SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
FILED BY THE REGISTRANT [ X ]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
CHECK THE APPROPRIATE BOX:
[ X ] PRELIMINARY PROXY STATEMENT
[ ] DEFINITIVE PROXY STATEMENT
[ ] DEFINITIVE ADDITIONAL MATERIALS
[ ] SOLICITING MATERIAL PURSUANT TO SECTION 240.14A-11(C) OR SECTION
240.14A-12
FRONTIER OIL EXPLORATION COMPANY
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(Name of Registrant as Specified In Its Charter)
FRONTIER OIL EXPLORATION COMPANY
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(Name of Person(s) Filling Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ x ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $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 0-11:1
4) Proposed maximum aggregate value of transaction:
1Set forth the amount on which the filing fee is calculated and state how it was
determined.
[ ]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>
FRONTIER OIL EXPLORATION COMPANY
3006 SOUTH HIGHLAND DRIVE, SUITE 206
SALT LAKE CITY, UTAH 84106
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD , 1996
TO THE SHAREHOLDERS OF FRONTIER OIL EXPLORATION COMPANY:
The 1996 annual meeting of the shareholders (the "Annual Meeting") of
Frontier Oil Exploration Company (the "Company") will be held at , Salt
Lake City, Utah, on , 1996. The Annual Meeting will convene at :00
a.m., local time, to consider and take action on the following proposals:
(1) To elect five directors to serve until the expiration of their
respective terms and until their respective successors are elected and
qualified;
(2) To approve amendment of the Company's Articles of Incorporation to
change its corporate name from "Frontier Oil Exploration Company" to
"FX Energy, Inc.";
(3) To approve the Frontier Oil Exploration Company 1995 Stock Option and
Award Plan; and
(4) To transact such other business as may properly come before the Annual
Meeting or any adjournment(s) thereof.
ONLY OWNERS OF RECORD OF THE 8,704,596 SHARES OF THE COMPANY'S COMMON STOCK
ISSUED AND OUTSTANDING AS OF THE CLOSE OF BUSINESS ON JUNE 10, 1996 (THE "RECORD
DATE"), WILL BE ENTITLED TO NOTICE OF AND TO VOTE AT THE ANNUAL MEETING. EACH
SHARE OF COMMON STOCK IS ENTITLED TO ONE VOTE.
HOLDERS OF AT LEAST A MAJORITY OF THE SHARES OF COMMON STOCK OUTSTANDING ON
THE RECORD DATE MUST BE REPRESENTED AT THE MEETING TO CONSTITUTE A QUORUM FOR
CONDUCTING BUSINESS.
THE ATTENDANCE AT AND/OR VOTE OF EACH SHAREHOLDER AT THE ANNUAL MEETING IS
IMPORTANT, AND EACH SHAREHOLDER IS ENCOURAGED TO ATTEND.
FRONTIER OIL EXPLORATION COMPANY
BY ORDER OF THE BOARD OF DIRECTORS
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Andrew W. Pierce, Secretary
Salt Lake City, Utah
DATED: , 1996
IMPORTANT
REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE FILL IN,
SIGN, DATE, AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE SELF-ADDRESSED,
STAMPED ENVELOPE PROVIDED. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
SPECIAL REQUEST
IF YOUR SHARES ARE HELD IN THE NAME OF A BROKERAGE FIRM, NOMINEE, OR OTHER
INSTITUTION, ONLY IT CAN VOTE YOUR SHARES. PLEASE CONTACT PROMPTLY THE PERSON
RESPONSIBLE FOR YOUR ACCOUNT AND GIVE INSTRUCTIONS FOR YOUR SHARES TO BE VOTED.
<PAGE>
FRONTIER OIL EXPLORATION COMPANY
3006 SOUTH HIGHLAND DRIVE, SUITE 206
SALT LAKE CITY, UTAH 84106
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the management of Frontier Oil Exploration Company, d/b/a
FX Energy (the "Company"), to be voted at the annual meeting of shareholders to
be held at , Salt Lake City, Utah, on , 1996, at :00 a.m.,
local time, or at any adjournment thereof (the "Annual Meeting"). The enclosed
proxy, when properly executed and returned in a timely manner, will be voted at
the Annual Meeting in accordance with the directions set forth thereon. If no
instructions are indicated on the enclosed proxy, at the Annual Meeting, the
proxy will be voted:
(1) FOR THE ELECTION OF THE FIVE NOMINEES OF MANAGEMENT SET FORTH HEREIN
AS DIRECTORS OF THE COMPANY TO SERVE AS DIRECTORS UNTIL THE EXPIRATION
OF THEIR RESPECTIVE TERMS AND UNTIL THEIR SUCCESSORS ARE ELECTED AND
QUALIFIED;
(2) FOR APPROVAL OF THE AMENDMENT OF THE COMPANY'S ARTICLES OF
INCORPORATION TO CHANGE ITS CORPORATE NAME FROM "FRONTIER OIL
EXPLORATION COMPANY" TO "FX ENERGY, INC.";
(3) FOR APPROVAL OF THE FRONTIER OIL EXPLORATION COMPANY 1995 STOCK OPTION
AND AWARD PLAN (THE "PLAN"); AND
(4) IN ACCORDANCE WITH THE BEST JUDGMENT OF THE PERSONS ACTING AS PROXIES
ON OTHER MATTERS PRESENTED FOR A VOTE.
