DELTA PETROLEUM CORPORATION
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Aleron H.
Larson, Jr. and Roger A. Parker, or each of them, lawful attorneys
and proxies of the undersigned, with full power of substitution,
for and in the name, place and stead of the undersigned, to attend
the Annual Meeting of Shareholders of Delta Petroleum Corporation,
to be held in the corporate offices of the Company at 555 17th
Street, Suite 3310, Denver, Colorado 80202 on June 30, 1999, at
10:00 a.m. (local time), and any adjournment(s) thereof, with all
powers the undersigned would possess if personally present and to
vote thereat, as provided below, the number of shares the
undersigned would be entitled to vote if personally present.
(Check One)
For Against Abstain
Proposal 1: To approve the four nominees to the
Board of Directors. [ ] [ ] [ ]
Proposal 2: To consider the ratification of an [ ] [ ] [ ]
amendment to the Company's 1993
Incentive Plan, as amended,
revising the compensation
formula for Nonemployee
Directors.
Proposal 3: To ratify the appointment of
KPMG Peat Marwick LLP
as independent auditors. [ ] [ ] [ ]
In accordance with their discretion, said attorneys and
proxies are authorized to vote upon such other business as may
properly come before the meeting or any adjournment(s) thereof.
Every properly signed proxy will be voted in accordance with the
specifications made thereon. IF NOT OTHERWISE SPECIFIED, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3. All prior proxies
are revoked. This Proxy will also be voted in accordance with the
discretion of the proxies or proxy on any other business. Receipt
is hereby acknowledged of the Notice of Annual Meeting and Proxy
Statement.
Signature Signature (if jointly held)
Print Name Print Name
Dated Dated
(Please sign exactly as name appears hereon. When signing as
attorney, executor, administrator, trustee, guardian, etc., give
full title as such. For joint accounts, each joint owner should
sign.)
PLEASE MARK, DATE, SIGN AND RETURN THE PROXY FORM PROMPTLY USING THE
ENCLOSED ENVELOPE.
June 1, 1999
Dear Delta Shareholders:
On behalf of the Board of Directors, it is a pleasure to
invite you to attend the 1998 Annual Meeting of Shareholders at
10:00 a.m. on Wednesday, June 30, 1999 in Denver, Colorado at the
Company's corporate offices.
Business matters expected to be acted upon at the meeting are
described in detail in the accompanying Notice of the Annual
Meeting and Proxy Statement. Members of management will report on
the Company's operations, followed by a period for questions and
discussion.
We hope you can attend the meeting. Regardless of the number
of shares you own, your vote is very important. Please ensure that
your shares will be represented at the meeting by signing and
returning your proxy now, even if you plan to attend the meeting.
Thank you for your continued support of the Company.
Sincerely,
s/Aleron H. Larson, Jr.
Aleron H. Larson, Jr.
Chairman of the Board
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 30, 1999
TO THE SHAREHOLDERS OF DELTA PETROLEUM CORPORATION:
As a shareholder of Delta Petroleum Corporation, a Colorado
corporation (the Company"), you are invited to be present in person
or to be represented by proxy at the Annual Meeting of Shareholders,
to be held at the Company's corporate offices, 555 17th Street, Suite 3310,
Denver, Colorado 80202, on Wednesday, June 30, 1999 at 10:00 a.m. (local time)
for the following purposes:
1) To elect four directors;
2) To consider and vote upon the ratification of an
amendment to the Company's 1993 Incentive Plan, as
amended, revising the compensation formula for
Nonemployee Directors;
3) To consider and vote upon the ratification of the
appointment of KPMG Peat Marwick LLP as independent
auditors for the Company for the fiscal year ending June
30, 1999; and
4) To transact such other business as may be properly
brought before the meeting and any adjournments thereof.
Shareholders of the Company of record at the close of business
on June 1, 1999, are entitled to vote at the meeting and all
adjournments thereof.
A majority of the outstanding shares of Common Stock of the
Company must be represented at the meeting to constitute a quorum.
Therefore, all shareholders are urged either to attend the meeting
or to be represented by proxy. If a quorum is not present at the
meeting, a vote for adjournment will be taken among the
shareholders present or represented by proxy. If a majority of the
shareholders present or represented by proxy vote for adjournment,
it is the Company's intention to adjourn the meeting until a later
date and to vote proxies received at such adjourned meeting(s).
If you do not expect to attend the meeting in person, please
complete, sign, date and return the accompanying proxy card in the
enclosed business reply envelope. If you later find that you can
be present or for any other reason desire to revoke your proxy, you
may do so at any time before the voting.
By order of the Board of Directors
s/Aleron H. Larson, Jr.
Aleron H. Larson, Jr.
Chairman\Secretary
June 1, 1999
PROXY STATEMENT
OF
DELTA PETROLEUM CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 30, 1999
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors (the "Board of Directors")
of Delta Petroleum Corporation ("Delta" or the "Company") of
proxies to be voted at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held on Wednesday, June 30, 1999 at the
Company's corporate offices, 555 17th Street, Suite 3310, Denver,
Colorado 80202, at 10:00 a.m. M.D.T., and at any adjournment
thereof. Each shareholder of record at the close of business on
June 1, 1999 of shares of the Company's Common Stock, par value
$0.01 per share (the "Common Stock"), will be entitled to one vote
for each share so held. As of September 23, 1998 there were
5,513,858 shares of Common Stock issued and outstanding.
Shares represented by properly executed proxy cards received
by the Company at or prior to the Annual Meeting will be voted
according to the instructions indicated on the proxy card. Unless
contrary instructions are given, the persons named on the proxy
card intend to vote the shares so represented FOR (i) the election
of the nominees for directors; (ii) the ratification of an
amendment to the Company's 1993 Incentive Plan, as amended,
revising the compensation formula for Nonemployee Directors; and
(iii) the ratification of the appointment of KPMG Peat Marwick LLP
as the Company's independent auditors for the fiscal year ending
June 30, 1999.
