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 Section 240.14a-11(c) Section 240.14a-12
Evergreen Resources, Inc.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-------------------------------------------------------------------------
(Name(s) of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
________________________
(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: ________________________
EVERGREEN RESOURCES, INC.
1401 17th Street, Suite 1200
Denver, Colorado 80202
303-298-8100
------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held June 16, 2000
TO THE SHAREHOLDERS OF EVERGREEN RESOURCES, INC.:
NOTICE HEREBY IS GIVEN that the Annual Meeting of Shareholders of Evergreen
Resources, Inc., a Colorado corporation (the "Company"), will be held at The
Westin in the Tabor Auditorium, 1672 Lawrence Street, Denver, Colorado
80202-0210, on June 16, 2000, at 10:00 a.m., Mountain Daylight Time, and at any
adjournment thereof (the "Meeting"), for the purpose of considering and acting
upon the following matters:
1. The election of two directors of the Company.
2. A proposal to approve the 2000 Stock Incentive Plan of Evergreen
Resources, Inc.
3. The transaction of such other business as may properly come before the
Meeting or any adjournment thereof.
This Proxy Statement and the accompanying proxy are being mailed to the
shareholders of the Company on or about May 17, 2000.
Only holders of record of the Company's common stock at the close of business on
May 15, 2000 are entitled to notice of and to vote at the Meeting.
All shareholders, whether or not they expect to attend the Meeting in person,
are urged to sign and date the enclosed proxy and return it promptly in the
enclosed postage-paid envelope, which requires no additional postage if mailed
in the United States. The giving of a proxy will not affect your right to vote
in person if you attend the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS.
KEVIN R. COLLINS
SECRETARY
Denver, Colorado
May 17, 2000
EVERGREEN RESOURCES, INC.
------------------------------------
PROXY STATEMENT
2000 ANNUAL MEETING OF SHAREHOLDERS
GENERAL INFORMATION
The enclosed proxy is solicited by and on behalf of the Board of Directors of
Evergreen Resources, Inc., a Colorado corporation (the "Company" or
"Evergreen"), for use at the Company's Annual Meeting of Shareholders to be held
at The Westin in the Tabor Auditorium, 1672 Lawrence Street, Denver, Colorado
80202-0210, on June 16, 2000, at 10:00 a.m., Mountain Daylight Time, and at any
adjournment thereof (the "Meeting"). This Proxy Statement and the accompanying
proxy are being mailed to the shareholders of the Company on or about May 17,
2000.
Any person signing and returning the enclosed proxy may revoke it at any time
before it is voted by giving written notice of such revocation to the Company or
by voting in person at the Meeting. Any written notice revoking a proxy should
be sent to: Evergreen Resources, Inc., P.O. Box 660, Denver, Colorado
80201-0660. The expense of soliciting proxies, including the cost of preparing,
assembling and mailing these proxy materials, will be borne by the Company. It
is anticipated that solicitations of proxies for the Meeting will be made only
by use of the mails; however, the Company may use the services of its directors,
officers and employees to solicit proxies personally or by telephone without
additional salary or compensation to them. Brokerage houses, custodians,
nominees and fiduciaries will be requested to forward the proxy soliciting
materials to the beneficial owners of the Company's shares held of record by
such persons, and the Company will reimburse such persons for their reasonable
out-of-pocket expenses for that purpose.
All shares represented by valid proxies will be voted in accordance therewith
at the Meeting. If no direction is made, validly executed and returned
proxies will be voted for the election of the nominees for director named
below, for approval of the 2000 Stock Incentive Plan of Evergreen Resources,
Inc. and in the discretion of the proxy holders with respect to any other
matters properly brought before the Meeting.
The Company's Annual Report for the fiscal year ended December 31, 1999 is
being mailed along with these proxy materials to the Company's shareholders
and contains certain financial information regarding the Company. See
"Financial Information."
SHARES OUTSTANDING AND VOTING RIGHTS
All voting rights are vested exclusively in the holders of the Company's no
par value common stock (the "Common Stock"), with each share entitled to one
vote. Only shareholders of record at the close of business on May 15, 2000
are entitled to notice of and to vote at the Meeting. On May 15, 2000, the
Company had 14,943,106 shares of Common Stock outstanding, each of which is
entitled to one vote on all matters to be voted upon at the Meeting,
including the election of directors. No fractional shares are presently
outstanding.
A majority of the outstanding Common Stock represented in person or by proxy
will constitute a quorum at the Meeting. The two nominees for director receiving
the most votes for their election will be elected director, provided that a
quorum is present. The proposal to approve the 2000 Stock Incentive Plan of
Evergreen Resources, Inc. will be approved if the votes cast in favor of the
proposal exceed the votes cast against it, again provided that a quorum is
present. Abstentions and broker non-votes will have no effect on the election of
directors or the proposal to approve the plan, but will be counted for purposes
of determining if a quorum is present.
2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding persons known to
the Company to beneficially own five percent or more of the Common Stock as of
May 1, 2000. This information is based upon filings made by such persons with
the Securities and Exchange Commission (the "SEC") and upon information provided
to the Company. Beneficial ownership is determined in accordance with SEC rules.
In computing the number of shares beneficially owned by a person and the
percentage ownership of that person, shares subject to options or warrants held
by that person that are currently exercisable or that are or may become
exercisable within 60 days of May 1, 2000, are deemed outstanding. These shares,
however, are not deemed outstanding for the purposes of computing the percentage
ownership of any other person. Except as indicated in the footnotes to this
table and under applicable community property laws, each shareholder named in
the table has sole voting and investment power with respect to the shares set
forth opposite the shareholder's name.
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF CLASS
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OUTSTANDING
- ------------------- -------------------- ----------------
Advisory Research, Inc. 852,381 (1) 5.70%
David B. Heller
Two Prudential Plaza
180 N. Stetson, Suite 5780
Chicago, IL 60601
AMVESCAP, PLC 1,504,700 10.07%
11 Devonshire Square
London EC2M 4YR
England
Gerald R. Forsythe 1,150,716 (2) 7.70%
1075 Noel Avenue
Wheeling, IL 60090
John Hancock Financial Services, Inc. 2,006,376 (3) 13.25%
200 Claredon Street
Boston, MA 02117
Lord, Abbett & Co. 1,087,970 7.28%
90 Hudson Street
Jersey City, NJ 07302
Perkins, Wolt, McDonnell & Company 955,000 6.39%
53 W. Jackson Blvd., Suite 722
Chicago, IL 60604
- -------------------
(1) David B. Heller is President and the controlling shareholder of Advisory
Research, Inc.
(2) Consists of shared voting and dispositive power over 223,530 shares and
14,452 shares issuable under stock purchase warrants currently exercisable
held by Energy Investors Fund I ("Fund I") and 727,186 shares and 185,548
shares issuable under stock purchase warrants currently held by Energy
Investors Fund II ("Fund II"). Fund I is controlled by its general partner
Energy Investors Partners, L.P. ("Partners I"). Fund II is controlled by
its general partner Energy Investors Partners II, L.P. ("Partners II").
Partners I and Partners II are each 50%-owned by John Hancock Financial
Services, Inc. ("JHFS"), an indirect, wholly-owned subsidiary of John
Hancock Mutual Life Insurance Co. ("John Hancock"), and by EIF Investors,
Inc. ("Investors"). Investors is 100%-owned by EIF Acquisition, L.L.C.,
which in turn is 99%-owned by Indeck Capital, Inc., which in turn is
80%-owned by Gerald R. Forsythe.
(3) Consists of 905,660 shares held directly and 1,150,716 shares over which
voting and dispositive power is held by JHFS as described in note
(2) above. JHFS is a wholly-owned subsidiary of John Hancock Subsidiaries,
Inc., which in turn is a wholly-owned subsidiary of John Hancock.
3
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information as of May 1, 2000, regarding
the Common Stock beneficially owned by each director, nominee for director, each
executive officer named in the summary compensation table below (the "Named
Executive Officers") and all directors and executive officers as a group.
Beneficial ownership is determined in accordance with SEC rules. In computing
the number of shares beneficially owned by a person and the percentage ownership
of that person, shares subject to options or warrants held by that person that
are currently exercisable or that are or may become exercisable within 60 days
of May 1, 2000, are deemed outstanding. These shares, however, are not deemed
outstanding for the purposes of computing the percentage ownership of any other
person. Except as indicated in the footnotes to this table and under applicable
community property laws, each shareholder named in the table has sole voting and
investment power with respect to the shares set forth opposite the shareholder's
name.
AMOUNT AND NATURE OF PERCENT OF CLASS
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OUTSTANDING
- ------------------------ -------------------- ----------------
Alain G. Blanchard 62,376 (1) *
Dennis R. Carlton 202,866 (2) 1.34%
Kevin R. Collins 116,800 (3) *
Larry D. Estridge 31,057 (4) *
John J. Ryan III 902,487 (5) 5.70%
Mark S. Sexton 730,194 (6) 4.66%
Scott D. Sheffield 31,687 (7) *
All Directors and Executive Officers 2,077,467 (8) 13.38%
As a Group (7 Persons)
- -------------------
* Less than 1%
(1) Includes 22,540 shares issuable pursuant to stock options.
(2) Includes 156,500 shares issuable pursuant to stock options.
(3) Includes 106,500 shares issuable pursuant stock options.
(4) Includes 29,287 shares issuable pursuant to stock options.
(5) Includes 40,147 shares issuable pursuant to stock options.
(6) Includes 196,500 shares issuable pursuant to stock options. Also includes
450,000 shares held by CIS Oil and Gas, Inc. over which Mr. Sexton holds
voting power by proxy; Mr. Sexton has no power to sell or otherwise dispose
of these shares and disclaims any beneficial ownership of the shares.
(7) Includes 30,147 shares issuable pursuant to stock options.
(8) Includes 581,621 shares issuable pursuant to stock options.
4
PROPOSAL 1 -- ELECTION OF DIRECTORS
The Company's articles of incorporation provide that the members of the Board of
Directors shall be divided into three classes, as nearly equal in number as
possible, each of which is to serve for three years, with one class being
elected each year. The articles of incorporation also provide that the Board
will be comprised of at least six members. The Board currently consists of six
members, of which two are to be elected at the meeting.
The two nominees for director receiving the most votes for their election
will be elected directors, assuming a quorum is present. Abstentions and
broker non-votes will have no effect on the election of directors.
Shareholders do not have the right to cumulate their votes for directors. The
persons named in the enclosed form of proxy, unless otherwise directed
therein, intend to vote such proxy FOR the election of each of the nominees
named below as director for the term specified. If a nominee becomes
unavailable for any reason, the persons named in the proxy are expected to
vote for such nominees as are recommended by management. Management has no
reason to believe that the nominees will be unavailable or unwilling to serve
if elected to office.
The Board of Directors has nominated two persons for election as director at the
Meeting to serve for three-year terms. The nominees are currently serving as
directors and have consented to serve for the new terms.
