<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
HS RESOURCES, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
HS RESOURCES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 22, 1997
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of HS
Resources, Inc. ("HSR" or the "Company"), a Delaware corporation, will be held
on May 22, 1997, at 9:00 a.m., local time, at the Sheraton Palace Hotel, 2 New
Montgomery Street, San Francisco, California 94105, for the following purposes:
1. To elect two directors to serve until their successors are elected
and qualified.
2. To approve the HS Resources, Inc. 1997 Performance and Equity
Incentive Plan.
3. To transact such other items of business as may properly come
before the meeting.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on April 14, 1997, are
entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof. The Company's stock transfer books will not be closed. A complete list
of the stockholders entitled to vote at the Annual Meeting will be open to the
examination of any stockholder, for any purpose germane to the Annual Meeting,
during ordinary business hours for a period of ten days prior to the date of the
Annual Meeting at the offices of the Company at One Maritime Plaza, 15th floor,
San Francisco, California 94111, and at the time and place of the Annual
Meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to ensure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed proxy card as promptly as possible in the
enclosed postage-prepaid envelope. Any stockholder attending the Meeting may
vote in person even if he or she has returned a proxy.
Sincerely,
JAMES M. PICCONE
Secretary
San Francisco, California
April 24, 1997
IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE
REQUESTED TO COMPLETE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE
PROVIDED.
<PAGE> 3
HS RESOURCES, INC.
PROXY STATEMENT FOR THE 1997 ANNUAL MEETING
OF STOCKHOLDERS
---------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of HS Resources, Inc. ("HSR" or
the "Company") for use at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held on Friday, May 22, 1997, at 9:00 a.m., local time, or at
any adjournment thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting will
be held at the Sheraton Palace Hotel, 2 New Montgomery Street, San Francisco,
California 94105. The Company's principal executive offices are located at One
Maritime Plaza, 15th Floor, San Francisco, California 94111. Its telephone
number is (415) 433-5795.
These proxy solicitation materials were first mailed on or about April 24,
1997, to all stockholders entitled to vote at the Annual Meeting.
RECORD DATE AND PRINCIPAL STOCKHOLDERS
Stockholders of record at the close of business on April 14, 1997, are
entitled to notice of and to vote at the Annual Meeting. At the record date,
17,114,349 shares of the Company's Common Stock were issued and outstanding. For
information with respect to the holders of 5% or more of the Company's common
stock (the "Common Stock"), see "Securities Ownership of Principal Stockholders
and Management."
REVOCABILITY OF PROXIES
At any time before its use, any proxy given pursuant to this solicitation
may be revoked by the person giving it by (i) delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a later
date or (ii) attending the Annual Meeting and voting in person.
VOTING AND SOLICITATION
The presence, in person or by proxy, of the holders of at least a majority
of the outstanding shares of Common Stock is necessary to constitute a quorum at
the Annual Meeting. Each outstanding share of common stock entitles its holder
to one vote with respect to the matters set forth herein. The affirmative vote
of the holders of a plurality of the shares of Common Stock represented at the
Annual Meeting is required for the election of directors. The affirmative vote
of the majority of the shares of Common Stock represented at the Annual Meeting
and entitled to vote is required for other shareholder action. Abstentions are
counted in tabulations of votes cast at the meeting and have the same effect as
no-votes. Broker non-votes are treated as present for purposes of establishing a
quorum, but are not counted either way for purposes of determining the vote.
The solicitation of proxies is made by the Company and all related costs
will be borne by the Company. In addition, the Company may reimburse brokerage
firms and other persons representing beneficial owners of shares for their
expenses in forwarding solicitation material to such beneficial owners. Proxies
also may be solicited by certain of the Company's directors, officers and
regular employees, without additional compensation, personally or by telephone
or telegram.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
The Company's Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation") provides for a Board of Directors (the "Board"),
the members of which serve staggered terms. Pursuant thereto, the terms of Board
members constituting approximately one-third of the total Board generally expire
<PAGE> 4
every year, and each director in a "class" of directors serves for a term of
three years, or until his or her successor has been duly elected and qualified.
Two directors are to be elected at the Annual Meeting to serve until the 2000
Annual Meeting of Stockholders. Unless otherwise instructed, the proxyholders
will vote the proxies received by them for the Company's nominees, Nicholas J.
Sutton, who is currently a Director and the Chief Executive Officer and was a
founder of the Company, and Kenneth A. Hersh, who has been a director since
1990, and who is not an employee of the Company. In the event that either Mr.
Sutton or Mr. Hersh should be unable or decline to serve as a director at the
time of the Annual Meeting, the proxies will be voted for any nominee who shall
be designated by the Chairman of the Board to fill the vacancy. The Company does
not expect that either Mr. Sutton or Mr. Hersh will be unable or will decline to
serve as a director. The Board of Directors recommends the election of Messrs.
Sutton and Hersh.
Information about Mr. Sutton and Mr. Hersh is set forth below:
<TABLE>
<CAPTION>
CAPACITIES IN WHICH SERVED WITH THE COMPANY DIRECTOR
NAME AGE AND/OR OTHER PRINCIPAL OCCUPATION SINCE
---- --- ------------------------------------------- --------
<S> <C> <C> <C>
Nicholas J. Sutton................. 52 Chairman of the Board and Chief Executive 1987
Officer
Kenneth A. Hersh................... 34 Director; Managing Partner of Natural Gas 1990
Partners
</TABLE>
Nicholas J. Sutton is a founder of the Company and has been employed
exclusively in activities relating to the Company and its oil and gas business
since 1978. Mr. Sutton is an attorney and practiced with the San Francisco law
firm of Pillsbury, Madison & Sutro before founding the Company. Prior to that
time, he served as a law clerk to the Chief Justice of the California Supreme
Court. He earned his law degree from the University of California-Hastings
College of Law, and his engineering undergraduate degree from Iowa State
University. Mr. Sutton is a graduate of the Harvard Business School's Executive
Education OPM Program, is a member of the Society of Petroleum Engineers and is
a Director of the Colorado Oil and Gas Association. He has served as Chairman of
the Board and as Chief Executive Officer of the Company since its inception.
Kenneth A. Hersh has been a Director of the Company since 1990. Mr. Hersh
has been a Managing Partner of Natural Gas Partners ("NGP") since 1989. NGP is a
family of investment funds organized to make equity investments in oil and gas
companies. Previously, he was employed by the investment banking division of
Morgan Stanley & Co. Incorporated where he was a member of the firm's energy
group specializing in oil and gas financing and acquisition transactions. Mr.
Hersh also serves as a director of Titan Exploration, Inc. and Mesa, Inc., which
has recently announced a merger with Parker & Parsley Petroleum Co. Mr. Hersh
earned his MBA from the Stanford University Graduate School of Business and his
undergraduate degree from Princeton University.
There are currently no vacancies on the Company's Board.
2
<PAGE> 5
Specific information about the other Board members and the Company's
officers is set forth below:
<TABLE>
<CAPTION>
CAPACITIES IN WHICH SERVED WITH CURRENT
THE COMPANY AND/OR OTHER DIRECTOR TERM
NAME AGE PRINCIPAL OCCUPATION SINCE EXPIRES
---- --- ------------------------------- -------- -------
<S> <C> <C> <C> <C>
P. Michael Highum....................... 46 Director, President 1987 1999
James E. Duffy.......................... 46 Director, Vice President -- 1990 1998
Finance and Chief Financial
Officer
Michael J. Savage....................... 62 Director, Managing Director of 1996 1999
the San Francisco Opera
Philip B. Smith......................... 45 Director 1996 1998
Dale E. Cantwell........................ 41 Vice President -- D-J Basin N/A N/A
District Manager
Tony W. Church.......................... 40 Vice President -- Exploration N/A N/A
Theodore Gazulis........................ 42 Vice President -- Planning and N/A N/A
Analysis and Assistant
Secretary
Annette Montoya......................... 40 Vice President -- Accounting N/A N/A
Rick L. Parks........................... 44 Vice President -- Mid-Continent N/A N/A
District Manager
Janet W. Pasque......................... 39 Vice President -- Land N/A N/A
James M. Piccone........................ 46 Vice President -- General N/A N/A
Counsel and Secretary
George H. Solich........................ 35 Vice President -- Acquisitions N/A N/A
and Divestitures
Wayne D. Williams....................... 47 Vice President -- Geophysical N/A N/A
Manager
Philip S. Winner........................ 41 Vice President -- Northern N/A N/A
Rockies District Manager
</TABLE>
P. Michael Highum is a founder of the Company and for the past eighteen
years has been employed exclusively in activities relating to the Company and
its oil and gas business. Mr. Highum is an attorney and, prior to founding the
Company, practiced with the San Francisco law firm of Pillsbury, Madison &
Sutro. He earned his undergraduate degree from the University of California at
Berkeley and his law degree from the University of California-Hastings College
of Law. He has served as a Director and as President of the Company since its
inception in 1987.
James E. Duffy has been a Director since 1990 and has been Vice
President -- Finance and Chief Financial Officer since April 1991. From 1985 to
1990, Mr. Duffy was a general partner of J.L. Feshbach & Co., an investment
banking firm specializing in the oil and gas business and was responsible for
acquisitions and special investments for an affiliate of that firm. Prior to
that time, he was the Chief Financial Officer of Hilliard Oil and Gas and was a
director and co-founder of several affiliated companies. Previously, he was a
manager with Arthur Young & Co. Mr. Duffy earned his undergraduate degree from
San Jose State University.
Michael J. Savage has been a Director of the Company since January 1996.
Mr. Savage has been the Managing Director of the San Francisco Opera since 1994.
He was the founder of Savage Petroleum Company and served as its President from
1988 to 1995. From 1983 to 1988, Mr. Savage served as President of Merlin
Petroleum, of which he was also the founder. From 1978 to 1982, he served as
President of Sohio Petroleum Company. Prior to 1978, he served as President of
BP Alaska, and in 1982 he was Director for Africa of BP in London, and also
served as personnel director for the BP Group. He received his
3
<PAGE> 6
undergraduate degree in Business Management from the Manchester Business School
in Manchester, England, and his masters degree in Law and Economics from
Cambridge University. Mr. Savage serves on the Boards of Directors of the San
Francisco Opera and the San Francisco Conservatory of Music.
Philip B. Smith has been a Director of the Company since June 1996 and
serves on the board of Mesa, Inc., which has recently announced a merger with
Parker & Parsley Petroleum Co. Mr. Smith served as President, Chief Executive
Officer and director of Tide West Oil Company from November 1992 until the time
of the merger of Tide West into a subsidiary of the Company ("Merger"). He was
President and director of Draco Petroleum, Inc., a wholly-owned subsidiary of
Tide West from April 1992 until the time of the Merger, and of Tide West Trading
& Transport Company, formerly Draco Production Company, a wholly-owned
subsidiary of Tide West, from July 1989 until the time of the Merger. From May
1986 until April 1991, Mr. Smith was a Senior Vice President of Mega Natural Gas
Company, a natural gas gathering company and the former parent company of Tide
West Trading & Transport Company and its predecessor companies. Prior to that
time, he held various technical and management positions at other independent
and major oil and natural gas companies.
Dale E. Cantwell has been an employee and member of the Company's
management team since joining the company in 1993, where his primary duties were
managing the Company's oil and gas marketing department. Mr. Cantwell was
recently promoted to serve as Vice President in charge of the D-J Basin
District. From 1979 until joining the Company, Mr. Cantwell worked for Amoco
Production Company in various engineering capacities. Mr. Cantwell received his
bachelor's degree in Chemical Engineering from the University of Colorado. Mr.
Cantwell is a member of the Rocky Mountain Natural Gas Association, The Society
of Petroleum Engineers, and the Colorado Oil and Gas Association.
Tony W. Church has been an employee of the Company since 1994 and prior to
appointment as Vice President -- Exploration in April 1997 he served as Southern
Region Exploration Manager. Mr. Church has primary responsibility for oversight
and supervision of the corporate exploration program. Mr. Church has 19 years of
industry experience. Prior to joining HS Resources, he was Vice
President -- Exploration for Gerrity Oil and Gas. From 1984 to 1992, Mr. Church
was an explorationist and supervisor for Chevron USA. From 1978 to 1984 he was
an explorationist for Gulf Oil Corporation and Kerr McGee Corporation. Mr.
