) to such year.
With respect to incentive stock options issued on or after January 1, 1987,
the aggregate fair market value (determined at the time such incentive stock
option is granted) of the Common Stock with respect to which such incentive
stock options are exercisable for the first time by such individual during any
calendar year (under all such plans of the individual's employer corporation and
its parent and subsidiary corporations) shall not exceed $100,000.
SECTION 7.
Stock Under Expired Option
In the event that any outstanding option under the Plan for any reason
expires or is terminated, the shares of Common Stock allocable to the
unexercised portion of such option may again be subject to an option under the
Plan.
SECTION 8.
Terms And Conditions Of Incentive Stock Options
Incentive stock options granted pursuant to the Plan shall be authorized and
granted by the Committee and shall be evidenced by agreements in such form as
the Committee shall from time to time deem appropriate. Incentive stock option
agreements need not be identical, but each incentive stock option agreement
shall comply with and be subject to the following terms and conditions:
(a) Number of Shares. Each incentive stock option shall state the number of
shares to which it pertains.
(b) Option Price. Each incentive stock option shall state the option
price, which shall be not less than 100% (110% in the case of an optionee who,
at the time the option is granted, is considered for purposes of Section 422 of
the Code to own more th an 10% of the total combined voting power of all classes
of stock of the Corporation or its parent or subsidiary corporation as
determined under Section 425 of the Code (herein referred to as a "10%
Shareholder")) of the fair market value of a share of Common Stock of the
Corporation on the date of the granting of the option. During such time as such
stock is not listed upon an established stock exchange, the fair market value
per share shall be the mean between dealer "bid" and "ask" prices of the Common
Stock in the New York over-the-counter market on the day the option is granted,
as reported by the National Association of Securities Dealers, Inc. If the stock
is listed upon an established stock exchange or exchanges, such fair market
value shall be deemed to be the closing price of the Common Stock on such stock
exchange or exchanges on the day the option is granted or if no sale of the
Corporation's Common Stock shall have been made on any stock exchange on that
day, on the next p receding day on which there was a sale of such stock.
Subject to the foregoing, the Board of Directors and the Committee in fixing the
incentive stock option price shall have full authority and discretion and shall
be fully protected in doing so.
(c) Method of Exercise and Payment. An incentive stock option may be
exercised by the optionee delivering to the Committee on any business day a
written notice specifying the number of shares of Common Stock the optionee then
desires to purchase. The option price shall be paid in full in cash (by
certified or bank check or such other instrument as the Company may accept) or,
if and to the extent set forth in the option agreement or as otherwise permitted
by the Committee, may also be paid by one or more of the following: (i) in the
form of unrestricted
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Common Stock or the Attestation of Ownership of Common Stock already owned by
the optionee for such minimum period of time as may be prescribed by the
Committee and based in any such instance on the fair market value of the Common
Stock on the date the Stock Option is exercised; provided, however, that, in the
case of an Incentive Stock Option, the right to make a payment in the form of
already owned shares of Common Stock may be authorized only at the time the
Stock Option is granted; (ii) by a combination thereof; provided however, that
any payment made in the manner set forth in (i), (ii) or (iii) above shall, at
all times, be subject to the approval of the Committee.
(d) Terms and Exercise of Incentive Stock Options. Except as otherwise
expressly provided in this Plan, each incentive stock option granted pursuant to
this Plan shall contain provisions established by the Committee setting forth
the manner of exercise of such incentive stock option, and may, at the sole
discretion of the Committee, provide such restrictions on exercise as the
Committee may deem appropriate. Each incentive stock option granted under this
Plan shall terminate as set forth therein; provided, that no incentive stock
option shall be exercisable after the expiration of ten years from the date of
the granting of the option (five years in the case of an optionee who, at the
time the option is granted, is a 10% Shareholder). Each incentive stock option
granted under this Plan shall contain provisions making such option
nontransferable by the optionee, except upon death, and exercisable during the
optionee's lifetime only by the optionee.