PRESENT DIRECTORS NOMINATED FOR RE-ELECTION
DIRECTOR TERM TO
NAME AGE POSITION SINCE EXPIRE
---- --- -------- -------- -------
Alain G. Blanchard 59 Director 1989 2003
Scott D. Sheffield 47 Director 1996 2003
CONTINUING DIRECTORS WHOSE TERMS ARE NOT EXPIRING
DIRECTOR TERM TO
NAME AGE POSITION SINCE EXPIRE
---- --- -------- -------- -------
Dennis R. Carlton 49 Sr. Vice President and Director 1995 2001
Larry D. Estridge 56 Director 1989 2002
John J. Ryan III 72 Director 1989 2002
Mark S. Sexton 44 President, CEO, Chairman and Director 1995 2001
There are no family relationships among any directors, executive officers or
persons nominated or chosen by Evergreen to become a director or executive
officer.
Additional information regarding the nominees for election as directors and the
continuing directors of the Company follows:
5
NOMINEES
ALAIN BLANCHARD DIRECTOR
Mr. Blanchard was named director of Evergreen in May 1989. A resident of
Cannes, France, he has managed discretionary funds for private and
institutional clients for over 20 years and continues to do so. Mr. Blanchard
graduated from the University of Paris with a doctorate in economics and a
degree in political science.
SCOTT D. SHEFFIELD DIRECTOR
Mr. Sheffield was named a director of Evergreen in September 1996. Since April
1985, Mr. Sheffield has served as Chairman, President and Chief Executive
Officer of Pioneer Natural Resources Company, an energy company traded on the
New York Stock Exchange, and its predecessor company, Parker & Parsley Petroleum
Company. From 1979 to April 1985 he was employed by Parker & Parsley in various
engineering positions, including serving from 1981-1985 as Vice President of
Engineering. Mr. Sheffield obtained a bachelor of science degree in petroleum
engineering from the University of Texas in 1975. He resides in Dallas, Texas.
CONTINUING DIRECTORS
DENNIS R. CARLTON SENIOR VICE PRESIDENT - EXPLORATION AND OPERATIONS AND
DIRECTOR PRESIDENT - EVERGREEN OPERATING CORPORATION
Mr. Carlton joined Evergreen in 1981 and was named a director in March 1995. He
is currently Evergreen's Senior Vice President of Exploration and Operations.
Mr. Carlton also manages the daily activities of Evergreen's operating
subsidiary, Evergreen Operating Corp ("EOC"), and was named President of EOC in
1995. He received a B.S. degree in geology in 1972 and a masters of science
degree in geology in 1975 from Wichita State University. He resides in
Littleton, Colorado.
LARRY D. ESTRIDGE DIRECTOR
Mr. Estridge was named a director of Evergreen in May 1989. He received an A.B.
degree from Furman University in 1966 and a J.D. from Harvard University School
of Law in 1969. He resides in Greenville, South Carolina, and is a partner in
the law firm Womble Carlyle Sandridge & Rice, PLLC. Mr. Estridge joined Womble
Carlyle in January 1999. Prior to January 1999, he was a partner with Wyche,
Burgess, Freeman & Parham, P.A. from July 1972 through December 31, 1998. He has
represented Evergreen and a number of affiliated companies for over 13 years.
JOHN J. RYAN III DIRECTOR
CHAIRMAN - EVERGREEN RESOURCES (U.K.) LTD.
Mr. Ryan was named a director of Evergreen in May 1989. Since 1982 he has been
engaged in international tax and investment activities through Corporate
Investment Services, of which he is a principal. Mr. Ryan, a resident of London,
England, is also Chairman of Evergreen Resources (U.K.) Ltd., a wholly owned
subsidiary of the Company. Mr. Ryan serves as a director of Vail Resorts, Inc.
MARK S. SEXTON PRESIDENT, CEO, CHAIRMAN AND DIRECTOR
CEO - EOC
Mr. Sexton joined Evergreen in 1989, through a merger of companies, and
initially managed the daily operating activities of Evergreen's operating
subsidiary, EOC. He has been a director of Evergreen since March 1995 and was
named President and CEO in June 1995. Mr. Sexton is a registered professional
engineer in Colorado. He graduated in 1978 from Stanford University with a B.S.
degree in mechanical engineering. He was previously employed in various
technical, financial, and management positions with Amoco Production Company,
Norwest Bank and
6
energy companies specifically targeting coal bed methane development. Mr.
Sexton, who resides in Evergreen, Colorado, is also a director of KFX Inc.
MEETINGS OF DIRECTORS AND COMMITTEES
The Company's Board of Directors held seven meetings during the year ended
December 31, 1999. All directors attended 100% of such meetings. The Company has
established Audit, Compensation and Nominating committees. Certain information
about these committees is provided below.
The Audit Committee is presently composed of Alain Blanchard, Larry D.
Estridge, and John J. Ryan, III. This committee recommends to the Board the
firm to be retained as the Company's independent auditors and consults with
and reviews the reports of the Company's independent auditors and the
Company's internal financial staff. Three meetings were held during the year
ended December 31, 1999, at which all members were present.
The Compensation Committee is presently composed of Alain Blanchard, Larry D.
Estridge and Scott D. Sheffield. The Compensation Committee assists the Board in
establishing compensation for key employees. One meeting was held during the
year ended December 31, 1999, at which all members were present.
The Nominating Committee, formed in February 1999, is presently composed of
Alain Blanchard, Mark S. Sexton and Scott D. Sheffield. This committee
recommends to the Board and shareholders nominees to serve as directors. For
information on procedures by which shareholder nominations for directors may be
made, see "Date for Receipt of Shareholder Proposals." The Nominating Committee
held one meeting during the year ended December 31, 1999, at which all members
were present.
BUSINESS EXPERIENCE OF OTHER EXECUTIVE OFFICERS
The following provides certain information concerning the executive officer of
the Company who is not also a director:
KEVIN R. COLLINS VICE PRESIDENT - FINANCE, CHIEF FINANCIAL OFFICER
AND TREASURER
Mr. Collins, age 43, joined Evergreen as Vice President and Treasurer in June
1995. He has over 13 years of public accounting experience. Mr. Collins received
a B.S. in business administration and accounting from the University of Arizona
in 1980, and, before working with Evergreen, was employed by BDO Seidman, LLP,
where he was a senior manager. He resides in Littleton, Colorado.
Each officer of the Company holds office until his successor is duly elected and
qualified or until his death, resignation or removal, if earlier. Any officer
elected or appointed by the Board of Directors may be removed by the Board of
Directors whenever in its judgment the best interests of the Company would be
served thereby.
7
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following information is furnished for the years ended December 31, 1999,
1998 and 1997, for the Company's Chief Executive Officer and the two other
executive officers of the Company whose salary and bonus exceeded $100,000
during 1999 (as defined above, the "Named Executive Officers").
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS ALL OTHER COMPENSATION ($)(3)
------------------- ---------------------- -----------------------------
RESTRICTED SECURITIES
FISCAL STOCK UNDERLYING
NAME AND YEAR/ SALARY BONUS AWARDS OPTIONS
PRINCIPAL POSITION PERIOD ($)(1) ($) ($)(2) (#)
- ------------------ ------ ------ ----- ---------- ---------- -----------------------------
Mark S. Sexton 12/31/99 160,600 75,000 -- 70,000 25,000
President, CEO and 12/31/98 154,600 -- -- 64,000 28,700
a Director 12/31/97 118,300 -- 32,900 -- 20,000
Dennis R. Carlton 12/31/99 162,200 75,000 -- 70,000 25,000
Sr. Vice President 12/31/98 154,500 -- -- 64,000 28,700
and a Director 12/31/97 118,905 -- 32,900 -- 20,000
Kevin R. Collins 12/31/99 107,700 50,000 -- 70,000 4,000
Vice President, 12/31/98 100,000 -- -- 64,000 6,500
CFO and Treasurer 12/31/97 86,673 -- 32,900 -- --
- -------------------
(1) The amounts shown in this column include salaries and contributions which
have been deferred pursuant to the Company's 401(k) plan.
(2) The shares indicated were issued pursuant to the Company's Key Employee
Equity Plan. None of such shares remain subject to any conditions under
the plan.
(3) Amounts include premiums and contributions made by the Company in 1999 to
split dollar life insurance policies of which the Named Executive Officers
or their estates are the beneficiaries as follows: Mr. Sexton, $20,000; and
Mr. Carlton, $20,000. Amounts also include the dollar value of
contributions made by the Company in 1999 to the account of each Named
Executive Officer under the Company's 401(k) plan, as follows: Mr. Sexton,
$5,000; Mr. Carlton, $5,000; and Mr. Collins, $4,000.
8
The following table sets forth information with respect to the Named
Executive Officers concerning the value of unexercised options held as of the
end of the last fiscal year. None of the Named Executive Officers exercised
any options during fiscal 1999.
FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT DECEMBER 31,1999 (#) AT DECEMBER 31, 1999 ($)(1)
------------------------------ ----------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------- ----------- ------------- ----------- -------------
Mark S. Sexton 177,250 126,750 $1,920,250 $1,009,500
President and CEO
Dennis R. Carlton 139,000 95,000 $1,488,800 $ 660,900
Senior Vice President
Kevin R. Collins 97,750 86,250 $ 962,900 $ 549,400
Vice President, CFO
and Treasurer
- -------------------
(1) Based on the difference between the closing price of the Common Stock on
December 31, 1999 ($19.75) and the option exercise price.
9
The following table sets forth information concerning options to purchase Common
Stock granted to the Named Executive Officers in the last fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
-----------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK PRICE
SECURITIES PERCENT OF TOTAL APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OPTION TERM (1)
OPTIONS TO EMPLOYEES IN PRICE PER EXPIRATION ---------------------------
NAME GRANTED (#) FISCAL 1999 SHARE ($/SH) DATE 5% 10%
- -------------------- ----------- ---------------- ------------- ---------- -------- ----------
Mark S. Sexton 70,000 33.3% $ 14.625 1/22/09 $643,831 $1,631,594
President and CEO
Dennis R. Carlton 70,000 33.3% $ 14.625 1/22/09 $643,831 $1,631,594
Senior Vice President
Kevin R. Collins 70,000 33.3% $ 14.625 1/22/09 $643,831 $1,631,594
Vice President,
CFO and Treasurer
- -------------------
(1) The potential realizable value is calculated based on the term of the
option at its time of grant and is calculated by assuming that the stock
price on the date of grant as determined by the Compensation Committee
appreciates at the indicated annual rate compounded annually for the entire
term of the option and that the option is exercised and sold on the last
day of its term for the appreciated price. The 5% and 10% assumed rates of
appreciation are derived from the rules of the SEC and do not represent the
Company's estimate or projection of the future Common Stock price.
(2) Such option vests and becomes exercisable in four equal installments on
January 22 of each of 2000, 2001, 2002 and 2003, provided the optionee
remains an employee of the Company.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's compensation program for its executive officers is comprised of
three principal components: base salary, annual incentive compensation and
long-term incentive compensation in the form of stock-based awards. Evergreen's
compensation policy has been to offer conservative base salaries and to provide
performance-based incentives in the form of annual bonuses and stock awards in
order to provide an overall competitive compensation package for executive
officers. The goal of the Compensation Committee (the "Committee") is to ensure
that the Company employs qualified, experienced executives whose financial
interest is aligned with that of the shareholders. The Committee considers
general industry practice, tax effects and other factors in structuring
executive compensation.