Church earned his undergraduate degree in Geology from Yale University and his
masters degree in Mineral Economics from Colorado School of Mines. He is a
member of the American Association of Petroleum Geologists, the Rocky Mountain
Association of Geologists, and the Houston Geological Society. Mr. Church is a
DPA Certified Geologist and a Registered Geologist in the State of Wyoming.
Theodore Gazulis has served as an officer of the Company since its
incorporation, and has served in his current capacity since 1991. Mr. Gazulis
has primary responsibility for oversight and management of two broad areas. The
first covers economic, financial and project analyses and planning functions,
the second covers the Company's information systems area. Prior to joining the
Company in 1984, Mr. Gazulis was an exploration economist for Sohio Petroleum
Company where he evaluated exploration plays, prospects and acquisitions and
implemented computer financial and economic models to facilitate such economic
analysis. From 1978 to 1981, he served in a similar capacity for Amoco
Production Company. Mr. Gazulis received an MBA from the University of
California at Los Angeles and his undergraduate degree from Stanford University.
Mr. Gazulis is a member of the American Association of Petroleum Geologists.
Annette Montoya heads the Company's accounting staff and has served in her
current capacity since 1991. Prior to joining the Company in 1987, Ms. Montoya
was the accounting manager for MidCon Central Exploration Company. Prior to her
employment with MidCon Central, Ms. Montoya was an auditor with Price Waterhouse
& Co. Ms. Montoya earned her undergraduate degree from Regis College and is a
member of the Council of Petroleum Accountants Society.
Rick L. Parks as been an employee of the company since 1986, serving as the
Mid-Continent District Manager since the merger of Tide West in June 1996 and
was appointed Vice President -- Mid-Continent District Manager in April 1997. He
has also served as Operations Manager, District Manager and Field Superintendent
during his tenure with the Company. Prior to 1986, Mr. Parks was President and
owner of Rainbow Exploration, Inc. He also worked for Energy Minerals
Corporation and Amoco Production
4
<PAGE> 7
Company. Mr. Parks is a past President of the North Central Chapter of the
Colorado Oil and Gas Association and has served as a Director of that
organization.
Janet W. Pasque has been an employee of the Company since 1993 and has
served as Corporate Land Manager since 1994. She was appointed Vice
President -- Land in April 1997. Prior to joining HSR, Ms. Pasque was a landman
for Methane Resources Group and served as a consultant in the acquisition and
divestiture of oil and gas properties. From 1982 to 1989, she was a landman for
Union Pacific Resources Company responsible for land operations in the Rocky
Mountains, Alaska and California. From 1980 to 1982, Ms. Pasque was a land
representative for Texaco Inc. She earned her undergraduate degree from Colorado
State University, and is a member of the American Association of Professional
Landmen, Denver Association of Petroleum Landmen and the Louisiana Association
of Petroleum Landmen.
James M. Piccone has served as the Company's Vice President -- General
Counsel and Secretary since he joined the Company in May of 1995. From 1984 to
May of 1995, Mr. Piccone was a partner at the law firm of Davis, Graham & Stubbs
where he served in various capacities including the head of the firm's
Transactions Department, Practice Group Leader of the firm's Energy Group and
member of the firm's management committee. From 1980 through 1984 he was an
associate at the firm, and from 1978 to 1980 he was an associate at the law firm
of Kutak, Rock & Huie. Mr. Piccone earned his law degree from the University of
Colorado School of Law and his B.A. in Economics from the University of
Colorado.
George H. Solich has served the Company as Vice President -- Acquisitions
and Divestitures since he joined the Company in December 1996. From 1983 to
November 1996, Mr. Solich served in various capacities for Apache Corporation,
most recently as Director, Business Development where he was responsible for the
company's acquisition and divestiture of producing oil and gas properties. Prior
to his employment with Apache Corporation, Mr. Solich worked for Belco Petroleum
Corporation. Mr. Solich earned his undergraduate degree from the University of
Colorado at Boulder and his graduate degree in Marketing and Finance from the
University of Colorado at Denver.
Wayne D. Williams has been an employee of the company since May of 1995. He
has served in the capacity of Geophysical Manager since May of 1996 and was
appointed Vice President -- Geophysical Manager in April 1997. His primary
responsibility is the supervision and oversight of the geophysical effort for
the Company. Prior to joining the Company, Mr. Williams was Geophysical Advisor
for Union Pacific Resources, and from 1977 to 1992, held several management
positions, including Seismic Data Processing Manager and Rocky Mountain
Geophysical Manager. From 1972 to 1977, he was contracted to Mobil Oil Corp., as
Data Processing Manager for the Prudhoe Bay, Beaufort Sea, and offshore
California areas. Mr. Williams earned his undergraduate degree in
Geology/Geophysics from Virginia Polytechnic Institute and State University. He
is a member of the Society of Exploration Geophysicists and the American
Association of Petroleum Geologists.
Philip S. Winner is Director of Investor Relations for the Company, and
serves as the primary investor contact. In addition, Mr. Winner serves as Vice
President -- Northern Rockies District Manager and is responsible for
development and implementation of E&P growth strategies in that region. Mr.
Winner has nearly 15 years of energy industry experience in both geotechnical
and financial positions. Prior to HS Resources, Mr. Winner worked for 11 years
with Mobil Oil Corporation where, as Senior Staff Geologist, he was involved
with both geological analysis and strategic planning of domestic exploration and
development projects. He also worked as an energy research analyst for Hanifen,
Imhoff, a Denver-based investment bank. Mr. Winner has earned two advanced
degrees, an MBA (University of Denver) and a MS in Geology (University of
Vermont), as well as a BS in Geology (Southern Oregon State College). He is a
member of Beta Gamma Sigma's business honors society, the American Association
of Petroleum Geologists, the Rocky Mountain Association of Geologists, and the
National Investor Relations Institute.
There is no family relationship between any director or executive officer
of the Company.
(References to certain officers' tenure and periods of service include service
with the Company's predecessors.)
5
<PAGE> 8
REPORTS REQUIRED BY SECTION 16(a)
Section 16 of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent
(10%) of the Company's Common Stock, to file with the Securities and Exchange
Commission and any exchange on which the Company's stock is traded, reports of
ownership and changes in ownership of the Company's Common Stock.
Based solely on its review of Forms 3, 4 and 5 received by the Company and
written representations from certain reporting persons that no filings were
required for such persons, the Company believes that, during the fiscal year
ended December 31, 1996, all Section 16(a) filing requirements applicable to its
officers, directors and 10% shareholders were complied with, except for the
following: A timely Form 4 was not filed with respect to Ms. Montoya upon the
conversion of shares of Tide West Oil Company stock into shares of HS Resources
Common Stock pursuant to the merger of Tide West Oil Company and HS Resources,
Inc. in June 1996. This omission was corrected by the filing of a Form 5 for the
year ending December 31, 1996.
BOARD MEETINGS AND COMMITTEES
The Board held five meetings during 1996, and each director attended all
meetings of the Board and all meetings of committees, if any, upon which such
director served. The Board also took action by unanimous written consent on
twenty-two occasions.
The Board has two standing committees, an Audit Committee and a
Compensation Committee. It does not have a nominating committee.
The Audit Committee recommends to the Board the engagement of an
independent public auditing firm, reviews the fees and the services provided,
including the scope of the audit coverage, and reviews the auditor's
independence from management. The Audit Committee confers with the independent
auditors and reviews the results of their audit. The Audit Committee reviews the
financial statements of the Company and related information, and monitors the
Company's internal accounting, auditing and financial reporting practices,
procedures and controls as it deems appropriate. The Audit Committee provides
assistance to the Board with respect to the corporate accounting and reporting
practices, and reports to the Board on Audit Committee activities. During 1996
the Audit Committee consisted of Mr. Hersh and Mr. Savage and held no meetings.
The Audit Committee met in February 1997 to review the audit of the Company for
1996.
The Compensation Committee has oversight responsibility for the Company's
significant compensation policies and practices, including the scope and design
of the Company's compensation and benefit plans. The Compensation Committee
determines the nature and amount of compensation of executive officers of the
company who also are directors, and approves compensation of the other executive
officers based on recommendations of, and discussions with, management. The
Compensation Committee also is responsible for administering certain employee
benefit plans, including the amount and terms of stock options granted to
employees under the 1987 Stock Incentive Plan, as amended and restated December
16, 1996 (the "1987 Plan"). Members of the Compensation Committee are not
eligible to participate in any of the plans or programs they administer. During
1996 the Compensation Committee consisted of Mr. Hersh and Mr. Savage, held two
meetings, and took action by unanimous written consent on two occasions.
COMPENSATION OF BOARD MEMBERS
During 1996, the Company's non-employee directors were paid an annual
retainer of $10,000 in quarterly installments. They also were reimbursed for
out-of-pocket expenses incurred in connection with service on the Board.
In 1992, the Company implemented the 1992 Directors' Stock Option Plan (the
"1992 Directors' Plan"). The 1992 Directors' Plan provides that each
non-employee director shall receive an initial option to purchase 7,500 shares
of the Company's Common Stock upon the commencement of his or her tenure on the
Board, of which options to purchase 1,500 shares are immediately exercisable and
the remainder of which vest ratably on each of the four succeeding anniversaries
of the date of grant. In addition, the 1992 Directors' Plan provides that each
director shall receive an annual option grant to purchase 750 shares of the
Company's Common
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<PAGE> 9
Stock on the date of the Board meeting closest in time to the anniversary date
of the director's commencement of services to the Board. The annual option
grants are exercisable in full immediately as of the date of their grant.
Options granted under the 1992 Directors' Plan generally have a term of 10
years; however, the term of any option granted under the 1992 Directors' Plan
terminates (i) 30 days following the termination of the director's status as a
director of the Company, or (ii) one year after the date of death or disability
of the director while he is serving as a director. Options granted under the
1992 Directors' Plan may not be assigned.
In October 1993, the Company's Board approved the 1993 Directors' Stock
Option Plan (the "1993 Directors' Plan"). The terms of the 1993 Directors' Plan
are substantially similar to the terms of the 1992 Directors' Plan except that
(i) the 1993 Directors' Plan permits the optionee-director to assign his or her
rights to receive options under the Plan and (ii) option grants following the
initial grant are in the amount of 1,500 shares and are granted biannually. This
Plan was adopted by the Board in consideration of those directors who are
subject to employment conditions and other policies which prohibit their
personal retention of options granted in connection with the services rendered
to the Board. A director may participate in the 1993 Directors' Plan only upon
waiver of his or her right to participate in the 1992 Directors' Plan. To date,
Mr. Hersh is the only participant under the 1993 Directors' Plan.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth for each of the three years ended December
31, 1996, the cash, bonus and other annual compensation received by the
Company's Chief Executive Officer and the other four most highly paid executive
officers during the 1996 fiscal year (each, a "Named Executive Officer"). The
named officers received no long-term compensation awards in the form of
restricted stock awards, SAR awards, or payouts pursuant to any long-term
incentive plan during fiscal 1996.
* * * * * * *
7
<PAGE> 10
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
NAME AND PRINCIPAL ------------------------------ OPTIONS ALL OTHER
POSITION YEAR SALARY($) BONUS($)(1) (SHARES) COMPENSATION(2)
------------------ ---- --------- ----------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Nicholas J. Sutton...................... 1996 225,000 200,000 0 9,500
Chairman of the Board and 1995 225,000 0 0 4,620
Chief Executive Officer 1994 225,000 65,000 25,000 14,614
P. Michael Highum....................... 1996 225,000 200,000 0 9,500
President 1995 225,000 0 0 4,620
1994 225,000 65,000 25,000 14,614
James E. Duffy.......................... 1996 175,000 140,000 0 9,500
Chief Financial Officer 1995 175,000 0 0 4,620
1994 175,000 47,500 0 14,614
James M. Piccone........................ 1996 175,000 112,000 50,000 9,500
Vice President -- 1995 104,327 0 0 0
General Counsel & Secretary 1994 0 0 0 0
Theodore Gazulis........................ 1996 123,733 40,000 0 9,500
Vice President -- Planning & 1995 115,000 0 0 4,620
Analysis 1994 114,231 30,000 13,500 14,132
</TABLE>
- ---------------
(1) Includes certain amounts accrued during the year indicated and paid the
following year.
(2) Includes the amount of the Company's contribution pursuant to the Company's
401(k) and Profit Sharing Plans.