(e) Prior Outstanding Incentive Stock Option. No incentive stock option
granted hereunder prior to January 1, 1987 (for purposes of this Section (e)
called "New Option") shall be exercisable while there is outstanding (within the
meaning of Section 422A (c)(7) of the Internal Revenue Code as in effect prior
to 1986) any other incentive stock option, which incentive stock option was
granted before the granting of the New Option to the optionee to purchase stock
in the Corporation or in a corporation which, at the time the New Option is
granted, is a parent or subsidiary corporation of the Corporation, or a
predecessor corporation referred to in such Section 422A(b)(7). An incentive
stock option shall be treated as outstanding until such option is exercised in
full or expires by reason of a lapse of time.
SECTION 9.
Terms And Conditions Of Non-Qualified Stock Options
Non-qualified stock options granted pursuant to the Plan shall be authorized
and granted by the Committee and shall be evidenced by agreements in such form
as the Committee shall from time to time deem appropriate. Non-qualified stock
option agreements need not be identical, but each non-qualified stock option
agreement shall comply with and be subject to the following terms and
conditions:
(a) Number of Shares. Each non-qualified stock option shall state the number
of shares to which it pertains.
(b) Option Price. Each non-qualified stock option shall state the option
price, which shall be determined by the Committee and which shall not be less
than 100% of the fair market value of the shares of Common Stock of the
Corporation on the date of the granting of the non-qualified stock option.
Subject to the foregoing, the Committee, in fixing the option price, shall have
full authority and discretion and shall be fully protected in doing so.
(c) Method of Exercise and Payment. A non-qualified stock option may be
exercised by the optionee delivering to the Committee on any business day a
written notice specifying the
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number of shares of Common Stock the optionee then desires to purchase. The
option price shall be paid in full in cash (by certified or bank check or such
other instrument as the Company may accept) or, if and to the extent set forth
in the option agreement or as otherwise permitted by the Committee, may also be
paid by one or more of the following: (i) through the delivery of or the
Attestation of Ownership of shares of Common Stock held by the optionee for at
least six months and having a fair market value as determined under Section 8(b)
hereof at the time of exercise equal to the full amount of the option price on
the date the Stock Option is exercised; (ii) by requesting the Company to
withhold from the number of shares of Common Stock otherwise issuable upon
exercise of the Stock Option that number of shares having an aggregate fair
market value on the date of exercise equal to the exercise price for all of the
shares of Common Stock subject to such exercise; or (iii) by a combination
thereof; provided however, that any payment made in the manner set forth in (i),
(ii) or (iii) above shall, at all times, be subject to the approval of the
Committee.
(d) Deferral of Receipt of Shares. An optionee may elect to defer the
receipt of the shares of Common Stock deliverable upon the exercise of a non-
qualified stock option provided such optionee (i) delivers to the chairperson of
the Committee a written election (a "Deferral Election") to defer the receipt of
shares of Common Stock in such form and with such terms as the Committee
determines no later than six months before the date of exercise of an option as
to which the receipt of a portion of the shares of Common Stock is to be
deferred, (ii) pays the option price payable upon such exercise by delivery to
the Corporation of shares of Common Stock as provided at Section 9(c) hereof,
and (iii) is employed by the Corporation or one of the Subsidiaries at the time
of exercise of such option. Only the number of shares otherwise deliverable upon
exercise of a non-qualified stock option in excess of the number of shares of
Common Stock delivered in payment of the option price upon any ex ercise of such
option shall be Deferred Shares. Any such Deferral Election shall be revocable
only upon the delivery of a superseding Deferral Election for the option shares
subject to a Deferral Election. Upon the exercise of an option subject to a
Deferral Election, that number of shares of Common Stock which, but for such
Deferral Election, would be deliverable upon such exercise shall be issued to
the Corporation for the benefit of the optionee and credited to a bookkeeping
account (a "Unit Account") in the name of the optionee. Each optionee's Unit
Account will be credited with all noncash property either distributed in respect
of any Deferred Shares credited to such account or into which any Deferred
Shares credited to such Unit Account are converted. All cash distributed in
respect of an optionee's Deferred Shares or into which an optionee's Deferred
Shares are converted shall be delivered to such optionee as soon as is
reasonably practical after such distribution or conversion. No optionee shall
be entitled to vote the Deferred Shares and instead such shares shall be voted
by the Secretary of the Corporation on behalf of such optionee on all matters on
which the holders of Common Stock are entitled to vote in the same manner as a
majority of the Shares of Common Stock are voted.