BASE SALARIES: Base salaries for each of the Company's executives are determined
by taking into consideration performance, length of tenure with the Company and
compensation of industry competitors for comparable positions. In order to
determine comparable salary levels paid within the industry, the Committee
reviews various surveys and publicly filed information regarding its
competitors.
10
ANNUAL BONUS INCENTIVES: Performance by executives is measured by several
criteria which are considered important to the Company's success. These criteria
are not specifically weighted in the determination of salary increases and
bonuses, since the relative importance of such criteria may change from year to
year and the relative responsibilities of each executive in the achievement of
the objectives may differ. Examples of criteria considered are: (i) quantity of
oil and gas reserves and increases in such reserves; (ii) increases in
production and cash flow; (iii) finding costs of oil and gas reserves; (iv)
controls exerted over lifting costs and resulting stabilization or reduction of
lifting costs; (v) discovery and investigation of prospective new projects; and
(vi) overall financial management. Of particular importance in determining 1999
bonus payments were substantial increases in proved reserves, production and
cash flow. Though the Committee did not establish specific numeric formulas for
converting these increases into bonus adjustments, they were important factors
in the Committee's compensation decisions because the Committee believed that
the experience, skill, good judgment and management practices of the executives
contributed substantially to these increases.
STOCK-BASED AWARDS: The Committee also utilizes restricted stock and/or stock
options as incentives for executives. In determining the number of shares
and/or share options to be awarded to each executive, the Committee considers
the individual performance of each executive, his level of responsibility,
his base salary, and the number of restricted shares and options already
owned by the executives as a group relative to the total number of
outstanding shares and stock options owned by all shareholders. In addition
to the stock options reflected in the table titled "Option Grants in Last
Fiscal Year", certain options held by executive officers vested during 1999
pursuant to the Key Employee Equity Plan adopted by the Board in September
1996. The executives were entitled to be vested in these options because the
Company met and exceeded in fiscal year 1998 all three of the goals
established in its initial formulation of the plan: (i) 20% increase in
proved developed reserves; (ii) 20% increase in total production, and (iii)
20% increase in cash flow. Under this plan, the total number of shares
subject to options held by each of the Named Executive Officers which vested
in 1999 is as follows: Mark S. Sexton -- 19,250 shares; Dennis R. Carlton --
17,500 shares; and Kevin R. Collins -- 8,750 shares. The Committee also
granted each of these individuals incentive stock options to purchase 70,000
shares of Common Stock under the Company's Initial Stock Option Plan, which
the Company's shareholders approved at the 1998 annual meeting. To enable the
Company to continue to provide competitive stock-based compensation program,
the Board has also approved the adoption of the 2000 Stock Incentive Plan,
subject to shareholder approval of the plan. See Proposal 2 below.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER: During the fiscal year ended
December 31, 1999, Mark S. Sexton, President and CEO, received compensation of
$165,000 for his services. This includes a salary of $160,600 and deferred
compensation pursuant to the Company's 401(k) plan in the amount of $5,000. In
setting the salary for Mr. Sexton for 1999, the Committee considered all of the
criteria described above in this Report, along with information indicating that
his previous salary was in the mid-to-low range of CEOs of comparable companies.
Because the performance of the Company in the key areas of measurement
referenced above, along with its earnings for 1999 as compared to previous
years, substantially exceeded the performance of most peer companies, the
Committee believed that a bonus payment in the amount of $75,000 to Mr. Sexton
was justified.
SUBMITTED BY THE COMPENSATION COMMITTEE: Larry D. Estridge
Scott D. Sheffield
Alain G. Blanchard
COMPENSATION COMMITTEE INTERLOCKS,
INSIDER PARTICIPATION AND TRANSACTIONS WITH MANAGEMENT
Since January 1999, Mr. Estridge has been a member of the law firm of Womble
Carlyle Sandridge & Rice, PLLC in Greenville, South Carolina, which provided
legal services to the Company from time to time during 1999 at customary rates.
Total legal fees paid to Womble Carlyle during 1999 were $191,000.
During 1999, Alain Blanchard and a related entity received cash and Common Stock
valued in the aggregate at $23,600 for consulting services related to the
identification of prospective coal bed methane projects in Europe.
11
COMPENSATION OF DIRECTORS
Directors of the Company are entitled to receive fees of $100 per meeting for
their attendance at Board meetings and have currently waived these fees. All
directors are reimbursed for reasonable out-of-pocket expenses incurred in
connection with attending Board and shareholder meetings. Directors who are not
officers or are not salaried employees of the Company ("Non-Executive
Directors") each receive a $30,000 annual retainer fee in the form of cash,
Common Stock or options to purchase Common Stock, as elected by the director.
Such options vest fully at the time of grant. The Non-Executive Directors also
agreed to waive compensation for participation in 1999 on the Nominating, Audit
and Compensation Committees.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Company's knowledge, during the fiscal year ended December 31, 1999, the
Company's 10% shareholders, officers and directors timely complied with all
applicable Section 16(a) filing requirements. This statement is based solely on
a review of the copies of such reports furnished to the Company by such
reporting persons and their written representations that such reports accurately
reflect all reportable transactions.
12
PERFORMANCE GRAPH
The following performance graph reflects yearly percentage change in (i) the
cumulative, five year total stockholder return on the Common Stock as compared
with the cumulative, five year total return of (ii) the National Securities
Dealers Automated Quotation System ("NASDAQ") Stock Market Index of U.S.
Companies and (iii) a peer group index. The NASDAQ index and the peer group
index were supplied by the Center for Research in Security Prices ("CRSP"), an
independent third-party source. The peer group index is composed of
approximately 185 companies categorized under the Standard Industrial
Classification Number 13 (Oil and Gas Extraction) applicable to the Company. All
cumulative returns are calculated on a fiscal year basis ending on December 31
of each year.
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
[GRAPH]
LEGEND
SYMBOL CRSP TOTAL RETURNS INDEX FOR: 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
- ------ ----------------------------- -------- -------- -------- -------- -------- --------
_____ EVERGREEN RESOURCES, INC. 100.0 95.2 157.1 295.2 338.1 376.2
----- Nasdaq Stock Market (US Companies) 100.0 141.3 173.9 213.1 300.4 556.0
..... NASDAQ Stocks (SIC 1300-1399 US Companies) 100.0 123.7 202.4 218.8 99.1 122.2
Oil and Gas Extraction
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on
the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a
trading day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 12/31/94.
13
PROPOSAL 2 - ADOPTION OF 2000 STOCK INCENTIVE PLAN
BACKGROUND
The Board of Directors of the Company recommends that the shareholders approve
the adoption of the 2000 Stock Incentive Plan (the "Plan") in substantially the
form attached hereto as Exhibit A. The Board approved the Plan on April 14,
2000, subject to the approval of the Plan by the shareholders at the 2000 Annual
Meeting of Shareholders. Awards may be granted under the Plan on and after the
effective date of the Plan (June 16, 2000), provided the shareholders approve
the Plan, but no later than June 15, 2010. The discussion that follows is
qualified in its entirety by reference to the Plan.
Subject to adjustment as described below, the maximum number of shares of Common
Stock that may be issued pursuant to awards granted under the Plan is 1,000,000
shares, plus an annual increase equal to the lesser of either 150,000 shares or
an amount determined by the Board of Directors. No participant may be granted
awards in any 12-month period for more than 250,000 shares of Common Stock (or
the equivalent value thereof based on the fair market value per share of the
Common Stock on the date of grant of award), subject to adjustment as described
herein. The number of shares reserved for issuance under the Plan will be
adjusted, and the terms of awards may be adjusted, in the event of an adjustment
in the capital stock structure of the Company or a related corporation (due to a
merger, stock split, stock dividend or similar event). On April 28, 2000, the
closing sales price of the Common Stock as reported on the Nasdaq National
Market was $23.13 per share.
PURPOSE AND ELIGIBILITY
The purpose of the Plan is to encourage and enable employees, directors and
independent contractors of the Company and related entities to acquire or
increase their holdings of Common Stock and other proprietary interests in the
Company in order to promote a closer identification of their interests with
those of the Company and its shareholders, thereby further stimulating their
efforts to enhance the Company's efficiency, soundness, profitability, growth
and shareholder value. At this time, the approximate number of persons who may
be eligible to participate under the Plan includes 94 employees, four directors
and several independent contractors, although these numbers will vary from time
to time.
The purpose will be carried out by the granting of benefits ("awards") to
selected participants. Awards which may be granted under the Plan include
incentive stock options, nonqualified stock options, stock appreciation rights
("SARs"), restricted stock awards and restricted units. The material terms of
each type of award are discussed below. See "Awards."
ADMINISTRATION; AMENDMENT AND TERMINATION
The Plan will be administered by the Board of Directors, or upon its delegation,
by the Compensation Committee of the Board. The Board of Directors and the
Compensation Committee are referred to in this discussion collectively as the
"Administrator." Under the terms of the Plan, the Administrator has full and
final authority to take any action with respect to the Plan, including, without
limitation, the authority to: (1) determine all matters relating to awards,
including selection of individuals to be granted awards, the types of awards,
the number of shares of Common Stock subject to an award, and the terms,
conditions, restrictions and limitations of an award; (2) prescribe the form or
forms of agreements related to awards granted under the Plan; (3) establish,
amend and rescind rules and regulations for the administration of the Plan; and
(4) construe and interpret the Plan and agreements related to awards, establish
and interpret rules and regulations for administering the Plan and make all
other determinations deemed necessary or advisable for administering the Plan.
The Administrator also has authority to accelerate the vesting or exercisability
of awards.
The Plan and awards may be amended or terminated at any time by the Board of
Directors, subject to the following: (1) shareholder approval is required of any
Plan amendment if such approval is required by applicable law, rule or
regulation; and (2) an amendment or termination of an award may not adversely
affect the rights of an award recipient without the recipient's consent.
14
AWARDS
As noted above, the Plan authorizes the granting of incentive stock options,
nonqualified stock options, SARs, restricted stock awards and restricted units.
A summary of the material terms of each type of award is provided below.
OPTIONS. The Plan authorizes the grant of both incentive stock options and
nonqualified stock options, both of which are exercisable for shares of Common
Stock. The option price at which an option may be exercised will be determined
by the Administrator at the time of grant. In the case of incentive stock
options, which may only be granted to employees of the Company or a related
corporation, the option price must be at least equal to 100% of the fair market
value per share of the Common Stock on the date of grant. The option price of
nonqualified options must be at least 85% of the fair market value per share of
the Common Stock on the date of grant. The term of an option and the periods and
conditions for exercise will be determined by the Administrator at the time of
option grant. In the case of incentive options, the option term may not exceed
10 years. Unless an individual agreement provides otherwise, payment of the
option price may be made by cash or check and, if permitted by the
Administrator, by delivery or withholding of shares of Common Stock, "cashless
exercise" or a combination of these methods. Options are subject to certain
restrictions on exercise if the participant terminates employment or service.
The Administrator also has authority to establish other terms and conditions
related to options.