OPTION GRANTS IN LAST FISCAL YEAR
There was one grant of stock options to the Named Executive Officers in
1996. See "Report of the Compensation Committee -- Components of Executive
Compensation -- Incentive Plans."
The following table provides information on the number and value of options
granted during 1996 to Named Executive Officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANT
-----------------------------------------------
PERCENT OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO EXERCISE PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES OF BASE OPTION TERM
OPTIONS IN FISCAL PRICE EXPIRATION -----------------------
NAME GRANTED YEAR ($/SH) DATE 5% 10%
---- ---------- ---------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
James M. Piccone.............. 50,000 53.19% $10.13 2/28/2006 $318,536 $807,230
</TABLE>
8
<PAGE> 11
The following table provides information on the exercisability of options
held by the Named Executive Officers and the value of such officers' unexercised
options at December 31, 1996. There were no option or SAR exercises during the
1996 fiscal year by the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED VALUE AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
ON REALIZED --------------------------- ---------------------------
NAME EXERCISE $ EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Nicholas J. Sutton.......... 0 0 127,500 10,000 $750,375 $ 0
P. Michael Highum........... 0 0 127,500 10,000 750,375 0
James E. Duffy(2)........... 0 0 80,500 0 726,675 0
James M. Piccone............ 0 0 0 50,000 0 318,500
Theodore Gazulis............ 0 0 70,735 5,400 439,096 0
</TABLE>
- ---------------
(1) Based on the fair market value of the Company's Common Stock at the close of
business on December 31, 1996 ($16.50 per share) minus the exercise price of
the options (or warrant).
(2) Includes an exercisable warrant to purchase 1,500 shares of Common Stock.
The Company has no defined benefit or actuarial plan under which benefits
are determined by final compensation and years of service. The Company has not,
during fiscal 1996 (or at any other time), adjusted or amended the exercise
price of stock options previously awarded to any of the Named Executive Officers
identified on the foregoing tables. The Company has not awarded any SARs.
9
<PAGE> 12
PERFORMANCE GRAPH
Note: The following graph is based solely on stock price performance on the
dates shown, and is neither an indication of future performance nor necessarily
representative of the average return to investors over time. Furthermore, the
graph does not show the Company's relative performance on the underlying
determinants of shareholder value. The Company believes that it has demonstrated
strong performance on financial and operational measures contributing to
shareholder value. Shareholders are referred to the Company's Annual Report to
Shareholders, mailed to Shareholders earlier in April and available from the
Company, for more complete information on the financial and operational
performance of the Company.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) HS Resources, Inc. Peer Group S&P 500
<S> <C> <C> <C>
12/91 100 100 100
12/92 161 133 108
12/93 235 178 118
12/94 197 170 120
12/95 144 214 165
12/96 184 378 203
</TABLE>
* $100 INVESTED ON 12/31/91 IN STOCK OR INDEX INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31.
The Securities and Exchange Commission regulations require that the Company
provide a line graph comparing its cumulative total shareholder return with a
performance indicator of the overall or broad stock market and a comparison to
the Company's peers. The Company's stock is listed and began trading on the New
York Stock Exchange under the symbol "HSE" in 1994. Accordingly, the Company has
chosen to use the S&P 500 as the broad stock market indicator of stocks traded
on the same exchange. This comparison of cumulative total return assumes that
$100 was invested in Company Common Stock, peer group stock, or the index on
December 31, 1991, and includes reinvestment of dividends.
The peer group is made up of the companies for which public data is
available which comprise the John S. Herold, Inc. "Mid-size Domestic Exploration
and Production" peer group, as published in "Herold's Comparative Appraisal
Reports," dated July 8, 1996. John S. Herold, Inc. is an independent research
firm specializing in oil and gas company research. The companies included in the
peer group are: Barrett Resources Corp., Belden & Blake, Berry Petroleum Co.,
Chesapeake Energy Corp., Coho Energy, Cross Timbers Oil Co., Devon Energy Corp.,
Flores & Rucks, Forcenergy Gas Exploration, Forest Oil Corp., Helmerich & Payne
Inc., HS Resources, Inc., KCS Energy, Inc., Lomak Petroleum Corp., Louis Dreyfus
Natural Gas Corp., Mitchell Energy & Dev. Corp., Newfield Exploration, Nuevo
Energy Co., Patina Oil & Gas, Plains Resources, Inc., Pogo Producing Co., Snyder
Oil Corp., United Meridian Corp., Vintage Petroleum, Inc., and Wiser Oil Co.
10
<PAGE> 13
The registration of the Company's Common Stock pursuant to Section 12(g) of
the Securities Exchange Act of 1934, as amended, became effective in April 1991.
The Securities and Exchange Commission's regulations require that the foregoing
graph commence as of December 31, 1991. However, trading in the shares of the
Company's Common Stock was isolated and not meaningful until the Company's
public offering in November 1992, at which time the Common Stock began being
traded on the NASDAQ National Market System.
COMPENSATION COMMITTEE; INTERLOCKS AND INSIDER PARTICIPATION
Kenneth A. Hersh and Michael J. Savage, both non-employee directors,
constitute the Compensation Committee of the Board. During 1996 neither of these
individuals was an officer or employee of the Company or any of its
subsidiaries, or formerly an officer of the Company or any of its subsidiaries.
During 1996, these directors had no interlocking relationships as defined by the
Securities and Exchange Commission. For a discussion of certain transactions of
the Company in which Mr. Hersh has an interest, see "Certain Transactions."
INDEMNIFICATION AGREEMENTS
The Company has entered into indemnification agreements with each of its
directors and officers, including the Named Executive Officers. Those agreements
require the Company to indemnify the directors and officers to the fullest
extent permitted by the Delaware General Corporation Law and to advance expenses
in connection with certain claims against directors and officers. The Company
expects to enter into similar agreements with persons selected to be directors
and officers in the future.
REPORT OF THE COMPENSATION COMMITTEE
The following is the Report of the Compensation Committee of the Company
describing the compensation policies and rationale with respect to compensation
paid to certain executive officers for the year ended December 31, 1996. The
information contained in the report shall not be deemed to be "soliciting
material" or to be "filed" with the Securities and Exchange Commission nor shall
such information be incorporated by reference into any future filing under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, except to the extent that the Company specifically incorporates it by
reference into such filing.
The Compensation Committee of the Board is comprised entirely of outside
directors. Through 1996, Mr. Hersh and Mr. Savage were the members of the
Compensation Committee. The Compensation Committee is responsible for guiding
and overseeing policies concerning compensation and employee benefit matters,
determining the nature and amount of compensation for executive officers who
also are directors, approving the compensation of other executive officers,
administering the 1987 Plan and, if approved, the 1997 Plan.
COMPENSATION PHILOSOPHY
The Company's compensation policies are intended to align compensation with
business strategy, to create value for the stockholders, and to support a
performance-based culture throughout the Company. Consistent with the foregoing
principles, the Committee's compensation policies with respect to executive
compensation are to:
- Tie total compensation to the performance of the Company, particularly as
compared to its peers and when viewed in light of available opportunities
and resources. Total executive compensation should be directly linked to
improvements in corporate performance and increases in the primary
determinants of stockholder value such as production and cash flow.
- Inspire executive officers to work together as a team to pursue Company
goals.
- Establish a general corporate atmosphere that promotes an entrepreneurial
style of leadership.
11
<PAGE> 14
- Have a significant portion of the executive officers' total compensation
"at risk" in the form of incentive compensation.
- Recognize individual initiative and achievement.
- Ensure compensation levels that are externally competitive and internally
equitable.
- Align the long-term interests of the executive officers with those of the
Company's stockholders through the use of stock options and
performance-based awards such as those provided in the proposed 1997
Plan.
- Provide a competitive total compensation package that enables the Company
to attract and retain key executives who are capable of leading the
Company in achieving its business objectives.
COMPONENTS OF EXECUTIVE COMPENSATION
In 1996, the Company announced its goal of hiring and retaining in key
positions people with skill and experience that would rank them at or near the
top of their profession for the position in question. The Committee believes
that the cash and other compensation of executive officers, as well as other key
employees, should be competitive with other companies as necessary to achieve
this goal, while being fair and discriminating within the Company on the basis
of personal performance.
There are three major components of the Company's executive compensation
program: Base Salary, Annual Incentive Bonuses, and Long-Term Incentives through
such things as stock options. Executives, like all qualified employees, are
eligible to participate in the Company's 401(k) Plan and Profit Sharing Plan as
well as in certain other benefit plans such as the Company's health and life
insurance plans.
Base Salary. The Company believes it is essential to pay a competitive
salary in order to attract qualified individuals and to support the continuity
of management, consistent with the long-term nature of the oil and gas industry.
In assessing the appropriate salary level to be paid an executive, the Committee
evaluates data as to wages paid by comparable companies to executives having
substantially similar responsibilities and skill levels, and establishes a base
salary range based on the comparative data. Although compensation survey data
generally is imprecise as to responsibilities, and transparent as to talent and
experience, the Committee may adjust the range after subjectively considering
the impact of such factors. Consideration also may be given to Company and
industry performance, to internal parity and to disparities related to
geographic location and living cost. Of critical importance to the setting of
salary is the particular individual's skill level and performance, and the value
of his or her skills to the Company. These factors are subjective, and no
predetermined weighting of factors is applied.
Incentive Bonus. The purpose of the incentive bonus is to link annual
executive compensation to the Company's and to the individual's overall
performance. The policy is that if the performance of an individual and the
Company are in line with performance criteria, the bonus should be sufficiently
meaningful to increase the executive's total cash compensation to the upper end
of the range of total cash compensation paid to executives in the survey groups
described above. The individual's performance is evaluated relative to the prior
year and to various objectives set forth in the annual business plan, such as
production levels, cash flow targets and successful completion of major
projects. These objectives are not specifically weighted in evaluating whether
to award an annual incentive bonus to an executive officer because specific
circumstances and the relative importance of any such objectives may change with
time, and the relative responsibilities of each executive officer in the
achievement of each objective may differ.
Incentive Plans. The Company believes that each employee, particularly
those in management positions, should have interests aligned with those of the
stockholders. Such long-term incentive compensation also rewards long-term
commitment to the Company's growth. To achieve this objective, the Company has
granted options pursuant to the 1987 Plan. The 1987 Plan has allowed for the
granting of incentive stock options, nonstatutory stock options, restricted
stock and stock appreciation rights. Options for approximately 858,000 shares of
Company common stock are outstanding under this plan. To date, the Company has
issued only stock options and a small number of restricted shares under the
Plan. Future grants of long-term
12
<PAGE> 15
incentive compensation will be granted pursuant to the proposed 1997 Plan, if it
is approved by the shareholders.
401(k) and Profit Sharing Plans. Effective June 30, 1989, the Company
adopted two qualified defined contribution plans, the HS Resources, Inc.
Employee Investment 401(k) Plan (the "401(k) Plan") and the HS Resources, Inc.
Profit Sharing Plan (the "Profit Sharing Plan"). All full-time employees are
eligible to participate in both plans after one year of continuous service.
Under the 401(k) Plan, participants may make regular pretax contributions of up
to 10% of their compensation. The Company may, but is not obligated to make
matching contributions in an amount determined by the Board. All contributions
to the 401(k) Plan are vested 100%. Contributions to the Profit Sharing Plan are
made only by the Company in its sole discretion as may be determined by the
Board. Contributions to the Profit Sharing Plan are vested over five years to
all eligible employees. During 1996, the Company contributed $417,275.97 to the
401(k) Plan funded by 35,894 treasury shares of the Company's Common Stock. The
Company made no contribution to the Profit Sharing Plan in 1996.
Chief Executive Officer Compensation. The compensation of the Company's
Chief Executive Officer, Mr. Sutton, is determined in the same manner as the
compensation for other executive officers of the Company as described above. As
a result, the compensation of the Company's Chief Executive Officer is largely
dependent upon the overall performance of the Company as well as the
compensation being paid by other oil and gas companies to their chief executive
officers. The compensation of Mr. Highum, the Company's President, a Director
and co-founder of the Company with Mr. Sutton, is determined in the same manner
as, and is generally equivalent to, the compensation of Mr. Sutton.
Mr. Sutton's and Mr. Highum's base salary was $225,000 for 1996. In light
of the Company's impressive performance in 1996 including the closing of three
major transactions which doubled the Company's reserves and production, and
significant improvements in all the Company's financial measures including those
on a per-share basis, the Compensation Committee awarded each of Mr. Sutton and
Mr. Highum a bonus in the amount of $200,000.