The enclosed proxy, even though executed and returned to the Company, may
be revoked at any time before it is voted, either by giving a written notice,
mailed or delivered to the secretary of the Company, by submitting a new proxy
bearing a later date, or by voting in person at the Annual Meeting. If the
proxy is returned to the Company without specific direction, the proxy will be
voted in accordance with the board of directors' recommendations as set forth
above.
The entire expense of this proxy solicitation will be borne by the
Company. In addition to this solicitation, officers, directors, and regular
employees of the Company, who will receive no extra compensation for such
services, may solicit proxies by mail, by telephone, or in person. This
statement and form of proxy were first mailed to stockholders on or about
.
Only holders of the Company's 8,704,596 shares of common stock, par value
$0.001 (the "Common Stock"), issued and outstanding as of the close of business
on June 10 1996 (the "Record Date"), will be entitled to vote at the Annual
Meeting. Each share of Common Stock is entitled to one vote. Holders of at
least a majority of the 8,704,596 shares of Common Stock outstanding on the
Record Date must be represented at the Annual Meeting to constitute a quorum for
conducting business.
All properly executed and returned proxies as well as shares represented in
person at the meeting will be counted for purposes of determining if a quorum is
present, whether the proxies are instructed to abstain from voting or consist of
broker non-votes. Under Nevada corporate law and the Company's articles of
incorporation and bylaws, the election of directors requires a vote by a
plurality of the shares present at the Annual Meeting and the amendment of the
articles of incorporation requires approval by a majority of the issued and
outstanding shares entitled to vote. All other matters except certain specified
extraordinary matters are considered approved by the shareholders if approved by
at least a majority of the shares constituting a quorum at a meeting of the
shareholders. Therefore, abstentions and broker non-votes will have the same
legal effect as a vote against matters other than the election of directors.
Officers and directors holding an aggregate of 1,131,493 shares of Common
Stock, or approximately 13.0% of the issued and outstanding shares, have
indicated their intent to vote in favor of all proposals.
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ELECTION OF DIRECTORS
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GENERAL
The Company's articles of incorporation provide that the board of
directors shall be divided into three classes, with each class as equal in
number as practicable. One class is to be elected each year for a three-year
term. Due to the recent resignations and appointments of directors and the
desire to have all directors elected by the stockholders, all five directors of
the Company will be elected at the Annual Meeting. In order to apportion the
directors into classes as equal in number as possible, one director will be
elected to serve a one-year term, two directors will be elected to each serve a
two-year term, and two directors will be elected to each serve a three-year
term. The board of directors has nominated Andrew W. Pierce to serve for a term
expiring at the annual meeting for fiscal year 1997, Scott J. Duncan and Thomas
B. Lovejoy each to serve for a term expiring at the annual meeting for fiscal
year 1998, and David N. Pierce and Peter L. Raven each to serve for a term
expiring at the annual meeting for fiscal year 1999, in each case until their
respective successors shall have been elected and qualified.
It is intended that votes will be cast, pursuant to authority granted by
the enclosed proxy, for the election of the nominee named below as director of
the Company, except as otherwise specified in the proxy. In the event the
nominee shall be unable to serve, votes will be cast, pursuant to authority
granted by the enclosed proxy, for such person as may be designated by the board
of directors. Biographical information follows for the person nominated and for
each director whose term of office will continue after the Annual Meeting. The
officers of the Company are elected at the annual meeting of the board of
directors to hold office until their respective successors are elected and
qualified. The information concerning the nominee and directors and their
security holdings has been furnished by them to the Company. (See "PRINCIPAL
SHAREHOLDERS" below.)
EXECUTIVE OFFICERS, DIRECTORS, AND NOMINEES
The board of directors' nominees for election as directors of the Company
at the Annual Meeting are David N. Pierce, Scott J. Duncan, Thomas B. Lovejoy,
and Peter L. Raven. The following table sets forth the name, age, and position
of each executive officer and director of the Company who has served in such
position since the Company's last fiscal year:
Year
Director Term Business Experience During Past
Name Age Since Expires Five Years and Other Information
David N. Pierce 50 1992 1996 President and a Director of the
Company. For over three years prior
to 1992, he was Vice-President and
director of the Company's
predecessor, which he co-founded
with his brother, Andrew W. Pierce,
in January 1989. He became president
and director of the Company on its
acquisition of Exploration in March
1992. Mr. Pierce has been engaged in
an executive capacity with privately
held oil and gas companies since
1979 and has served exclusively in
such a capacity with Exploration
since its formation and with the
Company since its acquisition of
Exploration. He is an attorney with
over 20 years' experience in natural
resources, securities and
international business law. He is a
graduate of Princeton University and
Stanford Law School.
Andrew W. Pierce 48 1992 1997 Vice-President and a Director of the
Company. For over three years prior
to 1992, he was the President and a
Director of the Company's
predecessor, which he co-founded
with his brother, David N. Pierce,
in January 1989. He has over 20
years' oil and gas exploration,
drilling, production and leasing
experience. Mr. Pierce has held
primary management and line
responsibility for drilling and
completion operations on more than
60 oil and gas wells in Montana,
Wyoming, Utah and Nevada over the
last 20 years and supervises all
field operations of the Company.