STOCK APPRECIATION RIGHTS. Under the terms of the Plan, SARs may be granted to
an optionee of an option (a "related option") with respect to all or a portion
of the shares of Common Stock subject to the related option (a "tandem SAR") or
may be granted separately (a "freestanding SAR"). The consideration to be
received by the holder of an SAR may be paid in cash, shares of Common Stock
(valued at fair market value on the date of the SAR exercise), or a combination
of cash and shares of Common Stock, as determined by the Administrator. The
Administrator may establish a maximum value payable for an SAR. The
consideration paid by the Company upon exercise of an SAR may be paid currently
or on a deferred basis.
SARs are exercisable according to the terms stated in the related agreement.
Upon the exercise of a tandem SAR, the related option is deemed to be
surrendered to the extent of the number of shares of Common Stock for which the
tandem SAR is exercised. No SAR may be exercised more than 10 years after it was
granted, or such shorter period as may apply to related options in the case of
tandem SARs. SAR holders are subject to the same restrictions on exercise during
employment and following termination of employment or service as optionees.
RESTRICTED AWARDS. Subject to the limitations of the Plan, the Administrator may
in its sole discretion grant restricted awards to such eligible individuals in
such numbers, upon such terms and at such times as the Administrator shall
determine. A restricted award may consist of a restricted stock award or a
restricted unit, or both. Restricted awards may be payable in cash or whole
shares of Common Stock (including restricted stock), or partly in cash and
partly in whole shares of Common Stock, in accordance with the terms of the Plan
and the discretion of the Administrator.
The Administrator has authority to determine the nature, length and starting
date of the period, if any, during which the restricted award may be earned (the
"restriction period") for each restricted award, and will determine the
conditions that must be met in order for a restricted award to be granted or to
vest or be earned in whole or in part. These conditions may include (but are not
limited to) attainment of performance objectives, completion of the restriction
period (or a combination of attainment of performance objectives and completion
of the restriction period), retirement, displacement, disability, death, or any
combination of these conditions. In the case of restricted awards based upon
performance criteria, or a combination of performance criteria and continued
service, the Administrator will determine the performance objectives to be used
in valuing restricted awards and determine the extent to which such awards have
been earned. Performance objectives may vary from participant to participant and
between groups of participants and will be based upon those Company, business
unit and/or individual performance factors and criteria as the Administrator in
its sole discretion may deem appropriate, including but not limited to
production, reserves, cash flow, earnings per share, return on equity, return on
assets, total return to shareholders, or any combination of these factors.
15
The Administrator has authority to determine whether and to what degree
restricted awards have been earned and are payable, as well as to determine the
forms and terms of restricted awards. If a participant's employment or service
is terminated before the participant has earned all or part of a restricted
award, the unearned portion of the award will be forfeited (unless the
Administrator elects to accelerate vesting of the award or his individual
agreement provides otherwise).
CHANGE OF CONTROL
The Plan provides that upon a "change of control" of the Company (as defined in
the Plan): (1) all options and SARs outstanding as of the date of the change of
control will become fully exercisable, whether or not then otherwise
exercisable; and (2) any restrictions applicable to any restricted awards will
be deemed to have expired, and restricted awards will become fully vested and
payable to the fullest extent of the original award. However, the Plan
authorizes the Administrator, in the event of a merger, share exchange,
reorganization or other business combination affecting the Company or a related
corporation, to determine that any or all awards shall not vest or become
exercisable on an accelerated basis, if the Company or the board of directors of
the surviving or acquiring corporation takes such action (including but not
limited to the assumption of plan awards or the grant of substitute awards)
which, in the opinion of the Administrator is equitable or appropriate to
protect the rights and interest of participants under the Plan.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary generally describes the principal federal (not state and
local) income tax consequences of awards granted under the Plan as of this time.
The summary is general in nature and is not intended to cover all tax
consequences that may apply to a particular employee or to the Company. The
provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and
regulations thereunder relating to these matters are complicated and their
impact in any one case may depend upon the particular circumstances.
INCENTIVE STOCK OPTIONS. Incentive stock options granted under the Plan are
intended to qualify as incentive stock options under Section 422 of the Code.
Pursuant to Section 422, the grant and exercise of an incentive stock option
will generally not result in taxable income to the optionee (with the possible
exception of alternative minimum tax liability) if the optionee does not dispose
of shares received upon exercise of such option less than one year after the
date of exercise and two years after the date of grant, and if the optionee has
continuously been a Company employee from the date of grant to three months
before the date of exercise (or 12 months in the event of death or disability).
The Company generally will not be entitled to a deduction for income tax
purposes in connection with the exercise of an incentive stock option. Upon the
disposition of shares acquired upon exercise of an incentive stock option, the
optionee will be taxed on the amount by which the amount realized upon such
disposition exceeds the option price, and such amount will be treated as
long-term capital gain or loss. If the holding period requirements for incentive
stock option treatment described above are not met, the option will be treated
as a nonqualified stock option.
Pursuant to the Code and the terms of the Plan, in no event can there first
become exercisable by an optionee in any one calendar year incentive stock
options granted by the Company with respect to shares having an aggregate fair
market value (determined at the time an option is granted) greater than
$100,000. To the extent an incentive stock option granted under the Plan exceeds
the foregoing limitation, it will be treated as a nonqualified stock option. In
addition, no incentive stock option may be granted to an individual who owns,
immediately before the time that the option is granted, stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company.
NONQUALIFIED STOCK OPTIONS. If an optionee receives a nonqualified stock option,
the difference between the fair market value of the stock on the date of
exercise and the option price will constitute taxable ordinary income to the
optionee on the date of exercise. The Company will be entitled to a deduction in
the same year in an amount equal to the income taxable to the optionee. The
optionee's basis in shares of Common Stock acquired upon exercise of an option
will equal the option price plus the amount of income taxable at the time of
exercise. Any subsequent disposition of the stock by the optionee will be taxed
as a capital gain or loss to the optionee, and will be long-term capital gain or
loss if the optionee has held the stock for more than one year at the time of
sale.
16
STOCK APPRECIATION RIGHTS. For federal income tax purposes, the grant of an SAR
will not result in taxable income to the holder or a tax deduction to the
Company. At the time of exercise of an SAR, the SAR holder will forfeit the
right to benefit from any future appreciation of the stock subject to the SAR.
Accordingly, taxable income to the SAR holder is deferred until the SAR is
exercised. Upon exercise, the amount of cash and fair market value of shares
received by the SAR holder, less cash or other consideration paid (if any), is
taxed to the SAR holder as ordinary income and the Company will receive a
corresponding income tax deduction to the extent the amount represents
reasonable compensation and an ordinary and necessary business expense, subject
to any required income tax withholding.
RESTRICTED STOCK SUBJECT TO RESTRICTED AWARDS. Similar to SARs, awards for
restricted stock will not result in taxable income to the employee or a tax
deduction to the Company for federal income tax purposes. Upon expiration of the
restricted period applicable to the restricted stock awarded, the fair market
value of such shares at such date and any cash amount awarded, less cash or
other consideration paid (if any), will be included in the recipient's ordinary
income as compensation, except that, in the case of restricted stock issued at
the beginning of the restriction period, the recipient may elect to include in
his ordinary income as compensation at the time the restricted stock is awarded,
the fair market value of such shares at such time, less any amount paid
therefor. The Company will be entitled to a corresponding income tax deduction
to the extent that the amount represents reasonable compensation and an ordinary
and necessary business expense, subject to any required income tax withholding.
RESTRICTED UNITS AND RESTRICTED AWARDS OTHER THAN RESTRICTED STOCK. The federal
income tax consequences of the award of restricted units and other restricted
awards other than restricted stock will depend on the conditions of the award.
Generally, the transfer of cash or property will result in ordinary income to
the recipient and a tax deduction to the Company. If there is a substantial risk
that the property transferred will be forfeited (for example, because receipt of
the property is conditioned upon the performance of substantial future
services), the taxable event is deferred until the risk of forfeiture lapses.
However, the recipient may generally elect to accelerate the taxable event to
the date of transfer, even if the property is subject to a substantial risk of
forfeiture. If this election is made, subsequent appreciation is not taxed until
the property is sold or exchanged (and the lapse of the forfeiture restriction
does not create a taxable event). Generally, any deduction to the Company occurs
only when ordinary income in respect of an award is recognized by the employee
(and then the deduction is subject to reasonable compensation and withholding
requirements). Because restricted stock awards will be subject to such
conditions as may be determined by the Administrator, the federal income tax
consequences to the recipient and to the Company will depend on the specific
conditions of the award.
PERFORMANCE-BASED COMPENSATION -- SECTION 162(m) REQUIREMENTS
The Plan is intended to preserve the Company's tax deduction for certain awards
paid under the Plan by complying with the terms of Section 162(m) of the Code
and related regulations. Section 162(m) of the Code denies an employer a
deduction for compensation paid to covered employees (generally, the Named
Executive Officers) of a publicly held corporation in excess of $1,000,000
unless the compensation is exempt from the $1,000,000 limitation because it is
performance-based compensation or paid on a commission basis. Although the
$1,000,000 deduction limitation is not applicable at this time to any of the
Named Executive Officers, the Plan is structured to comply with the requirements
imposed by Section 162(m) of the Code in order to preserve, to the extent
practicable, the Company's tax deduction for awards made under the Plan.
In order to qualify as performance-based compensation, the compensation paid to
covered employees must be paid under pre-established objective performance goals
determined and certified by a committee comprised of outside directors. In
addition to other requirements for the performance-based exception, shareholders
must be advised of, and must approve, the material terms (or change in material
terms) of the performance goal under which compensation is to be paid. Material
terms include the individuals eligible to receive compensation, a description of
the business criteria on which the performance goal is based, and either the
maximum amount of the compensation to be paid or the formula used to calculate
the amount of compensation if the performance goal is met.
As proposed, the Plan limits the maximum amount of awards that may be granted to
any employee. In particular, the Plan provides that (subject to capital
adjustments), no participant may be granted awards in any calendar year for more
than 250,000 shares of the Common Stock (or the equivalent value thereof based
on the fair market value per share of the Common Stock on the date of grant of
an award). Further, restricted awards that are performance-based
17
will be based upon such Company, business unit and/or individual performance
factors and criteria as the Administrator determines, including but not limited
to production, reserves, cash flow, earnings per share, return on equity, return
on assets, total return to shareholders or any combination of these factors. See
"Awards -- Restricted Awards," above.
The amount of compensation that will be paid pursuant to the grant of awards
under the Plan in the current fiscal year to the following persons is not yet
determinable due to vesting, performance and other requirements. However, the
following table sets forth the number of options that were granted in the last
fiscal year under the Company's stock incentive plans and arrangements, to each
of the following:
2000 STOCK INCENTIVE PLAN
NEW PLAN BENEFITS
NAME AND POSITION DOLLAR VALUE ($)(1) NUMBER OF SHARES
----------------- ------------------- ----------------
Mark S. Sexton $14.625 70,000
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Dennis R. Carlton $14.625 70,000
SENIOR VICE PRESIDENT
Kevin R. Collins $14.625 70,000
VICE PRESIDENT- FINANCE, CHIEF FINANCIAL OFFICER AND TREASURER
Executive Group $14.625 210,000
Non-Executive Director Group $14.625 11,300
Non-Executive Officer Employee Group -- --
(1) The dollar value is based on the per share exercise price for the options
granted.