The Compensation Committee
Kenneth A. Hersh
Michael J. Savage
13
<PAGE> 16
CERTAIN TRANSACTIONS
EMPLOYMENT CONTRACTS
Mr. Piccone has a three-year employment contract with the Company
commencing May 15, 1995. The contract provides for base salary of $175,000 per
year, plus an additional annual payment sufficient to bring total annual cash
compensation to $220,000. The contract also provides for severance payments
equal to annual compensation in the event of termination without cause or, under
certain circumstances, twice annual compensation upon a change in control.
OTHER TRANSACTIONS WITH SECURITY HOLDERS
NGP. Mr. Hersh is a Managing Partner of NGP. See "Principal Stockholders."
NGP previously acted as a subordinated lender to the Company. In consideration
of such financing, NGP acquired, and currently holds, two warrants to purchase
an aggregate of 740,262 shares of Common Stock at an exercise price of from
$6.67 to $10.00 per share.
On February 25, 1996, the Company entered into the Merger Agreement with
Tide West Oil Company ("Tide West"). Pursuant to the Merger Agreement, Tide West
was merged into a wholly-owned subsidiary of the Company (the "Merger"). The
Merger pursuant to the Merger Agreement was consummated in June of 1996
following special shareholder meetings of the shareholders of the Company and
Tide West. NGP was Tide West's largest stockholder, owning approximately
4,550,000 shares, or 46.49% of the outstanding common stock of Tide West. Three
representatives of NGP were members of Tide West's Board of Directors at the
time of the Merger. The Company and NGP entered into a voting agreement whereby
NGP agreed to vote its shares in Tide West in favor of approval of the Merger
Agreement. In consideration of this agreement, HSR agreed to take such action as
is required to appoint one NGP designee to the Company's Board following
consummation of the Merger. Mr. Hersh, already then a member of the HSR Board,
was not considered to be the NGP designee. Following the consummation of the
Merger, the Board took appropriate action to increase the number of authorized
directors to six, and appointed Mr. Philip B. Smith as the nominee of NGP to
fill the vacancy so created. Pursuant to an agreement entered into between NGP
and Tide West in 1995, NGP received a fee in 1996 for financial services in the
amount of $150,000 upon consummation of the Merger.
Philip B. Smith. Prior to the Merger, Philip B. Smith was a director,
president and chief executive officer of Tide West Oil Company. Pursuant to the
Merger, Tide West Oil Company was merged into a wholly-owned subsidiary of HSR.
Mr. Smith received compensation as an employee of Tide West Oil Company prior to
the Merger, but resigned all of his positions with respect to Tide West Oil
Company at the time of the Merger.
Trust Company of the West. Trust Company of the West in its capacity as
investment manager for various parties, holds 778,206 shares of the Company as
of February 28, 1997. This represents 4.23% of issued and outstanding shares of
common stock of the Company. In August 1995, the Company signed a term sheet
with a Trust Company of the West-related entity covering a proposed $90 million
non-recourse volumetric overriding royalty (the "TCW Facility"). The proceeds
from the TCW Facility may be used by the Company in its discretion for a variety
of corporate purposes, including acquisitions of new properties, exploration and
development drilling and monetization of existing corporate properties.
Effective July 1996, the Company sold certain non-strategic properties under the
TCW Facility for a total consideration of $9.4 million. The Company used the
sale proceeds to repay indebtedness under its primary bank facility.
FUTURE TRANSACTIONS
Any future transactions (including loans) between the Company and an
officer, director, principal stockholder or affiliate of the Company will be
approved by a majority of the directors disinterested in such transactions and
by a majority of the independent outside directors, each of which shall have
determined that the transaction is fair to the Company and its stockholders and
that the terms of such transaction are no less favorable to the Company than
could be obtained from unaffiliated parties.
14
<PAGE> 17
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS
AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of April 14, 1997, by (i) each person
who is known by the Company to own beneficially 5% or more of the Common Stock,
(ii) each director of the Company, (iii) each Named Executive Officer, and (iv)
all directors and officers as a group. Unless otherwise indicated, all persons
listed below have sole voting power and investment power with respect to such
shares.
AMOUNT OF BENEFICIAL OWNERSHIP(1)
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES CLASS
------------------------------------ --------- ----------
<S> <C> <C>
Nicholas J. Sutton(2)....................................... 794,855 4.32%
One Maritime Plaza, 15th Floor
San Francisco, CA 94111
P. Michael Highum(3)........................................ 539,951 2.94%
1999 Broadway, Suite 3600
Denver, CO 80202
Natural Gas Partners, L.P.(4)............................... 3,611,987 19.64%
777 Main Street, Suite 2700
Fort Worth, TX 76102
T. Rowe Price Associates, Inc. and.......................... 1,617,700 8.80%
T. Rowe Price Small Cap Value Fund, Inc.
100 E. Pratt, 9th Floor
Baltimore, MD 21202
James E. Duffy(5)........................................... 84,113 *
Kenneth A. Hersh(6)......................................... 4,430 *
Michael J. Savage(7)........................................ 3,750 *
Philip B. Smith(8).......................................... 275,052 1.50%
Theodore Gazulis(9)......................................... 84,269
James M. Piccone(10)........................................ 10,817 *
All directors as a group (6 persons)(11).................... 1,702,151 9.25%
All directors and executive officers as a group (17
persons)(12).............................................. 1,890,647 10.28%
</TABLE>
- ---------------
* Less than one percent of stock.
(1) Assumes exercise of all options and warrants exercisable within 60 days of
April 14, 1997, for the purchase of Common Stock with respect to such
owner.
(2) Includes 127,500 shares purchasable within 60 days after April 14, 1997,
upon the exercise of stock options granted under the 1987 Plan. Includes
13,295 shares held by trusts for the benefit of children of Mr. Sutton and
his wife of which a third party is trustee and of which Mr. Sutton
disclaims beneficial ownership. Includes 330 shares held by the children of
Mr. Sutton and his wife of which Mr. Sutton disclaims beneficial ownership.
(3) Includes 127,500 shares purchasable within 60 days after April 14, 1997,
upon the exercise of stock options granted under the 1987 Plan. Also
includes 1,500 shares held by his wife.
(4) Includes 740,262 shares subject to issuance within 60 days after April 14,
1997, upon the exercise of warrants and 7,500 shares subject to issuance
upon the exercise of options granted under the 1993 Directors' Plan. GFW
Energy, L.P. ("GFW") is the general partner of NGP and may be deemed to be
the beneficial owner of such shares. R. Gamble Baldwin is the general
partner of GFW and may be deemed to be the beneficial owner of such shares.
15
<PAGE> 18
(5) Includes 1,500 shares subject to issuance within 60 days after April 14,
1997, upon the exercise of a warrant and 79,000 shares subject to issuance
within 60 days after April 14, 1997, upon the exercise of stock options
granted under the 1987 Plan.
(6) Includes 3,430 shares of stock acquired following the merger with Tide West
and conversion of Tide West shares to HS shares. Mr. Hersh, a director of
the Company, disclaims beneficial ownership of any shares subject to
issuance upon exercise of warrants or options held by NGP, of which he is
an employee.
(7) Includes 3,750 shares purchasable within 60 days after April 14, 1997, upon
the exercise of stock options granted under the 1992 Directors' Plan.
(8) Includes 1,500 shares purchasable within 60 days after April 14, 1997, upon
the exercise of stock options granted under the 1992 Directors' Stock
Option Plan.
(9) Includes 70,735 shares purchasable within 60 days after April 14, 1997,
upon the exercise of stock options granted under the 1987 Plan.
(10) Includes 10,000 shares purchasable within 60 days after April 14, 1997,
upon the exercise of stock options granted under the 1987 Plan.
(11) Includes Footnotes 2, 3, 5, 6, 7 and 8.
(12) Includes Footnotes 2, 3, 5, 6, 7, 8, 9, and 10.
16
<PAGE> 19
PROPOSAL TO APPROVE THE COMPANY'S
1997 PERFORMANCE AND EQUITY INCENTIVE PLAN
The Board of Directors of the Company has adopted, and submits for
shareholder approval, the HS Resources, Inc. 1997 Performance and Equity
Incentive Plan (the "1997 Plan"). THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE FOR THE PROPOSAL TO APPROVE THE 1997 Plan. Proxies will be so voted
unless shareholders specify otherwise in their proxies. A majority of shares
represented in person or by proxy which are entitled to be voted at the Annual
Meeting is required for adoption of this proposal. Proxies marked "abstain" will
be counted as voting in respect of the matter and will have the same effect as a
no vote. Broker non-votes will be counted for purposes of establishing a quorum,
but will not be counted either way for purposes of determining the vote. A copy
of the 1997 Plan is attached as Exhibit A to this Proxy Statement. The summary
of the 1997 Plan which appears below is qualified by reference to the full text
of the plan.
The Company has adopted the 1997 Plan to seek to enhance the profitability
and value of the Company for the benefit of its shareholders by providing equity
ownership opportunities and performance based incentives to better align the
interests of officers and employees with those of shareholders. The 1997 Plan is
also designed to enhance the profitability and value of the Company for the
benefit of its shareholders by providing stock and cash awards to attract,
retain and motivate officers and other employees who make important
contributions to the success of the Company.
In 1987, the Company's shareholders approved the 1987 Plan. As of April 14,
1997, of the 1.5 million shares of Company stock authorized to be issued under
the 1987 Plan, the Company had issued approximately 71,000 shares pursuant to
exercised options, and had issued approximately 858,000 additional options and
12,500 shares of restricted stock. No awards which may cause the Company to
issue additional shares of Company stock have been made under the 1987 Plan
since that date and, if the 1997 Plan is approved by the shareholders, the
Company will cease to issue new stock awards under the 1987 Plan.
One of the purposes of the 1997 Plan is to provide performance based
incentives. Section 162(m) of the Internal Revenue Code ("Code") enacted in
1993, generally limits the Company's federal income tax deduction for
compensation paid to the Company's chief executive officer and four other
highest paid executives in excess of $1 million to any executive. However, to
the extent compensation is "performance-based compensation" within the meaning
of Code Section 162(m), it will not be subject to the Code Section 162(m)
deduction limitation. While the Company does not presently expect to make awards
that would approach the $1 million limit at the time of grant, the value of
stock-based awards could rise substantially over time, and the Company desires
to have maximum flexibility in structuring awards to attain the best tax result
for the Company and the Participant. Additionally, as discussed below, some of
the shares of Company stock issued under the 1997 Plan may not be performance
based. Set forth below is a description of the features of the 1997 Plan.
PLAN PROVISIONS
Benefits Generally. The 1997 Plan provides for the award of benefits
(collectively, "Benefits") of various types, including stock options
("Options"), stock appreciation rights ("SARs"), restricted shares of Company
stock ("Restricted Stock"), performance shares ("Performance Shares"),
performance based, cash awards and other performance based, stock-based awards
("Other Stock-Based Awards"). The number of shares of Company stock which may be
issued under the 1997 Plan in connection with Benefits will not exceed 1,000,000
shares. This represents approximately 5.84% of the Company's issued and
outstanding shares of stock as of April 14, 1997. In any given fiscal year, no
person eligible under the Plan for grants may receive Benefits covering more
than 200,000 shares of the Company's stock. Additionally, not more than $200,000
in value of Performance Shares or Other Stock-Based Awards (other than Options
and SARs) may be granted to any Participant in any fiscal year. Additionally,
the number of shares of Restricted Stock and Performance Shares that may be
granted under the plan is restricted to 25,000 per year and 150,000 in the
aggregate. Finally, cash awards in any fiscal year to any Participant shall not
exceed $500,000. An individual's shares may
17
<PAGE> 20
be awarded in the form of Options, SARs, Restricted Stock, Performance Shares or
in Other Stock-Based Awards, or in any combination thereof. On April 14, 1997,
the closing price of HSR Stock was $11.88.
Administration. The 1997 Plan is administered by a committee consisting of
at least two members of the Board. Generally, it is anticipated that such
members shall be "non-employee directors" as defined in Rule 16b-3 of the
Securities Exchange Act of 1934 ("Exchange Act") and "outside directors" as
defined in Treasury Regulations issued under Section 162(m) of the Code. Except
with respect to awards intended to qualify for exemption under Section 162(m) of
the Code, the Committee may delegate to a separate committee composed of at
least one member of the Board, the limited authority to grant Benefits to
persons other than officers and directors and establish the terms of the Benefit
at the time of grant.