Thomas B. Lovejoy 60 1995 1998 Vice-Chairman of the Board of
Directors and a Director of the
Company. Mr. Lovejoy has been
engaged in financial advisory and
investment banking activities since
1961. In November 1992, Mr. Lovejoy
formed Lovejoy Associates, Inc.,
Greenwich, Connecticut, to provide
financial strategic advice
respecting private placements,
mergers and acquisitions and other
financial alternatives. For three
years prior to forming Lovejoy
Associates, Inc., Mr. Lovejoy was
managing director and head of
natural resource, utility and mining
groups for Prudential Securities,
Inc., New York, New York. From 1980
to 1988, he was managing director
and head of the energy and natural
resources group of Paine Webber,
Inc. Since 1993, Mr. Lovejoy has
been a director of Scaltech, Inc.,
Houston, Texas, which processes
petroleum refinery oily waste. Mr.
Lovejoy received an MBA from Harvard
Business School and a B.S. from the
Massachusetts Institute of
Technology.
Peter L. Raven 57 1996 1998 Director of the Company. For over 25
years, Mr. Raven was employed by
Ultramar, PLC, London, England, a
British holding company for a world-
wide group of operating companies
engaged in the exploration for, and
production of, crude oil and natural
gas and the shipping, refining and
marketing of crude oil and petroleum
products. From 1957 through 1985,
Mr. Raven held various positions
with Ultramar and its U.K. and
American subsidiaries. From 1985
through 1988, Mr. Raven was
executive vice president, and from
1988 through 1992, was president of
American Ultramar. During this
time, he also served as the chief
financial officer of Ultramar PLC.
Mr. Raven received his education
from the Downside School in England,
obtained his associate's degree from
the Institute of Chartered
Accountants in 1962, and graduated
from the Harvard Business School
Advanced Management Programme in
1987.
Scott J. Duncan 47 1993 1996 Vice-President, Treasurer and a
Director of the Company. Mr. Duncan
was a financial consultant to the
Company from its inception in 1992
through April 1993, when he became a
full-time employee. From December
1988 through February 1992, Mr.
Duncan served as a director and
principal shareholder of MusicNet
Holding Company, Salt Lake City,
Utah. In March 1989, he became
secretary/treasurer of MusicNet and
in December 1989 was elected its
president. He continued in those
positions until February 1992. Mr.
Duncan served as president, director
and principal shareholder of
Hastings Corp., Salt Lake City,
Utah, from May 1990 until January
1992, when it acquired Anodyne
Corporation, a Whitmore Lake,
Michigan, manufacturer of a patented
lift device. Mr. Duncan is a
graduate of the University of Utah
School of Business.
* The year given for the expiration of the term of each incumbent director
does not give effect to the election of such incumbent to the term as
proposed herein. In order to effect the reassignment of individual
directors to the proposed terms, the incumbent directors will resign from
their current terms upon their reelection to such terms.
VOTE REQUIRED
Directors are elected by the affirmative vote of the holders of a plurality
of the shares of Common Stock voted at the Annual Meeting. Abstentions and
broker non-votes will not be counted in the election of directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
NOMINEES OF MANAGEMENT SET FORTH HEREIN AS DIRECTORS OF THE COMPANY, TO SERVE IN
SUCH CAPACITIES UNTIL THE EXPIRATION OF THEIR TERM AND UNTIL THEIR SUCCESSORS
ARE ELECTED AND QUALIFIED.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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Unless otherwise indicated, the terms of the following transactions
between related parties were not determined as a result of arm's length
negotiations.
AMOUNTS DUE TO AND FROM AFFILIATES
During 1994, David N. Pierce and Andrew W. Pierce provided their
management services to the Company through Pierce-Arrow Management, Inc.
("Pierce-Arrow"), a company which they own. Total amounts accrued to Pierce-
Arrow were $195,067 for 1994. As of December 31, 1995, the Company owed Pierce-
Arrow a total of $95,005, including interest at 9% of $17,997, for such services
provided previously. During the first quarter of 1996, the Company paid Pierce-
Arrow $60,000 reducing the outstanding balance due Pierce-Arrow to $35,551
(including interest) as of March 31, 1996.
There has been no independent review or determination of the fairness or
reasonableness of the terms of the arrangements between the Company and Pierce-
Arrow.
INTERIM LOAN COMMITMENT; CONSULTING AGREEMENT
Effective August 3, 1995, the Company entered into a loan agreement with an
existing shareholder, Thomas B. Lovejoy, which provided for borrowing, with
interest at the shareholder's borrowing rate plus 2%, through March 31, 1996, up
to $430,000, reduced by the amount of any equity investment in the Company by
such shareholder after August 1, 1995. As a result of Mr. Lovejoy's subsequent
equity investment of $370,000, the available borrowing under this line of credit
was reduced to $60,000. No amounts were borrowed by the Company under this
credit facility prior to its expiration on March 31, 1996.
On August 3, 1995, the Company also agreed to engage Mr. Lovejoy's company,
Lovejoy Associates, Inc., as financial consultant. The parties subsequently
entered into a formal consulting agreement, effective August 3, 1995, with
Lovejoy Associates, Inc., under which it advises the Company respecting future
financing alternatives, identifying possible sources of debt and equity
financing, with particular emphasis on funding for the Baltic Concession and
the Company's relationship with the investment community at a fee of $10,000 per
month commencing October 15, 1995, and continuing through December 31, 1997.
The Company agreed to reimburse the consultant for out-of-pocket expenses.