The plan will be approved if a quorum is present at the Meeting and the
number of votes cast for approval of the Plan exceeds the number of votes
cast against. Any shares not voted, whether by abstention, broker non-vote or
otherwise, will have no effect on the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE PROPOSAL TO ADOPT
THE 2000 STOCK INCENTIVE PLAN IN SUBSTANTIALLY THE FORM ATTACHED HERETO AS
EXHIBIT A.
18
INDEPENDENT AUDITORS
BDO Seidman, LLP, currently serves the Company as independent auditors.
Representatives of BDO Seidman, LLP, will be present at the Meeting, will have
an opportunity to make a statement if they desire to do so, and will be
available to respond to appropriate questions from shareholders.
OTHER BUSINESS
As of the date of this Proxy Statement, management of the Company was not aware
of any other matter to be presented at the Meeting other than as set forth
herein. However, if any other matters are properly brought before the Meeting,
the shares represented by valid proxies will be voted with respect to such
matters in accordance with the judgment of the persons voting them.
FINANCIAL INFORMATION
The Company's 1999 Annual Report to Shareholders is enclosed. The Company
will provide without charge to any shareholder of record or beneficial owner
of Common Stock a copy of the Company's 1999 Annual Report to Shareholders or
the 1999 Annual Report on Form 10-K (without exhibits), including financial
statements and financial statement schedules, filed with the SEC. Any such
request should be directed to Evergreen Resources, Inc. P.O. Box 660, Denver,
CO 80201-0660, Attention: John Kelso, Manager of Investor Relations.
DATE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Any proposal by a shareholder intended to be included in the Company's proxy
materials for the Company's 2001 annual meeting must be received at the offices
of the Company, P.O. Box 660, Denver, Colorado 80201-0660, no later than January
21, 2001. Pursuant to the Company's bylaws, shareholder proposals (other than
director nominations) must be submitted to the Company no later than the close
of business on the 60th day before the first anniversary of the date of the
preceding year's annual meeting and no earlier than the 90th day prior to such
date. Such proposals must be made in accordance with established procedures.
Shareholder nominations for director must be received by the Company no later
than the close of business on the 30th day before the annual meeting of
shareholders at which directors are to be elected and no earlier than the 60th
day before the meeting. Such nominations must also be made in accordance with
established procedures.
KEVIN R. COLLINS
SECRETARY
Denver, Colorado
May 17, 2000
19
EXHIBIT A
2000 STOCK INCENTIVE PLAN
OF
EVERGREEN RESOURCES, INC.
20
2000 STOCK INCENTIVE PLAN
OF
EVERGREEN RESOURCES, INC.
1. PURPOSE
The purpose of the 2000 Stock Incentive Plan of Evergreen Resources, Inc. (the
"Plan") is to encourage and enable selected employees, directors and independent
contractors of Evergreen Resources, Inc. (the "Corporation") and its related
entities to acquire or to increase their holdings of common stock of the
Corporation (the "Common Stock") and other proprietary interests in the
Corporation in order to promote a closer identification of their interests with
those of the Corporation and its shareholders, thereby further stimulating their
efforts to enhance the efficiency, soundness, profitability, growth and
shareholder value of the Corporation. This purpose will be carried out through
the granting of benefits (collectively referred to herein as "awards") to
selected employees, independent contractors and directors, including the
granting of incentive stock options ("incentive options") intended to qualify
under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
nonqualified stock options ("nonqualified options"), stock appreciation rights
("SARs"), restricted stock awards ("restricted stock awards"), and restricted
units ("restricted units") to such participants. Incentive options and
nonqualified options shall be referred to herein collectively as "options."
Restricted stock awards and restricted units shall be referred to herein
collectively as "restricted awards."
2. ADMINISTRATION OF THE PLAN
(a) The Plan shall be administered by the Board of Directors of the
Corporation (the "Board" or the "Board of Directors") or, upon its delegation,
by the Compensation Committee of the Board of Directors (the "Committee").
Unless the Board determines otherwise, the Committee shall be comprised solely
of "non-employee directors," as such term is defined in Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or as may
otherwise be permitted under Rule 16b-3. Further, to the extent required by
Section 162(m) of the Code or related regulations, the Plan shall be
administered by a committee comprised of "outside directors" (as such term is
defined in Section 162(m) or related regulations) or as may otherwise be
permitted under Section 162(m) and related regulations. For the purposes herein,
the term "Administrator" shall refer to the Board and, upon its delegation to
the Committee of all or part of its authority to administer the Plan, to the
Committee.
(b) Any action of the Administrator with respect to the Plan may be taken
by a written instrument signed by all of the members of the Board or Committee,
as appropriate, and any such action so taken by written consent shall be as
fully effective as if it had been taken by a majority of the members at a
meeting duly held and called. Subject to the provisions of the Plan, the
Administrator shall have full and final authority in its discretion to take any
action with respect to the Plan including, without limitation, the authority (i)
to determine all matters relating to awards, including selection of individuals
to be granted awards, the types of awards, the number of shares of the Common
Stock, if any, subject to an award, and all terms, conditions, restrictions and
limitations of an award; (ii) to prescribe the form or forms of the agreements
evidencing any awards granted under the Plan; (iii) to establish, amend and
rescind rules and regulations for the administration of the Plan; and (iv) to
construe and interpret the Plan and agreements evidencing awards granted under
the Plan, to interpret rules and regulations for administering the Plan and to
make all other determinations deemed necessary or advisable for administering
the Plan. The Administrator shall also have authority, in its sole discretion,
to accelerate the date that any award which was not otherwise exercisable or
vested shall become exercisable or vested in whole or in part without any
obligation to accelerate such date with respect to any other award granted to
any recipient. In addition, the Administrator shall have the authority and
discretion to establish terms and conditions of awards as the Administrator
determines to be necessary or appropriate to conform to the applicable
requirements or practices of jurisdictions outside of the United States.
(c) To the extent permitted by applicable law, each person who is or at any
time serves as a member of the Board or the Committee shall be indemnified and
held harmless by the Corporation against and from (i) any loss, cost, liability,
or expense that may be imposed on or reasonably incurred by such person in
connection with or resulting from any claim, action, suit, or proceeding to
which such person may be a party or in which such person
21
may be involved by reason of any action or failure to act under this Plan; and
(ii) any and all amounts paid by such person in satisfaction of judgment in any
such action, suit, or proceeding relating to this Plan. Each person covered by
this indemnification shall give the Corporation an opportunity, at its own
expense, to handle and defend the same before such person undertakes to handle
and defend the same on such person's own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under the charter or by-laws of the
Corporation, as a matter of law, or otherwise, or any power that the Corporation
may have to indemnify such person or hold such person harmless.
(d) Notwithstanding Section 2(a), the Administrator may delegate to the
chief executive officer of the Corporation the authority to grant awards, and to
make any or all of the determinations reserved for the Administrator in the Plan
and summarized in Section 2(b) herein with respect to such awards, to any
individual who, at the time of said grant or other determination, (i) is not
deemed to be an officer or director of the Corporation within the meaning of
Section 16 of the Exchange Act, (ii) is not deemed to be a covered employee (as
defined in Section 18(b) herein), and (iii) is otherwise eligible under Section
5. To the extent that the Administrator has delegated authority to grant awards
pursuant to this Section 2(d) to the chief executive officer, references to the
Administrator shall include references to such person, subject, however, to the
requirements of the Plan, Rule 16b-3, Section 162(m) of the Code and other
applicable law.
3. EFFECTIVE DATE
The effective date of the Plan shall be June 16, 2000 (the "Effective Date").
Awards may be granted under the Plan on and after the Effective Date, but no
awards may be granted after June 15, 2010.
4. SHARES OF STOCK SUBJECT TO THE PLAN; AWARD LIMITATIONS
(a) Subject to adjustments as provided in this Section 4, the maximum
number of shares of Common Stock that may be issued pursuant to awards shall be
1,000,000 shares, plus an annual increase to be added following the last day of
each calendar year during the term of the Plan equal to the lesser of (i)
150,000 shares of Common Stock or (ii) an amount determined by the Board of
Directors. Such shares shall be authorized but unissued shares or shares
purchased on the open market or by private purchase. No participant may be
granted awards in any 12-month period for more than 250,000 shares of Common
Stock (or the equivalent value thereof based on the fair market value per share
of the Common Stock on the date of grant of an award). The share and award
limitations imposed pursuant to this Section 4(a) shall be subject to adjustment
as provided in Section 4(c) herein.
(b) The Corporation hereby reserves sufficient authorized shares of Common
Stock to meet the grant of awards hereunder. Any shares subject to an award
which is subsequently forfeited, expires or is terminated may again be the
subject of an award granted under the Plan. To the extent that any shares of
Common Stock subject to an award are not delivered to a participant (or his
beneficiary) because the award is forfeited, canceled, settled in cash or used
to satisfy applicable tax withholding obligations, such shares shall not be
deemed to have been issued for purposes of determining the maximum number of
shares of Common Stock available for issuance under the Plan. If the purchase
price of an award granted under the Plan is satisfied by tendering or
withholding shares of Common Stock, only the number of shares issued net of the
shares of Common Stock tendered or withheld shall be deemed issued for purposes
of determining the maximum number of shares of Common Stock available for
issuance under the Plan.
(c) If there is any change in the outstanding shares of Common Stock
because of a merger, consolidation or reorganization involving the Corporation
or a related entity, or if the Board of Directors of the Corporation declares a
stock dividend, stock split distributable in shares of Common Stock or reverse
stock split, or if there is a similar change in the capital stock structure of
the Corporation or a related entity affecting the Common Stock, the number of
shares of Common Stock reserved for issuance under the Plan shall be
correspondingly adjusted, and the Administrator shall make such adjustments to
awards or to any provisions of this Plan as the Administrator deems equitable to
prevent dilution or enlargement of awards or as may be otherwise advisable.
22
5. ELIGIBILITY
An award may be granted only to an individual who satisfies the following
eligibility requirements on the date the award is granted:
(a) The individual is either (i) an employee of the Corporation or a
related entity, (ii) a director of the Corporation or a related entity, or (iii)
an independent contractor, consultant or advisor (collectively, "independent
contractors") providing services to the Corporation or a related entity. For
this purpose, an individual shall be considered to be an "employee" only if
there exists between the individual and the Corporation or a related corporation
the legal and bona fide relationship of employer and employee.
(b) With respect to the grant of incentive options, the individual does not
own, immediately before the time that the incentive option is granted, stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Corporation or a related corporation. Notwithstanding the
foregoing, an individual who owns more than 10% of the total combined voting
power of the Corporation or a related corporation may be granted an incentive
option if the option price is at least 110% of the fair market value of the
Common Stock (as defined in Section 6(c)(ii) herein), and the option period (as
defined in Section 6(d)(i) herein) does not exceed five years. For this purpose,
an individual will be deemed to own stock which is attributable to him under
Section 424(d) of the Code.
(c) With respect to the grant of substitute awards or assumption of awards
in connection with a merger, reorganization or similar business combination
involving the Corporation or related corporation, the recipient is otherwise
eligible to receive the award and the terms of the award are consistent with the
Plan and applicable laws, rules and regulations (including, to the extent
necessary, the federal securities laws registration provisions and Section
424(a) of the Code).