As to any other business which may properly come before the
meeting, the persons named on the proxy card will vote according to
their judgement. The enclosed proxy may be revoked prior to the
meeting by written notice to the Secretary of the Company at 555
17th Street, Suite 3310, Denver, Colorado 80202, or by written or
oral notice to the Secretary at the Annual Meeting prior to being
voted. This Proxy Statement and the proxy card enclosed herewith
are expected to be first sent to shareholders of the Company on or
about June 4, 1999.
If a quorum is not present at the meeting, a vote for
adjournment will be taken among the shareholders present or
represented by proxy. If a majority of the shareholders present or
represented by proxy vote for adjournment, it is the Company's
intention to adjourn the meeting until a later date and to vote
proxies received at such adjourned meeting(s).
ELECTION OF DIRECTORS
(Proposal 1 of the Proxy)
Directors of the Company are elected annually by the
shareholders to serve until the next Annual Meeting of Shareholders
and until their respective successors are duly elected. The Bylaws
of the Company provide that the number of directors comprising the
whole Board shall from time to time be fixed and determined by
resolution adopted by the Board of Directors. The Board of
Directors has established the size of the Board for the ensuing
year at four directors. Accordingly, the Board of Directors is
recommending that the four current directors of the Company be re-
elected. If any nominee becomes unavailable for any reason, a
substitute nominee may be proposed by the Board of Directors and
the shares represented by proxy will be voted for any substitute
nominee, unless the Board reduces the number of directors. The
Board of Directors has no reason to expect that any nominee will
become unavailable. Assuming the presence of a quorum, the
affirmative vote of the holders of a majority of the outstanding
shares of Common Stock represented in person or by proxy at the
Annual Meeting is required for the election of directors.
At the Annual Meeting, the shares of Common Stock represented
by proxies will be voted in favor of the election of the nominees
named below unless otherwise directed.
The Board of Directors recommends a vote for these nominees.
NOMINEES FOR ELECTION AS DIRECTORS TO SERVE
UNTIL NEXT ANNUAL MEETING
The following information with respect to Directors and
Executive Officers is furnished pursuant to Item 401(a) of
Regulation S-B.
Name Age Positions Period of Service
Aleron H. Larson, Jr. 53 Chairman of the Board, May 1987 to Present
Chief Executive Officer,
Secretary, Treasurer,
and a Director
Roger A. Parker 36 President and May 1987 to Present
a Director
Terry D. Enright 49 Director November 1987 to
Present
Jerrie F. Eckelberger 54 Director September 1996 to
Present
The following is biographical information as to the business
experience of each current officer and director of the Company.
Aleron H. Larson, Jr., age 53, has operated as an independent
in the oil and gas industry individually and through public and
private ventures since 1978. From July of 1990 through March 31,
1993, Mr. Larson served as the Chairman, Secretary, CEO and a
Director of Underwriters Financial Group, Inc. ("UFG") (formerly
Chippewa Resources Corporation), a public company then listed on
the American Stock Exchange which presently owns approximately
16.67% of the outstanding equity securities of Delta. Subsequent
to a change of control, Mr. Larson resigned from all positions with
UFG effective March 31, 1993. Mr. Larson serves as Chairman, CEO,
Secretary, Treasurer and Director of Amber Resources Company
("Amber"), a public oil and gas company which is a majority-owned
subsidiary of Delta. He has also served, since 1983, as the
President and Board Chairman of Western Petroleum Corporation, a
public Colorado oil and gas company which is now inactive. Mr.
Larson practiced law in Breckenridge, Colorado from 1971 until
1974. During this time he was a member of a law firm, Larson &
Batchellor, engaged primarily in real estate law, land use
litigation, land planning and municipal law. In 1974, he formed
Larson & Larson, P.C., and was engaged primarily in areas of law
relating to securities, real estate, and oil and gas until 1978.
Mr. Larson received a Bachelor of Arts degree in Business
Administration from the University of Texas at El Paso in 1967 and
a Juris Doctor degree from the University of Colorado in 1970.
Roger A. Parker, age 36, served as the President, a Director
and Chief Operating Officer of Underwriters Financial Group from
July of 1990 through March 31, 1993. Mr. Parker resigned from all
positions with UFG effective March 31, 1993. Mr. Parker also
serves as President, Chief Operating Officer and Director of Amber.
He also serves as a Director and Executive Vice President of P & G
Exploration, Inc., a private oil and gas company (formerly Texco
Exploration, Inc.). Mr. Parker has also been the President, a
Director and sole shareholder of Apex Operating Company, Inc. since
its inception in 1987. He has operated as an independent in the
oil and gas industry individually and through public and private
ventures since 1982. He was at various times, from 1982 to 1989,
a Director, Executive Vice President, President and shareholder of
Ampet, Inc. He received a Bachelor of Science in Mineral Land
Management from the University of Colorado in 1983. He is a member
of the Rocky Mountain Oil and Gas Association and the Independent
Producers Association of the Mountain States (IPAMS).
Terry D. Enright, age 49, has been in the oil and gas business
since 1980. Mr. Enright was a reservoir engineer until 1981 when
he became Operations Engineer and Manager for Tri-Ex Oil & Gas. In
1983, Mr. Enright founded and is President and a Director of Terrol
Energy, a private, independent oil company with wells and
operations primarily in the Central Kansas Uplift and D-J Basin. In
1989, he formed and became President and a Director of a related
company, Enright Gas & Oil, Inc. Since then, he has been involved
in the drilling of prospects for Terrol Energy, Enright Gas & Oil,
Inc., and for others in Colorado, Montana and Kansas. He has also
participated in brokering and buying of oil and gas leases and has
been retained by others for engineering, operations, and general
oil and gas consulting work. Mr. Enright received a B.S. in
Mechanical Engineering with a minor in Business Administration from
Kansas State University in Manhattan, Kansas in 1972, and did
graduate work toward an MBA at Wichita State University in 1973.