In consideration of the consulting agreement and a loan agreement now
expired, the Company issued to Lovejoy Associates, Inc., 200,000 shares of
restricted Common Stock and granted to Mr. Lovejoy options to purchase 350,000
shares of Common Stock at an exercise price of $3.00 per share. The options
became immediately exercisable to purchase 150,000 shares of Common Stock and
subsequently become exercisable respecting an additional 100,000 shares on
December 31, 1996, and an additional 100,000 shares on December 31, 1997, unless
the consulting agreement with Lovejoy Associates, Inc., has previously been
terminated by the Company for cause. The options may be exercised at any time
within five years after they become exercisable. The Company recognized
$400,000 as compensation expense in connection with the issuance of such 200,000
shares. The Company has agreed to register the resale of shares of Common Stock
issuable on the exercise of the option. At the optionee's election, any tax
withholding obligation may be satisfied by the optionee tendering shares of
Common Stock to the Company or by the Company withholding shares otherwise
issuable on exercise of the options. The foregoing was the result of arm's
length negotiations.
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PRINCIPAL SHAREHOLDERS
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The following table sets forth, as of the Record Date, the name, address
and shareholdings of each person who owns of record, or was known by the Company
to own beneficially, 5% or more of the Common Stock currently issued and
outstanding; the name and shareholdings of each director; and the shareholdings
of all executive officers and directors as a group. Unless otherwise indicated,
all shares consist of Common Stock, and all such shares are owned beneficially
and of record by the named person or group.
Percentage
of
Nature of Ownership
Name of Beneficial Owner Ownership Amount(1) (2)
PRINCIPAL STOCKHOLDERS
David N. Pierce Common Stock 227,993 (3) 2.6%
3006 Highland Drive, No. 206 Options 750,000 (7) 7.9%
Salt Lake City, Utah 84106 Total 977,993 10.3%
Andrew W. Pierce Common Stock 210,000 (4) 2.4%
3006 Highland Drive, No. 206 Options 700,000 (7) 7.4%
Salt Lake City, Utah 84106 Total 910,000 9.7%
Thomas B. Lovejoy Common Stock 419,000 (5) 4.8%
48 Burying Hill Road Options 350,000 (7) 3.9%
Greenwich, Connecticut 06831 Total 769,000 8.5%
The Wood River Trust Common Stock 500,000 (9) 5.7%
370 Lexington Avenue, No. 400
New York, New York 10017
MML Management, Ltd. Common Stock 532,028 6.1%
19 Willis Street Warrants 43,194 (8) 0.5%
Armadale 3143 Total 575,222 6.6%
Melbourne, Australia
National Australia Trustees Common Stock 411,364 4.7%
271 Collins Street Warrants 36,500 (7) 0.4%
Melbourne 3000 Total 447,864 5.1%
Australia
DIRECTORS
David N. Pierce -------------------(See Above)-------------
Andrew W. Pierce -------------------(See Above)-------------
Scott J. Duncan Common Stock 242,000 (6) 2.8%
Options 50,000 (7) 0.6%
Total 292,000 3.3%
Thomas B. Lovejoy -------------------(See Above)-------------
Peter L. Raven Common Stock 32,500 0.4%
ALL EXECUTIVE OFFICERS AND
DIRECTORS AS A GROUP (5 Common Stock 1,131,493 13.0%
PERSONS)
Options 2,050,000 19.1%
Total 3,181,493 29.6%
(1)Except as otherwise noted, shares are owned beneficially and of record, and
such record shareholder has sole voting, investment and dispositive power.
(2)Calculations of total percentages of shares outstanding for each individual
assumes the exercise of options held by that individual to which the
percentage relates. Percentages calculated for totals of all executive
officers and directors as a group assume the exercise of all options held by
the indicated group.
(3)Includes 127,493 shares held by Mr. Pierce jointly with his wife, Mary
Phillips; 20,000 shares held by Mary Phillips; 40,000 shares held by Mr.
Pierce as custodian for minor children; 20,000 shares held by Alysa Thirsk,
an adult child living in Mr. Pierce's household; and 20,000 held by Mary
Phillips as custodian for a minor child. Mr. Pierce is deemed to hold or
share voting and dispositive power over all of such shares.
(4)Includes 10,000 shares held by a minor child. Mr. Pierce is deemed to hold
dispositive power over all of such shares.
(5)Includes 12,000 shares held in trust for the benefit of Mr. Lovejoy's
children, 49,500 shares held in Mr. Lovejoy's IRA account, and 208,000 shares
held by Lovejoy Associates, Inc., (of which Mr. Lovejoy is sole owner). Mr.
Lovejoy is deemed to hold dispositive power over all of such shares.
(6)Includes 10,000 shares held solely by Mr. Duncan; 172,000 shares held by Mr.
Duncan jointly with his wife, Cathy H. Duncan; 20,000 shares held solely by
Cathy H. Duncan; and 40,000 shares held by Cathy Duncan as custodian for
minor children. Mr. Duncan is deemed to hold or share voting and dispositive
power over all of such shares.
(7)These options give the holders the right to acquire shares of Common Stock at
prices ranging from $1.50 to $3.00 per share with various expiration dates
ranging from May 1998 to June 2004. Certain of the options are subject to
vesting requirements but are reflected in the table as being fully vested and
exercisable. See "ITEM 10. EXECUTIVE COMPENSATION: Options and Warrants to
Executive Officers, Directors, and Others."
(8)These warrants give the holder the right to acquire shares of Common Stock at
a price of $1.65 per share expiring September 19, 1999.