Amendment of Plan. The committee may amend the 1997 Plan at any time.
However, the committee may not amend the 1997 Plan without shareholder approval
if such amendment would (i) increase the numerical limitations on number of
shares issued under the Plan, number of shares issued to individuals or the
number of shares of Restricted Stock or Performance Stock that may be issued,
(ii) increase the limit on cash awards to individuals or (iii) change the
designation or class of persons eligible to receive Benefits under the Plan. The
amendment or termination of the 1997 Plan will not adversely affect any Benefit
granted prior to such amendment or termination. However, any Benefit may be
modified or canceled by the committee if and to the extent permitted by the 1997
Plan or applicable agreement or with the consent of the Participant to whom the
Benefit was granted.
Term. No Benefit may be granted under the 1997 Plan on or after the tenth
anniversary date of the date the 1997 Plan is approved by the Company's
shareholders, but Benefits granted prior to such tenth anniversary may extend
beyond that date.
Participants. Benefits may be awarded only to salaried employees and
directors of the Company and its affiliates. The Company has approximately 115
salaried employees. Under the 1997 Plan, the Committee may grant Benefits at
such times, in such amounts, and to such recipients as the Committee may
determine in its discretion subject to the specific limitations set forth above.
Performance Goals. To the extent Benefits granted under the Plan are
performance based, performance goals shall be based upon one or more of the
following: production, reserves, finding costs, expenses or any component
thereof, earnings, cash flow, return on stockholders' equity, return on assets,
net income, consummation of identified or quantified transactions or projects,
any of the foregoing on a department, subsidiary, or any other division basis,
or any of the foregoing on a per share basis. The Committee has discretion to
determine whether grants will be made under any performance goal. The
performance goals may include minimum and optimum objectives or a single set of
objectives.
Types of Benefits. Options may be either incentive stock options ("ISOs")
or non-qualified stock options ("NSOs"). For both ISOs and NSOs, the option
price will be no less than the fair market value of the shares of Company stock
at the time the Option is granted. The other terms of the Options will be
determined by the Committee, and, in the case of Options intended to qualify as
ISOs, will meet all the requirements of Section 422 of the Code.
SARs are the right to receive an amount equal to the appreciation in value
of one share of Company stock from the time the SAR is awarded until the time
the grantee elects to receive payment. Participants who elect to receive payment
of an SAR will receive an amount in cash, Company stock or any combination of
cash or Company stock, as determined by the Committee.
Restricted Stock is subject to forfeiture until certain conditions have
been fulfilled and/or a period of time has elapsed. Grants of Restricted Stock
shall be made at such cost as the Committee shall determine and may be issued
for no monetary consideration, subject to applicable state law. At the
discretion of the Committee, the grantee may or may not be entitled to voting
and dividend rights with respect to the Restricted Stock from the date of grant.
Performance Shares are the right to receive Company stock or cash equal to
the fair market value of the Company stock at a future date. Generally, such
right will be based upon the attainment of one or more
18
<PAGE> 21
targeted performance goals. The maximum cash award that may be granted to an
individual in any fiscal year of the Company may not exceed in the aggregate
$500,000. The Committee may also grant Other Stock-Based Awards which may be
valued in whole or in part by reference to, or otherwise based on, Company
stock.
Awards may be granted by the Committee in tandem. However, no Benefit
except an SAR may be granted in tandem with an ISO.
Unused Shares/Adjustments. If an Option or SAR expires or is terminated,
surrendered, or canceled without having been fully exercised, if Restricted
Stock or Performance Shares are forfeited, or if any other conditions result in
any Company stock not being issued, the unused shares of Company stock covered
by any such Benefit shall again be available for grant under the 1997 Plan. If
there is any change in Company stock by reason of any stock split, stock
dividend, spin-off, split-up, spin-out, recapitalization, merger, consolidation,
reorganization, combination or exchange of shares, or any other similar
transaction, the number of shares of Company stock available for grant under the
1997 Plan or subject to, or granted pursuant to, a Benefit and the price
thereof, as applicable, will be appropriately adjusted by the Committee, except
that with respect to ISOs, such adjustment will apply only in the case of a
change in capitalization such as a stock dividend or stock split.
Amendment of Benefits. Except as may be provided in an applicable
agreement, any Benefit may be converted, modified, forfeited, or canceled, or
the restrictions or conditions applicable to such Benefit waived or accelerated,
prospectively or retroactively, in whole or in part, by the Committee, but
(unless the Participant has been terminated for cause under certain
circumstances) no such action may impair the rights of a Participant without his
or her consent. The occurrence of a Change of Control, as defined in Section 2.8
of the 1997 Plan, will not limit the Committee's authority to take any such
action.
Exercise. Upon the exercise of an Option or in the case of any other
Benefit that requires a payment to the Company, payment may be made either (i)
in cash, or (ii) with the consent of the Committee, (a) by the tender to the
Company of Company stock owned by the Participant having a fair market value
equal to the amount due to the Company; (b) by the tender to the Company of
Company stock owned by the Participant and registered in his or her name having
a fair market value equal to the amount due to the Company; (c) by delivery to
the Company of irrevocable instructions to a broker to deliver to the Company
promptly the amount of the proceeds of the sale of all or a portion of the stock
subject to the exercise or the proceeds of a loan from the broker to the Option
holder necessary to pay the exercise price; (d) in other property, rights and
credits deemed acceptable by the Committee; or (e) by any combination of the
payment methods specified in (a) through (d) above.
Transferability. Unless otherwise determined by the Committee or specified
in an applicable agreement, Benefits will not be transferable other than by
beneficiary designation, will, or pursuant to the laws of descent and
distribution, except that a Benefit other than an ISO may, with the consent of
the Committee, be transferred to one or more members of the Participant's
family, or to a trust established for one or more such family members, and will
be exercisable during the Participant's lifetime only by such Participant.
Unfunded Obligation. The incentive awards to be paid to Participants
pursuant to this Plan are an unfunded obligation of the Company. The Committee,
in its sole discretion, may direct the Company to share with its subsidiaries
the costs of a portion of the incentive awards paid to Participants who are
executives of those companies. The Company is not required to segregate any
monies from its general funds, to create any trusts, or to make any special
deposits with respect to this obligation. Title to and beneficial ownership of
any investments which the Company may make to fulfill this obligation shall at
all times remain in the Company.
Change in Control. Upon the occurrence of a Change in Control, any award
then outstanding held by a Participant shall be immediately vested and will
remain so until distributed in accordance with the Plan, and any performance
standards related to any incentive award shall be deemed achieved at the target
level and restrictions otherwise applicable shall lapse. See Section 2.8 of the
full text of the 1997 Plan for a definition of Change in Control.
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FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain federal income tax consequences of
the 1997 Plan. Any time a distribution is made under the 1997 Plan, whether in
cash or in shares of stock, the Company may withhold from such payment any
amount necessary to satisfy federal and state income tax withholding
requirements with respect to the distribution. Such withholding may be in cash
or in shares of stock.
Deductibility of Benefits. All Company deductions for 1997 Plan Benefits
are limited by Section 162(m) of the Code which generally limits the Company's
deduction for non-performance based compensation to $1 million per year per
employee for the Company's CEO and its other four most highly compensated
officers. Section 162(m) was adopted in 1993 and the IRS issued final
regulations thereunder in 1995. The 1997 Plan is intended to allow awards of
Benefits that are exempt from Section 162(m) either because they are performance
based, or because they are Options or SARs.
Incentive Stock Options. An optionee does not recognize income on the grant
of an ISO. If an optionee exercises an ISO in accordance with the terms of the
Option, the optionee will not realize any income by reason of the exercise
(except for alternative minimum tax ("AMT") purposes, discussed below), and the
Company will be allowed no deduction by reason of the grant or exercise. The
optionee's basis in the shares acquired upon exercise will be the amount paid
upon exercise. (See the discussion below for the tax consequences of the
exercise of an Option with stock already owned by the optionee.) Provided the
optionee holds the shares as a capital asset at the time of sale or other
disposition of the shares and does not dispose of the shares acquired within two
years from the date of the grant of the Option or within one year from the date
of exercise, his gain or loss, if any, recognized on the sale or other
disposition will be capital gain or loss. The amount of his gain or loss will be
the difference between the amount realized on the disposition of the shares and
his basis in the shares.
If an optionee disposes of the shares within two years from the date of
grant of the Option or within one year from the date of exercise ("Early
Disposition"), the optionee will realize ordinary income at the time of such
Early Disposition which will equal the excess, if any, of the lesser of (i) the
amount realized on the Early Disposition, or (ii) the fair market value of the
shares on the date of exercise, over the optionee's basis in the shares. The
Company will be entitled to a deduction in an amount equal to such income. The
excess, if any, of the amount realized on the Early Disposition of such shares
over the fair market value of the shares on the date of exercise will be
long-term or short-term capital gain, depending upon the holding period of the
shares. If an optionee disposes of such shares for less than the optionee's
basis in the shares, the difference between the amount realized and the
optionee's basis will be a long-term or short-term capital loss, depending upon
the holding period of the shares.
The exercise of an ISO may result in tax liability under the AMT. The AMT
provides for additional tax equal to the excess, if any, of (a) 26%/28% of
"alternative minimum taxable income" in excess of a certain exemption amount,
over (b) regular tax for the taxable year. Alternative minimum taxable income
includes the excess, if any, of the fair market value of the shares acquired
under an ISO at the time of the exercise (or up to six months later if the
option is subject to Section 16(b) of the Securities Exchange Act of 1934) over
the exercise price for the optioned shares.
Non-Qualified Stock Options. An optionee does not recognize income at the
time of the grant of the Option; the optionee recognizes ordinary income upon
the exercise (or up to 6 months later if the optionee is subject to Section
16(b) of the Securities Exchange Act of 1934) of an NSO in an amount equal to
the excess, if any, of the fair market value of the stock on the date of
exercise (or up to 6 months later if the optionee is subject to Section 16(b))
of the Option over the amount of cash paid for the stock. As a result of the
optionee's exercise of an NSO, the Company will be entitled to deduct as
compensation an amount equal to the amount included in the optionee's gross
income. The Company's deduction will be taken in the Company's taxable year in
which the Option is exercised.
Stock Appreciation Rights. Recipients of SARs do not recognize income upon
the grant of such rights. When a Participant elects to receive payment of an
SAR, the Participant recognizes ordinary income in an amount equal to the cash
and fair market value of shares of Common Stock received, and the Company is
entitled to a deduction equal to such amount.
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<PAGE> 23
Restricted Stock and Performance Shares. Grantees of Restricted Stock and
Performance Shares do not recognize income at the time of the grant of such
stock. However, when shares of Restricted Stock are no longer subject to a
substantial risk of forfeiture or become transferable or when Shares are
received with respect to Performance Shares, grantees recognize ordinary income
in an amount equal to the fair market value of the stock less, in the case of
Restricted Stock, the amount paid, if any, for the stock. Alternatively, the
grantee of Restricted Stock may elect to recognize income upon the grant of the
stock and not at the time the restrictions lapse. The Company is entitled to
deduct an amount equal to the fair market value of the stock at the time the
grantee recognizes income related to the grant.
Cash Awards, Dividends, and Dividend Equivalents. Cash awards, dividends
and dividend equivalent payments are taxable as ordinary income when paid. The
Company is entitled to deduct the amount of a cash award, dividends on
Restricted Stock and dividend equivalent payments when such amounts are taxable
to the recipient.
Change in Control. If there is an acceleration of the vesting or payment of
Benefits and/or an acceleration of the exercisability of Options upon a Change
in Control, all or a portion of the accelerated Benefits may constitute "Excess
Parachute Payments" under Section 280G of the Code. The employee receiving an
Excess Parachute Payment incurs a non-deductible excise tax of 20% of the amount
of the payment in excess of the employee's average annual compensation over the
five calendar years preceding the year of the Change in Control and the Company
is not entitled to a deduction for such excess amount.
The foregoing summary of the federal income tax consequences of the 1997
Plan is based on the Company's understanding of present federal tax law and
regulations. The summary does not purport to be complete or applicable to every
specific situation.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals that stockholders of the Company would like to present at next
year's Annual Meeting must be received by the Company no later than December 26,
1997, in order that they may be included in the proxy statement and form of
proxy related to that meeting.