He is a member of the Society of Petroleum Engineers and a past
member of the American Petroleum Institute and the American Society
of Mechanical Engineers.
Jerrie F. Eckelberger, age 54, is an investor, real estate
developer and attorney who has practiced law in the State of
Colorado for 26 years. He graduated from Northwestern University
with a Bachelor of Arts degree in 1966 and received his Juris
Doctor degree in 1971 from the University of Colorado School of
Law. From 1972 to 1975, Mr. Eckelberger was a staff attorney with
the eighteenth Judicial District Attorney's Office in Colorado.
From 1982 to 1992 Mr. Eckelberger was the senior partner of
Eckelberger & Feldman, a law firm with offices in Englewood,
Colorado. In 1992, Mr. Eckelberger founded Eckelberger &
Associates of which he is still the principal member. Mr.
Eckelberger previously served as an officer, director and corporate
counsel for Roxborough Development Corporation. Since March 1996,
Mr. Eckelberger has acted as President and Chief Executive Officer
of 1998, Ltd., a Colorado corporation actively engaged in the
development of real estate in Colorado. He is the Managing Member
of The Francis Companies, L.L.C., a Colorado limited liability
company, which actively invests in real estate and has been since
June, 1996. Additionally, since November, 1997, Mr. Eckelberger
has served as the Managing Member of the Woods at Pole Creek, a
Colorado limited liability company, specializing in real estate
development.
There is no family relationship among or between any of the
Directors.
Messrs. Enright and Eckelberger serve as the audit committee
and as the compensation committee. Messrs. Enright and Eckelberger
also constitute the Incentive Plan Committee for the Delta 1993
Incentive Plan for the Company.
All directors will hold office until the next annual meeting
of shareholders. There are no arrangements or understandings among
or between any director of the Company and any other person or
persons pursuant to which such director was or is to be selected as
a director.
All officers of the Company will hold office until the next
annual directors' meeting of the Company. There is no arrangement
or understanding among or between any such officer or any person
pursuant to which such officer is to be selected as an officer of
the Company.
There is no employee who is not a designated officer or
director who is expected to make any significant contribution to
the business of the Company.
BOARD OF DIRECTORS AND COMMITTEES
During fiscal year 1998 the Board of Directors met on six
occasions either in person or by phone or in lieu thereof acted by
consent. The Board of Directors has appointed three committees:
the Audit, Compensation, and Incentive Plan Committees. The non-
employee directors, Messrs. Eckelberger and Enright, currently
serve on all three committees and both are necessary to constitute
a quorum. During fiscal year 1998 the Compensation Committee met
on one occasion, the Audit Committee on one occasion, and the
Incentive Plan Committee on three occasions, either in person or
by phone or, in lieu thereof, acted by consent.
The Compensation Committee makes recommendations to the Board
of Directors in the area of executive compensation. The Audit
Committee is appointed for the purpose of overseeing and monitoring
the Company's independent audit process. It is also charged with
the responsibility for reviewing all related party transactions for
potential conflicts of interest. The Incentive Plan Committee is
charged with the responsibility for selecting individual employees
to be issued options and other grants under Delta's 1993 Incentive
Plan, as amended. Members of the Incentive Plan Committee, as non-
employee directors, are automatically awarded options on an annual
basis under a fixed formula under the 1993 Incentive Plan, as
amended. (See "Compensation of Directors").
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
SHAREHOLDERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners:
The following table presents information concerning
persons known by management to own beneficially 5% or more of the
issued and outstanding voting securities of the Company at
September 23, 1998.
Name and Address Amount and Nature
of Beneficial of Beneficial Percent
Title of Class (1) Owner Ownership of Class (2)
Common Stock Aleron H. Larson, Jr. 1,497,480 shares(3) 25.07%
555 17th St., #3310
Denver, CO 80202
Common Stock Roger A. Parker 1,389,794 shares(4) 23.82%
555 17th St., #3310
Denver, CO 80202
Common Stock Aleron H. Larson, Jr. 1,968,294 shares(5) 31.27%
& Roger A. Parker
(as a group)
555 17th St., #3310
Denver, CO 80202
Common Stock Underwriters Financial 918,980 shares(6) 16.67%
Group, Inc.
80 Maiden Lane
New York, NY 10038
Common Stock Burdette A. Ogle 761,891 shares(7) 13.82%
1224 Coast Village Rd, #24
Santa Barbara, CA 93108
(1) Delta has an authorized capital of 300,000,000 shares of
$.01 par value Common Stock of which 5,513,858 shares
were issued and outstanding as of September 23, 1998.
Delta also has an authorized capital of 3,000,000 shares
of $.10 par value preferred stock of which no shares were
outstanding at September 23, 1998. As of September 23,
1998, Delta had outstanding warrants and options to
purchase 889,500 shares of Common Stock at prices ranging
from $1.25 per share to $8.50 per share. Additionally,
Delta had outstanding options which were granted to
officers and employees to purchase up to 1,162,977 shares
of Common Stock at prices ranging from $1.125 to $9.75
per share.
(2) The percentage set forth after the shares listed for each
beneficial owner is based upon total shares outstanding
of 5,513,858. The percentage set forth after each
beneficial owner is calculated as if any warrants and/or
options owned had been exercised by such beneficial owner
and as if no other warrants and/or options owned by any
other beneficial owner had been exercised. Warrants and
options are aggregated without regard to the class of
warrant or option.
(3) Includes 111,000 shares owned by Mr. Larson's wife and
2,000 shares owned by each of his four children (119,000
in aggregate) and 459,500 options to purchase 459,500
shares of Common Stock at $1.125 per share until
September 1, 2008. Also includes 918,980 shares owned by
Underwriters Financial Group, Inc. for which Mr. Larson
has shared voting power with Mr. Parker but for which he
has no investment power. The duration of the voting
agreement affecting the aforementioned shares voted by
Messrs. Larson and Parker (unless the shares are sold to
non-affiliates) is until December 31, 2002.