(9)Includes 25,000 shares of Common Stock held by the Rumsey Royalty Trust. The
Wood River Trust and Rumsey Royalty Trust are both affiliates of Sunshine
Pacific Corporation.
COMPLIANCE WITH EXCHANGE ACT REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
10% of a registered class of the Company's equity securities to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of equity securities of the Company. Officers, directors,
and greater than 10% shareholders are required to furnish the Company with
copies of all section 16(a) forms they file.
Based solely upon a review of Forms 3, 4, and 5, and amendments thereto,
furnished to the Company during or respecting its last fiscal year ended
December 31, 1995, no person who, at any time during the most recent fiscal
year, was a director, officer, beneficial owner of more than 10% of any class of
equity securities of the Company or any other person known to be subject to
Section 16 of the Exchange Act failed to file, on a timely basis, reports
required by Section 16(a) of the Exchange Act, except that David N. Pierce
failed to timely report his conversion of shares of the Company's preferred
stock into 500 shares of Common Stock; two reports filed on behalf of trusts
which Thomas B. Lovejoy acts as trustee for the benefit of his children were
filed less than one month late; Mr. Lovejoy's initial statement of ownership was
filed less than one month late and incorrectly overstated the number of shares
of Common Stock held by Mr. Lovejoy; Scott J. Duncan failed to report his
gifting of 1,500 shares of Common Stock prior to becoming a director on his
initial statement of ownership; Robert I. Coward filed one report two days late;
Marc W. Eller, a former director, did not timely report his initial ownership or
subsequent conversion of preferred stock into Common Stock; MML Management,
Ltd., previously a holder of more than 10% of the Common Stock outstanding
during the year but which now holds less than such amount, failed to timely
report its initial statement of ownership; and Charles C. Rumsey and the Wood
River Trust, previously beneficial holders of more than 10% of the Common Stock
outstanding during the year but who now hold less than such amount, failed to
file any reports required by Section 16(a).
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EXECUTIVE COMPENSATION
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SUMMARY COMPENSATION
The following table sets forth, for the last three fiscal years of the
Company, the annual and long term compensation earned by, awarded to, or paid to
the person who was chief executive officer of the Company as of the end of the
last fiscal year. None of the Company's other executive officers as of the end
of the last fiscal year received total annual salary and bonuses in excess of
$100,000 for all services rendered in all capacities to the Company and its
subsidiaries.
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Securities
Year Annual RestricteUnderlying All
Ended Compen- d Stock Options/ LTIP Other
Name and Dec. Salary Bonus sation Award(s) SARs PayoutsCompen-
Principal 31, ($)(1) ($) ($) ($) (no.) ($) sation
Position ($)
David N. 1995 $120,000 -- -- -- 100,000 -- --
Pierce
President 1994 $99,569 -- -- -- 500,000 -- --
(CEO)
1993 $90,000 -- -- -- 150,000 -- --
(1) Figures shown represent the compensation component of amounts paid
to Pierce-Arrow Management, Inc., owned by David N. and Andrew W. Pierce. See
"ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS: Transactions
Between Related Parties."
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth information respecting all individual
grants of options and stock appreciation rights ("SARs") made during the last
completed fiscal year to the chief executive officer of the Company.
(a) (b) (c) (d) (e)
Number of % of Total
Securities Options/SARs
Underlying Granted to
Options/SARs Employees Exercise or
Name Granted (no.) During Fiscal Base Price Expiration
Year ($/share) Date
David N.
Pierce 100,000 8.5% $3.00 October 6,
President 2000
(CEO)
On October 6, 1995, the Company granted options to purchase 100,000 shares
of common stock, subject to adjustment for certain events of dilution, to Mr.
David Pierce. See below for a discussion of the terms of such options.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND YEAR END OPTION/SAR
VALUES
The following table sets forth information respecting the exercise of
options and SARs during the last completed fiscal year by the chief executive
officer of the Company and the fiscal year end values of unexercised options and
SARs.
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY End (no.) FY End ($)
Shares Exercisable/
Name Acquired on Value Realized Unexercisable Exercisable/
Exercise (no.) ($) Unexercisable
David N.
Pierce
President 350,000/400,000
(CEO) -- -- (1) $56,250/-- (2)
(1) Includes options to purchase 100,000 shares of Common Stock at any
time through October 6, 2000, at an exercise price of $3.00 per share;
150,000 shares of Common Stock at any time through May 7, 1998, at an
exercise price of $1.50 per share; and 500,000 shares of Common Stock
exercisable in installments of 100,000 shares per year commencing in June
1995, at an exercise price of $3.00 per share.
(2) Based on the bid price for the Company's Common Stock of $1.875 on
December 31, 1995.
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT, AND CHANGE IN CONTROL
On June 10, 1994, the Company entered into three-year employment
agreements, effective January 1, 1995, with David N. Pierce and Andrew W.
Pierce, each of whom is an officer and director, providing for annual salaries
during 1995 of $120,000 and $90,000, respectively, with annual increases of at
least 7.5%, as determined by the Company's board of directors or a compensation
committee. Each employment agreement, as amended, provides that on the
initiation of the Company's first test well in its Baltic Concession in Poland,
the executive employee is entitled to receive a bonus in the form of a $100,000
credit that may be applied against the exercise of options to purchase Common
Stock. The term of such employment agreements are automatically extended for an
additional year on the anniversary date of each such agreement. In the event of
termination of employment resulting from a change in control of the Company not
approved by the Board of Directors, each of the above employees would be
entitled to a termination payment equal to 150% of his annual salary at the time
of termination and the value of previously granted employee benefits, including
the repurchase of outstanding options.