(e) Terms and Exercise of Non-Qualified Stock Options. Except as otherwise
expressly provided in this Plan, each non-qualified stock option granted
pursuant to this Plan shall contain provisions established by the Committee
setting forth the mann er of exercise of such non-qualified stock option, and
may, at the sole discretion of the Committee, provide such restrictions on
exercise as the Committee may deem appropriate. Each non-qualified stock option
granted under this Plan shall terminate as set forth therein; provided, that no
non-qualified stock option shall be exercisable after the expiration of 10 years
and one day from the date of the granting of the non-qualified stock option.
Each non-qualified stock option granted under this Plan shall contain provisions
making such non-qualified stock option nontransferable by the optionee, except
upon death, and exercisable during the optionee's lifetime only by the optionee.
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SECTION 10.
Terms And Conditions Of Incentive And Non-Qualified Stock Options
(a) Recapitalization. If the shares of Common Stock as a whole are
increased, decreased or changed into, or exchanged for, a different number or
kind of shares or securities of the Corporation, whether through merger,
consolidation, reorganization, recapitalization, reclassification, stock
dividend, stock split, combination of shares, exchange of shares, change in
corporate structure or the like, an appropriate and proportionate adjustment may
be made by the Committee in the number and kinds of shares subject to the Plan,
and the number, kinds, and per share exercise price of shares subject to
unexercised options or portions thereof granted prior to any such change. Any
such adjustment in an outstanding option, however, shall be made without a
change in the total price applicable to the unexercised portion of the option,
but with a corresponding adjustment in the price for each share of Common stock
covered by the option.
(b) Reorganization or Liquidation. Each option agreement may contain such
provisions relating to the dissolution, liquidation, reorganization,
consolidation or merger of the Corporation, or the sale or disposition by the
Corporation of substantially all of its assets, as the Committee may deem
appropriate.
(c) Adjustments. To the extent that the adjustments described in (a) above
relate to stock or securities of the Corporation, such adjustments shall be made
by the Committee, whose determination in that respect shall be final, binding
and conclusive; provided that each incentive stock option granted pursuant to
this Plan shall not be adjusted in a manner that causes the incentive stock
option to fail to continue to qualify as an incentive stock option within the
meaning of Section 422 of the Code.
SECTION 11.
Rights As A Stockholder
An optionee or a transferee of an option shall not have rights as a
stockholder with respect to any shares covered by his option until the date of
the issuance of a stock certificate to him for such shares. No adjustment shall
be made for dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distributions of other rights for which the record date is
prior to the date such stock certificate is issued, except as provided in
Section 10(a) hereof.
SECTION 12.
Modification, Extension And Renewal Of Options
Subject to the terms and conditions and within the limitations of the Plan,
the Board of Directors or the Committee may modify, extend or renew outstanding
options granted under the Plan, or accept the surrender of outstanding options
(to the extent not theretofore exercised) and authorize the granting of new
options in substitution therefore (to the extent not theretofore exercised).
The Board of Directors or the Committee shall not, however, modify any
outstanding stock options so as t o specify a lower option price or with respect
to an outstanding incentive stock option, accept the surrender of outstanding
options and authorize the granting of new incentive stock options in
substitution therefore specifying a lower price. Notwithstanding the foregoing
however no modification of an option shall, without the consent of the optionee,
alter or impair any rights or obligations under any option theretofore granted
under the Plan.
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SECTION 13.
Investment Purpose
Each option under the Plan shall be granted on the condition that the
purchases of stock there under shall be for investment purposes, and not with a
view to resale or distribution except that in the event the stock subject to
such option is registered under the Securities Act of 1933, as amended, or in
the event a resale of such stock without such registration would otherwise be
permissible, such condition shall be inoperative if in the opinion of counsel
for the Corporation such condition is not required under the Securities Act of
1933 or any other applicable law, regulation, or rule of any governmental
Agency.