(4) Includes 149,837 shares owned by Mr. Parker directly and
320,977 options to purchase 320,977 shares of Common
Stock at $1.125 per share until September 1, 2008. Also
includes 918,980 shares owned by Underwriters Financial
Group, Inc. for which Mr. Parker has shared voting power
with Mr. Larson but for which he has no investment power.
The duration of the voting agreement affecting the
aforementioned shares voted by Messrs. Larson and Parker
(unless the shares are sold to non-affiliates) is until
December 31, 2002.
(5) Includes all warrants, options and shares referenced in
footnotes (3) and (4) above as if all warrants and
options were exercised and as if all resulting shares,
including shares covered by the above referenced voting
agreements, were voted as a group.
(6) These shares are subject to a voting agreement referenced
in footnotes (3) and (4) above.
(7) Includes 635,264 shares owned by Mr. Ogle directly,
26,627 shares owned beneficially by Sunnyside Production
Company, and warrants to purchase 100,000 shares of
Common Stock at $8.00 per share until August 31, 1999,
with a call provision whereby the Company may repurchase
any unexercised warrants for an aggregate sum of $1,000
after the Company stock has traded for $10.00 per share
or greater for 30 consecutive trading days.
(b) Security Ownership of Management:
Amount and Nature
Title of Name of Beneficial of Beneficial Percent
Class (1) Owner Ownership of Class(2)
Common Stock Aleron H. Larson, Jr. 1,497,480 shares(3) 25.07%
Common Stock Roger A. Parker 1,389,794 shares(4) 23.82%
Common Stock Terry D. Enright 37,500 shares(5) 00.68%
Common Stock Jerrie F. Eckelberger 9,375 shares(6) 00.17%
Common Stock Officers and Directors 2,015,169 shares(7) 31.78%
as a Group (4 persons)
(1) See Note (1) to preceding table
(2) See Note (2) to preceding table
(3) See Note (3) to preceding table
(4) See Note (4) to preceding table
(5) Includes 5,000 Class D Warrants to purchase shares of
Common Stock at $1.25 per share until 30 days after the
underlying shares are registered; 10,000 Class I warrants
to purchase stock at $3.50 per share until June 9, 2003;
7,500 options to purchase shares of Common Stock at $3.30
per share until November 11, 2006; 7,500 options to
purchase shares of Common Stock at $3.15 per share until
December 31, 2006, and 7,500 options to purchase shares
at $1.88 per share until December 31, 2007.
(6) Includes 1,875 options to purchase shares of Common Stock
at $2.98 per share until December 31, 2006 and 7,500
options to purchase shares at $1.88 per share until
December 31, 2007.
(7) Includes 918,980 shares owned by UFG as of September 23,
1998 which are voted by Messrs. Larson and Parker under
voting agreements described in footnotes (3) and (4)
above and includes all warrants and options referenced in
footnotes (3), (4), (5) and (6) above.
(c) Change in Control. Not applicable.
<TABLE>
<CAPTION>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
SECURITIES
UNDERLYING
NAME AND OPTIONS/ ALL OTHER
<S> <C> <C> <C> <C> <C>
PRINCIPAL POSITION PERIOD SALARY(1) BONUS SARS(#) COMPENSATION($)
Aleron H. Larson, Jr.
Chairman, CEO, Secretary,
Treasurer and Director Year Ended $198,000 $-0- 275,000(3) -0-
6/30/98
Year Ended
6/30/97 198,000 55,000 100,000 (2)(3) -0-
Year Ended
6/30/96 189,000 55,000 75,000(3)(4) -0-
Roger A. Parker
President, Chief Operating
Officer and Director Year Ended $198,000 $-0- 253,427(3) -0-
6/30/98
Year Ended
6/30/97 198,000 55,000 100,000(2)(3) -0-
Year Ended
6/30/96 189,000 55,000 75,000(3)(4) -0-
</TABLE>
(1) Includes reimbursement of certain expenses.
(2) Options to purchase 100,000 shares of Common Stock at $3.25
per share until August 30, 2006 under the Delta 1993 Incentive
Plan. (See Note 3 below)
(3) Previously granted options: exercise price repriced from $3.25
to $1.66 and expiration date extended until December 8, 2007
during fiscal year 1998.
(4) Options to purchase 75,000 shares of Common Stock at $3.25 per
share until August 30, 2005 under the Delta 1993 Incentive
Plan. The exercise price of these options was repriced from
$5.375 to $3.25 per share during fiscal year 1997 and again in
fiscal year 1998 as indicated in Note 3 above.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
NUMBER of % of TOTAL
SECURITIES OPTIONS/SAR's
UNDERLYING GRANTED TO EXERCISE
OPTIONS/SAR's EMPLOYEES OR BASE EXPIRATION
NAME GRANTED IN FISCAL PRICE DATE
YEAR ($/sh)
Aleron H. Larson, Jr. 275,000(1) 39.40% $1.66 12/08/07
Roger A. Parker 253,427(1) 36.30% $1.66 12/08/07
(1) Previously granted options: exercise price repriced from
$3.25 to $1.66 and expiration date extended until December 8,
2007 during fiscal year 1998.
AGGREGATED OPTIONS/EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
AT AT
SHARES JUNE 30, 1998(#) JUNE 30, 1998($)
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) $ UNEXERCISABLE UNEXERCISABLE
Aleron H.
Larson, Jr. -0- -0- 459,500 (1)/0 $912,375/0
CEO
Roger A. Parker 32,000(2) $84,000(2) 320,977 (1)/0 $609,543/0
President
(1) Includes as of June 30, 1998, 177,500 options for Mr. Larson
and 60,550 options for Mr. Parker to purchase Common Stock
exercisable at $1.25 per share until September 21, 2004; 7,000
options to purchase Common Stock exercisable at $2.50 per
share until August 8, 1995; 275,000 options for Mr. Larson and
253,427 options for Mr. Parker to purchase Common Stock
exercisable at $1.66 per share until December 8, 2007. On
September 1, 1998, the exercise prices of all of these options
were reduced to $1.125 per share and their expiration dates
were extended to September 1, 2008.