OPTIONS AND WARRANTS TO OFFICERS, DIRECTORS AND EMPLOYEES
The Company currently has outstanding options to purchase an aggregate of
2,300,000 shares that have been granted to officers, directors and employees of
the Company. Of such options, 825,000 contain vesting limitations contingent on
continuing association with the Company. Options held by officers, directors
and employees are exercisable at prices of between $1.50 and $3.00 per share.
Options issued to executive officers and directors contain terms providing that
in the event of a change in control of the Company and at the election of the
optionee, in consideration of the cancellation of unexercised options, the
Company will pay to the optionee an amount equal to the number of unexercised
options multiplied by the amount by which the fair market value of the Common
Stock as of the date preceding the date of the change of control exceeds the
option exercise price. The grants of options to officers and directors were not
the result of arm's length negotiations.
BOARD MEETINGS AND COMMITTEES
The board of directors had two formal meeting(s) during the 1995 fiscal
year, at which all of the directors were in attendance. The directors also met
informally on several occasions throughout the year and discussed the business
and affairs of the Company. Additionally, the board of directors took several
actions through unanimous written consents of lieu of meetings. In June 1996,
the Board of Directors appointed Messrs. Lovejoy and Raven to the audit and
compensation committees. Such committees have not yet met.
DIRECTORS' COMPENSATION
In connection with Mr. Raven's appointment to the board of directors, the
Company issued 6,000 shares of Common Stock to Mr. Raven as compensation for
services to be provided as a director. The Company has agreed to issue 6,000
shares to Mr. Raven on the anniversary date of his appointment as a director
each year that he continues to serve as a director.
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PROPOSAL NO. 2: CHANGE OF COMPANY NAME
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The first Article of the Company's Articles of Incorporation currently
reads as follows: "The name of the Corporation shall be Frontier Oil
Exploration Company."
In the course of its various business activities, the Company has
encountered a number of other companies that utilize the word "Frontier" as the
first word of their name, which has the potential of being confusing to the
Company's shareholders and third parties. Accordingly, the board of directors
has approved a change in the name of the Company to FX Energy, Inc. If the
proposal to change the name is approved, Article I of the Company's Articles of
Incorporation will read as follows:
The name of the Corporation is FX Energy, Inc.
Stock certificates for Common Stock may be retained by shareholders and
need not be exchanged for certificates bearing the Company's new name. Stock
certificates reflecting the name FX Energy, Inc., will be issued to shareholders
upon any sale or registration of transfer of shares of Common Stock following
the effectiveness of the name change.
VOTE REQUIRED
Amendment of the Company's Articles of Incorporation requires approval by
a majority of the shares of Common Stock issued and outstanding. Abstentions
and broker non-votes will have the same legal effect as a vote against the
amendment.
The board of directors recommends a vote "FOR" amendment of the Articles
of Incorporation to change the Company's name to FX Energy, Inc. It is intended
that, in the absence of contrary specifications, votes will be cast pursuant to
the enclosed proxies for approval of the amendment to the Articles of
Incorporation.
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PROPOSAL NO. 3: APPROVAL OF 1995 OPTION AND AWARD PLAN
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GENERAL
On August 31 1995, the board of directors of the Company approved the terms
of a 1995 Stock Option and Award Plan (the "Plan"). In order for certain of the
Plan's provisions to be effective, it must be approved by the shareholders of
the Company and is being submitted for such approval pursuant to this Proxy
Statement. If the Plan is approved, it will be deemed to be the Plan of the
Company, as discussed above.
In the following paragraphs a summary of the terms of the Plan is provided.
The following summary is qualified in its entirety by the provisions of the
Plan, the form of which is attached hereto at Tab A.
PLAN SUMMARY
The board of directors of the Company believes that it is important that
employees and other individuals who contribute to the success of the Company
have a stake in the enterprise as shareholders. Consistent with this belief,
the award of stock options will be an important element of the Company's
compensation program.
The Plan is intended to (a) attract competent directors, executive
personnel, and other employees, (b) ensure the retention of the services of
existing directors, executive personnel and employees, and (c) provide
incentives to all of such personnel to devote the utmost effort and skill to the
advancement and betterment of the appropriate corporation by permitting them to
participate in ownership and thereby permitting them to share in increases in
the value which they help produce.
The Plan is to be administered either by the board of directors or by a
committee (the "Committee") to be appointed from time to time by such board of
directors. Awards granted under the Plan may be incentive stock options
("ISOs") as defined in the Code, appreciation rights, options which do not
qualify as ISOs, or stock bonus awards and are awarded to employees, including
officers and directors, who, in the opinion of the board or the Committee, have
contributed, or are expected to contribute, materially to the success of the
Company. In addition, at the discretion of the board of directors or the
Committee, options or bonus stock may be granted to individuals who are not
employees but contribute to the success of the Company.
The exercise price of options granted under the Plan is based on the fair
market value of the underlying capital stock at the time of grant and, in the
case of ISOs, may not be less than 100% of the fair market value of such capital
stock on the date the option is granted (110% of the fair market value in the
case of 10% shareholders). Options granted under the Plan shall expire not
later than ten years after the date of grant (five years in the case of ISOs
granted to 10% shareholders). The option price may be paid by cash or, at the
discretion of the board of directors or Committee, by delivery of shares of
capital stock of the Company already owned by the optionee (valued at their fair
market value at the date of exercise), or a combination thereof.