INDEPENDENT AUDITORS
The Audit Committee has recommended to the Board the continuation of the
engagement of Arthur Andersen LLP as the independent public auditing firm to
audit the Company for the year ending December 31, 1997. A representative of
Arthur Andersen LLP will be present at the Annual Meeting and will be afforded
the opportunity to make a statement if he decides to do so. Such representative
will also be available to respond to appropriate questions from stockholders at
the Annual Meeting.
OTHER MATTERS
The Company knows of no other matters to be submitted at the Annual
Meeting. If any other matters properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed form of Proxy to vote the shares
they represent as the Board may recommend.
FORM 10-K
A copy of the Company's Annual Report on Form 10-K, filed with the
Securities and Exchange Commission on March 18, 1997, is available without
charge upon written request to Investor Relations, HS Resources, Inc., 1999
Broadway, Suite 3600, Denver, Colorado 80202.
By signing and returning the enclosed Proxy, stockholders will be assured
of representation at the Annual Meeting in connection with approval of the
matters discussed herein. Each stockholder should review, complete, execute,
date and return the enclosed Proxy to the Company in the envelope provided as
promptly as possible. The Board appreciates the cooperation of the stockholders.
Dated: April 24, 1997
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<PAGE> 24
EXHIBIT A
HS RESOURCES, INC.
1997 PERFORMANCE AND EQUITY INCENTIVE PLAN
EFFECTIVE MAY , 1997
<PAGE> 25
CONTENTS
<TABLE>
<CAPTION>
SECTIONS PAGE
-------- ----
<S> <C>
1. NAME AND PURPOSE........................................ 1
2. DEFINITIONS............................................. 1
3. ADMINISTRATION OF THE PLAN.............................. 3
4. SHARES SUBJECT TO THE PLAN.............................. 4
5. ELIGIBILITY............................................. 5
6. ELECTIONS, PAYMENTS, DIVIDENDS, WITHHOLDING, AND
BONUSES.................................................. 5
7. OPTIONS................................................. 6
8. STOCK APPRECIATION RIGHTS............................... 6
9. RESTRICTED STOCK........................................ 6
10. PERFORMANCE SHARES...................................... 7
11. CASH PERFORMANCE AWARDS................................. 8
12. OTHER STOCK-BASED PERFORMANCE AWARDS.................... 8
13. TRANSFERABILITY......................................... 8
14. TERMINATION OF SERVICE.................................. 8
15. CHANGE IN CONTROL....................................... 9
16. TERM, AMENDMENT, SUSPENSION OR TERMINATION OF THE
PLAN...................................................... 9
17. INVESTMENT PURPOSE...................................... 10
18. MISCELLANEOUS........................................... 10
</TABLE>
i
<PAGE> 26
HS RESOURCES, INC.
1997 PERFORMANCE AND EQUITY INCENTIVE PLAN
1. NAME AND PURPOSE
1.1 This plan is the HS RESOURCES, INC. 1997 PERFORMANCE AND EQUITY
INCENTIVE PLAN (the "Plan").
1.2 The purposes of the Plan are (i) to enhance the profitability and value
of the Company for the benefit of its shareholders by providing equity ownership
opportunities and performance-based incentives to better align the interests of
officers and key employees with those of shareholders; (ii) to attract and
retain the best possible personnel for positions of substantial responsibility
with the Company; and (iii) to provide additional incentive to Participants to
promote the success of the Company. The Plan provides employees, officers and
directors of the Company an opportunity to acquire Shares of the Stock of the
Company pursuant to Incentive Stock Options and Non-Statutory Stock Options, and
to receive Restricted Stock, Stock Appreciation Rights, Performance Shares,
other Stock-Based Awards and Benefits, and to receive Cash Awards.
2. DEFINITIONS.
For purposes of interpreting the Plan and related documents and Agreements
(as defined), the following definitions shall apply:
2.1 "1987 Plan" means the HS Resources, Inc. 1987 Stock Incentive Plan
adopted April 29, 1987, as amended and restated November 6, 1992, and December
2, 1996.
2.2 "Affiliates" means any corporation or other entity which is affiliated
with the Company through stock ownership or otherwise and is treated as a common
employer under the provisions of Section 1114(b) and (c) of the Code.
2.3 "Agreement" means the document which evidences the grant of any Benefit
under the Plan and which sets forth the Benefit and the terms, conditions and
provisions of, and restrictions relating to, such Benefit.
2.4 "Benefit" means any benefit granted to a Participant under the Plan.
2.5 "Board" means the Board of Directors of the Company.
2.6 "Cash Award" means a Benefit payable in the form of cash.
2.7 "Cause" means any of the following, as determined by the Company:
(a) Willful dishonesty towards the Company, fraud upon the Company or
deliberate injury or intended injury to the Company;
(b) Conviction of a felony;
(c) Willful participation in activities which constitute unlawful
activities, such as gender-based harassment;
(d) Conviction of a misdemeanor involving moral turpitude;
(e) Gross negligence or willful misconduct in the performance of
duties;
(f) Continued abuse of alcohol or drugs on the job or otherwise
materially affecting job performance; or
(g) Failure to perform duties substantially in accordance with
instructions of relevant superiors and Company policies and procedures.
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<PAGE> 27
2.8 A "Change in Control" shall be deemed to have taken place if:
(a) any "person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the 1934 Act), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company becomes the
"beneficial owner" (as defined in Rule 13d-3 under the 1934 Act), directly
or indirectly, of more than 33 1/3% of the then outstanding voting stock of
the Company, except that in the case of Natural Gas Partners, such
ownership shall not constitute a Change in Control if it is approved by the
Board prior to Natural Gas Partners exceeding such ownership level;
(b) at any time during any period of three consecutive years (not
including any period prior to the Effective Date), individuals who at the
beginning of such period constitute the Board (and any new director whose
election by the Board or whose nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the beginning of such
period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority thereof; or
(c) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 60% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation, or the stockholders approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets.
2.9 "Code" means the Internal Revenue Code of 1986, as amended.
2.10 "Committee" means the committee appointed by the Board pursuant to
Section 3 hereof to administer the Plan.
2.11 "Company" means HS Resources, Inc., a Delaware corporation and its
Affiliates, if any.
2.12 "Effective Date" means the date that the Plan is approved by the
shareholders of the Company which must occur within one year after approval by
the Board. Any grants of Benefits prior to the approval by the shareholders of
the Company shall be void if such approval is not obtained.
2.13 "Fair Market Value" shall mean, with respect to Shares, the last
reported trade of such Shares on the New York Stock Exchange for the date in
question. If Fair Market Value is in reference to property other than Shares,
the Fair Market Value of such other property shall be determined by such methods
or procedures as shall be established from time to time by the Committee.
2.14 "Fiscal Year" means the taxable year of the Company which is the
calendar year.
2.15 "Grant Date" means the date on which the Committee takes valid action
to grant a Benefit hereunder; provided, however, that the Committee may
expressly provide for a Grant Date other than the date on which the Committee
takes action, and further provided that the Grant Date of an Option intended to
qualify as an Incentive Stock Option shall be not earlier than the first date
such grant may be given effect under the Code. The Grant Date of Restricted
Stock shall be the date determined under Section 9.1 below.
2.16 "Incentive Stock Option" or "ISO" means an Option designated as an
Incentive Stock Option and satisfying the requirements of Section 422 of the
Code.
2.17 "Non-Employee Director" means a director of the Company who meets the
definition of a "non-employee director" set forth in SEC Rule 16b-3, as amended,
or any successor rule and the definition of outside director set forth in Treas.
Reg. sec. 1.162-27(e)(3).
2.18 "Non-Statutory Stock Option" or "NSO" means an Option other than an
ISO.
2.19 "Option" means an option to purchase one or more Shares pursuant to
this Plan.
2.20 "Optionee" means a Participant who receives an Option.
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<PAGE> 28
2.21 "Option Price" means the purchase price for each Share subject to an
Option.
2.22 "Other Stock-Based Award" means an award under Article 12 that is
valued in whole or in part by reference to, or is otherwise based on, Shares.
2.23 "Participant" means any person who receives a Benefit under this Plan.
2.24 "Performance Share" means a Share awarded to a Participant under
Article 10 of the Plan.
2.25 "Plan" means this HS Resources, Inc. 1997 Performance and Equity
Incentive Plan and all amendments and supplements thereto.
2.26 "Plan Year" means each 12-month period during the term of the Plan
commencing the Effective Date or an anniversary thereof.
2.27 "Restricted Stock" means a Share which, at the time it is granted or
sold by the Company, is not transferable and is subject to a substantial risk of
forfeiture, within the meaning of Section 83 of the Code.
2.28 "Rule 16b-3" means the rule promulgated by the SEC, as amended, or any
successor rule in effect from time to time.
2.29 "SEC" means the Securities and Exchange Commission.
2.30 "Share" means a share of Common Stock of the Company.
2.31 "SAR" means a Stock Appreciation Right, which is the right to receive
an amount equal to the appreciation, if any, in the Fair Market Value of a Share
from the date of the grant of the right to the date of its payment.
3. ADMINISTRATION OF THE PLAN.
3.1 Committee. The Plan shall be administered by the Committee. The
Committee shall consist of not fewer than two members of the Board to be
appointed by the Board. The Board may from time to time remove members or add
members to the Committee. Vacancies on the Committee, howsoever caused, shall be
filled by the Board. Any power, authority, or decision-making granted to the
Committee under this Plan may also be exercised by the Board. The Committee
shall hold meetings at such times and places as it shall determine. Two members
of the Committee shall constitute a quorum and acts of the Committee at a
meeting at which a quorum is present, or acts approved in writing by all the
members of the Committee shall be the valid acts of the Committee.
3.2 Participants. The Committee may from time to time determine which
salaried employees or directors of the Company shall be granted Benefits under
the Plan, the terms and conditions thereof, including without limitation the
purchase price, if any, of Restricted Stock and the exercise price of Options,
and the number of Shares which shall be granted. The Committee shall report to
the Board the names of Participants, the number of Shares and the terms and
conditions of Benefits granted under this Plan.
3.3 Rules and Regulations. The Committee is authorized to establish such
rules and regulations consistent with provisions of the Plan as it may deem
appropriate for the proper administration of the Plan, and to make such
interpretations of and determinations under the Plan, and to take such steps in
connection with the Plan or the Benefits granted thereunder as it may deem
necessary or advisable. Except as may be provided in an Agreement, any Benefit
granted may be converted, modified, forfeited or canceled, prospectively or
retroactively, in whole or in part, by the Committee in its sole discretion,
but, subject to Section 14.1, no such action may impair the rights of any
Participant without his or her consent. The Committee may, in its sole
discretion, in whole or in part, waive any restrictions or conditions applicable
to, or accelerate the vesting of, any Benefit. No member of the Committee shall
be liable for any action or determination made in good faith, and all members of
the Committee shall, in addition to their rights as directors, be fully
protected by the Company with respect to any such action, determination or
interpretation. The determination, interpretations and other actions of the
Committee pursuant to the provisions of the Plan shall be final, binding and
conclusive for all purposes and on all persons.
3
<PAGE> 29
3.4 Rule 16b-3 Grants. For Committee approval of any grant of a Benefit to
an officer or director of the Company, as defined in Rule 16b-3 or any successor
rule, the Committee shall be composed entirely of two or more Non-Employee
Directors (or such composition as is required by any successor rule); provided,
however, that if the Committee is not composed as such, the Board shall have the
right to take such action with respect to any Benefit granted to an officer or
director as it deems necessary or advisable to comply with Rule 16b-3 and any
related rules, including but not limited to seeking shareholder ratification of
such Benefit or imposing a six-month period prior to sale of the Award or any
Shares underlying the Benefit.
3.5 Delegation. Except with respect to awards intended to qualify for
exemption under Section 162(m) of the Code, the Committee may delegate to a
separate committee composed of at least one member of the Board the limited
authority to grant Benefits to persons other than officers or directors and
establish the terms of such Benefits at the time of the grant.
3.6 Grant Evidenced by Agreement. The grant of any Benefit under the Plan
shall be evidenced by an Agreement which shall describe the specific Benefit
granted and the terms and conditions of the Benefit. The granting of any Benefit
shall be subject to, and conditioned upon, the recipient's execution of any
Agreement required by the Committee. Except as otherwise provided in an
Agreement, all capitalized terms used in the Agreement shall have the same
meaning as in the Plan, and the Agreement shall be subject to all of the terms
of the Plan.