(2) Mr. Parker acquired 32,000 shares through the exercise of
options to purchase shares at $1.25 per share. Mr. Parker has
not sold any of these shares. Payment for the shares
purchased upon exercise of the option was made in shares of
the Company's common stock previously owned by Mr. Parker,
valued at the market price on the date of exercise as provided
for under the Company's 1993 Incentive Plan, as amended.
Compensation of Directors.
Effective November 1, 1996, the Board of Directors of the
Company amended its Incentive Plan to include nonemployee
directors. Currently, under a formula contained in the Company's
1993 Incentive Plan ("Plan"), as amended, the Company grants on an
annual basis to each nonemployee director options to purchase, on
a pro rata basis, 7,500 shares of the Company's Common Stock for
services performed during the previous 12 months at 50% of the
average market price for the year or lesser portion of the year
served.
During the fiscal year 1998, the Company granted options under
the above referenced formula as contained in the Plan to purchase
the Company's Common Stock to nonemployee directors as follows:
Number of Exercise Expiration
Options Price Date
Terry Enright 7,500 $ 1.88 per share 12/31/07
Jerrie F. Eckelberger 7,500 1.88 per share 12/31/07
In addition, the outside nonemployee directors are each paid
$500 per month. Jerrie F. Eckelberger and Terry D. Enright were
each paid $6,000 during the year ended June 30, 1998.
Nonemployee Director Amendment
(Proposal 2 of the Proxy)
General
The Board proposes that the Company's 1993 Incentive Plan, as
amended (the "Plan"), be further amended to revise the formula
contained in the Plan for the compensation of nonemployee
directors. Currently, the Company has two nonemployee directors.
The amendment would provide for the annual grant to each
nonemployee director of either 5,000 shares of restricted Common
Stock or an option to purchase 10,000 shares of Common Stock at a
price equal to 50% of the average market price of the Common Stock
during the pervious year. Each director could elect to receive the
grant of either the Common Stock or options under the formula
contained in this proposed amendment to the Plan.
Had the revised formula been applicable for the last fiscal
year and the nonemployee directors elected to receive the shares of
Common Stock, the grants would have been as follows:
1993 Incentive Plan
Name Dollar Number of
and Position Value ($)(1) Shares
Terry Enright $ 10,000 5,000
Nonemployee Director
Jerrie F. Eckelberger $ 10,000 5,000
Nonemployee Director
Non-Executive Director $ 20,000 10,000
Group
(1) Based upon a price of $2.00 per share as of the date of
issuance. As the stock to be issued under the Plan is
restricted stock, this price has been set by the Board of
Directors and is not the market price of the Common Stock
as of the same date.
Had the revised formula been applicable for the last fiscal
year and the nonemployee directors elected to receive the options
to purchase shares of Common Stock, the grants would have been as
follows:
1993 Incentive Plan
Number
Name Exercise of Expiration
and Position Price Options Date
Terry Enright $1.88 10,000 12/31/07
Nonemployee Director
Jerrie F. Eckelberger $1.88 10,000 12/31/07
Nonemployee Director
Non-Executive Director $1.88 20,000 12/31/07
Group
No other provisions of the Plan will be affected by the
proposed amendment.
Interest of Certain Persons in the Nonemployee Director
Amendment.
Each of the two nonemployee directors named in this Proxy
Statement, as potential participants in the Nonemployee Directors
Amendment, could be deemed to have an interest in its approval.
Vote Required for Approval
The Nonemployee Director Amendment will be approved if a
quorum is present at the meeting and the number of votes cast for
the amendment is greater that the number of votes cast against the
amendment. Abstentions and broker non-votes will have no effect on
the vote to approve the amendment.
Employment Contracts and Termination of Employment and Change-
in-Control Agreement.
On April 10, 1998, the Company's Compensation Committee
authorized the Company to enter into employment agreements with the
Company's Chairman and President which employment agreements
replaced and superseded the prior employment agreements with such
persons. Under the employment agreements the Chairman and
President each receive a salary of $198,000 per year. The
employment agreements have five year terms and include provisions
for cars, parking and health insurance. Terms of the employment
agreements also provide that the employees may be terminated for
cause but that in the event of termination without cause or in the
event of a change in control of the Company, as defined in Delta's
1993 Incentive Plan, then the employees will continue to receive
the compensation provided for in the employment agreements for the
remaining terms of the employment agreements. Also in the event of
a change of control and irrespective of any resulting termination,
the Company will immediately cause all of each employee's then
outstanding unexercised options to be exercised by the Company on
behalf of the employee with the Company paying the employee's
federal, state and local taxes applicable to the exercise of the
options and warrants.
Report on Repricing of Options.
The Compensation Committee/Incentive Plan Committee reported
that options to purchase shares which were previously awarded under
the Company's Incentive Plan were repriced as indicated in the
accompanying tables and footnotes thereto in this section. Options
for other employees were also repriced coincident with the
repricing of options for the named executive officers. New prices
for all options were set at or above the market price for the
underlying Common Stock. Options were repriced to provide
additional incentive to officers and employees to continue to
improve Company performance and value and as a reward for past
employee contributions.
Retirement Savings Plan.
During 1997 the Company began sponsoring a qualified tax
deferred savings plan in the form of a Savings Incentive Match Plan
for Employees ("SIMPLE") IRA plan available to companies with fewer
than 100 employees. Under the SIMPLE IRA plan, the Company
employees may make annual salary reduction contributions of up to
three percent (3%) of an employee's base salary up to a maximum of
$6,000 (adjusted for inflation) on a pre-tax basis. The Company
will make matching contributions on behalf of employees who meet
certain eligibility requirements. During the fiscal year ended
June 30, 1998, the Company contributed $22,304 under the Plan.