All of the employees, officers, and directors of the appropriate
corporation are eligible to participate under the Plan. A maximum of 500,000
shares are available for grant under the Plan. The identification of
individuals entitled to receive awards, the terms of the awards, and the number
of shares subject to individual awards are determined by the board of directors
or the Committee, in their sole discretion; provided, however, that in no event
may the aggregate fair market value of shares for which an ISO is first
exercisable in any calendar year by any eligible employee exceed $100,000.
The aggregate number of shares with respect to which options or stock
awards may be granted under the Plan, the number of shares covered by each
outstanding option, and the purchase price per share, shall be adjusted for any
increase or decrease in the number of issued shares resulting from a
recapitalization, reorganization, merger, consolidation, exchange of shares,
stock dividend, stock split, reverse stock split, or other subdivision or
consolidation of shares or other increase or decrease in such shares effected
without substantial dilution or enlargement of rights granted to or available
for eligible participants in the Plan. In the case of an ISO, the ratio of the
option price immediately after the change to the fair market value of the stock
subject to the option immediately after the corporation transaction must not be
more favorable to the optionee on a share by share basis than the ratio of the
old option price to the fair market value of the stock subject to the option
immediately before such transaction. All such adjustments shall be made by the
board or the Committee, whose good faith determination shall be binding absent
manifest error.
The board of directors may from time to time alter, amend, suspend, or
discontinue the Plan with respect to any shares as to which options or stock
awards have not been granted. However, no such alternation or amendment (unless
approved by the shareholders) shall (a) increase (except in the event of an
event of dilution) the maximum number of shares for which options or stock
awards may be granted under the Plan either in the aggregate or to any eligible
employee; (b) reduce (except in the event of an event of dilution) the minimum
option prices which may be established under the Plan; (c) extend the period or
periods during which options may be granted or exercised; (d) materially modify
the requirements as to eligibility for participation in the Plan; (e) change the
provisions relating to events of dilution; or (f) materially increase the
benefits accruing to the eligible participants under the Plan.
CERTAIN TAX MATTERS
A participant to whom a nonqualified option is granted will not realize
income at the time of the grant. Upon exercise of the option, the excess of the
fair market value of the stock on the date of exercise over the exercise price
will be taxable to the optionee as ordinary income. The tax basis to the
optionee for the stock acquired is the exercise price plus the amount recognized
as income. The Company will be entitled to a deduction equal to the amount of
the ordinary income realized by the optionee in the taxable year which includes
the end of the optionee's taxable year in which he realizes the ordinary income.
When shares acquired pursuant to the exercise of the option are disposed of, the
holder will realize additional capital gain or loss equal to the difference
between the sales proceeds and his tax basis in the stock.
If a participant to whom an option is granted exercises such option by
payment of the exercise price in whole or in part with previously owned shares,
the optionee will not realize income with respect to the number of shares
received on exercise which equals the number of shares delivered by the
optionee. The optionee's basis for the delivered shares will carry over to the
option shares received. With regard to the number of nonqualified option
shares0 received which exceeds the number of shares delivered, the optionee will
realize ordinary income at the time of exercise; the optionee's tax basis in
these additional option shares will equal the amount of ordinary income realized
plus the amount of any cash paid.
Recipients of ISOs will not be required to recognize income at the time of
the grant of the options or at the time of exercise of the options as long as
the stock received on exercise is held for at least two years form the date of
the grant of the ISOs or one year from the date of exercise (although the
difference between the fair market value of the stock and the exercise price
paid at the time of exercise must be taken into account for alternative minimum
tax purposes). If the stock received upon exercise of an ISO is disposed of
prior to the expiration of either of such time periods, the employee will be
required to recognize as ordinary income the amount by which the fair market
value of the stock received at the time of exercise exceeds the exercise price
of the ISOs.
Under the Plan, stock appreciation rights ("SARs") can be granted at the
time an option is granted with respect to all or a portion of the shares subject
to the related option. SARs can only be exercised to the extent the related
option is exercisable and cannot be exercised for the six month period following
the date of grant, except in the event of death or disability of the optionee.
The exercise of any portion of either the related option or the tandem SARs will
cause a corresponding reduction in the number of shares remaining subject to the
option or the tandem SARs, thus maintaining a balance between outstanding
options and SARs. SARs permit the holder to receive an amount (in cash, shares,
or a combination of cash and shares, as determined by the board of directors at
the time of grant) equal to the number of SARs exercised multiplied by the
excess of the fair market value of the shares on the exercise date over the
exercise price of the related options.
Under the terms of the Plan, the board of directors or the Committee may
also grant stock awards which may, at the discretion of the board of directors
or Committee, be subject to forfeiture under certain conditions. Recipients of
stock awards will realize ordinary income at the time of the lapse of any
forfeiture provisions equal to the fair market value of the shares less any
amount paid in connection with the issuance (the board of directors or the
Committee can require the payment of par value at the time of the grant). The
appropriate corporation will realize a corresponding compensation deduction.
The holder will have a basis in the shares acquired equal to any amount paid on
exercise plus the amount of any ordinary income recognized by the holder. On
sale of the shares, the holder will have a capital gain or loss equal to the
sale proceeds minus his basis in the shares.