SECTION 14.
Other Provisions
The option agreements authorized under the Plan shall contain such other
provisions, including, without limitation, restrictions upon the exercise of the
option, which are not inconsistent with this Plan and which the Committee or the
Board of Directors of the Corporation shall deem advisable. Any incentive stock
option agreement shall contain such provisions as shall be necessary in order
that such option will be an "incentive stock option" as defined in Section 422
of the Code as amended, or to conform to any change in the law.
SECTION 15.
Term Of Plan
The term of the Plan shall commence May 2, 1985, and end May 30, 2010,
unless the Plan is terminated prior thereto by the Committee.
SECTION 16.
Indemnification Of Committee
In addition to such other rights of indemnification as they may have as
directors or as members of the Committee, the members of the Committee shall be
indemnified by the Corporation against the reasonable expenses, including
attorneys' fees actually and necessarily incurred in connection with the defense
of any action, suit or proceeding, or in connection with any appeal therein, to
which they or any of them may be a party by reason of any action taken or
failure to act under or in connection with the Plan or any option granted there
under, and against all amounts paid by them in settlement thereof (provided such
settlement is approved by independent legal counsel selected by the Corporation)
or paid by them in satisfaction of a judgment in any such action, suit or
proceeding that such Committee member is liable for negligence or misconduct in
the performance of his duties; provided that within 60 days after institution of
any such action, suit or proceeding a Committee member shall in writing offer
the Corporation the opportunity, at its own expense, to handle and defend the
same.
SECTION 17.
Amendment Of The Plan
The Board of Directors of the Corporation may, insofar as permitted by law,
from time to time, with respect to any shares at the time not subject to
options, suspend or discontinue the Plan or revise or amend it in any respect
whatsoever except that, without approval of the stockholders within twelve
months before or after the date of such amendment's adoption, no such revision
or amendment shall change the number of shares subject to the Plan, change the
designation of the
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class or employees eligible to receive options, decrease the price at which
options may be granted, increase the maximum term of options as provided herein
or remove the administration of the Plan from the Committee. Furthermore, the
Plan may not, without the approval of the stockholders, be amended in any manner
that will cause incentive stock options issued under it to fail to meet the
requirements of incentive stock options as set forth in Section 422 of the Code.
SECTION 18.
Approval Of Stockholders
The Plan shall become effective upon adoption by the Board of Directors, and
shall be submitted for approval by the holders of a majority of the outstanding
shares of Common Stock of the Corporation within twelve months after the date
the Plan is adopted by the Board of Directors. Options may be granted hereunder
prior to stockholder approval.
SECTION 19.
Non-Exclusivity Of Plan
Neither the adoption of the Plan by the Board of Directors, nor the
submission of the Plan to the shareholders of the Corporation for approval,
shall be construed as creating any limitation on the power of the Board of
Directors to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable generally or only
specific cases.
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Appendix B
UNIT CORPORATION
2000
NON-EMPLOYEE DIRECTORS'
STOCK OPTION PLAN
Adopted
As of
February 15, 2000
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UNIT CORPORATION
2000
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
The purposes of the Unit Corporation 2000 Non-Employee Directors' Stock
Option Plan (the "Plan") are to promote the long-term success of Unit
Corporation (the "Company") by creating a long-term mutuality of interests
between the non-employee Director s and stockholders of the Company, to provide
an additional inducement for such Directors to remain with the Company and to
provide a means through which the Company may attract able persons to serve as
Directors of the Company.
SECTION I
Administration
The Compensation Committee (the "Committee") of the Board of Directors of
the Company (the "Board") shall administer the Plan. All of the members of the
Committee shall be non-employee directors. The Committee shall keep records of
action taken at its meetings. A majority of the Committee shall constitute a
quorum at any meeting, and the acts of a majority of the members present at any
meeting at which a quorum is present, or acts approved in writing by a majority
of the Committee, shall be the acts of the Committee.