3.7 Provisions of Agreement. Each Agreement shall contain such provisions
as the Committee shall determine in its sole discretion to be necessary,
desirable and appropriate for the Benefit granted which may include, but not
necessarily be limited to, the following: description of the type of Benefit;
the Benefit's duration; its transferability; if an Option, the Option Price, and
the person or persons who may exercise the Option; the effect upon such Benefit
of the Participant's death, disability, retirement, change of duties or
termination of employment; the Benefit's conditions; subject to the provisions
of Section 14.1, when, if, and how any Benefit may be forfeited, converted into
another Benefit, modified, exchanged for another Benefit, or replaced; and the
restrictions on any Shares purchased or granted under the Plan.
3.8 Amendments to Benefits. The Committee may waive any conditions of or
rights of the Company under any outstanding Benefit, prospectively or
retroactively. The Committee may not amend, alter, suspend, discontinue or
terminate any outstanding Benefit, prospectively or retroactively, without the
consent of the Participant or holder or beneficiary thereof, except as otherwise
herein provided.
4. SHARES SUBJECT TO THE PLAN.
4.1 Number of Shares. 1,000,000 Shares are authorized for issuance under
the Plan in accordance with the provisions of the Plan and subject to such
restrictions or other provisions as the Compensation Committee may from time to
time deem necessary. The Shares may be divided among the various Plan components
as the Compensation Committee shall determine, except that no more than
1,000,000 Shares may be issued under ISOs and SARs that are granted in tandem
with ISOs under the Plan. Shares which may be issued upon the exercise of
Options shall be applied to reduce the maximum number of Shares remaining
available for use under the Plan. The Company shall at all times during the term
of the Plan and while any Options are outstanding retain as authorized and
unissued Shares, or as treasury Shares, at least the number of Shares from time
to time required under the provisions of the Plan, or otherwise assure itself of
its ability to perform its obligations hereunder.
4.2 Unused and Forfeited Stock. Any Shares that are subject to an Award
under this Plan which are not used because the terms and conditions of the Award
are not met, including any Shares that are subject to an Option which expires or
is terminated for any reason, shall become automatically available for use under
the Plan.
4.3 Limit on an Individual's Benefits. In any given Fiscal Year, no person
eligible under the Plan for Grants may receive Benefits covering or measured by
more than 200,000 Shares (such number of Shares to be adjusted in accordance
with Section 4.5). No more than $200,000 of Performance Shares or Other Stock-
4
<PAGE> 30
Based Awards (excluding Options and SARs), valued at Fair Market Value on the
date of grant and not taking into account the risk of forfeiture, may be granted
to any Participant in any Fiscal Year.
4.4 Limit on Certain Awards. Subject to adjustment pursuant to Section 4.5,
the aggregate number of Shares of Restricted Stock and Performance Shares that
may be granted pursuant to this Plan for a purchase price of less than Fair
Market Value shall not exceed 25,000 per year or 150,000 in the aggregate.
4.5 Adjustments. If there is any change in the Stock subject to the Plan or
the Shares subject to any Benefit through merger, consolidation, reorganization,
recapitalization, reincorporation, stock split, stock dividend, or other change
in the corporate structure of the Company, appropriate proportionate adjustments
or new or substitute Benefits in a new enterprise shall be made by the Committee
in the aggregate number of Shares subject to the Plan, the price, Fair Market
Value and number of Shares subject to outstanding Benefits in order to preserve,
but not to increase, the Benefits of the Participant; provided that the number
of Shares eligible for issuance as ISOs may be increased only to reflect a
change in capitalization such as a stock dividend or stock split.
5. ELIGIBILITY.
Persons eligible under the Plan for grant of Benefits are all salaried
employees and directors of the Company. Members of the Board who are not
employed as regular salaried officers or employees of the Company may not
receive Incentive Stock Options.
6. ELECTIONS, PAYMENTS, DIVIDENDS, WITHHOLDING, AND BONUSES.
6.1 Notices. An Option or SAR that is exercisable hereunder may be
exercised by delivery to the Secretary of the Company on any business day a
written notice of exercise, which notice shall specify the number of Shares with
respect to which the Option or SAR is being exercised, and shall, in the case of
Options, be accompanied by payment in full of the Option Price of the Shares for
which the Option is being exercised.
6.2 Payments. For any Benefit that requires a payment by a Participant to
the Company, the amount due the Company is to be paid in cash, or, with the
consent of the Committee:
(a) by the tender to the Company of Shares owned by the Participant
and registered in his or her name having a Fair Market Value equal to the
amount due to the Company;
(b) by delivery to the Company of irrevocable instructions to a broker
to deliver to the Company promptly the amount of the proceeds of the sale
of all or a portion of the Shares or of a loan from the broker to the
Option Holder necessary to pay the exercise price;
(c) in other property, rights and credits deemed acceptable by the
Committee; or
(d) by any combination of the payment methods specified above.
6.3 Dividend Equivalents. Grants of Benefits in Shares or Share equivalents
may include dividend or dividend equivalent payments or dividend credit rights.
6.4 Code Section 162(m). The Committee, in its sole discretion, may require
that one or more Agreements contain provisions which provide that, in the event
Section 162(m) of the Code, or any successor provision relating to excessive
employee remuneration, would operate to disallow a deduction by the Company for
all or part of any Benefit under the Plan, a Participant's receipt of the
portion of such Benefit that would not be deductible by the Company shall be
deferred until the next succeeding year or years in which the Participant's
remuneration does not exceed the limit set forth in such provision of the Code.
6.5 Withholding. The Company may, at the time any distribution is made
under the Plan, whether in cash or in Shares, or at the time any Option is
exercised, withhold from such distribution or Shares issuable upon the exercise
of an Option, any amount necessary to satisfy federal, state and local
withholding requirements with respect to such distribution or exercise of such
Option. Such withholding may be satisfied, at the Company's option, either by
cash or the Company's withholding of Shares.
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6.6 Cash Bonuses. The Committee, in its discretion, shall have the
authority to approve cash bonuses to designated Participants to be paid upon
their exercise or receipt of (or the lapse of restrictions relating to)
Benefits. The Committee shall have full authority in its discretion to determine
the amount of any such bonus.
7. OPTIONS.
7.1 Price. The Option Price of the Shares covered by each Option shall not
be less than the Fair Market Value of such Shares on the Grant Date; provided,
however, that in the event the Participant would otherwise be ineligible to
receive an ISO by reason of the provisions of Sections 422(b)(6) and 424(d) of
the Code (relating to stock ownership of more than 10 percent), the Option Price
of an Option that is intended to be an ISO shall be not less than 110 percent of
the Fair Market Value of a Share at the time such Option is granted. Such prices
shall be subject to adjustment as provided in Section 4.5 hereof.
7.2 Term. The term of each Option shall be for no more than ten years;
provided, however, that in the event the Participant would otherwise be
ineligible to receive an ISO by reason of the provisions of Section 422(b)(6)
and 424(d) of the Code (relating to stock ownership of more than 10 percent), an
Option granted to such Participant that is intended to be an ISO shall in no
event be exercisable after the expiration of five years from the date it is
granted.
7.3 Limits on ISOs. An Option intended to constitute an ISO (and so
designated at the time of grant) shall qualify as an ISO only to the extent that
the aggregate Fair Market Value (determined at the time the Option is granted)
of the Shares with respect to which ISOs are exercisable for the first time by
the Participant during any calendar year (under the Plan and all other plans of
the Participant's employer and its parent and subsidiary corporations within the
meaning of Section 422(d) of the Code) does not exceed $100,000, except as such
restriction may be amended under the Code. This limitation shall be applied by
taking Options into account in the order in which they were granted.
7.4 Agreement. The Stock Option Agreement may contain such other terms,
provisions, and conditions as may be determined by the Committee (not
inconsistent with this Plan) including, without limitation, provisions relating
to Stock Appreciation Rights with respect to Options granted hereunder. If an
Option, or any part thereof, is intended by the Committee to qualify as an
Incentive Stock Option, the Stock Option Agreement shall contain those terms and
conditions necessary to so qualify said Option or such part thereof.
8. STOCK APPRECIATION RIGHTS.
8.1 Grant and Payment. The Committee may grant SARs. Upon electing to
receive payment of an SAR, a Participant shall receive payment in cash.
8.2 Grant of Tandem Award. SARs may be granted in tandem with Options at
any time prior to exercise of the Option. If SARs are granted in tandem with an
Option, the exercise of the Option shall cause a proportional reduction in SARs
standing to a Participant's credit which were granted in tandem with the Option;
and the payment of SARs shall cause a proportional reduction of the Shares under
such Option. If SARs are granted in tandem with an ISO, the SARs shall have such
terms and conditions as shall be required for the ISO to qualify as an ISO.
8.3 Payment of Benefit. SARs shall be paid by the Company to a Participant,
to the extent payment is elected by the Participant (and is otherwise due and
payable), as soon as practicable after the date on which such election is made.
9. RESTRICTED STOCK.
9.1 Grant. The Committee may approve the grant or sale of Restricted Stock
to any eligible person, as specified in Section 5. A grant or sale of Restricted
Stock shall be evidenced by a Restricted Stock Agreement in such form as the
Committee shall approve. The Grant Date of Restricted Stock shall be (i) for
purposes of corporate law and establishing Fair Market Value, the date on which
the Committee acts to authorize the sale; and (ii) for purposes of any election
under Section 83(b) of the Code, the date on which the Participant receives a
beneficial ownership interest in such Restricted Stock.
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9.2 Price. The Committee shall determine the purchase price per Share with
respect to any sale of Restricted Stock, provided that the Committee may grant
or award Shares of Restricted Stock to a Participant without requiring payment
of cash consideration by the Participant.
9.3 Restrictions. A Participant's right to retain a Restricted Stock Award
granted to him under Section 9.1 shall be subject to such restrictions,
including but not limited to his continuous employment by the Company for a
restriction period specified by the Committee or the attainment of specified
performance goals and objectives, as may be established by the Committee with
respect to such award. The Committee may in its sole discretion require
different periods of employment or different performance goals and objectives
with respect to different Participants, to different Restricted Stock Awards or
to separate, designated portions of the Shares constituting a Restricted Stock
Award. At the discretion of the Committee, the Participant may or may not be
entitled to voting and dividend rights with respect to Restricted Stock.
9.4 Certificates. Each certificate representing Restricted Stock shall bear
one or more legends making appropriate reference to the restrictions imposed on
such stock.
10. PERFORMANCE SHARES.
10.1 Grant. The Committee may grant awards of Performance Shares.
10.2 Description. Performance Shares represent the right of a Participant
to receive Shares or cash equal to the Fair Market Value of such Shares at a
future date in accordance with the terms and conditions of a grant. The terms
and conditions shall be determined by the Committee, in its sole discretion, but
generally are expected to be based substantially upon the attainment of targeted
financial performance objectives.
10.3 Award Period and Performance Goals. The Committee shall determine and
include in a Performance Share award grant the period of time for which a
Performance Share award is made ("Award Period"). The Committee shall also
establish performance objectives ("Performance Goals") to be met by the Company
during the Award Period as a condition to payment of the Performance Share
award. The Committee shall establish Performance Goals no later than 90 days
after the commencement of the Award Period to which they relate or, if shorter,
when 25% of the Award Period has elapsed. The Performance Goals shall be based
upon the following factors: production, reserves, finding costs, expenses or any
component thereof, earnings, cash flow, return on stockholders' equity, return
on assets, net income, consummation of identified or quantified transactions or
projects, any of the foregoing on a department, subsidiary or any other division
basis, or any of the foregoing on a per share basis, or any combination of the
foregoing. The Committee shall have the discretion to determine whether a grant
will be made under any Performance Goal. The Performance Goals may include
minimum and optimum objectives or a single set of objectives.
10.4 Payment of Performance Share Awards. The Committee shall establish the
method of calculating the amount of payment to be made under a Performance Share
award if the Performance Goals are met, including the fixing of a maximum
payment. The Performance Share award shall be expressed in terms of Shares and
shall be referred to as "Performance Shares." After the completion of an Award
Period, the performance of the Company shall be measured against the Performance
Goals, and the Committee shall determine whether all, none or any portion of a
Performance Share award shall be paid. The Committee, in its discretion, may
elect to make payment in Shares, cash or a combination of Shares and cash. Any
cash payment shall be based on the Fair Market Value of Performance Shares on,
or as soon as practicable prior to, the date of payment.