(d) The individual, being otherwise eligible under this Section 5, is
selected by the Administrator as an individual to whom an award shall be granted
(a "participant").
6. OPTIONS
(a) GRANT OF OPTIONS: Subject to the limitations of the Plan, the
Administrator may in its sole and absolute discretion grant options to such
eligible individuals in such numbers, upon such terms and at such times as the
Administrator shall determine. Both incentive options and nonqualified options
may be granted under the Plan; provided, however, that incentive options may
only be granted to employees of the Corporation or a related corporation. To the
extent that an option is designated as an incentive option but does not qualify
as such under Section 422 of the Code, the option (or portion thereof) shall be
treated as a nonqualified option.
(b) OPTION PRICE: The price per share at which an option may be exercised
(the "option price") shall be established by the Administrator and stated in the
agreement evidencing the grant of the option; provided, that (i) in the case of
an incentive option, the option price shall be no less than 100% of the fair
market value per share of the Common Stock (as determined in accordance with
Section 6(c)(ii) on the date the option is granted); (ii) in the case of a
nonqualified option, the option price shall be no less than 85% of the fair
market value per share of the Common Stock (as determined in accordance with
Section 6(c)(ii) on the date the option is granted); and (iii) in no event shall
the option price per share of any option be less than the par value, if any, per
share of the Common Stock.
(c) DATE OF GRANT; FAIR MARKET VALUE:
(i) An incentive option shall be considered to be granted on the date
that the Administrator acts to grant the option, or on any later date
specified by the Administrator as the effective date of the option. A
nonqualified option shall be considered to be granted on the date the
Administrator acts to grant the option or any other date specified by the
Administrator as the date of grant of the option.
(ii) For the purposes of the Plan, the "fair market value" per share
of the Common Stock shall be established in good faith by the Administrator
and, except as may otherwise be determined by the
23
Administrator, the fair market value shall be determined in accordance with
the following provisions: (A) if the shares of Common Stock are listed for
trading on the New York Stock Exchange or the American Stock Exchange, the
fair market value shall be the closing sales price per share of the shares
on the New York Stock Exchange or the American Stock Exchange (as
applicable) on the date immediately preceding the date the option is
granted, or, if there is no transaction on such date, then on the trading
date nearest preceding the date the option is granted for which closing
price information is available, and, provided further, if the shares are
quoted on the Nasdaq National Market or the Nasdaq SmallCap Market of the
Nasdaq Stock Market but are not listed for trading on the New York Stock
Exchange or the American Stock Exchange, the fair market value shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such system on the date immediately preceding the
date the option is granted for which such information is available; or (B)
if the shares of Common Stock are not listed or reported in any of the
foregoing, then the fair market value shall be determined by the
Administrator in accordance with the applicable provisions of Section
20.2031-2 of the Federal Estate Tax Regulations, or in any other manner
consistent with the Code and accompanying regulations.
(iii) In no event shall there first become exercisable by an employee
in any one calendar year incentive options granted by the Corporation or
any related corporation with respect to shares having an aggregate fair
market value (determined at the time an incentive option is granted)
greater than $100,000.
(d) OPTION PERIOD AND LIMITATIONS ON THE RIGHT TO EXERCISE OPTIONS:
(i) The term of an option (the "option period") shall be determined by
the Administrator at the time the option is granted and stated in the
individual agreement. With respect to incentive options, the option period
shall not extend more than 10 years from the date on which the option is
granted. Any option or portion thereof not exercised before expiration of
the option period shall terminate. The period or periods during which and
terms and conditions pursuant to which an option may become exercisable
shall be determined by the Administrator in a manner consistent with the
terms of the Plan.
(ii) An option may be exercised by giving written notice to the
Corporation at such place as the Corporation or its designee shall direct.
Such notice shall specify the number of shares to be purchased pursuant to
an option and the aggregate purchase price to be paid therefor, and shall
be accompanied by payment of such purchase price. Unless an individual
option agreement provides otherwise, such payment shall be in the form of
cash or check, and, where expressly permitted by the Administrator, payment
may also be made by (A) delivery (by either actual delivery or attestation)
of shares of Common Stock owned by the participant at the time of exercise
for a period of at least six months and otherwise acceptable to the
Administrator; (B) shares of Common Stock withheld upon exercise; (C)
delivery of written notice of exercise to the Corporation and delivery to a
broker of written notice of exercise and irrevocable instructions to
promptly deliver to the Corporation the amount of sale or loan proceeds to
pay the option price; or (D) a combination of the foregoing methods. Shares
tendered or withheld in payment on the exercise of an option shall be
valued at their fair market value on the date of exercise, as determined by
the Administrator by applying the provisions of Section 6(c)(ii).
(iii) Unless an individual option agreement provides otherwise, no
option granted to a participant who was an employee at the time of grant
shall be exercised unless the participant is, at the time of exercise, an
employee as described in Section 5(a), and has been an employee
continuously since the date the option was granted, subject to the
following:
(A) An option shall not be affected by any change in the terms,
conditions or status of the participant's employment, provided that
the participant continues to be an employee of the Corporation or a
related corporation.
(B) The employment relationship of a participant shall be treated
as continuing intact for any period that the participant is on
military or sick leave or other bona fide leave of absence, provided
that the period of such leave does not exceed 90 days, or, if longer,
as long as the participant's right to reemployment is guaranteed
either by statute or by contract. The employment relationship of a
participant shall also be treated as continuing intact while the
24
participant is not in active service because of disability. The
Administrator shall have sole authority to determine whether a
participant is disabled and, if applicable, the date of a
participant's termination of employment or service for any reason (the
"termination date").
(C) Unless an individual option agreement provides otherwise, if
the employment of a participant is terminated because of disability,
or if the participant dies while he is an employee, the option may be
exercised only to the extent exercisable on the participant's
termination date, except that the Administrator may in its discretion
accelerate the date for exercising all or any part of the option which
was not otherwise exercisable on the termination date. The option must
be exercised, if at all, prior to the first to occur of the following,
whichever shall be applicable: (X) the close of the period of 12
months next succeeding the termination date (or such other period
stated in the applicable agreement); or (Y) the close of the option
period. In the event of the participant's death, such option shall be
exercisable by such person or persons as shall have acquired the right
to exercise the option by will or by the laws of intestate succession.
(D) Unless an individual option agreement provides otherwise, if
the employment of the participant is terminated for any reason other
than disability, death or for "cause," his option may be exercised to
the extent exercisable on his termination date, except that the
Administrator may in its discretion accelerate the date for exercising
all or any part of the option which was not otherwise exercisable on
the termination date. The option must be exercised, if at all, prior
to the first to occur of the following, whichever shall be applicable:
(X) the close of the period of 90 days next succeeding the termination
date (or such other period stated in the applicable agreement); or (Y)
the close of the option period. If the participant dies following such
termination of employment and prior to the earlier of the dates
specified in (X) or (Y) of this subparagraph (D), the participant
shall be treated as having died while employed under subparagraph (C)
immediately preceding (treating for this purpose the participant's
date of termination of employment as the termination date). In the
event of the participant's death, such option shall be exercisable by
such person or persons as shall have acquired the right to exercise
the option by will or by the laws of intestate succession.
(E) Unless an individual option agreement provides otherwise, if
the employment of the participant is terminated for "cause," his
option shall lapse and no longer be exercisable as of his termination
date, as determined by the Administrator. For purposes of the Plan, a
participant's termination shall be for "cause" if such termination
results from the participant's (W) termination for "cause" under the
participant's employment, consulting or other agreement with the
Corporation or a related entity; (X) dishonesty or conviction of a
crime; (Y) failure to perform his duties for the Corporation or a
related entity to the satisfaction of the Corporation; or (Z) engaging
in conduct that could be materially damaging to the Corporation
without a reasonable good faith belief that such conduct was in the
best interest of the Corporation. The determination of "cause" shall
be made by the Administrator and its determination shall be final and
conclusive.
(F) Notwithstanding the foregoing, the Administrator shall have
authority, in its discretion, to extend the period during which an
option may be exercised; provided that, in the event that any such
extension shall cause an incentive option to be designated as a
nonqualified option, no such extension shall be made without the
written consent of the participant.
(iv) Unless an individual option agreement provides otherwise, an
option granted to a participant who was a non-employee director of the
Corporation or a related entity at the time of grant may be exercised only
to the extent exercisable on the date of the participant's termination of
service to the Corporation or a related entity (unless the termination was
for cause), and must be exercised, if at all, prior to the close of the
option period. If the services of such a participant are terminated for
cause (as defined in Section 6(d)(iii)(E) herein), his option shall lapse
and no longer be exercisable as of his termination date, as determined by
the Administrator. Notwithstanding the foregoing, the Administrator may in
its discretion accelerate the date for exercising all or any part of an
option which was not otherwise exercisable on the termination date or
extend the period during which an option may be exercised, or both.
25
(v) Unless an individual option agreement provides otherwise, an
option granted to a participant who was an independent contractor of the
Corporation or a related entity at the time of grant (and who does not
thereafter become an employee, in which case he shall be subject to the
provisions of Section 6(d)(iii) herein) may be exercised only to the extent
exercisable on the date of the participant's termination of service to the
Corporation or a related entity (unless the termination was for cause), and
must be exercised, if at all, prior to the first to occur of the following,
as applicable: (X) the close of the period of 90 days next succeeding the
termination date (or such other period stated in the applicable agreement);
or (Y) the close of the option period. If the services of such a
participant are terminated for cause (as defined in Section 6(d)(iii)(E)
herein), his option shall lapse and no longer be exercisable as of his
termination date, as determined by the Administrator. Notwithstanding the
foregoing, the Administrator may in its discretion accelerate the date for
exercising all or any part of an option which was not otherwise exercisable
on the termination date or extend the period during which an option may be
exercised, or both.
(vi) A participant or his legal representative, legatees or
distributees shall not be deemed to be the holder of any shares subject to
an option and shall not have any rights of a shareholder unless and until
certificates for such shares have been issued and delivered to him or them
under the Plan. A certificate or certificates for shares of Common Stock
acquired upon exercise of an option shall be issued in the name of the
participant (or his beneficiary) and distributed to the participant (or his
beneficiary) as soon as practicable following receipt of notice of exercise
and payment of the purchase price (except as may otherwise be determined by
the Corporation in the event of payment of the option price pursuant to
Section 6(d)(ii)(D) herein).
(e) NONTRANSFERABILITY OF OPTIONS:
(i) Incentive options shall not be transferable other than by will or
the laws of intestate succession. Nonqualified options shall not be
transferable other than by will or the laws of intestate succession, except
as may be permitted by the Administrator in a manner consistent with the
registration provisions of the Securities Act of 1933, as amended (the
"Securities Act"). Except as may be permitted by the preceding sentence, an
option shall be exercisable during the participant's lifetime only by him
or by his guardian or legal representative. The designation of a
beneficiary does not constitute a transfer.
(ii) If a participant is subject to Section 16 of the Exchange Act,
shares of Common Stock acquired upon exercise of an option may not, without
the consent of the Administrator, be disposed of by the participant until
the expiration of six months after the date the option was granted.