The Committee shall interpret the Plan and prescribe such rules, regulations
and procedures in connection with the operations of the Plan, as it shall deem
to be necessary and advisable for the administration of the Plan consistent with
the purposes of the Plan. All questions of interpretation and application of the
Plan, or as to stock options granted under the Plan, shall be subject to the
determination of the Committee, which shall be final and binding.
Notwithstanding the above, the selection of the Directors to whom stock
options are to be granted, the timing of such grants, the number of shares
subject to any stock option, the exercise price of any stock option, the periods
during which any stock option may be exercised and the term of any stock option
shall be as hereinafter provided, and the Committee shall have no discretion as
to such matters.
SECTION 2
Shares Available under the Plan
The aggregate number of shares which may be issued or delivered and as to
which grants of stock options may be made under the Plan is 210,000 shares of
Common Stock, $.20 par value, of the Company (the "Common Stock"), subject to
adjustment and substitution as set forth in Section 5. If any stock option
granted under the Plan is cancelled by mutual consent or terminates or expires
for any reason without having been exercised in full, the number of shares
subject thereto shall again be available for purposes of the Plan. The shares
which may be issued or delivered under the Plan may be either authorized but
unissued shares or reacquired shares or partly each, as shall be determined from
time to time by the Board.
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SECTION 3
Grant of Stock Options
On the first business day following the day of each annual meeting of the
stockholders of the Company, each person who is then a member of the Board and
who is not then an employee of the Company or any of its subsidiaries (a "non-
employee Director") shall automatically and without further action by the Board
or the Committee be granted a stock option to purchase 3,500 shares of Common
Stock, subject to adjustment and substitution as set forth in Section 5. If the
number of shares then remaining available for the grant of stock options under
the Plan is not sufficient for each non-employee Director to be granted an
option for 3,500 shares of (or the number of adjusted or substituted shares
pursuant to Section 5), then each non-employee Director shall be granted an
option for a number of whole shares equal to the number of shares then remaining
available divided by the number of non-employee Directors, disregarding any
fractions of a share.
SECTION 4
Terms and Conditions of Stock Options
Stock options granted under the Plan shall be subject to the following terms
and conditions:
(A) The purchase price at which each stock option may be exercised (the
"option price") shall be one hundred percent (100%) of the fair market value per
share of the Common Stock covered by the stock option on the date of grant,
determined as provided in Section 4(G). Notwithstanding any other provision of
this Plan, the purchase price of an outstanding option shall not be subject to
modification or amendment subsequent to the date of grant of such option.
(B) The option price for each stock option shall be paid in full upon
exercise and shall be payable in cash in United States dollars (including check,
bank draft or money order). Provided, however, that in lieu of such cash the
person exercising the Stock Option may pay the option price in whole or in part
by delivering to the Company shares of the Common Stock having a fair market
value on the date of exercise of the Stock Option, determined as provided in
Section 4(G) equal to the option price for the shares being purchased; except
that (i) any portion of the option price representing a fraction of a share
shall in any event be paid in cash and (ii) no shares of the Common Stock which
have been held for less than six months ma y be delivered in payment of the
option price of a stock option. The date of exercise of a stock option shall be
determined under procedures established by the Committee, and, as of the date of
exercise the person exercising the stock option shall be considered for all
purposes to be the owner of the shares with respect to which the stock option
has been exercised. Payment of the option price with shares shall not increase
the number of shares of the Common Stock, which may be issued or delivered under
the Plan as provided in Section 2.
(C) No stock option shall be exercisable during the first six months of
its term except in case of death as provided in Section 4(E). Subject to the
terms of Section 4(E) providing for earlier termination of a stock option, no
stock option shall be exercisable after the expiration of ten years from the
date of grant. A stock option to the extent exercisable at any time may be
exercised in whole or in part.
(D) No stock option shall be transferable by the grantee otherwise than by
Will, or if the grantee dies intestate, by the laws of descent and distribution
of the state of domicile of the
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grantee at the time of death. All stock options shall be exercisable during the
lifetime of the grantee only by the grantee or the grantee's guardian or legal
representative.