10.5 Revision of Performance Goals. At any time prior to the end of an
Award Period, the Committee may reduce or eliminate the Performance Goals and
the computation of payment if unforeseen events occur which have a substantial
effect on the performance of the Company, and which in the judgment of the
Committee make the application of the Performance Goals unfair unless a revision
is made.
10.6 Requirement of Employment. A grantee of a Performance Share award must
remain in the employment of the Company until the completion of the Award Period
in order to be entitled to payment under the Performance Share award, provided
that the Committee may, in its sole discretion, provide for a partial payment
where such an exception is deemed equitable.
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10.7 Certification. The Committee shall certify in writing prior to payment
of the compensation that the Performance Goals and any other material terms were
satisfied. For this purpose, approved minutes of the Committee meeting in which
the certification is made shall be treated as written certification.
11. CASH PERFORMANCE AWARDS.
11.1 Grant. The Committee may grant Cash Awards. Such awards shall be based
on achievement of Performance Goals in the same manner as Performance Shares as
provided in Sections 10.3 through 10.7.
11.2 Limitation. The amount of any Cash Award paid in any Fiscal Year to
any Participant shall not exceed $500,000 paid in such Fiscal Year.
12. OTHER STOCK-BASED PERFORMANCE AWARDS.
12.1 Other Stock-Based Awards. The Committee shall have the right to grant
Other Stock-Based Awards. Such awards shall be based on achievement of
Performance Goals in the same manner as Performance Shares as provided in
Sections 10.3 through 10.7.
12.2 Other Benefits. The Committee shall have the right to grant other
types of Benefits under the Plan in addition to those specifically listed, if
the Committee believes that such Benefits would further the purposes for which
the Plan has been established.
12.3 Tandem Awards. Benefits may be granted by the Committee in its sole
discretion individually or in tandem; provided, however, that no Benefit except
SARs may be granted in tandem with an ISO.
13. TRANSFERABILITY
Each ISO granted pursuant to this Plan shall, during Participant's
lifetime, be exercisable only by the Participant, and neither the ISO nor any
right thereunder (including any SAR) shall be transferable by Participant by
operation of law or otherwise other than by beneficiary designation, will or the
laws of descent and distribution, and shall not be pledged or hypothecated (by
operation of law or otherwise) or subject to execution, attachment or similar
processes. Upon the prior written consent of the Committee in its sole,
unfettered discretion and subject to any conditions associated with such
consent, an NSO or any other Benefit hereunder (including any SAR) may be
assigned in whole or in part during the Participant's lifetime to one or more
members of the Participants' immediate family, to a trust established
exclusively for one or more such family members or pursuant to a qualified
domestic relation order as defined by Title I of the Employee Retirement Income
Security Act. The terms applicable to the assigned portion shall be the same as
those in effect immediately prior to such assignment and shall be set forth in
such documents issued to the assignee as the Committee may deem appropriate. A
Participant's rights in Restricted Stock are nontransferable except by the laws
of descent and distribution until the restriction lapses as it applies to the
Restricted Stock held by the Participant.
14. TERMINATION OF SERVICE
14.1 Options and SARs. The following provisions shall govern the exercise
of any Options or SARs held by any employee of the Company whose employment is
terminated:
(a) If the Employee's employment with the Company is terminated for
Cause, the Options or SARs held by the Employee shall be exercisable, to
the extent that such Options or SARs were exercisable on the date the
Employee's employment terminated, for a period of thirty (30) days
following such termination of employment; provided, however, if the
termination includes any matter described in Section 2.7(a) of the
definition of Cause herein, at the option of the Committee (in the case of
Options or SARs held by an officer or director) or the Chief Executive
Officer (in any other case) the Options or SARs held by the Employee may
terminate immediately upon the termination of the Employee's employment
with the Company or at any subsequent time.
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(b) If the Employee's employment with the Company is terminated for
any reason other than Cause or such Employee's death, disability, or (in
the case of Benefits other than ISOs) retirement, all Options or SARs held
by the Employee shall be exercisable, to the extent that such Options were
exercisable on the date the Employee's employment terminated, for a period
of three (3) months following such termination of employment, or in the
case of SARs or Options other than ISOs, such longer period as the
Committee may determine in its sole discretion.
(c) If the Employee's employment with the Company is terminated
because of such Employee's death or disability within the meaning of
Section 22(e)(3) of the Code or, in the case of Benefits other than ISOs,
retirement as defined in the Company's 401(k) Retirement Plan (or successor
plan), all Options or SARs held by the Employee shall become immediately
exercisable and shall be exercisable for a period of twelve (12) months
following such termination of employment.
(d) In no event may any Option or SAR remain exercisable after the
expiration of the term of the Option or SAR. Upon the expiration of any
thirty (30) day, or three (3) or twelve (12) month exercise period, as
applicable, or, if earlier, upon the expiration of the term of the Option,
the Option shall terminate and shall cease to be outstanding for any Shares
for which the Option has not been exercised.
14.2 Restricted Stock. In the event of the death or disability (within the
meaning of Section 22(e) of the Code) of a Participant, or the retirement of the
Participant as defined in the Company's 401(k) Plan (or successor plan) all
employment periods and other restrictions applicable to Restricted Stock then
held by such Participant shall lapse, and such awards shall become fully
nonforfeitable. In the event of a Participant's termination of employment for
any other reason, any Restricted Stock as to which the employment period or
other restrictions have not been satisfied shall be forfeited.
15. CHANGE IN CONTROL.
In the event of a Change in Control of the Company, the contingencies with
respect to Options, SARs and Restricted Stock all outstanding under the Plan as
of the day before the consummation of such Change in Control shall automatically
accelerate for all purposes under this Plan so that each Option or SAR shall
become fully exercisable with respect to the total number of Shares subject to
such Option or SAR as of such date, without regard to the conditions expressed
in the agreements relating to such Option or SAR, and the restrictions on each
share of Restricted Stock shall lapse and such Shares of Restricted Stock shall
no longer be subject to forfeiture. Performance Goals or other contingencies
with respect to other Benefits shall similarly lapse or be deemed satisfied in
the event of a Change in Control of the Company.
16. TERM, AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN.
16.1 Term. The Plan shall commence on the Effective Date, and remain in
effect for ten years from such date. The Committee may deem it advisable to seek
shareholder approval of the Plan prior to the end of the fifth year following
the Effective Date in order to comply with certain provisions of Treasury
Regulations issued under Section 162(m) of the Code.
16.2 Supervision, etc. The Board may at any time suspend or terminate the
Plan, and may amend it from time to time in such respects as the Board may deem
advisable; provided, however, except as provided in Section 3.2 hereof, the
Board shall not amend the Plan in the following respects without the consent of
stockholders then sufficient to approve the Plan in the first instance:
(a) To increase the numerical limitations on number of Shares issued
under the Plan, number of Shares issued to individuals, number of Shares of
issued Restricted Stock or Performance Stock that may be issued, or to
increase the limit on Cash Awards to individuals;
(b) To change the designation or class of persons eligible to receive
Benefits under the Plan.
16.3 Suspension or Termination of Plan. No Benefit may be granted during
any suspension or after the termination of the Plan, and no amendment,
suspension or termination of the Plan shall, without the Participant's consent,
impair any Participant's rights or obligations under any Benefit granted under
the Plan;
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provided, however, that all Participants shall receive the benefits of any
amendments which are made to the Plan.
17. INVESTMENT PURPOSE.
At the time of delivery of any Shares, the Committee may, if it shall deem
it necessary or desirable for any reason connected with any securities law or
regulation, require, as a condition to the issuance of any Shares to
Participant, that Participant represent in writing to the Company that it is
Participant's intention to acquire the Shares for investment and not with a view
to the distribution thereof or that the Participant agree to any other
appropriate restriction on transfer of the Shares. In the event such a
representation is required and made, no Shares shall be issued unless and until
the Company is satisfied with the correctness of such representation and, in
such event, the Committee may require that a legend be placed on the
certificates evidencing any Shares to be issued which legend shall disclose the
existence of an investment representation and such further restrictions on
transfer as may be imposed to comply with applicable laws as the Committee may
deem appropriate to protect the interest of the Company.
18. MISCELLANEOUS.
18.1 Unfunded Status of the Plan. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments or deliveries of Shares not yet made to a Participant by the Company,
nothing contained herein shall give any rights that are greater than those of a
general creditor of the Company. The Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Shares or payments hereunder consistent with the foregoing.
18.2 Rule 16b-3. With respect to Participants subject to Section 16 of the
Exchange Act, transactions under this Plan are intended to comply with all
applicable provisions of Rule 16b-3 or its successors under the Exchange Act. To
the extent any provision of the Plan or action by the Plan administrators fails
to so comply, it shall be deemed null and void, to the extent permitted by law
and deemed advisable by the Committee.
18.3 Number and Gender. The masculine, feminine and neuter, wherever used
in the Plan or in any Agreement, shall refer to either the masculine, feminine
or neuter; and, unless the context otherwise requires, the singular shall
include the plural and the plural the singular.
18.4 No Effect on Other Benefits. The receipt of Benefits under the Plan
shall have no effect on any benefits to which a Participant may be entitled from
the Employer, under another plan or otherwise, or preclude a Participant from
receiving or the Company from granting any such benefits.
18.5 Governing Law. The validity, interpretation and effect of this Plan,
and the rights of all persons hereunder, shall be governed by and determined in
accordance with the laws of the state of Delaware.
18.6 No Employment Right. The grant of any Benefit to any Participant under
this Plan shall not give such Participant any right to be retained in the employ
or service of the Company, and the right and power of the Company to discharge
any such person shall not be affected by such grant.
18.7 No Shareholder Rights. No Participant nor any person entitled to
exercise an Option under this Plan shall have any of the rights of a shareholder
with respect to the Shares of Stock subject to an Option except to the extent
Stock Certificates have been issued.
18.8 No Rights to Ungranted Benefits. No person shall have any right or
claim whatever, directly, indirectly, or by implication, to receive a Benefit,
nor any expectancy thereof, unless and until the same shall have been granted to
such person by the Committee as provided herein. The grant of a Benefit shall
not create any right or implication that any other or further Benefit may or
shall be granted at another time. Each Benefit hereunder shall be separate and
distinct from every other grant of a Benefit, and shall not be considered part
of any continuing series of such grants. Grants may be made inconsistently or
not at all among eligible Participants.
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HS RESOURCES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
Item 1 - ELECTION OF DIRECTORS
NOMINEES: Nicholas J. Sutton For Withheld For All
Kenneth A. Hersh Except
[ ] [ ] [ ]
--------------------------------
Nominee Exception
Item 2 - To approve the HS Resources, Inc. For Against Abstain
1997 Performance and Equity [ ] [ ] [ ]
Incentive Plan.
I PLAN TO ATTEND MEETING [ ]
COMMENTS/ADDRESS CHANGE
Please mark this box if you have written
comments/address change on the
reverse side. [ ]
Receipt is hereby acknowledged of the HS Resources, Inc. Notice of Annual
Meeting and Proxy Statement.
Dated: , 1997
-------------------------------------
- -----------------------------------------------------------------------------
Signature(s)
- -----------------------------------------------------------------------------
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.
HS RESOURCES, INC.
P PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
R MAY 22, 1997
O THIS PROXY IS SOLICITED ON BEHALF OF HS RESOURCES, INC.'S BOARD OF DIRECTORS
X The undersigned hereby appoints P. Michael Highum, Nicholas J. Sutton and
James M. Piccone, and each of them, proxies for the undersigned, with full
Y power of substitution to vote all shares of HS Resources, Inc. Common Stock
which the undersigned may be entitled to vote at the Annual Meeting of
Stockholders of HS Resources, Inc., on Thursday, May 22, 1997, at 9:00 A.M.,
or at any adjournment thereof, upon the matters set forth on the reverse side
and described in the accompanying Proxy Statement and upon such other
business as may properly come before the meeting or any adjournment thereof.
Please mark this Proxy as indicated on the reverse side to vote on any
item. If you wish to vote in accordance with the Board of Directors'
recommendations, 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 signed on other side.)