REPORT OF THE COMPENSATION AND INCENTIVE PLAN COMMITTEES
REGARDING COMPENSATION ISSUES
The objective of the Compensation Committee is to design the
Company's executive compensation program to enable the Company to
attract, retain and motivate executive personnel deemed necessary
to maximize return to shareholders. The fundamental concept of the
program is to align the amount of an executive's total compensation
with his contribution to the success of the Company in creating
shareholder value.
In furtherance of this objective, the Compensation Committee
has determined that the program should have the following
components:
Base Salaries: The Committee believes that the Company should
offer competitive base salaries to enable it to attract, motivate
and retain capable executives. The Committee has in the past
determined levels of the base compensation using published
compensation surveys and other information for energy and similar
sized companies. The Committee may or may not use such surveys or
other information to determine levels of base compensation in the
future.
Long-Term Incentives: The Committee believes that long-term
compensation should comprise a substantial portion of each
executive officer's total compensation. Long-term compensation
provides incentives that encourage the executive officers to own
and hold Company stock and tie their long-term economic interests
directly to those of the Company's shareholders. Long-term
compensation can be provided in the form of restricted stock or
stock options or other grants under the Company's 1993 Incentive
Plan, as amended.
With specific reference to the Chairman/Chief Executive
Officer and the President, the Committee attempts to exercise great
latitude in setting salary and bonus levels and granting stock
options. Philosophically, the Committee attempts to relate
executive compensation to those variables over which the individual
executive generally has control. These officers have the primary
responsibility for improving shareholder value for the whole
Company.
The Committee believes that its objectives of linking
executive compensation to corporate performance results in
alignment of compensation with corporate goals and shareholder
interest. When performance goals are met or exceeded, shareholder
value is increased and executives are rewarded commensurately.
Corporate performance includes circumstances that will result in
long-term increases in shareholder value notwithstanding that such
circumstances may not be reflected in the immediate increase in
Company profits or share price. It is the Committee's objective to
emphasize and promote long-term growth of shareholder value over
short-term, quarter to quarter performance whenever these two
concepts are in conflict. The Committee believes that compensation
levels during 1998 adequately reflect the Company's compensation
goals and policies.
In 1993, the Internal Revenue Code was amended to add section
162(m), which generally disallows a tax deduction for compensation
paid to a Company's senior executive officers in excess of $1
million per person in any year. Excluded from the $1 million
limitation is compensation which meets pre-established performance
criteria or results from the exercise of stock options which meet
certain criteria. While the Company generally intends to qualify
payment of compensation under section 162(m), the Company reserves
the right to pay compensation to its executives from time to time
that may not be tax deductible.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE
ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Company's executive officers, directors and
persons who beneficially own more than ten percent (10%) of a
registered class of the Company's equity securities, to file
initial reports of securities ownership of the Company and reports
of changes in ownership of equity securities of the Company with
the Securities and Exchange Commission ("SEC"). Such persons also
are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, during the fiscal year ended June
30, 1998, the Company's officers and directors complied with all
applicable Section 16(a) filing requirements. These statements are
based solely on a review of the copies of such reports furnished to
the Company by its officers and directors and their written
representations that such reports accurately reflect all reportable
transactions.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Prior to fiscal 1997, Delta had recorded a note payable
( Note ) to Snyder Oil Corporation ( SOCO ) by Underwriters
Financial Group, Inc. ( UFG ), the Company s former parent. The
Company recorded a liability for the Note upon the transfer by UFG
(subject to the Note) of the common stock of Amber Resources
Company, a subsidiary of Delta ("Amber"), to the Company in 1992.
Although the Note was an obligation of UFG, the Company recorded
a liability for the Note since a portion of the common shares of
Amber owned by the Company were pledged to secure the Note and
because of the uncertainties regarding UFG's ability to fulfill its
obligations under the Note.
On May 23, 1997 Delta, UFG and SOCO entered into a settlement
agreement under which SOCO released its lien on the Amber shares.
In connection with the agreement, Delta reissued 92,117 shares of
common stock to UFG. These shares had originally been returned to
Delta and cancelled pursuant to an agreement dated February 22,
1995. This agreement was rescinded in connection with the
settlement agreement.
As a result of the settlement agreement, the liability for the
Note was eliminated with a corresponding increase in Delta's
stockholders' equity. The fair value of the common shares issued
to UFG of $322,410 was recorded as an increase in stockholders'
equity, for the value of shares issued, and as a reduction of the
adjustment recorded to stockholders' equity for the elimination of
the liability for the Note.
(b) Effective October 28, 1992, the Company entered into a
five year consulting agreement with Burdette A. Ogle and Ronald
Heck which provides for an aggregate fee to the two of them of
$10,000 per month. The Company agreed to extend this agreement for
one year during the 1998 fiscal year and, subsequent to June 30,
1998, agreed to extend it for yet another year. Messrs. Ogle and
Heck own beneficially 13.82% and 4.53%, respectively, of the
Company's outstanding Common Stock. To the Company's best
knowledge and belief, the consulting fee paid to Messrs. Ogle and
Heck is comparable to those fees charged by Messrs. Ogle and Heck
to other companies owning interests in properties offshore
California for consulting services rendered to those other
companies with respect to their own offshore California interests.
It is the Company's understanding that, in the aggregate, Mr. Ogle
represents, as a consultant, a significant percentage of all of the
ownership interests in the various properties that are located in
the same general vicinity of the Company's offshore California
properties. Mr. Ogle also consults and advises the Company
relative to properties in areas other than offshore California,
relative to potential property acquisitions and with respect to the
Company's general oil and gas business. It is the Company's
opinion that the fees paid to Messrs. Ogle and Heck for the
services rendered are comparable to fees that would be charged by
similarly qualified non-affiliated persons for similar services.