(E) If a grantee ceases to be a Director of the Company, any outstanding
stock options held by the grantee shall be exercisable and shall terminate,
according to the following provisions:
(i) If a grantee ceases to be a Director of the Company for any reason
other than resignation, removal for cause or death, any then outstanding stock
option held by such grantee shall be exercisable by the grantee (but only to the
extent exercisable by the grantee immediately prior to ceasing to be a Director)
at any time prior to the regular expiration date of such stock option or within
one year after the date the grantee ceases to be a Director, whichever is the
longer period;
(ii) If during his or her term of office as a Director a grantee resigns
from the Board or is removed from office for cause, any outstanding stock option
held by the grantee which is not exercisable by the grantee immediately prior to
resignation or removal shall terminate as of the date of resignation or removal,
and any outstanding stock option held by the grantee which is exercisable by the
grantee immediately prior to resignation or removal shall be exercisable by the
grantee at a ny time prior to the regular expiration date of such stock option
or within 90 days after the date of resignation or removal, whichever is the
longer period;
(iii) Following the death of a grantee during service as a Director of the
Company, any outstanding stock option held by the grantee at the time of death
(whether or not exercisable by the grantee immediately prior to death) shall be
exercisable by the person entitled to do so under the Will of the grantee, or,
if the grantee shall fail to make testamentary disposition of the stock option
or shall die intestate, by the legal representative of the grantee at any time
prior to the regular expiration date of such stock option or within two years
after the date of death, whichever is the longer period;
(iv) Following the death of a grantee after ceasing to be a Director and
during a period when a stock option is exercisable, any outstanding stock
option held by the grantee at the time of death shall be exercisable by such
person entitled to do so under the Will of the grantee or by such legal
representative at any time prior to the expiration date of such stock option or
within one year after the date of death, whichever is the shorter period.
(F) All stock options shall be confirmed by an agreement, or an amendment
thereto, which shall be executed on behalf of the Company by the Chief Executive
Officer (if other than the President), the President or any Vice President and
by t he grantee.
(G) Fair market value of the Common Stock shall be the mean between the
following prices, as applicable, for the date as of which fair market value is
to be determined as quoted in The Wall Street Journal (or in such other reliable
publication as the Committee, in its discretion, may determine to rely upon):
(a) if the Common Stock is listed on the New York Stock Exchange, the closing
price per share of the Common Stock as quoted in the NYSE-Composite Transactions
listing for such date, (b) if the Common Stock is not listed on such exchange,
the highest and lowest sales prices per share of Common Stock for such date on
(or on any composite index including) the principal United States securities
exchange registered under the Securities Exchange Act of 1934 (the "1934 Act")
on which the Common Stock is listed, or (c) if the Common Stock is not listed on
any such exchange, the highest and lowest sales prices per share of the Common
Stock for such date on the National Association of Securities Dealer Automated
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Quotations System or any successor system then in use ("NASDAQ"). If there are
no such sale price quotations for the date as of which fair market value is to
be determined but there are such sale price quotations within a reasonable
period both before and after such date, then fair market value shall be
determined by taking a weighted average of the means between the highest and
lowest sales prices per share of the Common Stock as so quoted on the nearest
date b efore and the nearest date after the date as of which fair market value
is to be determined. The average should be weighted inversely by the respective
number of trading days between the selling dates and the date as of which fair
market value is to be determined. If there are no such sale price quotations on
or within a reasonable period both before and after the date as of which fair
market value is to be determined, then fair market value of the Common Stock
shall be the mean between the bona fide bid and asked prices per share of Common
Stock as so quoted for such date on NASDAQ, or if none, the weighted average of
the means between such bona fide bid and asked prices on the nearest trading
date before and the nearest trading date after the date as of which fair market
value is to be determined, if both such dates are within a reasonable period.
The average is to be determined in the manner described above in this Section
4(G).