7. STOCK APPRECIATION RIGHTS
(a) GRANT OF SARS: Subject to the limitations of the Plan, the
Administrator may in its sole and absolute discretion grant SARs to such
eligible individuals, in such numbers, upon such terms and at such times as the
Administrator shall determine. SARs may be granted to an optionee of an option
(a "related option") with respect to all or a portion of the shares of Common
Stock subject to the related option (a "tandem SAR") or may be granted
separately to an eligible individual (a "freestanding SAR").
(b) TANDEM SARS: A tandem SAR may be granted either concurrently with the
grant of the related option or (if the related option is a nonqualified option)
at any time thereafter prior to the complete exercise, termination, expiration
or cancellation of such related option. Tandem SARs shall be exercisable only at
the time and to the extent that the related option is exercisable (and may be
subject to such additional limitations on exercisability as the Administrator
may provide in the agreement), and in no event after the complete termination or
full exercise of the related option. For purposes of determining the number of
shares of Common Stock that remain subject to such related option and for
purposes of determining the number of shares of Common Stock in respect of which
other awards may be granted, a related option shall be considered to have been
surrendered upon the exercise of a tandem SAR to the extent of the number of
shares of Common Stock with respect to which such tandem SAR is exercised. Upon
the exercise or termination of a related option, the tandem SARs with respect
thereto shall be canceled automatically to the extent of the number of shares of
Common Stock with respect to which the related option was so exercised or
terminated. Subject to the limitations of the Plan, upon the exercise of a
tandem SAR, the participant shall be entitled to receive from the Corporation,
for each share of Common Stock with respect to which
26
the tandem SAR is being exercised, consideration equal in value to the excess of
the fair market value of a share of Common Stock on the date of exercise over
the related option price per share; provided, that the Administrator may
establish a maximum value payable for such SARs.
(c) FREESTANDING SARS: Unless an individual agreement provides otherwise,
the base price of a freestanding SAR shall be not less than 100% of the fair
market value of the Common Stock (as determined in accordance with Section
6(c)(ii) herein) on the date of grant of the freestanding SAR. Subject to the
limitations of the Plan, upon the exercise of a freestanding SAR, the
participant shall be entitled to receive from the Corporation, for each share of
Common Stock with respect to which the freestanding SAR is being exercised,
consideration equal in value to the excess of the fair market value of a share
of Common Stock on the date of exercise over the base price per share of such
freestanding SAR; provided, that the Administrator may establish a maximum value
payable for such SARs.
(d) EXERCISE OF SARS:
(i) Subject to the terms of the Plan, SARs shall be exercisable in
whole or in part upon such terms and conditions as may be established by
the Administrator and stated in the related agreement. The period during
which an SAR may be exercisable shall not exceed 10 years from the date of
grant or, in the case of tandem SARs, such other option period as may apply
to the related option. Any SAR or portion thereof not exercised before
expiration of the exercise period established by the Administrator shall
terminate.
(ii) SARs may be exercised by giving written notice to the Corporation
at such place as the Administrator or its designee shall direct. The date
of exercise of an SAR shall mean the date on which the Corporation shall
have received proper notice from the participant of the exercise of such
SAR.
(iii) No SAR may be exercised unless the participant is, at the time
of exercise, an eligible participant, as described in Section 5, and has
been a participant continuously since the date the SAR was granted, subject
to the provisions of Sections 6(d)(iii), (iv) and (v) herein.
(e) CONSIDERATION: The consideration to be received upon the exercise of
the SAR by the participant shall be paid in cash, shares of Common Stock (valued
at fair market value on the date of exercise of such SAR in accordance with
Section 6(c)(ii) herein) or a combination of cash and shares of Common Stock, as
elected by the Administrator. The Corporation's obligation arising upon the
exercise of the SAR may be paid currently or on a deferred basis with such
interest or earnings equivalent, if any, as the Administrator may determine. A
certificate or certificates for shares of Common Stock acquired upon exercise of
an SAR for shares shall be issued in the name of the participant (or his
beneficiary) and distributed to the participant (or his beneficiary) as soon as
practicable following receipt of notice of exercise. A participant or his legal
representative, legatees or distributees shall not be deemed to be the holder of
any shares subject to an SAR and shall not have any rights as a shareholder
unless and until certificates for such shares have been issued and delivered to
him or them under the Plan. No fractional shares of Common Stock will be
issuable upon exercise of the SAR and, unless otherwise provided in the
applicable agreement, the participant will receive cash in lieu of fractional
shares.
(f) LIMITATIONS: The applicable SAR agreement shall contain such terms,
conditions and limitations consistent with the Plan as may be specified by the
Administrator. Unless otherwise provided in the applicable agreement or the
Plan, any such terms, conditions or limitations relating to a tandem SAR shall
not restrict the exercisability of the related option.
(g) NONTRANSFERABILITY:
(i) SARs shall not be transferable other than by will or the laws of
intestate succession (except to the extent, if any, that a related option
is a nonqualified option and is transferable pursuant to Section 6(e)(i)
herein). SARs may be exercised during the participant's lifetime only by
him or by his guardian or legal representative. The designation of a
beneficiary does not constitute a transfer.
27
(ii) If the participant is subject to Section 16 of the Exchange Act,
shares of Common Stock acquired upon exercise of an SAR may not, without
the consent of the Administrator, be disposed of by the participant until
the expiration of six months after the date the SAR was granted.
8. RESTRICTED AWARDS
(a) GRANT AND EARNING OF RESTRICTED AWARDS: Subject to the limitations of
the Plan, the Administrator may in its sole and absolute discretion grant
restricted awards to such individuals in such numbers, upon such terms and at
such times as the Administrator shall determine. A restricted award may consist
of a restricted stock award or a restricted unit, or both. Restricted awards
shall be payable in cash or whole shares of Common Stock (including restricted
stock), or partly in cash and partly in whole shares of Common Stock, in
accordance with the terms of the Plan and the sole and absolute discretion of
the Administrator. The Administrator shall determine the nature, length and
starting date of the period, if any, during which a restricted award may be
earned (the "restriction period"), and shall determine the conditions which must
be met in order for a restricted award to be granted or to vest or be earned (in
whole or in part), which conditions may include, but are not limited to,
attainment of performance objectives, completion of the restriction period (or a
combination of attainment of performance objectives and completion of the
restriction period), retirement, displacement, disability or death, or any
combination of such conditions. In the case of restricted awards based upon
performance criteria, or a combination of performance criteria and continued
service, the Administrator shall determine the performance objectives to be used
in valuing restricted awards and determine the extent to which such awards have
been earned. Performance objectives may vary from participant to participant and
between groups of participants and shall be based upon such Corporation,
business unit and/or individual performance factors and criteria as the
Administrator in its sole discretion may deem appropriate, which factors may
include but are not limited to production, reserves, cash flow, earnings per
share, return on equity, return on assets, total return to shareholders, or any
combination of the foregoing. The Administrator shall have sole authority to
determine whether and to what degree restricted awards have been earned and are
payable and to interpret the terms and conditions of restricted awards and the
provisions herein. The Administrator shall also determine the form and terms of
payment of awards. The Administrator, in its sole and absolute discretion, may
accelerate the date that any restricted award granted to the participant shall
be deemed to be earned in whole or in part, without any obligation to accelerate
such date with respect to other restricted awards.
(b) FORFEITURE OF RESTRICTED AWARDS: Unless an individual agreement
provides otherwise, if the employment or service of a participant shall be
terminated for any reason and the participant has not yet earned all or part of
a restricted award pursuant to the terms of the Plan and the individual
agreement, such award to the extent not then earned shall be forfeited
immediately upon such termination and the participant shall have no further
rights with respect thereto.
(c) DIVIDEND AND VOTING RIGHTS; SHARE CERTIFICATES: Unless an individual
agreement provides otherwise, (i) a participant shall have no dividend rights or
voting rights or other rights as a shareholder with respect to shares subject to
a restricted award that has not yet vested; and (ii) a certificate or
certificates for shares representing a restricted award payable in shares shall
be issued in the name of the participant (or his beneficiary) and distributed to
the participant (or his beneficiary) as soon as practicable after the shares
subject to the award shall be earned.
(d) NONTRANSFERABILITY:
(i) The recipient of a restricted award shall not sell, transfer,
assign, pledge or otherwise encumber shares subject to the award until all
conditions to vesting have been met and shares have been issued and
delivered to him.
(ii) Restricted awards shall not be transferable other than by will or
the laws of intestate succession. The designation of a beneficiary does not
constitute a transfer.
(iii) If a participant of a restricted award is subject to Section 16
of the Exchange Act, shares of Common Stock subject to such award may not,
without the consent of the Administrator, be sold or otherwise disposed of
within six months following the date of grant of such award.
28
9. WITHHOLDING
The Corporation shall withhold all required local, state and federal taxes from
any amount payable in cash with respect to an award. The Corporation shall
require any recipient of an award payable in shares of the Common Stock to pay
to the Corporation in cash the amount of any tax or other amount required by any
governmental authority to be withheld and paid over by the Corporation to such
authority for the account of such recipient. Notwithstanding the foregoing, the
Corporation may establish procedures to permit a recipient to satisfy such
obligation in whole or in part, and any other local, state or federal income tax
obligations relating to such an award, by electing (the "election") to have the
Corporation withhold shares of Common Stock from the shares to which the
recipient is entitled. The number of shares to be withheld shall have a fair
market value as of the date that the amount of tax to be withheld is determined
as nearly equal as possible to (but not exceeding) the amount of such
obligations being satisfied. Each election must be made in writing to the
Administrator in accordance with election procedures established by the
Administrator.
10. SECTION 16(b) COMPLIANCE
It is the general intent of the Corporation that transactions under the Plan
which are subject to Section 16 of the Exchange Act shall comply with Rule 16b-3
under the Exchange Act. Notwithstanding anything in the Plan to the contrary,
the Administrator, in its sole and absolute discretion, may bifurcate the Plan
so as to restrict, limit or condition the use of any provision of the Plan to
participants who are officers or directors subject to Section 16 of the Exchange
Act without so restricting, limiting or conditioning the Plan with respect to
other participants.
11. NO RIGHT OR OBLIGATION OF CONTINUED EMPLOYMENT
Nothing in the Plan shall confer upon the participant any right to continue in
the service of the Corporation or a related entity as an employee, director, or
independent contractor or to interfere in any way with the right of the
Corporation or a related entity to terminate the participant's employment or
service at any time. Except as otherwise provided in the Plan or an individual
agreement, (i) all rights of a participant with respect to an award shall
terminate upon the termination of the participant's employment or service; and
(ii) awards granted under the Plan shall not be affected by any change in the
duties or position of the participant, as long as such individual remains an
employee of, or in service to, the Corporation or a related entity.
12. UNFUNDED PLAN; RETIREMENT PLANS
(a) Neither a participant nor any other person shall, by reason of the
Plan, acquire any right in or title to any assets, funds or property of the
Corporation or any related entity, including, without limitation, any specific
funds, assets or other property which the Corporation or any related entity, in
their discretion, may set aside in anticipation of a liability under the Plan. A
participant shall have only a contractual right to the Common Stock or amounts,
if any, payable under the Plan, unsecured by any assets of the Corporation or
any related entity. Nothing contained in the Plan shall constitute a guarantee
that the assets of such corporations shall be sufficient to pay any benefits to
any person.