(c) Effective February 24, 1994, Burdette A. Ogle ("Ogle"),
at the time a 21.44% shareholder of Delta, granted Delta an option
("Option") to acquire working interests in three undeveloped
offshore Santa Barbara, California federal oil and gas units
("Interests"). On August 31, 1994, in an addendum to the February
25, 1994 Agreement granting the Option, Ogle agreed to extend the
period during which the Option could be exercised until January 3,
1995 in consideration of the issuance by Delta to Ogle of warrants
to purchase 100,000 shares of Common Stock at a price of $8.00 per
share until August 31, 1999 with a call provision whereby Delta may
repurchase any unexercised warrants for an aggregate sum of $1,000
after the stock has traded at $10.00 per share or greater for
thirty consecutive trading days. On January 3, 1995, the Company
exercised its option to acquire these properties from Ogle. Under
the Purchase and Sale Agreement and related assignment and
conveyance of the Interests, Ogle immediately assigned and conveyed
the Interests to Delta. The purchase price of $8,000,000 is
represented by a production payment reserved in the documents of
Assignment and Conveyance and is payable out of three percent (3%)
of the oil and gas production from the working interests with a
requirement for minimum annual payment. Delta paid Ogle $350,000
in 1998 and 1997 and is to pay a minimum of $350,000 annually
thereafter until the earlier of: 1) when the production payments
accumulate to the $8,000,000 purchase price; 2) when 80% of the
ultimate reserves of any lease has been produced; or 3) 30 years
from the date of the conveyance. As of June 30, 1998, the Company
has paid a total of $1,200,000 in minimum royalty payments. Delta
already owned other interests in these same federal units.
The terms of the transaction with Mr. Ogle were arrived at
through arms-length negotiations initiated by management of the
Company. The Company is of the opinion that the transaction is on
terms no less favorable to the Company than those which could have
been obtained from non-affiliated parties. No independent
determination of the fairness and reasonableness of the terms of
the transaction was made by any outside person. Management
believes the terms are comparable to terms that would have been
negotiated in a transaction with non-affiliates.
(d) On February 12, 1996, the Board of Directors granted
Aleron H. Larson, Jr. and Roger A. Parker, the Company's Chairman
and President, respectively, the right to participate on a non-
promoted basis in up to a five percent (5%) working interest in any
Delta well drilled, re-entered, completed or recompleted by Delta
on its acreage (provided that any well to be re-entered or
recompleted is not then producing economic quantities of
hydrocarbons). Prior to commencement of the work on any such well,
Messrs. Larson and Parker shall pay to the Company the unpromoted
cost thereof as estimated by the Company's consulting engineers.
(e) On April 10, 1998, the Company's Compensation Committee
authorized the Company to enter into employment agreements with the
Company's Chairman and President, which employment agreements
replaced and superseded the prior employment agreements with such
persons. The employment agreements have five year terms and
include provisions for cars, parking and health insurance. Terms
of the employment agreements also provide that the employees may be
terminated for cause but that in the event of termination without
cause or in the event of a change in control of the Company, as
defined in Delta's 1993 Incentive Plan, as amended, then the
employees will continue to receive the compensation provided for in
the employment agreements for the remaining terms of the employment
agreements. Also in the event of a change of control and
irrespective of any resulting termination, the Company will
immediately cause all of each employee's then outstanding
unexercised options to be exercised by the Company on behalf of the
employee with the Company paying the employee's federal, state and
local taxes applicable to the exercise of the options and warrants.
(f) During the fiscal years ended June 30, 1997 and
1998, the Company made loans to Roger A. Parker, its President,
each loan bearing interest at 6%. As of June 30, 1998, the
Company was owed $22,306 by Mr. Parker. During a portion of the
years ended June 30, 1998 and 1997, Mr. Parker was indebted to the
Company in a maximum amount of $63,350 and $167,500, respectively,
plus applicable interest as a result of borrowing from the Company.
(g) On January 7, 1997, Mr. Parker returned 21,573 options to
purchase shares of Common Stock at $3.75 to the Company. At that
time the market price of the Company's Common Stock was $6.50 per
share. On the same date, the Company wrote off a receivable in
the amount of $59,326 from Apex Operating Company, Inc., a company
affiliated with Mr. Parker by reason of his position as its
President and his ownership of 100% of its Common Stock. Mr.
Parker's return of the 21,573 options was voluntary and was done as
an attempt to restore an approximately equivalent value to the
Company.
(h) During the fiscal year ended June 30, 1997, Mr. Parker
exercised options to purchase 14,450 shares of the Company's common
stock. The exercise price for the options was $1.25 and the then
current market price of the Company's Common Stock was $4.4375.
Payment for the shares of common stock purchased upon exercise of
the option was made in shares of the Company's common stock
previously owned by Mr. Parker, valued at the market price of the
stock on the date of exercise. The Company recorded the 4,070
shares of the Company's common stock reacquired at cost, which
shares were subsequently retired.
(i) During the fiscal year ended June 30, 1998, Mr.
Parker exercised options to purchase 32,000 shares of the Company's
Common Stock. The exercise price for the options was $1.25 and the
then current market of the Company's Common Stock was $3.875.
Payment for these shares of Common Stock purchased upon the
exercise of an option was made in shares of the Company's Common
Stock previously owned by Mr. Parker pursuant to the Company's 1993
Incentive Plan, as amended. As a result of this transaction, the
Company recorded the 10,323 shares of the Company's common stock
reacquired at cost, which shares were subsequently retired.
APPOINTMENT OF INDEPENDENT AUDITORS
(Proposal 3 of the Proxy)
Subject to ratification by the shareholders of the Company,
the Board has designated the firm of KPMG Peat Marwick LLP, Suite
2300, 707 17th Street, Denver, Colorado 80202, as independent
auditors to examine and audit the Company's financial statements
for the fiscal year 1999. This firm has audited the Company's
financial statements for four years and is considered to be well
qualified. The designation of such firm as auditors is being
submitted for ratification or rejection at the Annual Meeting.