(H) The obligation of the Company to issue or deliver shares of the Common
Stock under the Plan shall be subject to (i) the effectiveness of a registration
statement under the Securities Act of 1933, as amended, with respect to such
share s, if deemed necessary or appropriate by counsel for the Company, (ii) the
condition that the shares shall have been listed (or authorized for listing upon
official notice of issuance upon each stock exchange, if any, on which the
Common Stock shares may then be listed and (iii) all other applicable laws,
regulations, rules and orders which may then be in effect.
Subject to the foregoing provisions of this Section 4 and the other
provisions of the Plan, any stock option granted under the Plan may be subject
to such restrictions and other terms and conditions if any, as shall be
determined, in its discretion, by the Committee and set forth in the agreement
referred to in Section 4(F), or an amendment thereto.
SECTION 5
Adjustment and Substitution of Shares
If a dividend or other distribution shall be declared upon the Common Stock
payable in shares of the Common Stock, the number of shares of the Common Stock
set forth in Section 3, the number of shares of the Common Stock then subject to
any outstanding stock options and the number of shares of the Common Stock which
may be issued or delivered under the Plan but are not then subject to
outstanding stock options shall be adjusted by adding thereto the number of
shares of the Common Stock which would have been distributable thereon if such
shares had been outstanding on the date fixed for determining the stockholders
entitled to receive such stock dividend or distribution.
If the outstanding shares of the Common Stock shall be changed into or
exchangeable for a different number or kind of shares of stock, other securities
or other property of the Company or another corporation, whether through
reorganization, reclassification, recapitalization, stock split-up, combination
of shares, merger or consolidation, then there shall be substituted for each
share of the Common Stock set forth in Section 3, for each share of the Common
Stock subject to any then outstanding s tock option, and for each share of the
Common Stock which may be issued or delivered under the Plan but which is not
then subject to any outstanding stock option, the number and kind of shares of
stock or other securities into which each outstanding share of the Common Stock
shall be so changed or for which each such share shall be exchangeable.
B-5
<PAGE>
In case of any adjustment or substitution as provided for in this Section
5, the aggregate option price for all shares subject to each then outstanding
stock option prior to such adjustment or substitution shall be the aggregate
option price for all shares of stock or other securities (including any
fraction) to which such shares shall have been adjusted or which shall have been
substituted for such shares. Any new option price per share shall be carried to
at least three decimal places with the last decimal place rounded upwards to the
nearest whole number.
No adjustment or substitution provided for in this Section 5 shall require
the Company to issue or deliver or sell a fraction of a share or other security.
Accordingly, all fractional shares or other securities, which result from any
such adjustment or substitution, shall be eliminated and not carried forward to
any subsequent adjustment or substitution.
SECTION 6
Effect of the Plan on the Rights of Company and Stockholders
Nothing in the Plan, in any stock option granted under the Plan, or in any
stock option agreement shall confer any right to any person to continue as a
Director of the Company or interfere in any way with the rights of the
stockholders of the Company or the Board of Directors to elect and remove
Directors.
SECTION 7
Amendment and Termination
The right to amend the Plan at any time and from time to time and the right
to terminate the Plan at any time are hereby specifically reserved to the Board;
provided always that no such termination shall terminate any outstanding stock
options granted under the Plan; and provided further that no amendment of the
Plan shall (a) be made without stockholder approval if stockholder approval of
the amendment is at the time required for stock options under the Plan to
qualify for the exemption from Section 16(b) of the 1934 Act provided by Rule
16b-3 or by the rules of any stock exchange or the NASDAQ National Market System
on which the Common Stock may then be listed, (b) amend more than once every six
months the provisions of the Plan relating to the selection of the Directors to
whom stock options are to be granted, the timing of such grants, the number of
shares subject to any stock option, , the periods during which any stock option
may be exercised and the term of any stock option othe r than to comport with
changes in the Internal Revenue Code of 1986 or the rules and regulations
thereunder, (c) otherwise amend the Plan in any manner that would cause stock
options under the Plan not to qualify for the exemption provided by Rule 16 b-3
or (d) modify or amend the purchase price of any outstanding option No amendment
or termination of the Plan shall, without the written consent of the holder of a
stock option theretofore awarded under the Plan, adversely affect the rights of
such holder with respect thereto.