ISSUANCE OF OPTIONS PURSUANT TO THE PLAN
At the time of adoption of the Plan, the board of directors also approved
the grant of options to purchase an aggregate of 50,000 shares of Common Stock
at an exercise price of $1.50 per share under the Plan. If the Plan is approved
by the shareholders at the Annual Meeting, these options will qualify as ISOs
and be subject to the treatment described above.
VOTE REQUIRED
Adoption the Plan requires the approval of a majority of the shares present
in person or by proxy and entitled to vote at the Annual Meeting. Abstentions
and broker non-votes will have the same legal effect as a vote against the
approval of the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE PLAN.
IT IS INTENDED THAT, IN THE ABSENCE OF CONTRARY SPECIFICATIONS, VOTES WILL BE
CAST PURSUANT TO THE ENCLOSED PROXIES FOR THE APPROVAL OF THE PLAN.
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INDEPENDENT PUBLIC ACCOUNTANTS
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The selection of the Company's auditors will not be submitted to the
shareholders for their approval in the absence of a requirement to do so. It is
anticipated that representatives of Coopers & Lybrand LLP will be present at the
Annual Meeting and will be provided the opportunity to make a statement, if they
desire to do so, and be available to respond to appropriate questions.
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SHAREHOLDER PROPOSALS
- ------------------------------------------------------------------------------
No proposals have been submitted by shareholders of the Company for
consideration at the Annual Meeting. It is anticipated that the next annual
meeting of shareholders will be held during May 1997. Shareholders may present
proposals for inclusion in the proxy statement to be mailed in connection with
the 1997 annual meeting of shareholders of the Company, provided such proposals
are received by the Company no later than , 1997, and are otherwise
in compliance with applicable laws and regulations and the governing provisions
of the articles of incorporation and bylaws of the Company.
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OTHER MATTERS
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Management does not know of any business other than that referred to in the
Notice which may be considered at the Annual Meeting. If any other matters
should properly come before the Annual Meeting, it is the intention of the
persons named in the accompanying form of proxy to vote the proxies held by them
in accordance with their best judgment.
In order to assure the presence of the necessary quorum and to vote on the
matters to come before the Annual Meeting, please indicate your choices on the
enclosed proxy and date, sign, and return it promptly in the envelope provided.
The signing of a proxy by no means prevents your attending the meeting.
By Order of the Board of Directors
FRONTIER OIL EXPLORATION COMPANY
Andrew W. Pierce, Secretary
Salt Lake City, Utah
June , 1996
<PAGE>
PROXY
ANNUAL MEETING OF THE SHAREHOLDERS OF (THIS PROXY IS SOLICITED
FRONTIER OIL EPLORATION COMPANY ON BEHALF
ON , 1996 OF THE BOARD OF DIRECTORS)
The undersigned hereby appoints David N. Pierce and proxies,
with full power of substitution, to vote the shares of common stock of Frontier
Oil Exploration Company (the "Company"), which the undersigned is entitled to
vote at the annual meeting of shareholders of the Company ("Annual Meeting") to
be held at , Salt Lake City, Utah , on
, , 1996, at : p.m., local time, or any
adjournment(s) thereof, such proxies being directed to vote as specified below.
IF NO INSTRUCTIONS ARE SPECIFIED, SUCH PROXY WILL BE VOTED "FOR" EACH PROPOSAL.
To vote in accordance with the board of directors' recommendations, sign
below. The "FOR" boxes may, but need not, be checked. To vote against any of
the recommendations, check the appropriate box marked "AGAINST" below. To
withhold authority for the proxies to vote for any of the recommendations, check
the appropriate box(es) marked "WITHHOLD AUTHORITY" below.
The board of directors recommends votes "FOR" the following proposals,
each of which has been proposed by the board of directors:
1. To elect each of the following nominees to serve as a director for a
term expiring at the annual meeting of the shareholders of the Company
for the year indiciated next to the nominee's name and until a
successor is elected and qualified. To withhold your vote for any
individual nominee, strike a line through such nominee's name;
Andrew W. Pierce (1997)
Scott J. Duncan (1998)
Thomas B. Lovejoy (1998)
David N. Pierce (1999)
Peter L. Raven (1999)
2. To approve the amendment of the Company's articles of incorporation to
change its corporated name from "Frontier Oil Exploration Company" to
"FX Energy, Inc.";
FOR [ ] AGAINST [ ] WITHHOLD AUTHORITY [ ]
3. To approve the Frontier Oil Exploration Company 1995 Stock Option and
Award Plan; and
FOR [ ] AGAINST [ ] WITHHOLD AUTHORITY [ ]
4. To transact such other business as may properly come before the Annual
Meeting.
FOR [ ] AGAINST [ ] WITHHOLD AUTHORITY [ ]
PLEASE PRINT YOUR NAME AND SIGN EXACTLY AS YOUR NAME APPEARS IN THE RECORDS OF
THE COMPANY. WHEN SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. IF YOUR
SHARES ARE HELD AT A BROKERAGE HOUSE, PLEASE INDICATE IN THE SPACE PROVIDED THE
NAME OF THE BROKERAGE HOUSE AND THE NUMBER OF SHARES HELD.
Dated: Number of Shares Held of Record
Number of Shares Held at a Brokerage or Clearing House
Name of Brokerage or Clearing House
Signature Signature (if held jointly)
Print Name Print Name
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY TO:
FRONTIER OIL EXPLORATION COMPANY
3006 SOUTH HIGHLAND DRIVE SUITE 206
SALT LAKE CITY, UTAH 84106