Action by shareholders is not required under the law for the
appointment of independent auditors, but the ratification of their
appointment is submitted by the Board in order to give the
shareholders of the Company the final choice in the designation of
auditors. The Board will be governed by the decision of a majority
of the votes entitled to be cast. A majority of the votes
represented at the Annual Meeting by shares of Common Stock
entitled to vote is required to ratify the appointment of KPMG Peat
Marwick LLP.
A representative of KPMG Peat Marwick LLP will be present at
the Annual Meeting with the opportunity to make a statement if he
desires to do so and will also be available to respond to
appropriate questions.
The Board of Directors recommends a vote FOR this proposal.
SHAREHOLDER PROPOSALS
Any shareholder proposals to be included in the Board of
Directors' solicitation of proxies for the 1999 Annual Meeting of
Shareholders must be received by Aleron H. Larson, Jr., Secretary,
at 555 17th Street, Suite 3310, Denver, Colorado 80202, no later
than September 1, 1999.
GENERAL AND OTHER MATTERS
The Board of Directors knows of no matter, other than those
referred to in this Proxy Statement, which will be represented at
the Annual Meeting. However, if any other matters are properly
brought before the meeting or any of its adjournments, the person
or persons voting the proxies will vote them in accordance with
their judgement on such matters.
The cost of preparing, assembling, and mailing this Proxy
Statement, the enclosed proxy card and the Notice of the Annual
Meeting will be paid by the Company. Additional solicitation by
mail, telephone, telegraph or personal solicitation may be done by
directors, officers, and regular employees of the Company. Such
persons will receive no additional compensation for such services.
Brokerage houses, banks and other nominees, fiduciaries and
custodians nominally holding shares of Common Stock of record will
be requested to forward proxy soliciting material to the beneficial
owners of such shares, and will be reimbursed by the Company for
their reasonable expenses.
Available Information. Upon request of any shareholder, the
Company's Annual Report for the year ended June 30, 1998 filed with
the SEC on Form 10-KSB, including financial statements, will be
sent to the shareholder without charge by first class mail within
one business day of receipt of such request. All requests should
be addressed to the Secretary of the Company at 555 17th Street,
Suite 3310, Denver, Colorado 80202 or by telephone (303) 293-9133.
You are urged to complete, sign, date and return your proxy
promptly. You may revoke your proxy at any time before it is
voted. If you attend the Annual Meeting, as we hope you will, you
may vote your shares in person.
By order of the Board ofDirectors
s/Aleron H. Larson, Jr
Aleron H. Larson, Jr.
Chairman/CEO
June 1, 1999
Text of Proposed Amendment to the
Delta Petroleum Corporation
1993 Incentive Plan, as amended
25. Participation in the Plan by Nonemployee Directors
(a) The Plan will be administered as to Nonemployee Directors
by the Board of Directors.
(b) All Nonemployee Directors shall participate in the Plan,
subject to the conditions and limitations of the Plan, so long
as they remain eligible to participate in the Plan.
(c) No Nonemployee Director shall be eligible for an
Incentive Award if, at the time said Incentive Award would
otherwise be granted, such Nonemployee Director (i) is
directly or indirectly the beneficial owner of five percent or
more of any class of equity security of the Company which is
registered pursuant to Section 12 of the Exchange Act or of
any security convertible into or exercisable for such class of
equity security (excluding shares covered by the Plan); or
(ii) is an officer, director, 10% or greater shareholder,
employee or agent of a person or entity which is directly or
indirectly the beneficial owner of more than five percent of
any class of equity security of the Company which is
registered pursuant to Section 12 of the Exchange Act or of
any security convertible into or exercisable for such class of
equity security (excluding shares covered by the Plan).
Incentive Award grants, if any, to any such non-eligible
Nonemployee Directors shall be determined by the Board.
(d) Unless the Board of Directors shall otherwise direct,
Options or Restricted Common Stock shall automatically be
granted to Nonemployee Directors according to the following
formula:
(i) Stock and Options shall be determined for all
eligible Nonemployee Directors of the Company in each
calendar year during the term of the Plan as of December
31. No Stock or Option may be changed after it has been
so determined, except pursuant to the Plan. No
Nonemployee Director shall be entitled to receive more
than one grant of Stock or Options per year pursuant to
the Plan even if such Nonemployee Director serves as a
director for more than one Participating Company. The
Stock or Options shall be granted to each Participant by
the Company or, if the Participant is not a Nonemployee
Director of the Company, by the Participating Company for
which a Nonemployee Director serves as a director.
(ii) Stock or Options shall be granted pursuant to
the Plan to eligible Participants as follows:
Annually each Participant shall be granted either:
1) an option for 10,000 shares of common stock, or, if a
director for less than the prior 12 months, a pro rata
portion of options for 10,000 shares of common stock
based upon the number of months such Participant was a
Nonemployee Director of the Company; or 2) at the
election of the participating Nonemployee Director, shall
be granted, in lieu of an option, 5,000 shares of
Restricted Common Stock.
The exercise price of the Stock Options to be granted to
Nonemployee Directors pursuant to the Plan shall be 50% of the
Market Price as determined at the date of grant. The "Market
Price" of a share of common stock under the Plan shall be the
average of the "Fair Market Value" of the common stock for all
trading days during the twelve months preceding the date on
which the stock option is determined. The "Fair Market Value"
of a share of common stock with respect to any day shall be
(i) the closing sales price of a share of common stock as
reported on the principal securities exchange on which shares
of common stock are then listed or admitted to trading; or
(ii) if not so reported, the last sale price as reported by
the NASDAQ Stock Market; or (iii) if not so reported, the
average of the closing bid and ask prices as reported on the
NASDAQ Stock Market; or (iv) if not so reported, as furnished
by any member of the National Association of Securities
Dealers, Inc. selected by the Committee. Each Stock Option
shall be exercisable for a ten year period commencing on the
date of grant and shall expire ten years after the date of
grant. Certificates evidencing the Stock Options shall be
registered in the respective names of the Participants and
shall be issued to each Participant as soon as practicable
following the date of grant.