Notwithstanding anything contained in the preceding paragraph or any other
provision of the Plan or any stock option agreement, the Board shall have the
power to amend the Plan in any manner deemed necessary or advisable for stock
options granted under the Plan to qualify for the exemption provided by Rule
16b-3 (or any successor rule relating to exemption from Section 16(b) of the
1934 Act), and any such amendment shall, to the extent deemed necessary or
advisable by the Board, be applicable to any outstanding stock options
theretofore granted under the Plan notwithstanding any contrary provisions
contained in any stock option agreement. In the event of any such amendment to
the Plan, the holder of any stock option outstanding under the Pl an shall, upon
request of the Committee and as a condition to the exercisability of such
option, execute a conforming amendment in the form prescribed by the Committee
to the stock option
B-6
<PAGE>
agreement referred to in Section 4(F) within such reasonable time as the
Committee shall specify in such request.
SECTION 8
Effective Date and Duration of Plan
The effective date of the Plan shall be the date of its approval by the
stockholders of the Company and it shall end on May 30, 2010. Notwithstanding
any other provisions contained in the Plan, no stock option shall be granted
under the Plan until after such stockholder approval. No stock option may be
granted under the Plan subsequent to May 30, 2010.
IN WITNESS WHEREOF the Board of Directors as of the 15th day of February,
2000 has adopted this Plan .
UNIT CORPORATION
By: /s/ King P. Kirchner
-----------------------
King P. Kirchner
Chairman of the Board
of Directors
[Corporate Seal]
ATTEST:
/s/ Mark E. Schell
- -------------------------
Mark E. Schell, Secretary
B-7
<PAGE>
UNIT CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 3, 2000
THIS PROXY IS SOLICITED ON BEHALF OF UNIT CORPORATION'S BOARD OF DIRECTORS
P The undersigned hereby appoints King P. Kirchner and Mark E. Schell, and
each of them, proxies for the undersigned, with full power of substitution,
R to vote all shares of Unit Corporation Common Stock which the undersigned
may be entitled to vote at the Annual Meeting of Stockholders of Unit
O Corporation, Tulsa, Oklahoma, on Wednesday, May 3, 2000 at 11:00 A.M., or
at any adjournment thereof, upon the matters set forth on the reverse side
X and described in the accompanying Proxy Statement and upon such other
business as may properly come before the meeting or any adjournment
Y thereof.
Please mark this proxy as indicted on the reverse side to vote on any
item. If you wish to vote in accordance with the Board of Directors'
recommendation, please sign the reverse side; no boxes need to be checked.
- -----------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
(Continued, and to be marked, dated & signed on reverse side)
<PAGE>
The Board of Directors recommends a vote FOR Items 1 through 5.
Please mark
your vote as
indicated in [ ]
this example
WITHHELD
FOR FOR ALL FOR AGAINST ABSTAIN
Item 1 - Election of Item 4 - Approval of
Directors [ ] [ ] Amendments [ ] [ ] [ ]
to the Unit
Nominees: Corporation
John G. Nikkel Amended and
John S. Zink Restated Stock
Option Plan
withheld for: (Write that nominee's
name in the space provided below. FOR AGAINST ABSTAIN
Item 5 - Approval of
the Unit [ ] [ ] [ ]
Corporation
2000 Non-
Employee
Directors'
Stock Option
Plan
- -----------------------------------
PLEASE MARK THIS BOX
FOR AGAINST ABSTAIN IF YOU PLAN TO [ ]
Item 2 - Approval ATTEND THE MEETING
of [ ] [ ] [ ]
Auditors
COMMENTS/ADDRESS CHANGE
Item 3 - Approval Please mark this box if
of you have written [ ]
Amendment [ ] [ ] [ ] comments/address change
to our on the reverse side.
Restated
Certificate of Receipt is hereby acknowledged of
Incorporation the Unit Corporation Notice of
Meeting and Proxy Statement.
Signature(s) Date:
---------------------------------------- --------------------
Note: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