(b) In no event shall any amounts accrued, distributable or payable under
the Plan be treated as compensation for the purpose of determining the amount of
contributions or benefits to which any person shall be entitled under any
retirement plan sponsored by the Corporation or a related entity that is
intended to be a qualified plan within the meaning of Section 401(a) of the
Code.
13. AMENDMENT AND TERMINATION OF THE PLAN
The Plan and any award granted under the Plan may be amended or terminated at
any time by the Board of Directors of the Corporation; provided, that (i)
approval of an amendment to the Plan by the shareholders of the Corporation
shall be required to the extent, if any, that shareholder approval of such
amendment is required by applicable law, rule or regulation; and (ii) amendment
or termination of an award shall not, without the consent of a recipient of an
award, adversely affect the rights of the recipient with respect to an
outstanding award.
29
14. RESTRICTIONS ON AWARDS AND SHARES
The Corporation may impose such restrictions on any awards and on any shares
representing awards hereunder as it may deem advisable, including without
limitation restrictions under the federal securities laws, the requirements
of any stock exchange or similar organization and any blue sky or state
securities laws applicable to such shares. Notwithstanding any other Plan
provision to the contrary, the Corporation shall not be obligated to issue,
deliver or transfer shares of Common Stock under the Plan, make any other
distribution of benefits under the Plan, or take any other action, unless
such delivery, distribution or action is in compliance with all applicable
laws, rules and regulations (including but not limited to the requirements of
the Securities Act). The Corporation may cause a restrictive legend to be
placed on any certificate issued pursuant to an award hereunder in such form
as may be prescribed from time to time by applicable laws and regulations or
as may be advised by legal counsel.
15. APPLICABLE LAW
The Plan shall be governed by and construed in accordance with the laws of the
State of Colorado, without regard to the conflict of laws provisions of any
state.
16. SHAREHOLDER APPROVAL
The Plan is subject to approval by the shareholders of the Corporation, which
approval must occur, if at all, within 12 months of the effective date of the
Plan. Awards granted prior to such shareholder approval shall be conditioned
upon and shall be effective only upon approval of the Plan by such shareholders
on or before such date.
17. CHANGE OF CONTROL
(a) Notwithstanding any other provision of the Plan to the contrary, in the
event of a change of control (as defined in Section 17(b) herein):
(i) All options and SARs outstanding as of the date of such change of
control shall become fully exercisable, whether or not then otherwise
exercisable.
(ii) Any restrictions including but not limited to the restriction
period applicable to any restricted award shall be deemed to have expired,
and such restricted awards shall become fully vested and payable to the
fullest extent of the original grant of the applicable award.
(iii) Notwithstanding the foregoing, in the event of a merger, share
exchange, reorganization or other business combination affecting the
Corporation or a related entity, the Administrator may, in its sole and
absolute discretion, determine that any or all awards granted pursuant to
the Plan shall not vest or become exercisable on an accelerated basis, if
the Corporation or the board of directors of the surviving or acquiring
corporation, as the case may be, shall have taken such action, including
but not limited to the assumption of awards granted under the Plan or the
grant of substitute awards (in either case, with substantially similar
terms as awards granted under the Plan), as in the opinion of the
Administrator is equitable or appropriate to protect the rights and
interests of participants under the Plan. For the purposes herein, if the
Committee is acting as the Administrator authorized to make the
determinations provided for in this Section 17(a)(iii), the Committee shall
be appointed by the Board of Directors, two-thirds of the members of which
shall have been directors of the Corporation prior to the merger, share
exchange, reorganization or other business combinations affecting the
Corporation or a related entity.
(iv) The provisions of this Section 17(a) shall not in any way affect
or impair the right or obligation of a successor corporation of the
Corporation to assume outstanding awards granted under the Plan or to grant
substitute awards in replacement of outstanding awards granted under the
Plan; provided, however, that such substitute awards or assumed awards
shall in no way diminish such rights of participants as may be provided in
Section 17(a) herein with respect to outstanding awards granted under the
Plan.
30
(b) For the purposes herein, a "change of control" shall be deemed to have
occurred on the earliest of the following dates:
(i) The date any entity or person shall have become the beneficial
owner of, or shall have obtained voting control over, thirty percent (30%)
or more of the outstanding Common Stock of the Corporation;
(ii) The date the shareholders of the Corporation approve a definitive
agreement (A) to merge or consolidate the Corporation with or into another
corporation or other business entity (each, a "corporation"), in which the
Corporation is not the continuing or surviving corporation or pursuant to
which any shares of Common Stock of the Corporation would be converted into
cash, securities or other property of another corporation, other than a
merger or consolidation of the Corporation in which holders of Common Stock
immediately prior to the merger or consolidation have the same
proportionate ownership of Common Stock of the surviving corporation
immediately after the merger as immediately before, or (B) to sell or
otherwise dispose of all or substantially all the assets of the
Corporation; or
(iii) The date there shall have been a change in a majority of the
Board of Directors of the Corporation within a 12-month period unless the
nomination for election by the Corporation's shareholders of each new
director was approved by the vote of two-thirds of the directors then still
in office who were in office at the beginning of the 12-month period.
(For the purposes herein, the term "person" shall mean any individual,
corporation, partnership, group, association or other person, as such term
is defined in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act,
other than the Corporation, a subsidiary of the Corporation or any employee
benefit plan(s) sponsored or maintained by the Corporation or any
subsidiary thereof, and the term "beneficial owner" shall have the meaning
given the term in Rule 13d-3 under the Exchange Act.)
18. CERTAIN DEFINITIONS
In addition to other terms defined in the Plan, the following terms shall have
the meanings indicated:
(a) "Agreement" means any written agreement or agreements between the
Corporation and the recipient of an award pursuant to the Plan relating to the
terms, conditions and restrictions of awards and such other terms, conditions
and restrictions as the Administrator shall determine which are not inconsistent
with the provisions of the Plan.
(b) "Covered employee" shall have the meaning given the term in Section
162(m) of the Code or the regulations thereunder.
(c) "Disability" shall mean the inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death, or which has lasted or can
be expected to last for a continuous period of not less than twelve months.
(d) "Displacement" shall mean the termination of a participant's employment
or service due to the elimination of the participant's job or position without
fault on the part of the participant.
(e) "Parent" or "parent corporation" shall mean any corporation (other than
the Corporation) in an unbroken chain of corporations ending with the
Corporation if each corporation other than the Corporation owns stock possessing
50% or more of the total combined voting power of all classes of stock in
another corporation in the chain.
(f) "Predecessor" or "predecessor corporation" means a corporation which
was a party to a transaction described in Section 424(a) of the Code (or which
would be so described if a substitution or assumption under Section 424(a) had
occurred) with the Corporation, or a corporation which is a parent or subsidiary
of the Corporation, or a predecessor of any such corporation.
31
(g) "Related corporation" means any parent, subsidiary or predecessor of
the Corporation, and "related entity" means any related corporation or any other
business entity which is an affiliate of the Corporation.
(h) "Retirement" shall mean retirement in accordance with the retirement
policies and procedures established by the Corporation, unless an individual
agreement establishes a different meaning for such term.
(i) "Subsidiary" or "subsidiary corporation" means any corporation (other
than the Corporation) in an unbroken chain of corporations beginning with the
Corporation if each corporation other than the last corporation in the unbroken
chain owns stock possessing 50% or more of the total combined voting power of
all classes of stock in another corporation in the chain.
19. GENDER AND NUMBER
Where the context admits, words in any gender shall include any other gender,
words in the singular shall include the plural and the plural shall include the
singular.
IN WITNESS WHEREOF, this 2000 Stock Incentive Plan of Evergreen Resources, Inc.,
is, by the authority of the Board of Directors of the Corporation, executed in
behalf of the Corporation, effective this 16th day of June, 2000.
EVERGREEN RESOURCES, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
ATTEST:
- -----------------------------
Secretary
[Corporate Seal]
32
EVERGREEN RESOURCES, INC.
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF THE SHAREHOLDERS TO BE HELD ON JUNE 16, 2000
The undersigned hereby constitutes and appoints Mark S. Sexton and Kevin R.
Collins, and each of them, the true and lawful attorneys and proxies of the
undersigned, with full power of substitution and appointment, for and in the
name, place and stead of the undersigned, to act for and vote all of the
undersigned's shares of no par value common stock of Evergreen Resources, Inc.,
a Colorado corporation, at the Annual Meeting of Shareholders to be held at The
Westin, 1672 Lawrence Street, Denver, Colorado, at 10:00 a.m., Mountain Daylight
Time, on June 16, 2000, and any and all adjournments thereof (the "Meeting"),
for the purposes of considering and acting upon the following matters proposed
by Evergreen Resources, Inc.:
1. The election of two FOR all nominees listed WITHHOLD AUTHORITY
(2) Directors of the (EXCEPT AS MARKED TO THE TO VOTE FOR ALL
Company. CONTRARY BELOW) / / NOMINEES / /
Nominees: Alain G. Blanchard, Scott D. Sheffield
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE FOLLOWING SPACE):
- --------------------------------------------------------------------------------
2. Approval of the 2000 Stock Incentive Plan of Evergreen Resources, Inc.
/ / FOR / / AGAINST / / ABSTAIN
3. Such other business as properly may come before the Meeting.
/ / FOR / / AGAINST / / ABSTAIN
APPROVAL OF EACH MATTER LISTED ABOVE IS NOT CONTINGENT UPON THE APPROVAL OF
ANY OTHER MATTER LISTED ABOVE.
(Continued on other side)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ABOVE, FOR APPROVAL OF THE 2000
STOCK INCENTIVE PLAN OF EVERGREEN RESOURCES, INC. AND IN THE DISCRETION OF THE
PROXY HOLDERS NAMED HEREIN WITH RESPECT TO OTHER MATTERS THAT PROPERLY COME
BEFORE THE MEETING.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN ACCORDANCE
WITH THE SHAREHOLDER'S SPECIFICATION ABOVE. THIS PROXY CONFERS DISCRETIONARY
AUTHORITY WITH RESPECT TO MATTERS RELATED TO THE MEETING ABOUT WHICH THE COMPANY
DOES NOT RECEIVE TIMELY AND PROPER NOTICE AND WITH RESPECT TO MATTERS INCIDENT
TO THE CONDUCT OF THE ANNUAL MEETING.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Shareholders, Proxy Statement and the Company's Annual Report to shareholders
for the fiscal year ended December 31, 1999, furnished therewith.
Dated: ______________________, 2000
___________________________________
___________________________________
Signature(s) should agree with the
name(s) hereon. Executors,
administrators, trustees, guardians
and attorneys should indicate when
signing. Attorneys should submit
power of attorney.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF EVERGREEN
RESOURCES, INC. PLEASE SIGN AND RETURN THIS PROXY TO EVERGREEN RESOURCES, INC.,
PO BOX 660, DENVER, COLORADO 80201-0660. THE GIVING OF A PROXY WILL NOT AFFECT
YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.